long term – Hudson Berkshire Experience http://hudsonberkshireexperience.com/ Tue, 29 Mar 2022 10:20:18 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://hudsonberkshireexperience.com/wp-content/uploads/2021/05/cropped-icon-32x32.png long term – Hudson Berkshire Experience http://hudsonberkshireexperience.com/ 32 32 Allen Harris: How do higher interest rates affect businesses? | Business https://hudsonberkshireexperience.com/allen-harris-how-do-higher-interest-rates-affect-businesses-business/ Sat, 26 Feb 2022 12:00:00 +0000 https://hudsonberkshireexperience.com/allen-harris-how-do-higher-interest-rates-affect-businesses-business/

The good news is that your input costs may be low enough to offset some of your increased labor costs.

The bad news is that your sales could drop due to higher interest rates.

The Federal Reserve is expected to raise the federal funds rate from 0-0.25% to 1% by July 2022. That doesn’t sound like a big increase, and it isn’t. But, it’s fast.

The terminal rate is expected to be 2.5% in 2023. Even this rate is relatively low. However, the super cheap cost of money undermined the business environment as it allowed weak and failing businesses to operate.

A higher federal funds rate impacts other rates, such as mortgages, Wall Street Journal Prime, and lines of credit. Many lines of credit are re-evaluated monthly, so higher interest charges immediately impact the bottom line.

Some businesses operate from owner-occupied buildings, and those term loan payments could also adjust upwards. Higher interest rates affect your business’ cost of capital, reducing cash flow. You are mistaken if you think that higher interest rates will not affect you because you have no more debt. What impacts your customers, and the rest of the world, impacts you.

After the Japanese asset bubble collapsed in 1991, the government allowed banks to prop up so-called zombie companies by giving them enough cheap money to repay their loans. Two decades of easy money have created zombie companies here in the United States

There is no exact definition of “zombie companies”. Yet the Federal Reserve’s July 2021 report “US Zombie Firms: How Many and How Consequential?” notes that “it is generally accepted that these companies are not economically viable and manage to survive by appealing to banks and capital markets”.

Between 2015 and 2019, the Fed found that about 10% of public companies and 5% of private companies were zombies. Based on the peaks during the US recessions of 2001 and 2008, I would venture to assume that the numbers are double those reported for 2019 (and are even more dependent on easy money policies today).

The economic cycle has become linked to monetary policy. Marginal business practices were effective because the low cost of capital allowed for inefficiencies.

Despite these risks, the Fed intends to fight inflation by raising rates. According to the NFIB Research Foundation, the biggest problem facing small business owners is no longer labor shortages, it’s inflation. Inflation recently hit 7.5% over the past year, the highest consumer price index (CPI) measure since February 1982.

Since 1977, the Federal Reserve has fulfilled a dual mandate defined by Congress, to “effectively promote the goals of maximum employment, stable prices, and moderate long-term interest rates.” The Fed’s target inflation rate is 2% (using a measure known as Personal Consumption Expenditure). His next dragon to slay is the High Price.

Supply chain issues partly explain the high inflation. The Fed cannot fix the supply chain issues that contributed to inflation. However, the Fed can slow down the economy. Interest rate hikes are a lever to induce your customers to buy less of what you sell. Falling demand for goods and services lowers prices.

When interest rates rise, consumers tend to save more and spend less. Higher interest rates mean higher debt servicing costs. This prevents households from spending on credit cards and taking out loans, which means your sales and profits could plummet.

The corporate sectors that will be hit first will be the most sensitive to interest rates. Mortgages will become more expensive. Auto loan repayments will be higher. Then it could spill over to the rest of the economy.

Higher debt service decreases profits and deters companies from starting new projects or expanding because they cannot afford credit as easily. This company may not be you, but the company or its employees could be your customers. It affects us. And once that starts, banks might become more reluctant to give you a business loan when you need it most.

You can take steps now to prepare for how higher interest rates could affect your business. You need to take action to control rising costs and defend your revenue.

If your lender allows you, change your adjustable rate loans to a fixed rate. This will lock in your low rate for the duration of your loan. If the lender does not allow refinancing, you can pay off your debt to avoid spending more at a higher interest rate. (However, you will need to account for the ratio of interest payments to principal in your amortization schedule.)

If you have excess cash, you can open a high-yield savings account to generate more interest income.

You can get an approved line of credit now. If your bank does not extend the credit, you could borrow from your investment portfolio. For example, Charles Schwab & Co. allows investors to take out a “pledged asset line” to “use for real estate investment, business start-up, or other expenses.” Suppose the economy slows down or your borrowing costs increase. In this case, it will be more difficult to obtain financing. Better to have it and not need it than to need it and not have it.

Finally, change the consumption habits of your customers. Pull some of your sales forward and make others recurring. This statement can (and has) been extended to entire books.

I understand it’s borderline flippant to suggest that it comes as easily as waving a magic wand. I also know that the reaction of business owners in all industries is, “We can’t do this; you don’t understand my industry. Well, I know business. And I know that owners of small boxes often find themselves. This box limits opportunities to cut costs or defend revenue. Let’s get out of this box.

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3 Ultra High Yielding Dividend Stocks Billionaires Can’t Stop Buying https://hudsonberkshireexperience.com/3-ultra-high-yielding-dividend-stocks-billionaires-cant-stop-buying/ Mon, 21 Feb 2022 10:51:00 +0000 https://hudsonberkshireexperience.com/3-ultra-high-yielding-dividend-stocks-billionaires-cant-stop-buying/

The new year has not lacked major current events. Federal Reserve meetings, inflation data, coronavirus vaccine trial results and updates on the Russian-Ukrainian conflict are just a few of the events rocking the stock market.

But what you may have missed last week was one of the most important data releases of the quarter. February 15 marked the deadline for fund managers with more than $100 million in assets under management to file Form 13F with the Securities and Exchange Commission. A 13F provides an under-the-hood look at the stocks some of Wall Street’s brightest minds were buying and selling over the past quarter.

After scouring the portfolios of some of Wall Street’s brightest billionaires, one trend stood out: their attraction to dividend-paying stocks. Specifically, billionaire fund managers couldn’t stop buying the following three ultra-high-income stocks.

Image source: Getty Images.

AT&T: 8.75% return

Billionaire’s first ultra-high-yield equity fund manager couldn’t stop buying in the fourth quarter is the telecommunications giant AT&T (NYSE:T).

Before we get into the AT&T discussion, I want to mention that a business reorganization (which I’ll talk about in a moment) will cut the company’s dividend by more than half by mid-year. While it remains a high-yield company with a yield above 4%, its tenure as an ultra-high-yield income stock is wearing thin.

Among billionaire investors, Jim Simons of Renaissance Technologies and Jeff Yass of Susquehanna International kept charging AT&T in the fourth quarter. Renaissance added nearly 18.2 million shares and made AT&T its 26th largest holding. During that time, Susquehanna bought over 11.1 million shares.

While the peak of growth for AT&T is long gone, the company offers two very clear upside catalysts over the next two years. For starters, there’s the ongoing rollout of 5G wireless infrastructure. It’s been a decade since wireless download speeds improved dramatically, which should lead to a persistent cycle of device replacement for consumers and businesses. Since data consumption generates the juiciest margins in AT&T’s wireless segment, 5G is its golden ticket to steady organic growth.

The other major catalyst, and the “business reorganization” I alluded to earlier, is the upcoming spin-off of the WarnerMedia content arm, and its merger with Discovery. This new media entity will have approximately 94 million pro forma streaming subscribers and should be able to reduce its annual operating expenses by more than $3 billion. The spin-off from WarnerMedia — AT&T investors will have a stake in this new media entity — will also allow AT&T to lower its payouts and work on debt reduction.

At just 8 times 2022 forecast earnings, AT&T is about as cheap as it’s ever been.

Two businessmen shake hands, one holding a miniature house in his left hand.

Image source: Getty Images.

AGNC Investment Corp. : yield of 10.66%

Another ultra-high yielding stock that caught the attention of billionaire fund managers in the fourth quarter is the mortgage real estate investment trust (REIT). AGNC Investment Corp. (NASDAQ:AGNC). AGNC has averaged double digit returns in 12 of the past 13 years.

During the fourth quarter, Ken Griffin of Citadel Advisors and the aforementioned Jeff Yass bought AGNC. Griffin more than tripled Citadel’s stake in the company by buying over 396,000 shares, while Susquehanna increased its position from just over 112,000 shares to over 294,000.

While AGNC’s securities investment purchases can be complex, Mortgage REIT’s operating model is simple. Companies like AGNC seek to borrow at low short-term rates and use that capital to buy assets with higher long-term yields, such as mortgage-backed securities (MBS). The average return on MBS and other assets held minus the average borrowing rate equals the firm’s net interest margin (NIM). The higher the NIM, the more profitable the AGNC can become.

The biggest concern for mortgage REITs right now is the flattening of the yield curve between 2-year and 10-year US Treasuries. As the yields between these notes decline, companies like AGNC typically see their book value drop and their NIM tighten.

However – and this is a fat however – higher lending rates, which are most certainly on the horizon, should also help increase the returns AGNC receives from the MBS it purchases. Over time, the MBS he buys will expand his NIM.

In addition, the company purchases almost exclusively agency-guaranteed securities. An agency asset is guaranteed by the federal government in the event of default. While this protection reduces the return AGNC receives on the MBS it purchases, it also allows the company to deploy leverage to increase its profits.

With AGNC Investment Corp. trading well below its book value, it could be a theft.

A person using their phone's speakerphone while walking down a city street.

Image source: Getty Images.

Mobile TeleSystems: 13.37% efficiency

The third Russian telecommunications company Mobile telesystems (NYSE:MBT).

MTS, as the company is more commonly known, has the highest return on this list at over 13%. But keep in mind that his semi-annual payment is not fixed. Rather, the company’s operating results dictate what is ultimately paid out to shareholders. Nevertheless, MTS has returned around 9% (or more) for most of the last five years.

The big buyers last quarter were Israel Englander of Millennium Management and Larry Fink’s black rock. Millennium doubled its existing position by buying nearly 1.4 million shares, while BlackRock added nearly 641,000 shares to its stake, which now stands at 21.8 million shares.

Mobile TeleSystems’ daily bread continues to be its telecommunications segment. Even though mobile saturation rates are high across Russia, MTS stands to benefit from the deployment of 5G infrastructure in major cities and the continued expansion of 4G into the vast rural areas of the country. A smartphone replacement cycle can boost MTS’ retail segment, as well as its data-driven wireless segment.

But what makes MTS so intriguing are the company’s many new verticals. It moved into banking, cloud computing, and streaming, to name a few new revenue channels. In the first nine months of 2021, these new verticals saw sales growth of 24% over the prior year period. These fast-growing verticals have the potential to increase MTS’s organic growth rate and significantly reduce churn by keeping customers within its ecosystem of products and services.

In line with the theme, Mobile TeleSystems is inexpensive at around 8 times Wall Street consensus earnings for 2022.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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Typical Massachusetts home sold for less than $500,000 in January. For the last time ? https://hudsonberkshireexperience.com/typical-massachusetts-home-sold-for-less-than-500000-in-january-for-the-last-time/ Thu, 17 Feb 2022 18:27:36 +0000 https://hudsonberkshireexperience.com/typical-massachusetts-home-sold-for-less-than-500000-in-january-for-the-last-time/

Jon Gorey – Globe Correspondent

February 17, 2022 1:27 p.m.

Home sales in Massachusetts fell in January from a year ago, according to The Warren Group, a real estate analysis company. And while prices rose year on year to new highs in January, the typical single-family home sold for less than $500,000 for the first time since March 2021.

There were 3,509 single-family home sales in Massachusetts last month, down 8.9% from January 2021. But last year’s fierce fall and winter market makes comparisons difficult, and a decline was to be expected. Year-on-year sales figures have been down for six consecutive months now, Warren Group chief executive Tim Warren said, and 2021 was the busiest January for single-family home sales. since 1999.

The slowdown in sales is not due to a lack of interest from home buyers, Warren added, but rather a lack of homes for sale. There were about half as many homes and condos on the market in January as they were a year ago when inventories were already low, according to a separate report from the Massachusetts Association of Realtors.

The median price for a single-family home sold in January was $495,000, an all-time high for the month and a 10.7% increase from January 2021. “That’s a lot, but it’s not a astronomical increase,” Warren said. A slowdown in price growth is likely a good thing after two straight years of double-digit percentage gains in house prices, he added.

Moreover, it is unlikely to last long.

“Generally, January and February median prices are some of the lowest of the year, so we’ll be back to over $500,000 soon,” Warren said.

“Legs on the market in places like Wellesley and Newton and Cambridge, there may not be enough people left who can afford that price level, and so there is a drain to what I would call the affordability,” Warren said, noting that the median price of a single-family home in Worcester County rose 10.3% year-over-year, outpacing the most expensive counties that are mostly in within Interstate 495, such as Suffolk, Middlesex, Norfolk and Essex. (View data by county here.)

Statewide price growth was also supported by vacation home buyers, who continue to bid up prices in Berkshire and Barnstable counties. While there were fewer sales of single-family homes on Cape Cod last month than in January 2021, the median price of a home in Barnstable County climbed 18.8% a year ago, from from $505,000 to $600,000.

Economists expect rising interest rates to put some downward pressure on house prices this year as more expensive mortgages erode purchasing power. The average interest rate on a 30-year mortgage was 3.92% on February 17 – almost a percentage point higher than in February 2021. This difference is enough to reduce a homebuyer’s price range by tens of thousands of dollars.


Related Long-term mortgage rates in the United States are soaring and approaching 4%


But Warren fears buyers will be pressured to lock in a lower interest rate, creating something of a stampede in February and March and pushing prices higher in the near term. “People can bid too aggressively for the next two months, hoping that if they overpay by $10,000 in February, it’s the same monthly payment they would have gotten in October. [with the higher rates]”Warren said.

The local condo market mirrored that of single-family homes, with the median selling price of a Massachusetts condo rising 9.5% in January to $438,000 from $400,000 — a new high for the month. Sales volume also declined, down 14.9%, with 1,442 condo sales statewide. Condo sales were flat in Somerville in January, where the median selling price climbed 24.3% year over year to $891,500 from $717,500. Prices in South Boston were flat, with sales down 61.4% from a year ago. (See city-by-city data here.)

Jon Gorey blogs about houses at HouseandHammer.com. Send feedback to [email protected]. Follow him on Twitter at @jongorey. Subscribe to our free real estate newsletter at pages.email.bostonglobe.com/AddressSignUp. Follow us on Facebook, LinkedIn, Instagram and Twitter @globehomes.

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Your stress-free guide to buying home loans https://hudsonberkshireexperience.com/your-stress-free-guide-to-buying-home-loans/ Mon, 14 Feb 2022 21:25:54 +0000 https://hudsonberkshireexperience.com/your-stress-free-guide-to-buying-home-loans/

By Bob Walsmith Jr.
President 2022
Santa Barbara Association of Realtors

With this super-simple breakdown of loan types, you won’t be overwhelmed, you’ll find the right mortgage.

When it comes to buying a home, most people know what they prefer: a bungalow or a condo, a red-light district or a sleepy street.

Mortgages, too, come in many styles – and recognizing which type you should choose is just a bit more complex than, say, knowing that you prefer hardwood floors to carpet.

First, to choose the best loan for your situation, you need to know exactly what your situation is. Are you going to stay in this house for years? decades? Do you feel comfortable financially? Are you anxious about changing loan rates?

You’ll want to have an understanding of the different loans that are out there. There are a lot of options, and it can get a bit complicated – but you have this. Here we are.

Mortgages are fixed or adjustable, and one type is better for you

Let’s start with the most common type of mortgage, the workhorse of home loans: the fixed rate mortgage.

A fixed rate mortgage:

· Allows you to lock in an interest rate for 15 or 30 years (there are also 20-year loans). This means that your monthly payment will remain the same for the duration of the loan. (That said, your property taxes and insurance premiums will likely change over time.)

It is ideal when: You want long-term stability and plan to stay put.

Here’s what else you need to know about fixed rate mortgages:

· A 30-year fixed rate mortgage offers a lower monthly payment for the loan amount (for this reason, it is more popular than the other option, the 15-year one).

· A 15-year fixed rate mortgage usually offers a lower interest rate but a higher monthly payment because you pay off the loan amount faster.

Now let’s move on to variable rate, the other type of mortgage you’ll be looking at.

An adjustable rate mortgage (ARM):

Offers a lower interest rate than a fixed rate mortgage for an initial period — say, five or seven years — but the rate can fluctuate after the introductory period ends, depending on how interest rate. And that can complicate budgeting.

· Has caps that protect how high the rate can go.

It is ideal when: You plan to live in a house for a short time or expect your income to increase to compensate for potentially higher future rates.

Here’s what else you need to know about variable rate mortgages:

· Different lenders may offer the same initial interest rate, but different rate caps. It’s important to compare price caps when shopping for an MRA.

· Variable rate mortgages have a reputation for being complicated. As the Consumer Financial Protection Bureau advises, be sure to read the fine print.

A rule of thumb: when comparing adjustable rate loans, ask the potential lender to calculate the highest payment you might have to make. You don’t want any surprises.

Conventional loan or government loan? Your life answers the question

The fixed or variable rate mortgage you qualify for introduces a whole host of other categories, and they fall into two categories: conventional loans and government loans.

Conventional loans:

· Offer some of the most competitive interest rates, which means you’ll likely pay less interest over the life of the loan.

· Generally, you can get one faster than a government loan because there is less paperwork.

Who is eligible? Generally, you need at least a credit score of 620 or better and a 5% down payment to qualify for a conventional loan.

Here’s what else you need to know about conventional loans:

If you put less than 20% down on a conventional loan, you will have to pay private mortgage insurance, an additional monthly fee designed to mitigate the risk to the lender that a borrower might default on a loan. (The PMI ranges from about 0.3% to 1.15% of your home loan.) The result: The lender must cancel the PMI when you reach 22% of your home’s equity, and you can ask for it to be cancelled. once you reach 20% net worth.

· Most conventional loans also have a maximum debt-to-equity ratio of 43%, which compares the amount you owe (student loans, credit cards, auto loans and other debts) to your income, expressed as a percentage.

Fannie Mae and Freddie Mac set limits on how much money you can borrow for a conventional loan. A home loan that respects these limits is called a conforming loan:

· In most cities, the maximum conforming loan amount is $548,250.

· In high-cost areas, such as New York and San Francisco, the limit is $822,275.

· Limits are reviewed annually and are subject to change based on the average home price in each area.

A home loan that exceeds these limits is called a giant loan:

Jumbo loans generally require a higher down payment (up to 30% for some lenders) and a credit score of at least 720. Some borrowers can qualify by down payment of 20%, but their credit score must be higher .

They also tend to have stricter debt-to-income requirements, typically allowing a maximum DTI ratio of 38%.

There are also practical considerations to take into account before getting a jumbo loan, mainly: Are you comfortable with so much debt? The answer depends on your current financial situation and your long-term financial goals.

There are other types of loans. You should contact your trusted real estate agent for suggestions of lenders to talk to for help.

Bob Walsmith Jr. is a Southern California native and Realtor® at Berkshire Hathaway HomeServices California Properties in Santa Barbara. During his work with the Santa Barbara Association of Realtors, Bob has served on the CORE Committee, the Education Committee, served as Chair of the Budget and Finance Committee and the Multiple Listing Service Committee. He is also a member of the board of directors of the Alpha Resource Center in Santa Barbara. Bob lives in Goleta with his beautiful wife Julie. When he’s not working, Bob enjoys golfing, tasting fine wine, eating well and walking our beautiful coastline. Bob can be reached at 805.720.5362 and/or bob@bobwalsmithjr.com

]]> 3 TSX Dividend Stocks Hit 52-Week Highs https://hudsonberkshireexperience.com/3-tsx-dividend-stocks-hit-52-week-highs/ Fri, 11 Feb 2022 15:00:00 +0000 https://hudsonberkshireexperience.com/3-tsx-dividend-stocks-hit-52-week-highs/

Image source: Getty Images

Investors who have these three TSX dividend-paying stocks in their investment portfolios are likely to be happy campers. They recently hit 52-week highs! Should we buy them, keep them or sell them? Here are some insights from analysts to help you in your decision making.

Fairfax Financial Holdings

Fairfax Financial Holdings (TSX:FFH) is sometimes called a smaller version of Berkshire Hathaway. Like Berkshire, it is a holding company that has an insurance business. FFH also aims for a high rate of return on invested capital to create long-term shareholder value.

The beta of the stock roughly matches the beta of the market. Like most stocks in the market, it took a hit during the pandemic crash. However, it has roughly doubled since the bottom of the stock market crash in early 2020. Over the past year, its returns have also been comparable to those of Berkshire Hathaway. FFH stock is currently yielding around 1.9%.

FFH Total Return Level Chart

FFH and BRK.B Total Return Level Data by YCharts

John O’Connell’s comment on FFH in October 2021 was not kind, however:

“Prem Watsa engages in market timing, unlike Warren Buffett. Fairfax is a black box in what it owns. Tough business. Stuck in the mud for a while. If you want to look for good capital allocators in the [property and casualty insurance] company, look at BRK.B, which he owns.

John O’Connell, Chairman and CEO of Davis Rea

Royal Bank Stocks

Quality companies are meant to recover from market corrections. Stocks of major Canadian banks made a big comeback after the pandemic crash. As a leading bank with leading positions in a range of financial services in Canada, Royal Bank of Canada (TSX:RY)(NYSE:RY) is no exception.

It has appreciated about 120% since the bottom of the stock market crash and now has the largest market capitalization of the major Canadian banks. Its market capitalization is $208 billion.

Over the past 52 weeks, the stock dividend has returned almost 43%! Bank stocks have long been a staple in dividend portfolios. Currently, it offers a respectable yield of 3.3%.

RY Total Return Level Chart

RY Total Yield Level Data by YCharts

Here are David Driscoll’s comments on RBC stocks this month:

Rising interest rates will improve net interest margins (the spread between mortgages issued and deposits received). Dividend increases have taken place across the industry. Well-diversified company with operations in the United States and internationally. Avoid buying too many bank stocks as this exposes investors to sector risk.

David Driscoll, President and CEO of Liberty International

Brookfield Infrastructure

While Royal Bank shares may be staple banking stocks for many, Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) could be a core utility holding company. Since BIP was separated from Brookfield Asset Managementit increased its cash distribution every year for more than a decade.

Based on the way he runs his business, investors can expect more dividend increases for many decades to come. Its cash flow is sustainable – around 90% is regulated and contractual and 70% is indexed to inflation. Currently, it gives about 3.5%.

Here is a comment on Varun Anand’s utility as of November 2021:

“A diversified large-cap infrastructure play, led by one of the top asset managers [Brookfield Asset Management]. Excellent construction work on a global scale. Better ways to play infrastructure by owning individual names versus a conglomerate. Good candidate if you want to sleep at night and collect the dividend.

Varun Anand, Vice President and Senior Portfolio Manager at Starlight Capital

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Housing market off to best start to year since 2005 https://hudsonberkshireexperience.com/housing-market-off-to-best-start-to-year-since-2005/ Tue, 01 Feb 2022 08:07:00 +0000 https://hudsonberkshireexperience.com/housing-market-off-to-best-start-to-year-since-2005/ The housing market had its best start to a year since 2005, according to an index.

Annual house price growth fell to 11.2% in January 2022 from 10.4% in December 2021, the Nationwide Building Society said.

But he said the real estate market is likely to slow this year.

Reduced housing affordability is likely to dampen market activity and house price growth, as household budgets are also squeezed by the wider rise in the cost of living, he warned. .

Robert Gardner, Nationwide’s chief economist, said: “Annual house price growth accelerated to 11.2% in January, the fastest pace since June last year and the best start to a year for 17 years.

“Prices rose 0.8% month-on-month, after adjusting for seasonal effects, the sixth consecutive monthly increase.”

In the UK, the average house price in January was £255,556.

Mr Gardner added: “While the outlook remains uncertain, the housing market is likely to slow this year.

“House price growth has significantly outpaced earnings growth since the start of the pandemic and as a result housing affordability has become less favourable.

“For example, a 10% down payment on a typical home for a first-time buyer now equals 56% of total gross annual income, a record high.

“Similarly, a typical mortgage payment as a share of take-home pay is now above the long-term average, despite mortgage rates remaining near historic lows.

“Reduced affordability is likely to have a dampening effect on market activity and house price growth, especially as household finances are also under pressure due to sharp increases in the cost of life.

“Consumer price inflation hit 5.4% in December, its fastest pace since 1992.

“This is more than double the Bank of England’s 2% target, and inflation is expected to rise further in the coming months as the ceiling on energy prices is raised.

“This rapid rise in inflation has been a significant factor that has undermined consumer confidence over the past few months, particularly how people view their own financial situation, although so far it hasn’t. did little to harm housing market activity.

“High inflation and growing confidence that the Omicron variant will not derail the broader economic recovery have led to heightened expectations that policymakers will raise interest rates further in the months ahead.

“This will further reduce housing affordability if it results in higher mortgage rates, although to date a significant proportion of the rise in long-term interest rates seen in recent months has been absorbed by lenders.”

Martin Beck, chief economic adviser at EY Item Club, said: “A robust start to the year for house price growth is unlikely to give a taste of things to come.

“In particular, the stamp duty exemption, which supported housing demand and prices last year, is now a thing of the past. To the extent that the tax holiday anticipated purchases, its impact could weigh on housing market activity in the near term.

“Meanwhile, the prospect of a series of interest rate hikes by the Bank of England in 2022, starting with a hike expected at this week’s meeting, will result in higher mortgage rates.

“And the cost of living pressures facing households from rising inflation and higher taxes mean that fewer people will be able to afford to borrow the amount needed to buy at higher mortgage rates.”

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said house prices could rise if households were willing to deploy the excess savings they accumulated during the pandemic.

She added: “But house price growth has struggled during periods of high inflation, due to the resulting impact on real incomes. Indeed, we expect real household disposable income to decline by around 1.5% this year due to soaring inflation and rising taxes.

Mark Harris, managing director of mortgage brokerage SPF Private Clients, said: “Even though mortgage rates are rising, they are still competitively priced, which should give buyers the confidence to take the plunge, even in the face of a downturn. higher cost of living.

Lucy Pendleton, of estate agent James Pendleton, said: ‘As supply improves it will have a sobering effect on prices.’

Nicky Stevenson, chief executive of estate agent group Fine & Country, said: “While monetary policy will tighten in 2022, this is unlikely to have a significant dampening effect on the housing market anytime soon, most agents across the country still unable to find enough accommodation to meet demand.

Tom Bill, head of UK residential research at Knight Frank, said: “The high level of market valuations demanded by potential sellers in January indicates that supply will increase as more owners decide now is the time to act.

“A number of potential sellers had been hesitant due to the distorting effect of a stamp duty holiday and a global pandemic.”

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Rental prices are rising at the fastest pace on record, data shows https://hudsonberkshireexperience.com/rental-prices-are-rising-at-the-fastest-pace-on-record-data-shows/ Thu, 27 Jan 2022 00:11:14 +0000 https://hudsonberkshireexperience.com/rental-prices-are-rising-at-the-fastest-pace-on-record-data-shows/ The average asking rental price in the UK has risen at the fastest rate on record, a major property company has found.

Rightmove’s quarterly rental trend tracker found that the average asking price per calendar month is £1,068 outside London and £2,142 in the capital.

This is an increase of 9.9% for the rest of the United Kingdom and 6.1% for London.

The real estate giant also predicted that asking prices will rise another 5% this year, as competition among tenants for available properties nearly doubled in the previous year.

The number of available properties is also 51% lower than the same period last year, resulting in properties being filled in just 17 days on average.

The average rental yield, the value of the rent you can expect to receive from your property in a year, is at its highest level since 2016 in Britain at 5.5%, the North East and Wales recording record yields.

The rise in rents is outstripping house prices in all regions except the East Midlands, South West and South East, Rightmove said.

The annual asking rental price in Wales increased by 12.7%, followed by the North West which jumped by 12.5% ​​and the South West which rose by 11%.

London has reached record annual growth of 10.9%, with asking prices in the capital now 3% higher than before the start of the pandemic.

The effects are also being felt on a smaller scale, as Pontypool in Monmouthshire, Wales, saw the biggest annual increase in asking price of any local area, rising 20% ​​from £562 a month to £674 .

Ascot saw an 18.8% increase while Littlehampton saw a 17.5% rise.

Rightmove’s director of real estate data, Tim Bannister, said: “Tenant demand continues to be very high at the start of the new year, which means that the imbalance between supply and demand is likely to continue until to more choice in the tenant market, which led to our forecast of a further 5% increase in average asking rents in 2022.

“Landlords understand the importance of having a good long-term tenant, and there’s a limit to what tenants can afford to pay, which will prevent rents from rising at the same rate we’ve seen in the past. over the past year.”

The rise reversed a downward trend seen during lockdowns, when there was an increase in tenants wanting garden homes outside cities.

At the end of 2020, London saw a near-record 6.4% drop in average asking rents as landlords lowered prices to entice tenants to stay in their properties.

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SREF partners with IED to acquire £162m Romford retail warehouse https://hudsonberkshireexperience.com/sref-partners-with-ied-to-acquire-162m-romford-retail-warehouse/ Mon, 24 Jan 2022 16:24:42 +0000 https://hudsonberkshireexperience.com/sref-partners-with-ied-to-acquire-162m-romford-retail-warehouse/

Schroder UK Real Estate Fund (SREF) announced that it has partnered with Zurich Immobilien Europa Direkt’s investment foundation (“IED”, a pan-European strategy managed by Schroders Capital) to acquire “The Brewery”, a supermarket-anchored retail warehouse and leisure scheme in Romford, Greater London, for £162million in a 50/50 joint venture.

The brewery comprises a 21-acre site with 545,478 square feet of retail and leisure space anchored by national operators including Sainsbury’s supermarket, Nuffield Health, The Range, Boots, Pure Gym, Vue cinema 16 screens and multiple food and drink outlets including Wagamama, Starbucks and Costa Coffee. The scheme also benefits from 1,750 parking spaces and strong sustainability credentials, including BREEAM accreditation in use.

The acquisition follows Schroders’ research that retail park rents are expected to stabilize, with retail park footfall currently 3% above pre-pandemic levels. With typical rents and service charges lower than malls, Schroders expects there will be continued demand for retail park units from discount retailers, convenience, gyms as well as take-out cafes and food chains. The sector should outperform other markets, supported by the active professional market and relatively high yields.

The Schroders Capital team is well positioned to drive the program forward post-acquisition and will seek to deploy its extensive experience and expertise in the retail and leisure sectors to drive performance. Schroders’ dedicated retail team will combine strong existing relationships with occupiers across the industry with a collaborative, operations-focused mindset, a strategy proven in major Bracknell, Hammersmith and Cardiff in recent years.

The brewery also offers potential for longer-term alternative use, being located in the strategic development area of ​​Romford. SREF has a strong track record of creating space, with several projects currently underway, including Ruskin Square in Croydon, where over 500,000 square feet of highly sustainable office space has been leased to the UK government and Cambridge North , where SREF is developing the first 100,000 square feet. First Grade A office building in the 35-acre mixed-use urban neighborhood.

HampsonWall, CSP, Montagu Evans and Stephenson Harwood represented the joint venture in the acquisition.

Jessica Berney, fund manager for SREF, Schroders Capital, comments: “The Brewery is a thriving commercial storage park that benefits from strong footfall and a good tenant mix that favors convenience and leisure occupants in accordance to post-pandemic consumer demand. We will work closely with local government planning teams to help improve the site and this area of ​​Romford.

“The asset offers an attractive initial yield for the fund and is in line with several of the fund’s objectives, including growing income returns, increasing exposure to sectors expected to outperform, building future performance potential capital and improving portfolio sustainability credentials The acquisition follows the £345m industry swap agreement with SEGRO in October 2021 and continues to demonstrate SREF’s strategic ability to find future opportunities to deliver strong returns to its investors.

Harry Pickering, Head of UK Retail, Schroders Capital, added: “The Brewery is an exciting opportunity, showcasing the best of what retail warehousing should be; well-located, strong business performance, affordable rents and ample opportunity to execute both short-term and long-term asset management initiatives to create sustainable long-term revenue growth and strong returns for SREF.

“We believe in retail assets that perform well for retailers. Our partnership approach with our retail tenants gives us strategic insight into how best to configure physical real estate for optimal business performance. The pandemic has accelerated omnichannel retail techniques, helping to secure physical real estate at the center of a retailer’s distribution network. Well-positioned assets like The Brewery will continue to position themselves as strategic retail hubs for Click & Collect, Fulfillment and Commodity destinations. Our long-standing specialist retail and leisure expertise has contributed to the repositioning of several retail warehousing assets, the Bracknell Regeneration, Mermaid Quay in Cardiff and the success of our business plan at Kings Mall in Hammersmith , which we sold to Ikea in the fourth quarter of 2019.”

Roger Hennig, Fund Manager for Zurich Investment Foundation Immobilien Europa Direkt (IED), Schroders Capital, comments: “This leisure, retail warehouse and food program is an attractive addition to the portfolio. The asset offers a high yield and will further diversify the portfolio, which has now grown in value to over €1.5 billion. The joint venture with the Schroder UK Real Estate Fund (SREF) will ensure both partners can capitalize on the significant expertise of the Schroders team in retail and venue building to ensure asset performance in the future.

IED is an investment vehicle managed by Schroders Capital. This investment vehicle is only available to eligible investors domiciled in Switzerland and is not available to investors in the UK.

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China’s economy slowed late last year due to real estate issues https://hudsonberkshireexperience.com/chinas-economy-slowed-late-last-year-due-to-real-estate-issues/ Mon, 17 Jan 2022 03:16:46 +0000 https://hudsonberkshireexperience.com/chinas-economy-slowed-late-last-year-due-to-real-estate-issues/

BEIJING – Construction and real estate sales have fallen. Small businesses have closed due to rising costs and weak sales. Local authorities in debt reduce the salaries of civil servants.

China’s economy slowed markedly in the final months of last year as government measures to curb property speculation also hurt other sectors. Lockdowns and travel restrictions to contain the coronavirus have also weighed on consumer spending. Strict regulations on everything from internet businesses to after-school tutoring businesses have sparked a wave of layoffs.

China’s National Bureau of Statistics said Monday that economic output from October to December was only 4% higher than the same period a year earlier. This represented a further deceleration from the 4.9% growth in the third quarter, from July to September.