February 17, 2017

No One Seems Able To Stop This Gadarene Rush

It’s Friday desk clearing time for this blogger. “Federal Housing Administration mortgage delinquencies jumped in the fourth quarter for the first time since 2006, the Mortgage Bankers Association reported Wednesday. The FHA insures low down-payment loans and is a favorite among first-time homebuyers. The seasonally adjusted FHA delinquency rate increased to 9.02 percent in the fourth quarter from 8.3 percent in the third quarter, MBA data show. The jump, which followed the lowest delinquency rate since 1997, was driven by loans made since 2014 and early-stage delinquencies, those just 30 days past due.”

“There were, however, signs as recently as last fall that FHA loans were beginning to fail at a higher rate. In October, ATTOM Data Solutions, a foreclosure sales and analytics company, reported the biggest jump in foreclosure activity since 2007, with FHA loans behind the surge. ‘While some states are still slogging through the remnants of the last housing crisis, the foreclosure activity increases in states such as Arizona, Colorado and Georgia are more heavily tied to loans originated since 2009 — after most of the risky lending fueling the last housing boom had stopped,’ said Daren Blomquist, senior vice president at Attom Data Solutions.”

“Since the start of 2017, Bridgeport Neighborhood Trust has seen an uptick in the number of people walking through its doors looking for help. The nonprofit provides foreclosure prevention services in a city where year after year foreclosures occur in higher numbers than elsewhere in the state. In 2016, the Park City reported 261 foreclosure deed filings, which transfer the deed to a lender after a mortgage is foreclosed, slightly higher than its 2015 total of 246 filings.”

“The fact that home prices dropped post-recession has also affected homeowners, said Doris Latorre, BNT’s director of foreclosure prevention. ‘Most of the folks we see in trouble in Bridgeport, their houses are upside down — they owe more than it is worth,’ she said.”

“The good news for renters: After several years of unbridled rent spikes across the City of Atlanta, data from 2016 suggest that trend might finally be cooling off, broadly speaking. The roughly 5,000 new units that hit the market in 2016 had a softening effect. Traditionally high-priced areas of Atlanta—the Buckhead and Peachtree Hills areas—actually recorded declines of up to 2.2 percent last year. That’s not a significant downturn, especially for high-roller renters, but it’s a jolting reversal of post-recession trends.”

“If you’re looking for a deal on a brand new apartment in downtown Chicago, it’s getting easier to find one. Amid a historic building boom, the downtown apartment market is tilting in favor of tenants, who have endured big rent hikes for several years. ‘We’re looking at a lot of giveaways,’ said Ron DeVries, vice president of Appraisal Research Counselors, a Chicago-based consulting firm.”

“Houston’s low inventory of homes for sale may give the impression that the market leans in favor of sellers, but a new report shows that buyers may have the upper hand. Houston ranks as the nation’s fifth-best market for home buyers, according to Zillow. The company looked at the percentage of listings with a price cut and how long listing typically stay on the market. In the Houston region, 11 percent of listings have had price cuts. By comparison, 5.4 percent of listings in San Francisco — considered the best market for sellers — had price cuts. ‘A number of markets nationwide continue to struggle with slower job growth, weaker home value appreciation and higher rates of negative equity, giving buyers more negotiating power,’ Zillow chief economist Svenja Gudell said.”

“Online agent HouseSimple reckons a third of properties for sale in the UK have had their asking prices reduced since they were first marketed, based on listing data. The agent looked at 100 large towns and cities across the UK and found that in eight the percentage of homes reduced was in excess of 40%. Of the three largest cities in the UK, London has the highest percentage of properties currently being marketed (30%) that have had a price reduction since they were initially listed. HouseSimple says this ’suggests that estate agents in the Capital are finding it harder to secure a sale and are having to drop asking prices to attract buyers.’”

“With low demand and oversupply of residential units in the market, real estate companies would be forced to reduce the rents by up to 30 percent in the near future, say industry experts. Instead of reducing the rents, several leading real estate companies have come out with attractive packages such as free occupancy up to six months in a bid to survive in the market. ‘Supply of housing units has surpassed the demand,’ Khalifa Al Maslamani, a Qatari real estate expert said in a talk-show on Qatar TV. ‘Owners of the buildings would have to reduce the rents by 20 to 30 percent due to low demand,’ he added.”

“In the summer of 2016, outside the office of a Cairo real estate company called Mountain View, a crush of hundreds of people had gathered, and they were in a frenzy. The crowd of men and women were there to reserve spaces in a new desert compound at a bargain price, hoping to sell it on a few weeks later for a big profit. Walid Salah-Ahmed, a real estate developer himself, ended up having to pull a woman out of the crowd after she fainted. He splashed water on her face, she came to, and got up and plunged right back into the crowd in the hopes of closing on an apartment.”

“But after authorities decided to float the Egyptian pound, and let the free market dictate the exchange rate, the boom days of real estate are probably over. ‘I think there’s a tremendous slowdown in the real estate sector,’ Salah-Ahmed said. ‘If this was a normal country, they would call this a crash.’”

“Malta’s landscape is today covered by cranes and many developers have been buying up derelict properties (or in some cases perfectly good residences) and converting them to apartment blocks. But we already have a huge stick of uninhabited buildings around and this spate of construction will surely increase the stock. The stock of uninhabited buildings is already unsustainable, let alone what will there be at the end of all his construction.”

“This is the real bubble that the construction sector is experiencing - not a bubble that threatens the banking system but a bubble that threatens the social fabric both of the would-be buyers and also of the would-be developers. No one seems able to stop or at least slow this Gadarene rush, but people are warned the consequences will be very painful.”