Weekly News (October 6, 2021)
This week’s Interest Rate (41st Week)
(By Fairway Home Loan)
|30 yr fx(%)||15 yr fx(%)||FHA(%)||10 yr Tr Y (%)|
|A year ago||2.875||2.375||2.625||0.672|
|A month ago||2.750||2.125||2.375||1.299|
Prime Rate:3.0% / Ref IR: 0.00- 0.25%
- 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.
- 2021 Conventional loan limit:
Conforming SFR : $548,250/ Conforming high balance: $822,375
Confirming 2 Family: $702,000/ Conforming High Balance: $1,053,000
Korean Festival pushes state holiday to recognize spicy side dish
(Record 10/6 )
- The pungent fermented-vegetable dish is a staple of Korean cuisine, in both South Korea and the U.S.. So Korean American are pushing New Jersey to become the 2nd state to recognize it with an official commemorative day.
- The campaign has been taken up by the Korean American Association of New Jersey, which will feature kimchi-making sessions at the 20th annual Korean Festival at Overpeck County Park in Ridgefield Park this Saturday. Visitors to this Bergen county festival, which runs from 10:00am to 10:00pm will get a chance to make their own kimchi.
- Korean culture is currently very much in vogue, said Michelle Song, vice president of KAANJ, noting the popularity of K-pop, K-beauty, K-drama.
- The Palisades Park-based group wants Nov. 22 to be declared Kimchi Day in the Garden State.
Manhattan Apartment Sales hit the record in 32 years
(Korea Times 10/6 )
- NYT reported on 5th that Manhattan condo sales in 3rd Qt this year were 4,523 which is more than total sales before financial crises in 2007. The total transaction amount will be estimated to $9.5B. The appraiser with Elliman said that those delayed buying during the pandemic are moving forward to close.\
- The condo median price in Manhattan in 3rd Qt was $1,115,000 which is 1.4% higher than the last year
Queens rent market is under sharp recovery
(Korea Times 10/1)
- According to Elliman, lease transactions continue to increase with 3 digits in NW Queens area in August – 470% in April, 242.3% in May, 171.4% in June, 150.3% in July and 157.7% (549 contracts) in August compared to the last year respectively while Manhattan increased 64.3% and Brooklyn increased 27.9%.
- However, the median rent fell by 3.6% in August ($2,696) compared to the last year. 2Br rent fell 4.8% and Studio,4.5%. The median rent for 1Br fell 0.3% and 3Br, 4.9% respectively in August.
U.S. Home Affordability Hits Lowest Point in Years
- House prices are rising at a record pace, but incomes aren’t keeping up – which is making home ownership less and less affordable. The median American household would need 32.1% of its income to cover mortgage payments on a median-priced home, according to the Federal Reserve Bank of Atlanta. That is the most since November 2008, when the same outlays would eat up 34.2% of income.
- In July, the latest month in the Atlanta Fed’s calculations, median home prices were $342,350, up 23% from the year before. Median incomes were $67,031, up 3%.
- Declining affordability will have the biggest impact on buyers shopping for their first homes, who will have sign up for larger monthly payments, buy less desirable homes or step back from the market altogether, economists said.
- Home buyers have noticed. About 63% of consumers surveyed in August believed it was bad time to buy a house, according the Fannie Mae. That was up from 35% at the same time last year.
Further debate on legality of “Pocket Listing”
(Korea Times 10/4)
- Pocket listing is selling a property through real estate agent’s private network without putting on the public market such as local MLS (Multiple Listing Services).
- NYT reported on 29th that pocket listing is increased sharply during the pandemic period and it has triggered the debate on its legality.
- According to Redfin, home sales through pocket listing has increased 67% and it takes 20% of total sales in a certain area in U.S.
- NAR has prohibited the pocket listing as an illegal transaction since 2019 because seller will block the way to perform a transaction fairly in the market and it is against the law of fair trading. In this light, NAR specifies a rule that any property listed by an agent must be on local MLS within 24 hours after seller signed the listing agreement. However, NYT reported that home sales are done often through pocket listing among Realtors who are real estate agents registered with NAR, and NAR leaves the control to a local boards of Realtors.
- While there is no clear control over this pocket listing issue, some IT companies such as “Long & Foster”, “Bespoke”, “Alto”, etc. are jumping into opening their sites for the pocket listing properties and perform the transactions
Will China Save Evergrande?
- China’s 2nd largest real estate developer, China Evergrande Group, with 1,300 projects in 280 cities, has some $300B in liabilities. Evergrande owes investors as many as 1.6M unfinished apartments, and as far as financial debt, it owes $88.5B to banks and bondholders with $37B due within a year.
- It already missed an $83.5M coupon payment on 9/23 and a $47.5M payment last Wednesday. Evergrande does have a 30-day grace period, so the clock is ticking toward a default.
- China doesn’t have a safety net or a robust retirement system, so most Chinese households – as many as 70% — put their wealth into real estate. When new buildings are announced, there is a frenzy to buy apartments, even if many remain vacant for years. The thinking goes: Hong Kong prices more than tripled since 2004: surely the same can be true going forward for mainland China. That is bubble logic.
- Evergrande stock is down more than 75% this year and its founder, former steel executive Xu Jiayin, will probably be villainized and have his billions diluted in a restructure.
- The big question: Can China allow Evergrande to fail and risk the wrath of citizens taking huge retirement losses? Or will China paper over Evergrande’s losses and risk Japan-like stagflation?
Indexes Signal Inflation Pressures Are Spreading
(WSJ 10/5 )
- While many pandemic pressures are easing, broader sources of higher inflation are replacing them. Inflation as measured by the Labor Department’s consumer-price index was 5.3% in the 12 months through August, close to the highest in 12 years. Economists generally expect that to fall, but disagree on how much.
- They attribute much of the recent surge in prices to temporary causes – such as a post-vaccine spending upsurge, specific supply-chain problems and other production bottle- necks – that should fade as businesses increase output. But important question is whether prices will continue to increase persistently once these temporary disruptions are gone.
- “By tracking this measure we think we’re getting something that’s telling us about inflation a year or two or three out. And that measure is starting move up” said the Atlanta Fed’s Mr. Meyer.
- There are 12 Federal Reserve Banks in U.S. /The Federal Reserve System is the central bank of the U.S./ Jerome Powell is the chair of the Fed who is ending his 4 year term early next year.