A report from Bloomberg. "Worsening conditions in the U.S. mortgage-backed securities market are doing little to ease fears over financial contagion. Demand for home purchases and refinancing continued to take a hit last month, as U.S. mortgage rates increased to their highest levels since November. For many potential buyers, the near-record amount of rental apartments available is becoming increasingly attractive. MBS current-coupon yield spreads over Treasuries are near the highest level since the 2008 subprime crisis as economic and political concerns weigh on performance, writes Bloomberg Intelligence strategist Erica Adelberg."

"The environment has also created unique opportunities. Dawn Fitzpatrick, chief investment officer of Soros Fund Management, pointed to the valuations of agency MBS. 'Two-thirds of your current holders — it’s central banks and banks — have turned into sellers,' she said."

Don't Waste Your Money. "During the years of the pandemic, the big story in real estate was rising home prices. This year, that story may be changing. Lately, the number of houses for sale in Sarasota has really increased. In fact, Realtor.com reported that 'there were nearly 2.3 times the number of active listings this May compared with last.' And they’re taking almost twice as long to sell. Naturally, the inventory glut has led to a drop in home prices — at a rate of -4.7% over the last year. Boise tops the list of metro areas with dropping home prices over the last year — with a percentage price drop (per square foot) of -7.8%. In fact, Boise real estate agent Rob Inman told Realtor.com that there are a number of homes available that are much lower than the median listing price. 'Now, you can actually find stuff between $350,000 and $425,000, right in that entry-level price point,' he told the site. 'There’s even new construction.'"

"Austin’s median listing price drop was similar to Boise’s, at -7.7%. That’s not surprising, since the pandemic price growth in Texas’ capital was the highest of all the cities on this list. Home prices rose by 75% between February 2020 and May 2022. According to Realtor.com, 'the median home list price, not standardized for size, went from about $364,000 to almost $630,000.'"

D Magazine in Texas. "The Dallas City Council’s marathon meeting earlier this month culminated in twin measures that will rein in the short-term rental market in the city. By December, short-term rental operators (who largely use Airbnb and Vrbo to list their properties) in single-family residential neighborhoods who still want to generate revenue will have to rent their properties to long-term tenants or sell. The Council declined to grandfather existing registered STRs into that zoning change, so even the most law-abiding operators are eliminated."

"Every operator we spoke with said that they understood the frustration with irresponsible operators—because it was frustrating for them as well. 'Dallas saw an STR investment rush the past two years. A lot of people with little property management experience joined the sector,' said France Falcon, who operates several properties on Airbnb. 'There were a lot of ‘Airbnb Gurus’ going viral, selling online courses claiming this is an easy way to make passive income, creating unrealistic expectations for investors. This coupled with really low interest rates, made the STR market in Dallas become fairly saturated.' Falcon said that the party houses didn’t offer the experiences that make properties stand out, so to survive and compete with better-performing STRs, they lowered their prices. 'You would see three bedroom homes in single family neighborhoods on STR platforms for the cost of a one star motel room,' she said."

"Sandra Figueroa said those party houses impacted her own guests. 'Two of my listings are next to ‘party’ homes and TikTok-inspired hosts who are trying to make a quick buck,' she said. 'I have been plagued with trash, noise, and threats to safety as well. I completely understand how the sudden unregulated boom in this industry over the past few years has created significant challenges for cities and its citizens to navigate.'"

"A few of the operators we talked to said they would likely either sell or reluctantly pivot to long-term rentals. 'I purchased my properties when interest rates were as low as 2.25 percent, I cannot sell these properties in a 7 percent (or more) interest rate market,' said Robert Wiley."

The Associated Press on California. "Retiree Pamela Haile has paid property taxes, insurance and other bills on a house she lets out in Oakland, but for more than three years her tenants have paid no rent thanks to one of the longest-lasting eviction bans in the country. The eviction moratorium in the San Francisco Bay Area city expires next month and Haile can't wait. The 69-year-old estimates she is owed more than $60,000 in back rent, money she doubts she will ever see. Moreover, the tenants have trashed her house and it will cost tens of thousands of dollars to make it habitable, she says. 'There is nothing natural about being forced to house and have people live in your property for over three years and not pay,' said Michelle Hailey, who is also Black and owns a triplex where both her tenants stopped paying. 'There is nothing natural, ethical or even humane about that.'"

"Hailey considers herself lucky because she was able to recoup some money through a rent-relief program. The tenants moved out, but she has a stack of bills and can’t afford to renovate. She purchased the property in 1999 after earning big for writing some songs. The artist figured the triplex would provide steady income as well as help fund her retirement. 'So this was my entire plan, and I’ve just kind of watched it go up in smoke,' said Hailey, 59. 'We've never had a situation where you would have government-sanctioned freedom to not pay your rent.'"

The Financial Times. "The 20-storey tower at 529 Fifth Avenue stands out from the other buildings around Grand Central Station. It is also remarkable as one among a small number of towers that have recently changed hands, giving a clue as to the value of Manhattan’s older offices now that the commercial real estate sector has emerged from a historic era of ultra-cheap money. Silverstein Properties sold the building three months ago for $US105 million ($156 million). In price-per-square-foot terms, that was even less than a plot of land across the street commanded in 2015."

"'In New York, buildings are selling for less than the value of the land they sit on,' said Will Silverman, managing director at Eastdil Secured, a real estate investment bank. 'We are seeing prices lower than they have been in 20 years in absolute dollar terms.' Craig Deitelzweig, chief executive of Marx Realty, said he was hearing of 'new buildings every day' being returned to lenders. 'It is the very beginning, but it seems that every asset class is at risk with these new interest rates and the very tight credit markets.'"

The Toronto Sun. "When the market turned back in winter 2022, I remember reading something about how Canada’s propensity for variable rate mortgages in tandem with our relatively short mortgage terms would ultimately provide our central bank with an edge in their fight against inflation. Unlike the United States, for example, where 30-year largely fixed rate mortgages are the norm, Canadian borrowers come up for renewal somewhere inside five years. One way or another, the theory went, the pinch of rising borrowing costs will be more immediately felt and belts will soon be tightened. The idea, as I recall, was that the end of cheap money would bring some pain, but at least that reckoning would come quickly — we just needed to get to the other side."

"One year later, the battle rages on. How is it that people are holding on? Well, it seems that few anticipated the power of the extended amortization periods. Thanks to static payments, many of the homeowners sitting on variable rate mortgages have yet to actually feel the acute pain of their leverage — it’s entirety theoretical at the moment, an issue to be grappled with during the 4 a.m. thinks and dealt with at renewal time. Dubbed 'extend and pretend,' it explains a lot about how it is that consumer spending continues, malls are still full, and summer travel season is shaping up to be a biggie. Now all eyes are looking to 2024 and 2025 when the bulk of the rock bottom pandemic mortgages will come up for renewal and original amortization terms will theoretically kick back in again."

"Assuming this happens, there will be many borrowers who will simply be unable to stay in their homes and will need to sell. Belts will be tightened. But say for a moment that the Feds decide they want to build on their promise made in Budget 2023 to 'protect existing homeowners with mortgages who are facing exceptional circumstances.' Say that shakes out to pressure being put on the Office of the Superintendent of Financial Institutions to change the rules requiring mortgages to revert back to original amortization period at renewal, a rumour that once sounded inconceivable but is starting to seem within the realm of possibility. What then? That edge we had suddenly seems like a huge liability."

The Telegraph in the UK. "Mortgage prisoners are being left 'suicidal' and at risk of destitution as standard variable rates approach double digits, campaigners have warned. Around 200,000 households remain trapped in mortgage deals set at some of the highest rates, after taking out home loans with banks such as Northern Rock that collapsed during the financial crisis. Many mortgage prisoners whose loans were sold by the Government to so-called vulture funds, which buy up discounted debt, are facing even higher costs. The firms that bought their debts are so-called inactive lenders, which offer no other mortgage products despite being licensed to do so, meaning the borrowers are unable to switch to cheaper rates."

"The situation is pushing homeowners into mental health crises and towards homelessness, according to Rachel Neale, of campaigning group UK Mortgage Prisoners. She said: 'We have had people openly put on the [Facebook] group that they want to commit suicide if this rate rise happens because they have nowhere to go. It’s devastating – families are in impoverished situations, they’re facing homelessness. These people aren’t on the 4.5pc or 5pc that the average person is now seeing. Their interest rate has gone from 4.5pc, which everyone is moaning about, all the way up to 9pc, 9.5pc and 10pc and above.'"

98 FM in Ireland. "According to the latest Daft.ie house price report which shows nationally prices are 0.5 percent cheaper than last year. It's the first time in three years that house prices have fallen. The average listed price nationwide in the second quarter of 2023 was €309,648, up 2.4% on the average for the first quarter - but slightly lower than this time last year and one-sixth below the Celtic Tiger peak. In Dublin, prices in the second quarter of 2023 were 1% lower than a year previously, compared to a fall of 6% seen a year ago. The average price of a home in the city is now €425,000, 14% below peak levels."

From Bloomberg. "Two more Chinese developers have failed to meet dollar-bond payments, occurring amid renewed home-sales softness and a lack of aggressive stimulus. Central China Real Estate Ltd. said it didn’t pay interest on a note before the end of a grace period on Friday and that it would suspend payments on all offshore debt. Smaller peer Leading Holdings Group Ltd. disclosed in its own exchange filing Friday night that it hadn’t paid the entire $119.4 million of principal plus interest due on a dollar bond issued a year ago as part of a debt swap. The property sector’s unprecedented cash crunch resulted in record defaults on Chinese issuers’ dollar bonds last year and still-elevated missed payments so far in 2023."

"Central China’s announcement likely isn’t a big market surprise given trading levels for the firm’s shorter-term dollar bonds, according to Zerlina Zeng, senior credit analyst at CreditSights. 'Most smaller privately owned developers still face dire liquidity conditions because of the muted recovery of contracted sales,' she said. The Central China and Leading Holdings notes on which payments weren’t made have been indicated at below 30 cents on the dollar much of this year, according to data compiled by Bloomberg. Such prices are generally considered deeply distressed levels and signal investor doubts about on-time payment."