Tag Archives: Katonah Luxury Homes

Chinese real estate is ‘biggest bubble in history | Katonah Real Estate

Chinese billionaire Wang Jianlin made his fortune in the country’s real estate market — and now he’s warning that it’s spiraling out of control.

It’s the “biggest bubble in history,” he told CNNMoney in an exclusive interview Wednesday.

Bubble is a sensitive word in China after the dramatic rise and spectacular crash in the country’s stock market last year, which wiped out the savings of millions of small investors who thought Beijing wouldn’t allow the market to drop.

After struggling to contain the fallout from the stock market debacle, China’s leaders could face a similar headache in the real estate sector.

The big problem, according to Wang, is that prices keep rising in major Chinese metropolises like Shanghai but are falling in thousands of smaller cities where huge numbers of properties lie empty.

“I don’t see a good solution to this problem,” he said. “The government has come up with all sorts of measures — limiting purchase or credit — but none have worked.”

It’s a serious worry in China, where the economy is slowing at the same time as high debt levelscontinue to increase rapidly. There are massive sums at stake in the real estate market: direct loans to the sector stood at roughly 24 trillion yuan ($3.6 trillion) at the end of June, according to Capital Economics.

“The problem is the economy hasn’t bottomed out,” Wang said. “If we remove leverage too fast, the economy may suffer further. So we’ll have to wait until the economy is back on the track of rebounding — that’s when we gradually reduce leverage and debts.”

He says, though, that he’s not worried about the prospect of a “hard landing” — a sudden and catastrophic collapse in economic growth.

Wang’s comments carry weight. He is the richest man in China, according to Forbes and Hurun Report data from 2015, and his real estate and entertainment empire brought in revenue of about $44 billion last year.

Wang has been warning of trouble in the Chinese property market for a while. His Dalian Wanda Group, which has developed huge malls and office complexes across China, has been gradually cutting back on its real estate business.

Instead, it’s pouring resources into entertainment, sports and tourism — areas where it sees potential for growth.

Wang has been on an overseas shopping spree lately, with a particular focus on the U.S. movie industry. And he’s on the hunt for more juicy targets.

In January, he bought the Hollywood studio Legendary Entertainment, which made blockbuster movies like “Jurassic World” and “Godzilla.” Less than two months later, his movie theater business AMC snapped up Carmike Cinemas, forming the biggest cinema chain in the world. And Wanda’s in talks to buy Dick Clark Productions, which produces shows like the American Music Awards and the Golden Globe awards.

But the major prize he’s seeking is control of one of Hollywood’s “Big Six” movie studios: 20th Century Fox, Columbia, Paramount, Universal Pictures, Warner Brothers and Walt Disney.

“We are waiting for the opportunity,” he said. “It could come in a year or two, or longer, but we have patience.”

His relations with Disney (DIS) came into the spotlight in May when he said the U.S. company“really shouldn’t have come to China” with its giant new Shanghai resort. Wanda is also investing heavily in theme parks in the country.

 

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http://money.cnn.com/2016/09/28/investing/china-wang-jianlin-real-estate-bubble/

#Mortgage rates rise | #Katonah Real Estate

Freddie today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates rising amid market expectations of possible rate increase by the Federal Reserve.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.87 percent with an average 0.6 point for the week ending November 5, 2015, up from last week when it averaged 3.76 percent. A year ago at this time, the 30-year FRM averaged 4.02 percent.
  • 15-year FRM this week averaged 3.09 percent with an average 0.6 point, up from last week when it averaged 2.98 percent. A year ago at this time, the 15-year FRM averaged 3.21 percent.
  • 1-year Treasury-indexed ARM averaged 2.62 percent this week with an average 0.2 point, up from 2.54 percent last week. At this time last year, the 1-year ARM averaged 2.45 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following links for theRegional and National Mortgage Rate Details and Definitions. Borrowers may still pay closing costs which are not included in the survey.

Quote
Attributed to Sean Becketti, chief economist, Freddie Mac.

“Treasury yields climbed nearly 20 basis points over the past week, capturing the market movement following last week’s FOMC meeting. In response, the 30-year mortgage rate experienced its largest increase since June, up 11 basis points to 3.87 percent. Recent commentary suggests interest rates may rise in the near future. Janet Yellen referred to a December rate hike as a ‘live possibility’ if incoming information supports it. The October jobs report to be released this Friday will be one crucial factor influencing the FOMC’s decision.”

 

 

Used homes sales fall | #Katonah Real Estate

Contract signings to purchase previously owned U.S. homes unexpectedly declined in August for just the second time this year, signaling residential real estate might have difficulty building on recent momentum.

An index of pending home sales decreased 1.4 percent after a 0.5 percent advance in July, the National Association of Realtors said Monday. The median projection in a Bloomberg survey of economists called for the gauge to climb 0.4 percent.

A scant supply of homes for sale that’s keeping prices elevated is hampering demand. At the same time, historically low mortgage rates and steady employment gains should help underpin the market as the broader U.S. economy battles headwinds from dollar appreciation and slower overseas growth.

“Pending sales have leveled off since mid-summer, with buyers being bounded by rising prices and few available and affordable properties within their budget,” NAR chief economist Lawrence Yun said in a statement.

Estimates in the Bloomberg survey of 37 economists ranged from a decrease of 4.2 percent to an advance of 1.5 percent.

Purchase contracts increased 6.7 percent in the 12 months ended in August after a 7.2 percent annual gain in July on an unadjusted basis, the NAR report showed.

The pending sales index was 109.4 on a seasonally adjusted basis. A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic, according to the NAR.

 

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http://www.bloomberg.com/news/articles/2015-09-28/pending-sales-of-previously-owned-u-s-homes-unexpectedly-fall

Interest Only Mortgages are back | Katonah Real Estate

They were the villains of the housing crash. Federal regulators called them toxic. Now interest-only mortgages are making a comeback, but these are not the loans of yesteryear or yester-housing booms.

“I think it’s opening the door back to responsible lending, giving people choices,” said Mat Ishbia, president and CEO of Michigan-based United Wholesale Mortgage, the second-largest lender through brokers in the nation.

The company announced Monday it is now offering interest-only loans through brokers, with significant safeguards. Borrowers must put 20 percent down, ensuring that they have the “skin in the game” that so many did not during the heady days of the housing boom. They must have at least a 720 FICO credit score, which is well above average, and they must qualify on what the payments will be once they’re adjusted higher, not at the starter rate.

Real estate

Mike Powell | Getty Images

“These people can afford these mortgages. They’re savvy homeowners,” said Ishbia. “We’re giving them the choice. It is no more risk to us. We actually think it’s less risk.”

United Wholesale Mortgage does not hold the loans but sells them to investors. Fannie Mae and Freddie Mac, the government-backed mortgage giants, do not buy these types of loans.

The mortgage begins as a five-year adjustable-rate product. Without paying principal, a borrower using, for example, a $300,000 mortgage, would start at 4.125 percent today, the same as a 30-year fixed. Without paying principal, however, the borrower would save $420 per month.

The interest rate can then adjust higher after five years, depending on market rates, but borrowers for this product are underwritten at a rate above 6 percent to ensure they could handle that adjustment. Borrowers are also required to start making principal payments after 10 years; of course they can also refinance the loan whenever they want.

In 2013, the Consumer Financial Protection Bureau issued rules to protect consumers from what it deemed “irresponsible mortgage lending.” So-called qualified mortgages under the new regulations would give lenders certain protections, should the loans go bad. Under the QM rules, according to the news release at the time, there would be:

No toxic loan features: A qualified mortgage cannot have risky loan features, such as terms that exceed 30 years, interest-only payments, or negative-amortization payments where the principal amount increases. In the lead up to the crisis, too many consumers took on risky loans that they didn’t understand. They didn’t realize their debt or payments could increase, or that they weren’t building any equity in the home.

Interest-only loans therefore fall under the definition of a qualified mortgage. During the housing boom, they were used to help borrowers buy homes they really couldn’t afford. Now, more lenders are starting to do them again, but with much tighter restrictions. They are mostly offered to high net worth individuals in the jumbo loan category, and banks hold the loans on their balance sheets.

 

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http://www.cnbc.com/2015/07/20/interest-only-mortgages-theyre-baaack.html

New home sales jump in April even as prices gain | Katonah Real Estate

Sales of new single-family houses in April 2015 were at a seasonally adjusted annual rate of 517,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

This comes after a big drop in March which saw just 481,000 new home sales, the biggest drop in almost two years and primarily driven by a precipitous drop in sales in the Northeast in March.

This is 6.8% above the revised March rate of 484,000 and is 26.1% above the April 2014 estimate of 410,000.

The big driver of the gain was one of the smaller home regions, the Midwest, which saw a jump from 57,000 to 78,000 sales. In April the West and Northeast both saw declines.

The median sales price of new houses sold in April 2015 was $297,300; the average sales price was $341,500 – both up from March.

 

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http://www.housingwire.com/articles/33989

Non-Revolving Credit Drives Consumer Credit Growth | Katonah Real Estate

The Federal Reserve Board recently reported that consumer credit outstanding rose by a seasonally adjusted annual rate of 5.6%, $186.2 billion, in February 2015. Consumer credit outstanding now totals $3.343 trillion.

The expansion of total consumer credit outstanding reflected an increase in the outstanding amount of non-revolving consumer credit. Non-revolving consumer credit includes auto loans and student loans. According to the report, non-revolving credit outstanding grew by a seasonally adjusted annual rate of 9.4%, $230.3 billion, in February 2015, 3.6 percentage points faster than the 5.8%, $141.6 billion, growth recorded in January 2015. There is now $2.459 trillion in outstanding non-revolving credit, 74% of the total amount of consumer credit outstanding.

The growth in non-revolving credit was partially offset by a contraction in the outstanding amount of revolving credit. Revolving credit outstanding is largely composed of consumer credit card debt. After recording a small decline of 1.4%, $12.0 billion, in January 2015, revolving credit outstanding registered a larger decrease, 5.0% or $44.1 billion, in February 2015. As of January 2015, revolving credit outstanding totals $884.8 billion, 26% of total consumer credit outstanding.

Presentation1

An earlier post showed that the increase in consumer credit outstanding largely reflects an expansion in non-revolving credit outstanding. As a result, non-revolving credit outstanding as a share of total consumer credit outstanding has risen. However, while the overall composition of consumer credit outstanding is skewed to non-revolving credit, the composition of consumer credit varies by type of holder. Depository institutions, nonfinancial businesses and pools of securitized assets hold more revolving credit than non-revolving credit. In contrast, finance companies, credit unions, the federal government, and nonprofit and educational institutions hold primarily on non-revolving credit. Both the federal government and non-profit and educational institutions focus only on non-revolving credit.

As Chart 2 illustrates, of the consumer credit held by depository institutions, 54% of it represents revolving credit while the rest, 46%, is non-revolving credit. Of the consumer credit held by pools of securitized assets and nonfinancial businesses, 58% and 52% respectively is held as revolving credit while the rest, 42% and 48% respectively, is held as non-revolving consumer credit. Meanwhile, of the consumer credit held by credit unions and finance companies, 15% and 9%, respectively, is revolving credit and the rest, 85% and 91% respectively, is non-revolving credit.

Presentation2

Although 3 types of institutions hold more revolving credit than non-revolving credit, 2, nonfinancial businesses and pools of securitized assets, account for only 3% of consumer credit outstanding combined but the third, depository institutions, is the largest holder of consumer credit outstanding. Although the current composition of consumer credit outstanding held by depository institutions is currently near evenly split, this has not always been the case. As Chart 3 illustrates, the consumer credit holdings of depository institutions were largely of non-revolving credit and very little revolving credit. However, over the last 46 years, 1968-2014, the share of revolving consumer credit has steadily risen while the share of non-revolving credit has declined. In 2010, a large spike in the holdings of revolving credit by depository institutions that was related to the shift of consumer credit pools of securitized assets to other categories due to implementation of the FAS 166/167 accounting rules, pushed its share past 50%. In contrast, the share of consumer credit held by depository institutions that was non-revolving credit fell below 50%. At the end of 2014, 54% of depository institutions’ consumer credit holdings were revolving credit and the rest, 46%, was non-revolving credit.

 

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http://eyeonhousing.org/2015/04/non-revolving-credit-drives-consumer-credit-growth/

Stronger Demand and Thin Inventories Push Prices up 7.5 Percent | Katonah Real Estate

Persistently tight inventories—not a good sign as the spring season nears—coupled with an uptick in sales pushed prices up 7.5 percent in February

The median existing-home price2 for all housing types in February was $202,600. This marks the 36th consecutive month of year-over-year price gains and the largest since last February (8.8 percent), according to the National Association of Realtors.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.2 percent to a seasonally adjusted annual rate of 4.88 million in February from 4.82 million in January. Sales are 4.7 percent higher than a year ago and above year-over-year totals for the fifth consecutive month.

Total housing inventory at the end of February increased from January by 1.6 percent to 1.89 million existing homes available for sale, but remains 0.5 percent below a year ago (1.90 million). For the second straight month, unsold inventory is at a 4.6-month supply at the current sales pace.

Concerns are growing about the low inventory levels have persisted through the winter months.  Lawrence Yun, NAR chief economist, said, “Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels,” he said. “Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.”

“With all indications pointing to a rate increase from the Federal Reserve this year – perhaps as early as this summer – affordability concerns could heighten as home prices and rents both continue to exceed wages,” adds Yun.

A NAR study released earlier this month found that the disparity between rent and income growth is widening in metro areas throughout the country and is making it harder for renters to become homeowners.

 

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http://www.realestateeconomywatch.com/2015/03/8633/

Mortgages Rise in 2014, Should Increase Further in 2015 | Katonah Real Estate

According to the Federal Reserve Bank of New York’s latest Household Debt and Credit Report, total household debt outstanding rose by $306 billion, 2.7%, between the fourth quarter of 2013 and the fourth quarter of 2014.

At the end of 2014 there was $11.8 trillion in house debt outstanding. By virtue of its size, the increase in mortgage debt outstanding over the year, $121 billion, accounted for much of the increase in total household credit outstanding. Auto loans, $92 billion, student loans, $77 billion, credit cards, $17 billion, and other consumer debt, $18 billion, also contributed to increase in total household debt outstanding over the 2014. The outstanding amount of home equity lines of credit fell by $19 billion. However, in year-over-year percentage growth terms, auto loans, 10.7%, and student loans, 7.1%, led the way. Outstanding credit card debt rose by 2.5% and mortgage debt increased by 1.5%. The amount of home equity lines of credit outstanding fell by 3.6%.

Although the year-over-year growth in mortgage credit outstanding, 1.5%, was below the 2.7% growth in total household debt outstanding, it represents acceleration from the rate of growth recorded over the year of 2013. As Figure 1 below illustrates, following four successive years of declines, 2014 marks the second consecutive year of growth. The rate of growth in 2014 was 1.3 percentage points greater than the rate recorded in 2013 and is similar to the rate recorded in 2008, the last year that mortgage debt outstanding registered annual growth.

Presentation1

Despite the presence of some risks, mortgage debt outstanding should expand further in 2015. Part of the reason that mortgage debt outstanding should rise in 2015 is because the serious mortgage delinquency rate is returning to its pre-recession level. At the same time, mortgage originators expect their mortgage business to grow. According to Fannie Mae’s Mortgage Lender Sentiment Survey, and as illustrated in Figure 2 below, 88% of respondents expect to grow their mortgage origination volume going forward, while 12% expect to maintain their mortgage origination volume. No respondent expects to either downsize their mortgage origination volume or exit the mortgage origination industry.

 

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http://eyeonhousing.org/2015/02/mortgages-rise-in-2014-should-increase-further-in-2015/