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Strong house price rises continue in Europe and parts of Asia | Mt Kisco Real Estate

During the year to Q2 2018:

  • House prices rose in 25 out of the 39 world’s housing markets which have so far published housing statistics, using inflation-adjusted figures.
  • The more upbeat nominal figures, more familiar to the public, showed house price rises in 32 countries. House prices fell in only 6 countries and remained stable in 1 country.

Most of Europe continues to experience strong price rises, especially Ireland and the Netherlands.  In Asia Hong Kong and Macau have risen strongly over the past year. There have also been notable turnarounds in Thailand, Egypt, and Puerto Rico. But China, Ukraine, and most of the Middle East are experiencing either house price falls – or a sharp deceleration of house price rises

The strongest housing markets in our global house price survey during the year to Q2 2018 included: Hong Kong (+13.15%), Ireland (+11.57%), Netherlands (+7.24%), Macau (+6.31%), and Mexico (+5.12%) using inflation-adjusted figures.

The biggest y-o-y house-price declines were in Qatar (-16.91%), Kiev, Ukraine (-7.81%), Dubai, UAE (-7.63%), Turkey (-4.21%), and Shanghai, China (-3.51%), again using inflation-adjusted figures.


Momentum. Only 16 of the world’s housing markets for which figures are available showed stronger upward momentum during the year to Q2 2018, while 23 housing markets showed weaker momentum, according to Global Property Guide’s research. Momentum is a measure of the “change in the change”; simply put, momentum has increased if a property market has risen faster this year than last (or fallen less).

Inflation-adjusted figures are used throughout this survey. In the case of Kiev, Ukraine, the Global Property Guide adjusts using the official U.S. inflation rate since Ukrainian secondary market dwelling sales are denominated in U.S. dollars.

The strongest performing markets:

Hong Kong is now the strongest housing market in our global survey, up from fourth place in the previous quarter. Residential property prices surged 13.15% during the year to Q2 2018, after y-o-y rises of 12.28% in Q1 2018, 12.78% in Q4 2017, 13.41% in Q3 2017 and 19.27% in Q2 2017. Quarter-on-quarter, house prices increased 5.05% in Q2 2018.

The boom continues despite stamp duties being raised for all non-first time homebuyers (November 2016) and allowable loans on residential and commercial properties being cut in May 2017. In addition, Chief Executive Carrie Lam revealed in June 2018 another series of cooling measures, including a tax against vacant flats.

Ireland‘s economy grew by 7.8% last year. It is not surprising that the housing market is growing at breakneck speed. Residential property prices were up by 11.57% during the year to Q2 2018, after y-o-y rises of 12.4% in Q1 2018, 11.7% in Q4 2017, 11.75% in Q3 2017, and 11.8% in Q2 2017. During the latest quarter, Irish house prices increased 2.22%. Ireland’s surging house prices are being driven by strong demand and supply shortages..

The Netherlands‘ housing market continues to perform very well, mainly due to robust demand, coupled with inadequate housing supply. The average purchase price of all dwellings rose by 7.24% during the year to Q2 2018, slightly up from the previous year’s 6.39% growth. On a quarterly basis, house prices were up 0.85% during the latest quarter.

During 2017, home sales surged 13% from a year ago. However in the first seven months of 2018, home sales dropped more than 7% from a year earlier due to supply shortages.

Macau’s housing market remains strong. The average transaction price of residential units rose by 6.31% during the year to Q2 2018, following y-o-y rises of 4.22% in Q1 2018, 4.93% in Q4 2017, 9.59% in Q3 2017 and 11.79% in Q2 2017. House prices increased by 5.21% q-o-q during the latest quarter. Macau’s housing market is buoyed by massive infrastructure investments, which will transform Macau’s connections to China and Hong Kong.

Mexico‘s housing market is strengthening, amidst improving economic conditions. The nationwide house price index rising by 5.12% during the year to Q2 2018, up from a y-o-y growth of just 0.73% in Q2 2017. On a quarterly basis, house prices increased 4.89% during the latest quarter.



Most Europe remains vibrant

European house price rises continue unabated. House prices have risen over the past year in no less than 13 of the 20 European housing markets for which figures were available.

Ireland remains the best performer in Europe, buoyed by its very strong economy. Residential property prices were up by 11.57% during the year to Q2 2018, after y-o-y rises of 12.4% in Q1 2018, 11.7% in Q4 2017, 11.75% in Q3 2017, and 11.8% in Q2 2017. During the latest quarter, Irish house prices increased 2.22%. Ireland’s surging house prices are mainly driven by strong demand as well as supply shortages. The Irish economy grew by around 7.8% last year and is projected to expand by another 5.6% this year, according to the European Commission.

The Netherlands‘ housing market remains strong, mainly due to robust demand, coupled with lack of adequate housing supply in the market. The average purchase price of all dwellings rose by 7.24% during the year to Q2 2018, slightly up from the previous year’s 6.39% growth. On a quarterly basis, house prices were up 0.85% during the latest quarter. During 2017, home sales surged 13% from a year ago, fuelled by low interest rates and robust economic growth. In the first seven months of 2018, home sales dropped more than 7% from a year earlier to 124,615 units, according to Statistics Netherlands. The Dutch economy grew by 3.1% in 2017, the highest growth since 2007. GDP is expected to grow by another 3.2% this year and by 2.4% in 2019, according to the IMF.

Portugal’s housing prices continue to rise strongly, fuelled by surging demand as well as improved economic conditions. Nationwide property prices rose by 4.53% during the year to Q2 2018, from y-o-y rises of 4.7% in Q1 2018, 3.03% in Q4 2017, 4.04% in Q3 2017 and 3.47% in Q2 2017. During the latest quarter, house prices were almost stable.

After more than three years of depression, house prices in Portugal started to recover in 2014. The Portuguese economy is expected to expand by 2.4% this year, after GDP growth of 2.7% in 2017, 1.6% in 2016, 1.8% in 2015, and 0.9% in 2014.

Other strong European housing markets included Iceland, with house prices rising by 4.18% during the year to Q2 2018, Spain (4.01%), and Riga, Latvia (2.68%). All, expect Latvia, recorded positive quarterly growth during the latest quarter. In terms of momentum, only Spain had stronger performance in Q2 2018 compared to a year earlier.

Minimal annual house price rises during the year to Q2 2018 were registered in Jersey (1.93%), Germany (1.74%), Slovak Republic (1.68%), Romania (1.66%), Athens, Greece (0.66%), Lithuania (0.48%) and Finland (0.43%). Only Germany, Slovak Republic, Finland and Lithuania saw quarterly growth during the latest quarter. On the other hand, only Jersey, Greece and Finland performed better in Q2 2018 compared to the previous year.

Other strong European housing markets included Jersey, with house prices rising by 8.91% during the year to Q1 2018, Macedonia (6.1%), Riga, Latvia (5.72%), Romania (4.71%), Portugal (4.7%), Germany (4.19%), and Estonia (3.72%). All recorded positive quarterly growth during the latest quarter. In terms of momentum, only Macedonia, Latvia, Portugal and Jersey had stronger performances in Q1 2018 compared to a year earlier.

Modest to very minimal annual house price rises during the year to Q1 2018 were registered in Sweden (2.97%), Slovak Republic (2.41%), Spain (2.37%), Vienna, Austria (1.68%), Finland (0.29%), and Lithuania (0.1%). Only Slovak Republic, Spain, and Austria saw quarterly growth during the latest quarter. On the other hand, only Spain, Austria and Finland performed better in Q1 2018 compared to the previous year.

The U.K.’s house prices were unchanged during the year to Q1 2018. London was the worst-performing region, with house prices falling by 3.4% y-o-y in Q1 2018. Some high-end London districts have experienced significant price-falls.


Europe’s weakest housing markets

Ukraine‘s housing market remains depressed, despite improved economic conditions. Secondary market apartment prices in Kiev fell by 7.81% (inflation-adjusted) during the year to Q2 2018, to an average price of US$ 1,071 per square metre (sq. m.) – worse than the previous year’s 5.13% decline. House prices fell 1.94% quarter-on-quarter in Q2 2018.

House prices in Ukraine have been falling over the past five years, particularly in 2014 (with prices plunging 37.38%) because of hryvnia devaluation due to the Russian war. Ukraine’s economy is expected to expand by 3.2% this year, after expansions of 2.5% in 2017 and 2.4% in 2016, and contractions of 9.8% in 2015, 6.6% in 2014 and 0.03% in 2013.

Turkey’s housing market continues to weaken, amidst its plummeting currency (the lira), record-high inflation, and the country’s political conflict with the US. Nationwide residential property prices fell by 4.21% during the year to Q2 2018, in contrast with a 1.62 y-o-y rise in a year earlier – the fourth consecutive quarter of y-o-y price declines. On a quarterly basis, house prices dropped 1.99% during the latest quarter.

In June 2018, inflation rose to 15.39%, the highest level since 2004. The Turkish lira plunged to record lows, having shed more than 40% of its value against the US dollar in the past year. The government recently cut its 2018 GDP growth forecast to 3% – 4% from its earlier estimate of 5%.

Switzerland’s house prices fell 3.49% y-o-y in Q2 2018, the fourth consecutive quarter of annual price declines and the biggest fall in almost two decades. During the latest quarter, prices fell by 1.28% q-o-q.

After about 15 years of uninterrupted house price rises, the Swiss government’s efforts to cool the country’s overheated property market have finally succeeded. The Swiss economy is expected to expand by 2.3% this year and by another 2% in 2019, following annual growth of 1.1% in 2017, 1.4% in 2016, 1.2% in 2015 and 2.5% in 2014, according to the IMF.

Other weak European housing markets included Sweden, with house prices falling by 1.86% during the year to Q2 2018, Russia(-0.81%), Norway (-0.73%), and the UK (-0.09%). Only Norway and the UK saw quarterly growth during the latest quarter. All, except Russia, performed better in Q2 2018 compared to the previous year.


The Asia-Pacific region remains strong, but China slowing rapidly

Two of the five strongest housing markets in our global survey are in Asia-Pacific, with house prices rising in 6 of the 9 housing markets for which figures were available during the year to Q2 2018.

Hong Kong‘s housing market continues to boom, with residential property prices surging 13.15% during the year to Q2 2018, from y-o-y rises of 12.28% in Q1 2018, 12.78% in Q4 2017, 13.41% in Q3 2017, and 19.27% in Q2 2017. Quarter-on-quarter, house prices increased 5.05% in Q2 2018.

The latest house price rises come despite the government raising stamp duties for all non-first time homebuyers starting November 2016 and cutting allowable loans on residential and commercial properties in May 2017. In June 2018, Chief Executive Carrie Lam revealed another series of cooling measures, including a tax against vacant flats. In the first half of 2018, the total number of property transactions in Hong Kong increased 5.6% from a year earlier while sales values rose by 8.4%, according to the Ratings and Valuation Department (RVD). The economy expanded by 3.8% last year, the highest growth since 2011. The IMF recently raised its 2018 growth forecast for Hong Kong to 3.6%, up from its earlier estimate of 2.6%.

Macau’s housing market remains vibrant, amidst massive infrastructure investments, which will transform Macau’s connections to China and Hong Kong. The average transaction price of residential units rose by 6.31% during the year to Q2 2018, following y-o-y rises of 4.22% in Q1 2018, 4.93% in Q4 2017, 9.59% in Q3 2017 and 11.79% in Q2 2017. House prices increased strongly by 5.21% q-o-q during the latest quarter.

Macau’s economy grew by a spectacular 9.3% in 2017, a sharp turnaround from y-o-y declines of 0.9% in 2016, 21.6% in 2015, and 1.2% in 2014. Macau’s economy is expected to grow by 7% this year and by another 6.1% in 2019, according to the IMF.

Thailand’s housing market is rising strongly again, with nationwide house prices rising by 5.01% during the year to Q2 2018, in contrast to a y-o-y decline of 3.02% in the previous year. House prices fell slightly by 0.58% q-o-q in Q2 2018. During the first five months of 2018, nationwide land and building transactions rose by 3.2% y-o-y to THB 425.74 billion (US$ 13.1 billion). The Bank of Thailand recently raised its 2018 economic growth forecast for the fifth time to 4.4% from its earlier projection of 4.1% due to rising exports and strong private consumption.

Other Asia-Pacific housing markets with modest house price rises include New Zealand, with house prices rising by 4.3% during the year to Q2 2018, Tokyo, Japan (3.89%), and Indonesia (0.01%). All, except Japan, recorded positive quarterly growth during the latest quarter. In addition, all showed stronger upward momentum in Q2 2018 as compared to the previous year.

Sharp housing slowdown China

China’s housing market is now slowing, with new regulatory and monetary policies impacting developers and speculative buyers. In Shanghai, the price index of second-hand houses fell by 3.51% during the year to Q2 2018, in sharp contrast with a y-o-y rise of 6.76 in Q2 2017. During the latest quarter, house prices in Shanghai fell by 0.81%.

Despite this, the Chinese economy grew by 6.7% y-o-y in Q2 2018, only slightly lower than the 6.8% growth recorded the previous quarter. The economy is projected to expand by 6.6% this year, after expanding 6.9% in 2017 and 6.7% in 2016. China has achieved 27 straight years of above 6% growth.

Taiwan‘s housing market is still weak. Nationwide house prices fell by 0.27% during the year to Q2 2018, compared to a decline of 0.07% y-o-y in Q2 2017. Quarter-on-quarter, house prices fell by 0.15% in during the latest quarter.

South Korea‘s housing market is also fragile, with the nationwide housing purchase price index falling by 0.08% during the year to Q2 2018, from a y-o-y decline of 0.73% a year earlier. House prices dropped 0.04% q-o-q during the latest quarter.


Middle Eastern housing markets continue to struggle, but Egypt is an exception

The Middle East is now in the doldrums, with two of the three weakest housing markets in our global house price survey: Qatar and UAE. This is not surprising given the region’s ailing economy due to low oil prices and the ongoing political and diplomatic crisis. The Middle East’s economy grew by just 1.1% in 2017, the lowest level in eight years.

Qatar remains the weakest housing market in our global survey, amidst a sharp economic slowdown and the adverse impact of the blockade it is suffering from other Golf countries.

Qatar’s real estate price index dropped 16.91% during the year to Q2 2018, after y-o-y declines of 9.65% in Q1 2018, 10.42% in Q4 2017, 3.47% in Q3 2017, and 4.52% in Q2 2017. Property prices fell by 6.62% q-o-q during the latest quarter. The Qatari economy is expected to grow by a modest 2.6% this year, after annual average growth of 2.1% in 2016-17, 4.2% during 2012-15, and 15.7% in 2008-11.

Other Middle Eastern housing markets are also depressed.

In Dubai, residential property prices fell 7.63% during the year to Q2 2018, worse than the prior year’s 2.51% decline, amidst weak economic growth, low investor sentiment, and an oversupply of housing. During the latest quarter, house prices in Dubai dropped 1.33% q-o-q.

Likewise, Israel‘s decade-long house price boom is now over, with government cooling measures intensifying. The nationwide average price of owner-occupied dwellings fell by 1.21% during the year to Q2 2018, in sharp contrast with the previous year’s 4.06% growth. Israeli house prices fell  1.14% q-o-q in Q2 2018.

Egypt is an exception

Egypt’s housing market has risen over the past year, with the nationwide real estate index rising by 4.51% during the year to Q2 2018, in contrast with the y-o-y decline of 5.32% during the previous year. However house prices fell 9.91% quarter-on-quarter during the latest quarter.

Rapid house price rises should be expected in Egypt due to the dramatic inflation unleashed by more-than-halving of the currency’s value in November 2016.  That house prices have not risen more is surprising.

President Abdel Fattah el-Sisi recently removed the last restrictions on foreign ownership of land and property in Egypt. He also allowed the government, the biggest landowner in Egypt, to use its land for public-private partnership schemes. The economy is expected to grow strongly by 5.2% this year, the fastest pace in a decade, according to the IMF.


The Americas are mixed

The U.S. remains strong but Canada is slowing sharply.

In Latin America, Mexico is strengthening while Chile has rebounded strongly. House prices are still falling in Brazil, despite some improvement.

After five years of strong house price growth, the U.S. housing market remains surprisingly vibrant. The Federal Housing Finance Agency’s seasonally-adjusted purchase-only U.S. house price index increased 3.67% y-o-y in Q2 2018 (inflation-adjusted), after annual rises of 4.93% in Q1 2018, 4.64% in Q4 2017, 4.68% in Q3 2017 and 4.77% in Q2 2017. The FHFA index rose by 0.07% q-o-q during the latest quarter.

U.S. housing demand and construction activity are mixed. In July 2018, sales of new single-family houses rose by 12.8% y-o-y while existing home sales were down by 1.5%. Building permits authorized for new housing units rose by 4.2% in July 2018 from a year earlier. On the other hand, new housing starts fell by 1.4% y-o-y in July 2018, while completions were slightly down by 0.8%.

The world’s biggest economy grew by 4.1% y-o-y in Q2 2018, nearly double the 2.2% growth the previous quarter and the fastest pace since Q3 2014. Growth was mainly driven by consumers spending their tax cuts and exporters rushing to get their goods delivered ahead of retaliatory tariffs. Recently, the IMF raised its 2018 US growth forecast from 2.3% to 2.7% and finally to 2.9%, an acceleration from the expansions of 2.3% in 2017 and 1.5% in 2016.

In December 2017, President Donald Trump signed a landmark tax law (known as the Tax Cuts and Jobs Act or TCJA) considered to be the largest overhaul of the U.S. tax code in over 30 years.

Canada‘s housing market is slowing sharply, amidst the introduction of more market-cooling measures and rising mortgage interest rates. House prices in the country’s eleven major cities rose by a meagre 0.41% during the year to Q2 2018, a sharp deceleration from last year’s 13.02% growth. Quarter-on-quarter, house prices increased 1.68% q-o-q in Q2 2018.

The Canadian Real Estate Association (CREA) expects home sales to fall by 11% this year, mainly due to higher home prices and interest rates, supply shortages, and heightened uncertainty. Demand is weak. In July 2018, actual sales activity dropped 1.3% from a year earlier.  The Canadian economy grew by a healthy 3% in 2017, the highest growth since 2011. The economy is expected to expand by 2.1% this year and by another 2% in 2019.


The Latin Americas are improving

Mexico‘s nationwide house price index rose by 5.12% during the year to Q2 2018, up from just 0.73% y-o-y house price rises in Q2 2017. House prices increased 4.89% q-o-q during the latest quarter.

Chile‘s housing market continues to grow stronger, despite the introduction of a property sales tax in 2016. The average price of new apartments in Greater Santiago rose by 3.39% during the year to Q2 2018, up from the previous year’s 2.11% y-o-y growth. House prices fell by 1.07% q-o-q in Q2 2018.

Brazil’s house prices are still falling, but the outlook is now positive, amidst increasing construction and home sales, as well as a positive economic outlook. In Sao Paulo, house prices fell by 2.38% during the year to Q2 2018, after a y-o-y decline of 2.15% a year earlier. Quarter-on-quarter, house prices in Sao Paulo fell by 1.22% in Q2 2018.


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Manhattan Renters Seeking Deals Send Leasing to a Record | Mt Kisco Real Estate

In Manhattan, the number of newly signed leases climbed 17 percent in May from a year earlier to 5,969, the biggest total for the month in nine years of record-keeping, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. In Brooklyn, new apartment contracts surged 23 percent to 1,460, also the biggest total for the month in data going back to 2008.

Renters are taking advantage of a market that’s crowded with listings, weighing offers of free rent and other perks from landlords who are working to keep their units filled. Twenty-five percent of all new leases signed last month in Manhattan came with some kind of concession from the owner, about double the share in May 2016, Miller Samuel and Douglas Elliman said. In Brooklyn, sweeteners were offered on 15 percent of new agreements, up from 8.8 percent a year earlier.

“They realize, ‘I do have quite a bit of options so let me take a look,’” Hal Gavzie, Douglas Elliman’s executive director of leasing, said of renters’ thinking. “‘Let’s just test the water and see what’s out there.’”

Vacancies Drop

In Manhattan, the surge of renter interest was enough to push down the vacancy rate to the lowest in two years, 1.72 percent, the firms said. It was the first time since 2015 that the figure dipped below 2 percent.

While all that dealmaking helped attract tenants, it kept a lid on rent growth. In Manhattan, net effective rents — calculated after incentives are factored in — were up 0.6 percent in May from a year earlier, to a median of $3,377, the firms said. In Brooklyn, the median rent after concessions dropped 2.1 percent to $2,782.

Some landlords are luring tenants by actually lowering their asking prices — a way to stand out from the crowd where free months of rent and payment of broker’s fees have become commonplace, Gavzie said.


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Developers are chasing the lower end of the condo market | Mt Kisco Real Estate

New condominiums coming to market are getting cheaper, as developers work to capture buyers in the popular sub-$5 million market.

In Manhattan, the average unit price on condos approved for market by the New York Attorney General’s office has been steadily trending down over the past two years. Back in 2015, developers were shooting for an average unit price of just under $5 million, according to The Real Deal’s analysis of accepted offering plans for the borough. In 2016, that average had dropped 24 percent to just below $3.8 million. And it looks like the trend is here to stay. In the first four months of 2017, the analysis showed, the average accepted unit price in the borough was $3.1 million, down 18 percent from 2016’s average accepted price.

It’s more evidence developers are shifting gears to provide product for the lower end of the market.

“We’re trying to make sure apartments aren’t too big or too expensive, given where the market is,” said Steven Rutter, the director of new development at Stribling Associates. “It’s a larger strategy to design stuff that is more affordable. We know the under $5 million market is stronger.” Stribling is handling sales at Gluck + and Cogswell Lee Development’s 150 Rivington Street, a project that was approved for sale last year with apartments starting at $995,000. Rutter said many developers are now planning buildings with a different mix of unit sizes than two or three years ago. “Buyers are looking for value right now. There’s a lot for them to choose from.”

At Corcoran Sunshine Marketing Group, president Kelly Kennedy Mack said in some cases they are telling their developer clients to adjust their unit mixes to remain below certain prices — although it’s not a blanket approach.

“There’s been an intelligent and necessary response to supply and demand dynamics,” she said. Corcoran tracks when buildings open for sale, which the firm define’s as when a sales office opens, rather than when the AG approves the offering plan. Mack said five of the seven Manhattan developments that have become publicly available this year are targeting a mid-market price of between $1,800 and $2,400 per square foot. It’s now been a year since a development with an average asking price of $4,000 per square foot and above has opened, with Related Companies’ 70 Vestry the most recent last big-ticket item, according to Mack.

The shift towards cheaper new development product has also broadened the buyer pool, developers said. “We’ve introduced the new development market to people who haven’t been able to afford it it before,” said Dan Hollander, managing principal of DHA Capital. Its project at 75 Kenmare Street in Nolita, approved earlier this year, has an average unit price of $3.7 million, according to the AG’s office. The company opted for lower prices following the success of its previous project at 50 Clinton Street, according Hollander, which launched in 2015 offering one-bedrooms for under $1 million and two-bedrooms for under $2 million. All but four of the 37 units are in contract at 50 Clinton, according to StreetEasy data. Hollander said targeting the lower price points and building more efficient-sized apartments was “experimental” at the time, but paid off because there’s so much demand in the sub $5-million market. “A lot of people want to get into a new condo… It’s a very appealing prospect, but there’s been little out there in their price range,” he said.

For other developers, the lower part of the Manhattan market has always been a safe bet. “We’ve been working like this for years,” said Gaia Real Estate’s Danny Fishman. “We always said we don’t care about the top 5 or 10 percent.” The company is joining with Acro Group to develop the Vantage, at 97-unit condo conversion at 308 East 38th Street where 30 percent of the units are priced under $1 million. Fishman said their business plan is to keep the unit cost down, and to design buildings with fewer amenities so there are lower common charges. The Vantage, approved earlier this year, has a gym but no swimming pool. The firm took a similar approach at its Hell’s Kitchen condo conversion at 416 West 52nd Street, where Gaia launched sales last year with the sub-$3 million buyers as the target.  “I’m giving up the market of the billionaire, but how many are there?” said Fishman.

CORE’s Emily Beare agreed that more new development product is becoming available for buyers who would normally only be able to buy resales. “For a few years the new development was geared towards the ultra-luxury, $10 million and above, and much larger units…. I think developers have switched direction a little for people who were priced out,” she said. The strategy shift may benefit buyers seeking new apartments with multiple bedrooms at a lower price point, she added.


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Mortgage rates average 4.02% | Mt. Kisco Real Estate

Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the 30-year fixed mortgage rate remaining around four percent for the fifth consecutive week.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 4.02 percent with an average 0.5 point for the week ending May 18, 2017, down from last week when it averaged 4.05 percent. A year ago at this time, the 30-year FRM averaged 3.58 percent.
  • 15-year FRM this week averaged 3.27 percent with an average 0.5 point, down from last week when it averaged 3.29 percent. A year ago at this time, the 15-year FRM averaged 2.81 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.13 percent this week with an average 0.5 point, down from last week when it averaged 3.14 percent. A year ago at this time, the 5-year ARM averaged 2.80 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 link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

Attributed to Sean Becketti, chief economist, Freddie Mac.

“The 30-year mortgage rate fell 3 basis points this week to 4.02 percent. However, this week’s survey closed prior to Wednesday’s flight to quality. The delayed impact of the associated decline in Treasury yields may push mortgage rates lower in next week’s survey.”

Rates Steady as Increases Expected | Mt Kisco Real Estate

Nationally, the contract interest rate on conventional mortgages for home purchase held steady in October 2016. Over the month, the rate on conventional mortgages for home purchase was unchanged at 3.60%, according to data released by the Federal Housing Finance Agency (FHFA). Rates on the purchase of previously occupied homes ticked up 1 basis point to 3.62% while rates on new homes fell 2 basis points to 3.54%.


The lack of change in mortgage rates overall reported by the FHFA does contrast with the increase in mortgage rates over the month of October in the Mortgage Bankers’ Association’s Mortgage Applications Survey (MAS). This Survey indicates that the contract rate on conventional mortgages rose 5 basis points to 3.72% over the month*. However, the FHFA release more closely parallels results from Freddie Mac’s Primary Mortgage Market Survey (PMMS). The commitment rate on conventional mortgages ticked up 1 basis point to 3.47% over the month of October*.

Despite some divergence, over the longer term, these 3 series track each other fairly closely. Between 1990 and 2000, the trend in the 3 series matched, although the rates reported by MBA’s MAS and Freddie Mac’s PMMS were more similar while FHFA’s MIRS was often a bit lower. Since 2000, the three series have been in near unison both in its point estimate and the overall trend.


The monthly data covers the month of October, but the weekly mortgage rate data for November indicates that rates have clearly begun to rise. As shown by the figure below, between October 28th and November 25th, the contract mortgage rate calculated by the PMMS rose from 3.47% to 4.03%. Over the same period, the MAS increased from 3.75% to 4.23%. Further, mortgage rates are expected to continue climbing in the near term. In its most recent forecast, dated October 28th, NAHB expects the rate on a 30 year fixed rate mortgage to climb in each of 2017 and 2018.

The increase in mortgage rates follows the increase in the 10-year Treasury note. A rising rate on the 10-year partly reflects the desire to make progress on monetary policy normalization, which has been impeded by a series of unrelated surprises over the course of the year. However, momentum has been building and expectations of an impending increase in the federal funds rate has pushed interest rates modestly higher in the second half of the year.

A more seismic impact from a different set of rate expectations has been set in motion by the surprise outcome of the November election. Proposals for fiscal stimulus via tax cuts, government spending and regulatory reform have led to expectations of stronger economic growth, higher inflation and higher interest rates. The yield on 10-year Treasury securities has moved up over 50 basis points since November 8.


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Existing Home Sales Weak Despite Good Job Numbers | Mt Kisco Real Estate

Sales of existing homes weakened at the end of 2015, despite ongoing good news for job creation. According to estimates from the National Association of Realtors (NAR), the seasonally adjusted volume of home resales declined 10.5% from October to November and were 3.8% lower than a year prior. This marked the first year-over-year decline since September 2014. However, much of this decline was attributable to new mortgage disclosure rules from the Consumer Financial Protection Bureau that likely resulted in delays for some sales.

Similarly, the NAR Pending Home Sales Index, a forward-looking indicator for home sales, declined in November. This was the third decline in the last four months; however, the index remains 2.7% higher than a year ago.

In contrast, new home sales posted a small increase in November, rising 4.3% from a downwardly revised October pace to a 490,000 annual pace. On a year-to-date basis, new home sales were 14.5% higher than for the first 11 months of 2014. Builders are also adding to inventory with rising demand. New home inventories rose to 232,000, the highest since January 2010.

Strengthening job creation should continue to promote home building activity in 2016. And the December Bureau of Labor Statistics report offered positive news. The economy produced 292,000 more jobs for the month, plus an additional 50,000 jobs recorded due to upward revisions for prior months. The unemployment rate held steady at 5%.

The residential construction industry – home builders and remodelers – added 23,100 jobs in December after a cycle-high job gain set in November (31,500). These two months followed a period of lackluster employment gains for the sector. The overall construction industry continues to see elevated levels of unfilled jobs, as does the economy as whole.


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Why you might retire to a tiny house | Mt Kisco Real Estate

Last year, 66-year-old Lauren Knoblauch sold or donated nearly everything she owned, from her two-bedroom home on a suburban Seattle lake to her furniture and many of her clothes. She moved everything else, two small carloads’ worth, into her new home: a downtown apartment that, at less than 150 sq. ft., is smaller than the average U.S. master bedroom.

The move came as Knoblauch, who works in inmate rehabilitation, pondered her impending retirement. “I started thinking about what I was passionate about,” she said. “I wanted to see opera in Europe, to spend money on what was exciting to me.”

Her new apartment, which costs $575 a month — less than half the $1,400 average for a Seattle one-bedroom — puts her about 20 minutes from Symphony Hall by foot and a short bus ride from the Opera House. With new financial flexibility, she’s traveled to Germany and Ireland to see opera performances. “I’m loving it,” she says.

The burgeoning tiny house and micro-apartment movements, which generally describe accommodations smaller than about 400 sq. ft., are sometimes seen as young person’s trends, with budget- and environmentally conscious millennials and Gen Xers seeking to slash living costs while lessening their environmental footprints. Some familiar with the industry, however, say they are increasingly of interest to older people at or nearing retirement age.

About 10,000 people live in tiny houses in the U.S. — the Pacific Northwest, Colorado and the Carolinas are particularly popular areas — though just a fraction are older; many more people, especially those in expensive cities, live in micro-apartments, according to Ryan Mitchell, owner of the website TheTinyLife. Their numbers are growing, he says, as modifications that make the homes more accessible to older residents, such as staircases rather than ladders and designs that keep everything easily reachable, become more commonplace. Visit CentralPennContracting.com for more new trends.

While their appeal is varied, the principal attraction is price. Smaller homes can give seniors “more disposable income and the ability for many to comfortably survive within their Social Security means and/or part time work,” says consultant Erik Blair, a tiny house advocate. “The number one reason to get into a tiny house: You can save 70% or more of your recurring cost of living.” It is times like these when one needs to be completely aware of theor social security standing and the benefits that can be reaped out of it. The social security office exists for the same reason, where answers for any queries related to it are provided along with a host of services. Such offices have been dispersed widely across the States, and so, residents living in Michigan may redirect themselves to the Michigan Social Security Card office locations.

Why older Americans want to retire in tiny houses

For older Americans, many on fixed incomes that may not heavily supplement their Social Security, the cost of living is of utmost importance. Nearly 60% of workers 55 and older have saved less than $100,000 for retirement, while 24% have saved less than $1,000, according to the nonprofit Employee Benefit Research Institute. Both figures are much lower than financial advisers recommend.

Enter tiny houses, which are relatively inexpensive to build, buy and maintain. It usually costs between $10,000 and $100,000 to buy or build one, according to Blair; the average U.S. home costs nearly $200,000. Tiny apartments tend to cost much less than larger rental units in the same area.

In both cases, less space means lower utility payments: Mitchell, who lives in a 150 sq. ft. home, says his average monthly bills are around $20.

Less storage space, meanwhile, can reduce the impulse to acquire new stuff because, simply put, there’s nowhere to put it. “When I want to buy something, I have to think of what can I get rid of,” said Knoblauch. Often, “I realize I have everything I need already.”

“There are no big trips to Sam’s to get tubs of ketchup,” joked Kerri Fivecoat-Campbell, 52, who lives in a 480-square-foot home in the Ozark Mountains in Arkansas, where she plans to retire, after years in a larger house in suburban Kansas City, Kan. “They won’t fit.”

Money isn’t the only reason tiny houses and micro-apartments appeal to retirees. Many empty nesters long to downsize, surveys show, even if they can afford more space. With their children grown, extra rooms can attract clutter and require maintenance like plumbing that is rather costly thing (check out these causes of plumbing damage to prevent them); some, anticipating an eventual move to a nursing home, like the idea of simplifying early.

“I used to spend an entire Saturday cleaning my house,” said Fivecoat-Campbell. “Now I can clean it top-to-bottom in under two hours.”

For still others, the houses allow them to live near family while retaining their own space. So-called “granny cottages” can be placed in the yard of a family’s home, allowing residents to live both independently and close by. They’re often fitted with amenities useful to older residents, including grab bars, barrier-free showers and elevated toilets that can reduce falling risks, and wheelchair access.

‘I love this place — life works’

Tiny-house living isn’t without challenges. Knoblauch doesn’t have a full kitchen or bathtub; she has just one sink; and her clothes hang on a free-standing rack rather than in a closet. Fivecoat-Campbell wishes she had space for her now-deceased mother’s china cabinet and other full-size furniture.

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Some 50,000 more New York City apartments may be eligible for rent regulation | Mt Kisco Real Estate

In late August, Gov. Andrew Cuomo and other top New York officials announced an unusual crackdown on landlords. Nearly 200 building owners were collecting big tax breaks under a program to spur housing, officials said, but hadn’t registered their apartments for rent stabilization as the law requires.

Is your rent legal? It might not be. Your landlord might be charging you too much, and we want your help figuring that out.

“We will not tolerate landlords who break the law and deny their tenants rent-regulated leases, plain and simple,” Cuomo said in a statement at the time. With Attorney General Eric Schneiderman, the governor announced a new enforcement effort to clean up such abuses.

But an investigation by ProPublica found that in reality, state and New York City officials have tolerated the problem for years—and ignored pleas to investigate. Nor is it limited to the building owners Cuomo and Schneiderman found—landlords have failed to register thousands of buildings for rent regulation, casting doubt on the legality of leases for about 50,000 apartments across the city.

That is the finding of an extensive analysis of government data covering nearly 15,000 rental buildings receiving the tax subsidies as of 2013. About 40%—or 5,500 buildings—weren’t listed as rent-stabilized, yet records show the owners are receiving more than $100 million in property tax reductions.

Stephen Werner, an analyst at the city’s Housing Preservation and Development Department (HPD), has been complaining to higher-ups about the missing registrations for decades. Werner said he first told his bosses 20 years ago they were “perpetrating a fraud” by counting too many apartments as rent-stabilized in the triennial surveys prepared for the City Council and the public.

Briefed on ProPublica’s analysis, Jumaane Williams, a city council member from Brooklyn who chairs the council’s housing and buildings committee, called for a “severe and swift response” to ensure that tenants are getting the rent protections they deserve.

“We have to fight and scrape for every last piece of affordable housing,” Williams said, “and here we are with thousands of units with people we’ve given money to and tax breaks to, and who’ve agreed to keep these units in rent stabilization, blatantly not doing it.”

ProPublica reported yesterday on a related abuse, where landlords do register for rent stabilization then collect bigger rent increases than allowed by the city’s Rent Guidelines Board. They do so in part by exploiting confusion about “preferential” rents and whether newer buildings are rent-stabilized.

Landlords who register properly for rent stabilization must do so annually with the state. Lists of buildings that have done so are published by the Rent Guidelines Board. To determine if a tax-advantaged building was registered, ProPublica cross-checked that data against a listing of properties receiving the tax breaks, known as 421-a and J51, published by the city’s Department of Finance.

Exactly what’s happening to tenants in the buildings is unclear. In some cases, tenants did have rent-stabilized leases because landlords skipped a year but had registered in others. In other cases, buildings had multiple addresses but registered only one. Others had opened only recently.

Despite that, three tenants reached by ProPublica said they had not been given rent-stabilized leases. “I knew that rent stabilization was something that existed, and I looked out for it and it definitely wasn’t present,” said Mark Ellison, a Crown Heights resident who lives in one unregistered building.

In 2013, Ellison said, his landlord proposed raising the rent $800 a month, or 40%. The landlord backed down when Ellison said it was unacceptable.

The implications go beyond rent. Tenants can only properly claim legal rights provided under a rent-stabilized lease—such as eviction protection and the right to timely repairs—if they are not in the dark about their building’s status and if the state has a record of it.

City officials acknowledged there is a problem with registrations but were unable to explain how such a large number of landlords could be out of compliance. They did not respond to a detailed accounting of ProPublica’s findings and methods or questions about why Werner’s complaints hadn’t been addressed.

A spokesperson for Mayor Bill de Blasio’s administration said in emails that officials “became cognizant” of the problem after de Blasio took office last year and “took action promptly to address it.” The matter is now the subject of a “multi-stage, multi-agency” enforcement effort, the spokesperson said.

“While we cannot disclose details on an ongoing investigation, we will not stop until every property is brought into compliance,” the de Blasio spokesperson said.

Announcing their August crackdown, Cuomo and Schneiderman said building owners who don’t register as rent-stabilized face serious legal consequences, including loss of their tax breaks, a rent freeze and paying triple the amount of overcharges any tenant might have received.

Instead of taking those steps, they sent owners of the 194 unregistered buildings a “one-time” opportunity to comply and informed tenants that they should expect their landlords to get into compliance sometime soon.

In the past three years, only two landlords have lost their tax breaks for not following the rent-stabilization rules, city officials have said.

The two tax-incentive programs at issue together provide almost $1.4 billion in property tax savings to New York City real estate owners, with most of the money flowing to multifamily apartment buildings.

Landlords who receive the 421-a and J51 tax benefits are supposed to submit all the units in their properties to rent stabilization for the duration of their tax breaks, which can span up to 34 years and significantly lower property tax burdens, in some instances by more than 90%.

The rent stabilization requirements are intended to help preserve affordability in places like Manhattan’s Stuyvesant Town and Peter Cooper Village, which receive a J51 tax break that subjects all of their 11,000 units to rent stabilization. A 2009 court decision involving Stuyvesant Town confirmed that, as long as such tax breaks are in place, landlords must provide tenants with rent-stabilized leases.

To make sure they are doing so, the state requires landlords to register their rent-stabilized apartments annually and report each unit’s rent. Tenant advocates say registration also creates an important protection for tenants, who are entitled to the rent history and can use it to prove overcharges.

“It’s incredibly important for tenants to be able to know that they’re rent-stabilized and also have the legal record of what the rent increases are,” said Katie Goldstein, executive director of Tenants & Neighbors, a statewide tenants’ rights group.

Landlords who didn’t register used to be ineligible for rent increases. But that changed in 1993, when the New York Legislature eliminated penalties for failing to register. “If they don’t do it, there are no repercussions,” Goldstein said.

Most of the buildings identified by ProPublica were repeat offenders: About 80% that didn’t register units in 2013 also didn’t do so from 2009 to 2012. Some appear to have never registered, according to searches against the state’s master directory of rent-stabilized buildings.

The noncompliant properties were mostly smaller buildings receiving 421-a benefits, including many three-family homes and four-to201310 unit apartment complexes. Among the five boroughs, Brooklyn and Queens had largest numbers of unregistered buildings.

In some corners of city government, the gap in registrations has been an open secret. Werner, the housing department analyst, first took notice in 1995.

Werner, 69 and still working at HPD, helps put together the city’s triennial housing survey. He collects data from the state showing all the apartments that have been registered for rent stabilization. The number never exceeded 800,000, he said, while the housing surveys routinely reported a higher number, now more than 1 million.

“The numbers never matched,” Werner said. He estimated the total shortage—beyond just properties receiving the tax breaks—at 200,000 apartments.

Werner said he raised the issue repeatedly with his superiors, but nothing was ever done about it besides occasional meetings and memos that went nowhere. In 2006, he emailed state regulators to inquire about the tax breaks, but no one there answered him, either.

The city denied ProPublica’s public records request for emails and memos about the registration gap.

Earlier this year, Werner took things into his own hands. Using publicly available data, he spent nights and weekends creating his own website where tenants can type in their address and see their building’s registration status and tax breaks. Then, out of frustration, he contacted ProPublica

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Student Debt Is a Bigger Barrier to Homeownership than ever | Mt Kisco Real Estate

Student loan debt continues to grow as an obstacle in a consumer’s ability to buy a home, as 57 percent of 2015 respondents who acknowledge having student loans said this debt was either “very much” or “somewhat” of an obstacle, compared to 49 percent of 2014 respondents, according to the third annual America at Home survey from NeighborWorks America.

The survey found that generally levels of student debt among adults have not changed greatly in the past year.  The percent that personally has any student debt stayed the same, at 17 percent of the national sample.  The percentage that worries about their student debt they owe either all of the time or some of the time also stayed constant, at 30 percent.

When it comes to their ability to buy a home, however, the survey found that student debt has grown to be an even greater barrier to homeownership now than it was a year ago.  One out of four participants in the survey (25%) said student is “very much of an obstacle” to buying a home, compared to 20 percent a year ago and 32 percent said it is “somewhat of an obstacle” compared to 29 percent a year ago. The percent of adults who said they who has had to delay the purchase of a home because of their student loan debt increased from 24 to 28 percent over the past 12 months.

Additionally, although mortgage rates remain historically low, a generally steady rise in home prices is outpacing income growth, leading homebuyers — especially first-time buyers — to search for ways to build up a down payment. However, nearly 40 percent of respondents have received “nothing at all” in terms of information about down payment assistance programs for middle-income homebuyers, programs that could provide thousands of dollars to help bridge a savings gap.

Finally, the housing market is being pressured by changing demographics. Of the respondents surveyed, 43 percent planned to purchase a home when they “got married or moved in with a life partner.” This is important for the housing market’s rebound, because the median age at first marriage has increased to 29.3 for men and 27.0 for women, according to the Census Bureau, up from 26.8 and 25.1 years, respectively in 2000.

“It’s clear the housing market is directly affected by many factors, and these forces identified in our survey are putting strong downward pressure on growth,” said Paul Weech, president and CEO of NeighborWorks America. “While NeighborWorks can’t address the demographic shift, we are increasing our efforts to support nonprofits that offer homebuyer education and financial capability coaching.”


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Home Prices Level Out | Mt Kisco Real Estate

Home prices increases may be leveling out, according to one closely-followed real estate report.

In 20 major American cities, home prices this May were about 4.9% higher than May of last year, according to the S&P/Case-Shiller Home Price Index, released Tuesday. That’s the same pace of growth as April, and surprised economists when it fell short of expected growth.

Economists predicted a 5.6% year-over-year increase, according to an Econoday survey.

Price increases of single-family homes have settled at a steady pace of 4-5% this year, said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. He said he expects price increases to slow over the next two years, as wages rise to catch up with housing costs.

“First time homebuyers are the weak spot in the market,” said Blitzer, citing research that high down-payments may be putting off first-time home purchases. “Without a boost in first timers, there is less housing market activity, fewer existing homes being put on the market, and more worry about inventory.”

Overall, 10 of the 20 cities surveyed saw housing price increases slow on a seasonally-adjusted basis.  Some real estate markets remain hot, however.

Home prices in Denver are 10% higher than this time last year, and San Francisco and Dallas are also seeing prices increase at almost twice the national pace. New York City and Phoenix have seen prices rise for six consecutive months.

Between April and May, the index slowed 0.2% on a monthly, seasonally adjusted basis. An analyst at Barclays said they were not inclined to “read too much” into the decline.

“This could be a pause for breath in the data after a strong performance for half a year,” wrote Blerina Uruçi in a research note.


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