A report from Better Dwelling in Canada. "A Canadian official in charge of housing policy confirmed the current market is not an accident. Instead, it’s a conscious decision where the government picked the winners and losers. TVO aired an interview with MP Adam Vaughan yesterday, discussing housing policy. In the interview, Vaughan, who helps oversee the CMHC, said price drops are not an option. The minister also said the market doesn’t work for locals, but is great for foreign investors. He also implied the strategy they might use to fix the market is one they were warned against."

"The government refuses to let prices drop, and will support inefficiencies. When Vaughan was asked if he would allow home prices to fall 10%, he tried to explain how hard it would be on homeowners. When discussing a price drop, the minister said 'I can understand why that is seen as a positive thing for people who are trying to get into the market, but hands up if you’d like to see 10 percent of the equity in your home suddenly disappear overnight.'"

"The minister was asked why a 10% drop would matter with prices rising '30 to 40 percent' over the past year. Apparently, without last year’s absurd gains, people would be underwater. 'you know it’s a situation where you don’t want people to be underwater with their mortgages.' He adds this is really an issue to save the real estate development industry in Canada. 'You don’t people who’ve made deposits on properties suddenly find themselves underwater if they close the deal. Because they’ll start walking away from projects and that collapse will have impacts on the development industry so you’ve got to be very careful about this.'"

"Canada doesn’t think it has a foreign investment problem, because they see it as a good thing. While discussing sprawl, Vaughan made an unprompted jump to foreign investment. He said, 'we have a very good system for foreign investment creating a lot of new housing in Canada as we have immigrants as we grow the population.'"

"A few seconds later, he admits the market is safe for foreign investment, but not so much for locals. '… we are a very safe market for foreign investment but we’re not a great market for Canadians looking to make choices around housing and so we’ve got to make a number of decisions that address the 2 sides of this coin.'"

"I know what you’re thinking — what foreign investment? They said that died down years ago. It’s likely a reference to new home pre-sales and permanent residents that are buying. Some argue new home pre-sale assignments are faster funded when foreign investors are involved. This is faster than waiting for your broke-ass to put together a downpayment."

From Bisnow London. "When the UK government said in February that its ban on evicting commercial tenants was to be extended until July, it made a tacit admission: It does not know how to bring to an end the yearlong policy without undue consequences. 'I’m of course only speculating, but I think this is really a proxy for a huge debate going on within government right now,' British Property Federation Chief Executive Melanie Leech said. 'The government stepped in at a time of crisis to support the economy, but now they can’t relieve that, and the can is being kicked down the road.'"

"For real estate owners, it is hard to say right now which of their tenants are being kept alive artificially by the boost to cashflow provided by the furlough, but might go under eventually. The question becomes, at what point do you try and cut your losses and find a new tenant? This is a very Anglo Saxon way of looking at an economy, Nuveen Head of Research for Europe Stefan Wundrak said — the creative destruction that argues it is better to let things go bust fast and then move on, rather than the more European idea of continuing support."

"The potential downside for real estate is — too much investment in real estate. 'It means capital doesn’t flow to productive uses,' Wundrak said. 'Whether it is an institution or a private investor, everyone just sticks money in houses and property.'"

"That might seem a paradox, but in the long run it means less investment in technology, innovation and research, which makes companies less productive and slows economic growth. Investment in property is great for the sector in the short term, but slows the economic growth that fuels the sector in the long term. A problem for another day, but a problem nonetheless. When it comes to withdrawal of government support and stimulus, nothing is as simple as it seems."

The Sydney Morning Herald in Australia. "The Reserve Bank’s charter requires it to work towards the economic prosperity and welfare of all Australians, but for most people that can be narrowed down to one issue – house prices. Since the advent of non-bank lenders in the mortgage market in the 1990s, property prices have grown faster than wages and inflation, generating an ongoing debate about who is to blame for a situation that leaves one of the world’s most sparsely populated nations with some of the globe’s most expensive housing."

"It’s an issue of which the RBA is acutely aware. And the sharp lift in house prices through the past 12 months, as interest rates have fallen to their lowest levels in history while governments have thrown billions of dollars at housing stimulus packages, has amplified the focus on the RBA and its role."

"Commonwealth Bank’s head of Australian economics, Gareth Aird, says falling interest rates have been a major economic tailwind for the past 30 years. But with rates at zero, and households carrying record levels of debt, a reckoning is coming that would be felt across the economy and especially in the property market."

"'Every time the central bank cuts interest rates, a person walks into a bank and asks for a bigger loan to pay for a house. It happens again and again,' he says. 'You get to that point where you can’t keep doing that when you have interest rates at zero. We’ve now had the last of the kicks of the can down the road.'"

From North Jersey. "New Jerseyans cannot be kicked out of their homes through at least mid-June under Gov. Phil Murphy's eviction and foreclosure moratorium, a protection he has renewed each month since March 2020. 'While many of the financial institutions in the state are providing forbearance for some mortgage holders, not every financial institution is, and forbearance basically just keeps that homeowner in debt before an extended period of time,' Lt. Gov. Sheila Oliver said. 'Let’s cross our fingers and see if the feds are going to let us do something with mortgage assistance"

The Real Deal on New York. "Hedge funder Steve Cohen’s Midtown penthouse, which had been on the market since 2013, finally found a buyer after a stunning 74 percent discount. '[That was] certainly one of the largest price drops in the history of residential real estate,' said Donna Olshan, author of the report, which tracks contract activity of Manhattan homes asking $4 million and above. 'A breathtaking eight years on the market and cycling through four brokers. Well done.'"

"Cohen first listed the 9,000-square-foot duplex at Beacon Court Condominium for $115 million in 2013. He slashed the price multiple times as he cycled through a who’s who of prominent brokers. The final asking price when it went into contract last week was $29.5 million."

"Olshan noted that last week’s performance is notable for the lack of foreign buyers. 'It’s all happening with a half a tank of gas because we don’t have the global audience,' she said. 'Many businesses are not open and we have no tourists.'"