Weekly News (June 8, 2022)
Interest Rate (23rd Week)
(By Fairway Home Loan )
| 30 yr fx
| 15 yr fx
|10 yr Tr Y
|5 Yr Arm
|7 Yr Arm
|A year ago||2.875||2.250||2.490||1.576|
|A month ago||5.250||4.999||4.875||2.915|
Prime Rate:3.75 – 4.00% / Fed Fund Rate: 0.75- 1.00% .
- 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
American Dream Mall facing financial hurdle
( Korea Daily 6/8 )
- According to the report from US Bank to SEC last week, Triple Five, owner of ADM is facing a default because ADM could not pay the interest of the loans.
- ADM has about $800M of loans including local government bonds, and they could not pay the interest due on 6/1 and they requested to delay of the due date till 15th, but they have a very low chance to pay.
- East Rutherford town could not receive the tax which could reach to $5.5M.
- The mega mall of the total of 3M sf size had an expectation of 40M visitors a year and anticipated $1.2B worth of economic effects in the beginning. But through the pandemic, the mall had to experience the loss of $60M.
New Jersey Housing market shows Signs of Stabilizing
( The Rcord 6/8)
- Higher mortgage rates and the pain of inflation are slowing the rise in home prices in Northern Jersey, as increased costs prompt buyers to tighten their budgets.
- Local real estate agents said they’ve seen prices stabilize since the Fed raised interest rates in May by the most in 22 years.
- In the latest report from NJAR (New Jersey Association of Realtors, the median home sales prices in Bergen County rose 7.4% in April, compared with a year earlier; in February, before the Fed’s first rate hike of the year, the increase was almost 12%.
- Passaic County saw the median sales price climb 6.1% in April, compared with 15.4% year-over-year in February.
- “The market remains strong with inventory still low, but is transitioning to a more traditional, normalized market,” said Max Stokes with Compass Real Estate of Ridgewood.
- In Morris County, the rise in home prices was roughly the same in April and February, at 4.5% and 4.2%, respectively.
- After two years of tight inventory during COVID-19 crisis, more homes are coming onto the market, according to May report from Realtor.com.
Hilton Hotel at Times Square is Set to Reopen After Sale
( WSJ 6/8 )
- A 478-room hotel near the heart of New York City’s Times Square is poised to reopen under new ownership after closing two years ago, the latest sign that investors are betting on the neighborhood’s comeback.
- The investment firm Apollo Global Management Inc. and hospitality investor Newbond Holdings agreed to buy the Hilton Times Square for about $85M, according to people familiar with the matter. The deal is expected to close toward the end of the summer, and the new owners plan to reopen the property in the fall.
- Previous owner Sunstone Hotel Investors Inc. defaulted on a loan for the hotel and handed the property over to the lender, Torchlight Investors, in late 2020.
- Real-estate investors are swooping in, if the price is right. Hotel owner and operator MCR and Island Capital Group LLC recently paid $373M for the Sheraton New York Times Square hotel, which was about half the price the property sold for in 2006.
- Hotel owners are encouraged by recent forecasts that the city’s tourism is in a strong recovery mode.
Commercial Property Shows Cooling Signs
( WSJ 6/8 )
- Commercial real estate is showing the first signs of cooling in more than a year, disrupted by rising interest rates that are already causing some deals to collapse.
- Property sales were $39.4B in April, which was down 16% compared with the same month a year ago, according to MSCI Real Assets. The decline followed 13 consecutive months of increases.
- Property sales tanked sharply during early pandemic and a rebound began in late 2020, as investors took advantage of low interest rates and started to buy in anticipation of an eventual rebound. Demand for multifamily and industrial properties in particular helped fuel commercial sales through 2021 and into this year.
- Now some analysts are starting ask whether the rally is running out of steam. Hotels, office buildings, senior housing and industrial properties recorded big drops in sales last month.
- Sales of retail properties were up in April, the fourth consecutive month that U.S. households boosted spending, while apartment building sales continued to rise due to strong tenant demand and landlord’s ability to raise rents. But analysts and brokers said activity in even these sectors might be slowing as rising interest rates keep some investors from making competitive offers.
Markets Think the Fed is Finally in Control
( WSJ 6/3 )
- Investors may be giving central banks too much credit – or blame – for whatever happens to inflation.
- Pessimist see a recession coming, as often happens when the Fed raises interest rates, whereas optimists think the central bank can hit a sweet spot to balance inflation and economic growth. Inflation markets appear to side with the latter.
- In periods of high inflation, central-bank policy can’t be understood through rates and bond yields alone. A popular gauge of “real” U.S. financial conditions are yields on inflation-protected Treasurys(TIPS). In March and April, these were negative even as regular yields climbed, implying investors saw inflation going higher because they didn’t find the Fed’s hawkish stance aggressive enough.
- But then inflation expectations started a steady decline as a trickle of data released in May pointed to a slowdown in parts of the economy – the housing market, for example. S. inflation for April came in at 8.3%, from March’s 8.5%, raising hopes of a peak.
Conversely, higher inflation in the second half of the year could lead to exaggerated fears that this will be permanent. China’s latest lockdowns ae a clear example of how supply disruptions may still drag on. The illusion of being in control can bring comfort, but it is a dangerous one.
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