Weekly News (June 29, 2022)

Weekly News (June 29, 2022)

by Stephen Lee (Broker of Record/President at C LAND REALTY)

Interest Rate (26th Week)

(By Fairway Home Loan )

   Prime Rate:4.5% – 4.75%  /  Fed Fund Rate: 1.5%- 1.75% 

• 3% Down payment for 1st home buyer is available.
• 5% Down payment 2-4 units FHA program available
• 15% Down payment 2 families -conventional program available.
• Potential home buyer – Have a pre-approval first before the shop.  Now we have 48hour underwriting turn-around times for regular loans.
• Self employed borrower – Need to prepare 3 month business bank statements and the YTD Profit and Loss Statement. YTD income can’t decline more than 30% compared to last year.
• 2022 Conventional loan limit:

Conforming SFR : $647,200.00/ Conforming high balance: $970,800.00
Conforming 2 Family: $828,700/ Conforming High Balance: $1,243,050

In Oradell, NJ, Developer revamps for old Subaru site

(The Record  6/29  )

• The developer, 66 Kinderkamack Road, LLC, had originally proposed 33-unit, three-story development before the board in March, but it was rejected after receiving 4-3 votes. Five affirmative votes would have been needed to approve the project.
• The project returned before the board on June 20, proposing a building with two floors and 29 units.
• In the original proposal, many members expressed concerns about the floor area ratio(FAR), or the measurement of building’s floor space in relation to the size of the lot. Under borough code, 0.35 is allowed, but the developer was proposing 1.99.
• Holly Schepisi, an attorney representing the developer, said the project would have no impact on the local school system, the market-rate units were all one-bedroom.

Portfolio of Apartment Buildings in Manhattan Sells for $1.75B

(WSJ   6/29  )

• A Venture of a New York investment firm and a U.S. residential developer agreed to pay $1.75B for six Manhattan rental apartment buildings, the highest price tag for a New York multifamily portfolio since the beginning of the pandemic.
• The planned purchase of the portfolio, which includes about 1,700 mostly market-rate units, by Black Spruce Management LLC and Orbach Affordable Housing Solutions LLC indicates the demand for Manhattan rental apartments remains healthy, despite rising interest rates, capital-markets upheaval and recession fears.
• The six towers are on Manhattan’s Upper Esat side and built in between 1960s and 2018 by Sheldon Solow, a New York developer.
• Residential landlords are better positioned than others to weather rising interest rates, since housing is a necessity that people can’t easily give up and 12-month leases allow for rent increases, analysts said.

Tough Battle for Home Buyers

(WSJ   6/25  )

• The median existing-home sale price in May rose 14.8% to more than $400,000, a record even when adjusting earlier prices for inflation. The number of home sales remains well below normal levels for this time of year, forcing buyers to compete in bidding wars and waive typical protections in their offers.
• The average rate on a 30-year fixed-rate mortgage surged to 5.81% this week from 3.1% at the end of 2021
• Rent prices are climbing too, making it more difficult for prospective buyers to save for a down payment.
• First-home buyers accounted for 27% of existing-home purchases in May, down from 31% a year earlier, according to NAR.
• Higher costs have pushed many buyers out of the market. In May, the monthly mortgage payment on a typical home climbed to $2,031 assuming a 30-year fixed-rate with 20% down payment, up from $1,378 a year earlier.
• Rising rates are expected to lead to slower home-rice growth later this year, but it hasn’t happened yet, and demand continues to exceed supply.
• Homeownership is a key wealth-building tool for the U.S. middle class. The median homeowner had $254,000 in wealth in 2019, compared with $6,270 for the median renter, according to Fed’s survey.
• The housing market has started to cool, which could benefit buyers who can afford to wait, though many economists think prices are unlikely to drop on a nationwide basis. In many markets, it’s starting to get less competitive for buyers, real estate agents say. Homes are sitting on the market longer and more sellers are cutting prices, though list prices still remain above year-ago levels.

 Fed Chief Says Rate Increases Risk a Recession

(WSJ  6/23 )

• The Fed chair Jerome Powell said the central bank’s battle against to inflation could lead it to raise interest rates high enough to cause a recession, offering his most explicit warning this year. “It’s not our intended outcome at all, buy it’s certainly a possibility,” Mr. Powell said Wed during the first two days of congressional hearings.
• His remarks underscore the challenge facing the central bank as it raises interest rates at the most rapid clip since the 1980s to cool inflation.
• “The events of the last few months around the world have made it more difficult for us to achieve what we want,” Mr. Powell told the Senate Banking Committee on Wed.
• A new research paper from a senior Fed economist published Tuesday found slightly more than a 50% chance of a recession over the next four quarters and a two-thirds probability of a downturn over the next two years.

Tight Housing Market Ignites Hot Bidding Wars for Rentals

(WSJ  6/29  )

• Bidding wars have long been a staple of hot housing markets, while buyers compete with offers above the seller’s listing price. Now these contests are becoming more commonplace in the rental market.
• Real-estate agents from New York City to Chicago and Atlanta said they see more people than ever making offers above asking rent to lease homes and apartments that they will never own.
• The median U.S. asking rent passed $2,000 for the first time in May, according to Redfin, and it has risen 15% over the past 12 months. If more high-income people enter into hot rental markets and the supply of new homes for them to rent or buy doesn’t substantially increase, rents are poised to keep rising, housing analysts said.

Foreclosures  increased after Mortgage Moratorium ended

(Korea Times    6/24 )

• Nationwide foreclosure cases are up 65% from last quarter, and up 180% from a year ago. The foreclosures initiated in 1st Qt un U.S. are 50,759.
• States with highest foreclosure rates were Illinois(1 in 791 housing units)à New Jersey( 1 in 792) → Ohio (1 in 991) → South Carolina (1 in 1,081) Nevada (1 in 1,090).