Weekly News (July 14, 2021)

This week’s Interest Rate (27th Week)

(By Fairway Home Loan )

 Prime Rate:3.0% / Ref IR: 0.00- 0.25% 

• Potential home buyer — Have a pre-approval first before the shop.  Now we have 48hour underwriting turn-around times for regular loans.
• 2021 Conventional loan limit:
  Conforming SFR : $548,250/ Conforming high balance: $882,375 Confirming 2 Family: $702,000/ Confirming High Balance: $1,053,000

NYC Work From Home rate is 31%, the highest in U.S.

(WSJ   7/13)

• According to recent NYC comptroller report, work from home rate is 31.2% which is almost double of the U.S. average of 16.6%, while it was 49.8% during the pandemic period.  The rate in NY State is 22.9%, still higher than the U.S. average.
• The same report said the number of hiring was 3.634M which is 449,209 jobs lower than 4.083,209 in February last year and it will be fully recovered in January 2022 with the current pace.

New Jersey resumed “Settlement Conference” for tenant eviction suits

(Korean Daily   7/12)

• NJ courts resumed Settlement Conference which landlord and tenant must participate together from this month.  According to the Governor Murphy’s executive order, the eviction is prohibited till the end of this year, but the eviction process is moving forward.
• The Conference is processed via online and the oldest cases get the priority or cases for tenant overdue more than a year.

Residential Market shows More Inventory soon?

(Korean Daily   7/14)

• According to Redfin on 6/12, during the previous 4 weeks as of 7/4 residential inventory increased 4%, compared to a year ago same period, and 3% compared to 2019 same period.
• Overall inventory is 32% lower than a year ago, but inventory is up 8% compared to March which is 4 month ago.
• According to CoreLogic, home sales sold at above the listing price in June were 55% while it was 27% a year ago.

IPO to Launch With a Single Warehouse

(WSJ  7/14)

• Startup REIT would acquire Amazon site in Bay Area, then expand with more.  A startup is attempting to create something that U.S. real-estate executives say doesn’t exist in their industry today: a private company that owns only one property.
• The prospective property is a 146,000 sf San Francisco Bay Area warehouse leased to Amazon.com LLC.  The startup, ROX financial LP, aims to use an IPO to create a real-estate investment trust that will acquire the Amazon facility.
• ROX Financial has applied to list the shares on the New York Stock Exchange’s Arca platform, an all-electronic exchange for exchange-traded funds and securities, public filings show.
• It is offering 8.25M shares at $10 a share.  That would be value the startup at a tiny fraction of the $94B market capitalization of Prologis Inc., the largest industrial property REIT with the biggest portfolio of warehouses leased by Amazon.
• ROX Financial, based in New York City, is classified as an “emerging growth company” meaning certain reporting requirements will be relaxed compared with audits that other public companies to comply with.

Foreign students are coming back to US?

(Korea Times   7/14)

• Foreign students from Korea increased about 3000 (7%) for the previous 3 months.  Korean foreign students are 43,773 as of June, including F-1, M-1 (trainee visa).  Overall Korean foreign student is 26% lower compare to Jan 2020.
• Other countries’ student also increased, but no cause known specifically.  In general, it might be stabilization of coronavirus situation, Biden Admin’s favorable immigration policies, etc.

Consumers Borrow at Record Level

(WSJ   7/13)

• Americans are borrowing again, in some cases at levels not seen in more than a decade.  Consumer demand for auto loans and leases, generally-purpose credit cards and personal loans rose 39% in April from a year earlier, according to credit-reporting firm Equifax Inc.
• It is quite the reversal from 2020, when many people shunned credit cards, personal loans and other types of debts.
• With vaccinations readily available in the US and economy reopening, many Americans are newly confident in the economy after hunkering down last year.  They are splurging on cars, vacations and eating out.
• Lenders originated some 3M car loans and leases in March, up about 53% from the same month in 2020 and the highest monthly figure on record according to Equifax.
• Lenders also issued nearly 6M general-purpose credit cards in March, up 32% from a year earlier and the highest March figure on record.  Some lenders are also extending more credit to people with low credit scores.

Mystery of Falling Bond Yields

(WSJ    7/13 )

• Perhaps the big drop in Treasury yields over the past 3 months is really a modern version of the taper tantrum.  That probably sounds odd, since back in 2013 the taper tantrum – a bond-market panic about FRB cutting its Treasury purchases – promoted the exact opposite reaction, and 10 year yields soared from 1.6% in May of that year to above 3% by the end of December. But actually, when the taper began, the yields dropped back, eventually falling all the way down to 1.6% again.
• The FRB is again readying the market for the tapering of its bond purchases, but instead of a repeat of 2013’s tantrum, there has been rush to buy bonds, and a big drop in yields.
• Tapering sends a signal about future moves in interest rates, as the FRB’s plan is to taper, then raise rates.  It took until late 2015 last time for the first rate rise to come.  This time, futures market thinks the first rise is more likely than not to come by December of next year.

Delta Variant becomes now Dominant Strain in NJ and NY

(Record /Korea Daily  7/14)

• In NJ, new positive cases per day are 333 (transmission rate: 1.01) on 7/12 while it was 227 a day before.  70% of new positive were Delta variant between 6/20 and 6/26.
• For the previous 2 weeks (6/6-6/19), Alpha variant positives were 37.7% while Delta Variant positives were 35.5%.
• In NY, NYC DOH reported that Delta variant took 45% of new positive cases as of 6/26.
• It is known that there are almost no symptoms of the positives of Delta variant for the vaccinated people and WHO confirms this statement on 6/12.
• NYT reported on 6/13 that total new positives in US on 6/12 were 32,105 while it was 15,572 two weeks ago, which is 106% up, while Florida has highest positives.

US Consumer prices surged in past year the most since 2008

(Record / NYT    7/14)

• American consumers faced a third straight monthly surge in prices in June, the latest evidence that a rapid reopening of the economy is fueling pent-up spending for goods and services that in many cases remain in short supply.
• Tuesday’s report from Labor Department showed that consumer prices in June rose 0.9% from May and 5.4% over the past year – the sharpest 12-month inflation spike since June 2008, 13 year ago.
• The Biden admin maintains that price gain will be temporary. But inside White House, aids have in recent weeks concluded that strong increases could linger for a year or more, according to two administration officials.
• Jamie Dimon, JPMorgan Chase’s CEO told analysts on a conference call on Monday that “it will be a little bit worse than the Fed thinks.  I don’t think it’s all going to be temporary, but that doesn’t matter if we have very strong growth.”

Wells Fargo will cut off all personal lines of credit products

(Korea Daily    7/13)

• The bank is shutting down all existing personal lines of credit in coming weeks and no longer offers the product, according CNBC.
• The revolving credit lines, which typically let users borrow $3000 to $100,000, were pitched as a way to consolidate higher-interest credit card debt, pay for home renovations or avoid overdraft fees on linked checking accounts.
• With this latest move, the bank warned customers that the account closures “may have an impact on your credit score”, and the move would let the bank focus on credit cards and personal loans, it said.
• Wells Fargo was accused for creating 3.5M fake customer accounts in 2018.