Real Estate

UK house prices need less rigging – not more

13 Sep 2013

Britain’s home valuers are rightly worried about a bubble, and suggest that annual growth of 5 pct should trigger a policy response. But if there’s a problem, the answer is to remove the props that are artificially inflating prices, not to set thresholds for applying the brakes.

U.S. mortgage slowdown comes with big silver lining

11 Sep 2013

BofA, JPMorgan and Wells Fargo are cutting staff, earnings guidance or both for their home lending arms as rates rise and refis slow. That’s bad for staff and shareholders but good for the system. A similar slowdown a decade ago led banks into subprime lending. That ended badly.

Countrywide legal escape aided by investor apathy

11 Sep 2013

A U.S. court says shareholders lost the right to sue on the mortgage lender’s behalf after it was sold to BofA. That squelches one way to hold the likes of ex-CEO Mozilo to account. And it’s a reminder to litigious stock owners to cover all their bases sooner rather than later.

Spanish property market is back from the dead

6 Sep 2013

Madrid is crawling with private equity funds looking for bargains and a few are clinching deals. But don’t expect the floodgates to open - buyers won’t return in earnest until job creation resumes and banks recognise more property losses.

Washington set to shake up autumn markets

3 Sep 2013

Lawmakers will soon return, most likely itching for another fight over the U.S. debt ceiling. Other market-sensitive policy is also brewing, notably the choice of a new leader for the Federal Reserve. Add in tinkering with housing, and investors need to brace for a turbulent fall.

New U.S. mortgage bond rules at least are simpler

28 Aug 2013

Regulators have reworked proposals for how much of their own structured finance cooking banks must eat. Though the feds have given ground on down payments, the streamlined requirements – despite their 500 pages – are a step toward greater mortgage market confidence.

Wall Street enforcers stretch law to hide sloth

21 Aug 2013

U.S. Attorney General Holder is already late with plans to crack down. His DOJ is trying to buy time by suing banks under a statute meant to protect them. But that creates legal uncertainty. If watchdogs were serious about avenging the 2008 crisis, they could have pounced sooner.

Nest-flyers are poised to supercharge U.S. economy

21 Aug 2013

As jobs return, droves of 20-somethings will get their own places. They may rent not buy, but the effects still look deep. Between building and related activity like furniture sales, Breakingviews sees new households accounting for up to 30 pct of GDP growth through 2019.

Deutsche Wohnen bets bigger is better in Berlin

20 Aug 2013

The residential landlord plans to offer 1.75 billion euros in stock for rival GSW Immobilien. This is a bet that Germany’s capital will stay among Europe’s hottest rental markets. A successful deal promises synergies with a respectable net present value of 430 million euros.

Dear UK chancellor: why Help to Buy was wrong

16 Aug 2013

The government’s “help to buy” scheme subsidising high-risk mortgages will exacerbate the country’s housing problems and be very hard to exit. Breakingviews imagines how the Bank of England governor in 2020 might wrestle with the fallout.

Trash outweighs treasure in Obama housing plan

6 Aug 2013

The president’s finally talking mortgage reform. A lot, though, is vague or lifted from others’ ideas, like how to replace Freddie and Fannie. But he also wants to fund hard-hit communities and get banks to make riskier loans. Smart or not, that won’t get a deal done in Congress.

Latest US mortgage kickstarter’s clever but costly

25 Jul 2013

Freddie Mac is selling the first agency home-loan bond that offloads some risk from taxpayers to investors. Such innovations are crucial for reducing Uncle Sam’s exposure to the housing market. But at current rates, investors are getting most of the benefits at Freddie’s expense.

UK’s "operation credit bubble" ripe for rethink

25 Jul 2013

The government’s plan to subsidise high-risk mortgages is bad economics and foolish policy. A nascent economic recovery makes it look redundant. The reasonably strong GDP number provides an opportunity for an almost dignified retreat.

Banks needn’t always eat their mortgage cooking

24 Jul 2013

Making them retain risk sounds logical. But U.S. lenders had lots of home loan exposure before the crisis, without such rules. Higher standards and the obligation to take back bad loans bring similar incentives. And cautious flexibility from regulators may revive securitization.

Ailing U.S. mortgage agency needs stronger walls

23 Jul 2013

The Federal Housing Administration is $16 bln in the red. Now a bipartisan group of senators is trying to boost the agency’s capital and oversight. Their bill, though, doesn’t go far enough. Without more robust rules on lending standards, the FHA will remain a fixer-upper.

Republicans add bricks and mortar to mortgage fix

15 Jul 2013

A new House bill offers some good ways to construct a durable financing market for home loans. It still has warts, but would reduce reliance on taxpayers and entice private capital back in. Together with the Senate’s more politically palatable version, it could be a winning mix.

Land-bank levy would compound UK housing-tax mess

4 Jul 2013

The IMF wants to stimulate the supply of housing in Britain by taxing housebuilders’ stocks of land. It’s a better idea than the government’s lunatic “Help to Buy” scheme. But it could backfire, and is way short of the root-and-branch rethink that UK land-tax policy sorely needs.

European IPO market still open – for the realistic

3 Jul 2013

The failure of Terra Firma’s German property IPO follows several touch-and-go new issues. Deutsche Annington faced specific challenges - size, a private equity vendor and bad markets. But the ultimate problem was value. The reality is that fairly priced IPOs will still fly.

German property IPO is in danger of falling flat

2 Jul 2013

Deutsche Annington, the largest residential real estate landlord in Europe’s strongest economy, is preparing to float. The company, which will have equity worth about 4.3 bln euros, specialises in small flats at the budget end of the market. Shares, however, look pricey.

Coup at GSW heralds new governance era in Germany

26 Jun 2013

A shareholder revolt has led to the ousting of the chairman and CEO of the German residential property company. The putsch marks a watershed for governance in Europe’s most powerful state. Boards should wake up: cosy capitalism is on the way out.