China Evergrande Says Construction Has | Stock Market News Today


Troubled property developer

China Evergrande Group


EGRNF -10.55%

said construction work has resumed at more than 90% of its stalled residential projects, adding that it has picked up the pace of delivering apartments promised to home buyers across the country.

Evergrande,


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in a statement Sunday night, said more than 80% of its suppliers of materials and decorative services have “resumed cooperation,” and that it has signed thousands of new contracts with various suppliers. At the end of August, the developer disclosed that construction had been suspended at some projects after it fell behind on payments. And by October, hundreds of Evergrande’s unfinished developments were affected by work stoppages.

With just a few days to go before the end of 2021, Evergrande said it intends to deliver 39,000 homes in 115 projects to buyers across China in December. It compared that to its completion of fewer than 10,000 units in each of the preceding three months.

The world’s most indebted real-estate firm Evergrande has embarked on a social media campaign to show construction has resumed and says it’s doing whatever it takes to deliver homes. WSJ compares these posts with ones from upset buyers. Photo Composite: Emily Siu

In a post on social media Monday, Evergrande said apartment projects have been handed over in batches in 18 provinces and it released photos of completed buildings adorned with bright red decorations and people signing papers to take ownership of their homes.

Despite this, Evergrande still has many more commitments to fulfill and its debt crisis remains unresolved. The 25-year-old developer used to be one of the country’s largest by contracted sales and is on the hook to deliver units to more than one million people. Many buyers made large down payments on unfinished flats, expecting to take ownership of them in a few years.

Hui Ka Yan,

Evergrande’s founder and chairman, said that “under the care and guidance of governments at all levels,” as well as support from partners, financial institutions and other constituents, the developer has made progress in its commitments to homeowners.

He added that Evergrande would do whatever it takes to resume work and deliver homes and predicted that the firm will eventually be able to “resume sales, resume operations, and pay off debts.”

Hui Ka Yan, China Evergrande’s chairman, in Hong Kong in 2019.



Photo:

Paul Yeung/Bloomberg News

The company’s statement followed comments over the weekend from two Chinese regulators which said they would safeguard the rights of homeowners and keep the property sector stable. Beijing has been trying to prevent Evergrande’s debt crisis from hurting the many small businesses and ordinary citizens that the developer owes money and apartments to.

Wang Menghui,

head of China’s Ministry of Housing and Urban-Rural Development, said in an interview with the state-run Xinhua News Agency that the regulator will address the risks of some leading developers that fail to deliver projects on time, with the goal of “guaranteeing home deliveries, protecting people’s livelihoods and maintaining social stability.”

The People’s Bank of China separately said—as part of a wide-ranging statement on the economy—that it would protect the rights and interests of homeowners and promote the healthy development of the country’s real-estate market.

Evergrande, the world’s most indebted developer, has been struggling under the weight of roughly $300 billion in liabilities, including around $20 billion in international bonds. The developer has missed payment deadlines on some of its dollar bonds, setting the stage for a massive and complex restructuring. Major credit raters have declared it to be in default.

Earlier this month, the conglomerate sought help from the government of its home province, Guangdong. It has since set up a risk-management committee that includes representatives from several state-backed entities.

Evergrande recently said the committee is working to help contain its risks and will engage with its creditors. Some international bondholders, however, have said there has been little communication from the company so far, the Journal reported last week.

The company’s Hong Kong-listed shares have plunged in value this year to historic lows and its dollar bonds are trading at deeply distressed levels. Markets in Hong Kong were closed Monday for a public holiday.

Write to Anniek Bao at [email protected]

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Latest News Today – Amazon Offers Intellectual Property Protection For


Amazon has launched intellectual property protection facility to small entrepreneurs in India

Amazon, the e-commerce giant on Sunday unveiled its Intellectual Property Accelerator or IP Accelerator programme, which is aimed at providing access to sellers, especially those who are also owners of brands, to services provided by legal experts.

This access, a statement by Amazon added, will help the sellers to secure trademark protection for their brands as well as from infringement mainly on Amazon websites across the country.

The IP Accelerator programme is already available in Europe and the United States, it added.

Mary Beth Westmoreland, vice-president, technology, brand protection at Amazon, said the IP Accelerator programme is already available in the US, Europe and Canada.

“We are excited to offer the advantages of this programme to our Indian businesses. Our Intellectual Property Accelerator Program enables businesses to protect their intellectual property, which in turn helps to ensure an authentic shopping experience for everyone,” said Amazon’s vice president technology, brand protection Mary Beth Westmoreland.

The programme was launched as a pilot project in India last year and received positive feedback from businesses, the statement said.

“Establishing IP rights is essential for businesses of all sizes to differentiate their products, earn customer trust and grow their business. However, the process can be complex and time-consuming, leading to a lot of businesses dropping off along the way,” Amazon India Director (MSME and Selling Partner Experience) Pranav Bhasin said.

He added that the launch of the IP Accelerator programme in India will give IP protection to millions of sellers, especially small and medium-sized ones as well as the upcoming entrepreneurs.



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Latest News Today – Intellectual Property Body Restricts Delhi-Based Entity


A Delhi based firm has been restrained from using a domain name which uses the word “khadi”.

World Intellectual Property Organization (WIPO) has ordered a Delhi-based firm against using a domain name www.urbankhadi.com, which illegally uses the brand name “Khadi”.

The administrative panel of WIPO’s Arbitration and Mediation Centre has ruled that the firm “Om Soft Solutions”, owned by one Harsh Gaba, had registered and used the domain name www.urbankhadi.com in “bad faith” and to gain benefit from the goodwill of Khadi.

The panel’s order came on a petition of Khadi and Village Industries Commission (KVIC) against “Om Soft Solutions” which was indulging in the business of garments by misusing the brand name “Khadi”, a statement issued by the Ministry of Micro, Small and Medium Enterprises said.

WIPO is a specialised agency of the United Nations for brand protection across the world.

The panel lent credence to KVIC’s contentions that “it was a systematic attempt by Mr Harsh Gaba to derive unfair advantage, wrongful commercial gains and to mislead the public into believing that www.urbankhadi.com is an associate of Khadi India”.

“It is evident that the respondent can have no legitimate interest in the disputed domain name…nobody would use the word “Khadi” unless seeking to create an impression of an association with Khadi,” the panel noted, the ministry’s statement quoting the WIPO order, said.

“The evidence submitted by the complainant (KVIC) leads to the presumption that the disputed domain name www.urbankhadi.com was registered and used by the respondent in bad faith….the panel orders that the disputed domain name be transferred to the complainant, i.e. KVIC,” the panel ruled.

The panel categorically rejected the arguments of “Om Soft Solutions” that the word “Khadi” enjoyed no protection and that nobody had an exclusive right to use the name “Khadi”.

“The complainant (KVIC) is the owner of several KHADI trademark registrations. The complainant is also the owner of trademarks “Khadi” and “Khadi India”…the disputed domain name www.urbankhadi.com includes the trademark of KVIC and is confusingly similar or identical to the trademarks of the complainant (KVIC),” the panel observed.

KVIC Chairman, Vinai Kumar Saxena said the WIPO’s order will bolster Khadi’s fight against violation of its brand name not only in India but also globally.

He said KVIC will take all measures to protect the identity and global popularity of Khadi, adding that the organisation has registered the trademark “Khadi” in several countries to prevent any misuse of the brand name “Khadi” as it has a direct bearing on the livelihood of our artisans.

On May 3, an Arbitration Tribunal in Delhi had said that “Khadi” was not a generic name to be used by private individuals or firms while permanently restraining an individual from using the brand name Khadi. In March this year, the Delhi High Court had also restrained a firm from using brand name Khadi and the Charkha symbol to sell its products under the name “IWEARKHADI”.

KVIC in the last few years has acted tough against several violators. So far KVIC has issued legal notices to over 1,000 private firms including Fabindia for misusing its brand name and selling products under the name of Khadi.

KVIC has sought damages to the tune of Rs 500 crore from Fabindia which is pending before the Mumbai High Court, the MSME ministry’s statement said.



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Whatever Their CEOs Say, Banks Are Wary About the Office | Sidnaz Blog


Some bank chiefs, like JPMorgan’s

Jamie Dimon,

talk as if the office will soon look more or less as it did before. Their real estate lending teams seem less sure.

Banks on both sides of the Atlantic are becoming more selective about which offices they will lend against. Pockets of the market have been resilient during the pandemic: The rate banks charge for mortgages on the best central London offices was 1.65% in the first quarter of 2021, more or less where it was before the crisis, data from real-estate company CBRE shows. But U.K. lending margins for older, less central offices are close to historic highs, based on the Cass Business School’s commercial real estate lending report.

In the U.S., the value of new office loans issued by banks in the first quarter of this year was just 35% of levels in the same period of 2019, according to Trepp data—a sharper pullback than for unloved retail assets such as malls. The spread between office mortgage rates and 10-year Treasurys also has widened from precrisis levels.

The value of new office loans issued by banks in the first quarter was just 35% of levels in the same period of 2019.



Photo:

Amir Hamja/Bloomberg News

The rise in debt costs is notable because default rates on existing office loans are currently below 1%. Corporate tenants locked into leases are continuing to pay the rent, so landlords have met their mortgage payments. But that could change once existing contracts roll off and white-collar employees spend more time at home. Companies ranging from tech giant

Facebook

to global bank

HSBC

plan to let some staff work remotely on a permanent basis.

Oversupply is already an issue in San Francisco, leading to big falls in rent and high vacancy rates. Lenders are also watching New York closely. In the mid-Atlantic region, which includes the troubled Manhattan market, almost one-third of banks’ outstanding office loans now fall into the riskier “criticized” category, up from 6% before the pandemic, survey data gathered by Trepp shows.

The pandemic also has accelerated the pre-Covid trend toward more energy-efficient offices with strong communal areas, good ventilation and natural light. Expensive improvements are needed both to entice workers back and to meet growing expectations for businesses to disclose and reduce their carbon footprints. Unfortunately for landlords, green credentials seem set to become a requirement to let rather than the basis for charging tenants a premium.

All of these factors make it tough to predict where office valuations are headed and therefore to underwrite loans. In central London, the best offices are still changing hands at high valuations that give rental yields of just 4%, buoyed by rock-bottom interest rates and strong demand from overseas buyers. Shareholders are more bearish. The discount to book value at which U.K. and U.S. office real-estate investment trusts now trade imply 15% and 10% falls in the value of the properties they own, respectively, according to real-estate research firm Green Street.

For now, mortgage writers too are erring on the side of caution. Seen through the lens of their lending activity, banks’ efforts to big up the office to staff appear halfhearted.

Plexiglass dividers and floor decals might not be permanent, but the pandemic will bring lasting change to offices. Experts from the architecture and real-estate industries share how they are getting back to work and what offices will look like in the future. Photo: Cesare Salerno for The Wall Street Journal

Write to Carol Ryan at [email protected] and Rochelle Toplensky at [email protected]

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For Many Home Buyers, a 5% Down Payment Isn’t Enough | Sidnaz Blog


Would-be home buyers without big piles of cash are getting left on the sidelines.

In the turbocharged housing market, prices are surging and homes on the market are routinely selling for far more than the listing price. Those who can’t afford big down payments are often the ones losing out.

Half of existing-home buyers in April who used mortgages put at least 20% down, according to a National Association of Realtors survey. In 10 years of record-keeping, that percentage has hit or exceeded 50% three times, and all have been since last fall. A quarter of existing-home buyers in April paid cash, the highest level since 2017, NAR said.

Oscar Reyes Santana has been house hunting with his parents and siblings for more than a year in California’s San Fernando Valley. They are all first-time buyers and budgeted for a 5% down payment.

The family bid on at least five homes, each time offering at least $30,000 above the asking price, but they lost out every time, said Mr. Reyes Santana, who is 23.

“It’s been really tough to try to beat everyone else,” he said.

They have all but given up the search for now, and are focused on saving up for a bigger down payment.

Home prices are surging. The median existing-home price rose 19% from a year earlier to $341,600 in April, a record high, according to NAR. That is largely because there aren’t enough homes on the market to meet demand.

In such a housing market, sellers can often choose among multiple offers. Cash buyers have an advantage because they don’t need to secure mortgages, which can make the transaction go faster. Sellers sometimes worry that offers with smaller down payments are likelier to fall through during the loan-closing process, agents say.

The median existing-home price in the U.S. rose 19% from a year earlier to $341,600 in April, a record high.

Many borrowers who can afford only small upfront costs get loans insured by the Federal Housing Administration or the Department of Veterans Affairs. In an April NAR survey of real-estate agents, 27% said sellers were unlikely to accept an offer with an FHA or VA loan, and another 6% said sellers would refuse such an offer. These loans are less attractive to sellers because they have stricter closing conditions, real-estate agents say.

While mortgage originations of all types rose last year as home buying surged, FHA and VA loans lost market share to conventional loans. FHA loans, which often go to first-time buyers, accounted for 10% of home purchases in the first quarter of 2021, the second-lowest level since 2008, according to Attom Data Solutions.

“It’s very hard to get my FHA offers accepted,” said Olivia Chavez Serrano, a real-estate agent in Los Angeles.

Bigger down payments can cushion the housing market in a downturn. In the 2007-09 recession, home buyers who had made tiny down payments were quickly underwater as soon as home prices started to fall.

A lump sum of 20% or more can be hard to come up with as home prices skyrocket, especially without help from family members. “I’d say at least 50% of my first-time home buyers are getting gifts right now,” said Chris Borg, a mortgage broker at Vantage Mortgage Group Inc.

Low-down-payment loans and down-payment assistance programs are touted by affordable-housing advocates as crucial tools for increasing the homeownership rate, particularly for minority buyers. In 2019, a higher proportion of FHA and VA borrowers were Black or Hispanic compared with conventional-loan borrowers, according to the Urban Institute. Some congressional Democrats have proposed new down-payment assistance initiatives to help first-time buyers.

Surging home prices are also complicating appraisals, which means some buyers are being forced to shell out more cash than they had expected.

Appraisals are based partly on recent sale prices for comparable homes in the area. When housing prices rise quickly, appraisal values don’t always keep up. Mortgage lenders will typically lend only enough to cover the appraised value of a home, so when an appraisal comes in low, the buyer has to make up the difference or let the deal fall through.

Oscar Reyes Santana and his family bid on at least five homes, each time offering at least $30,000 above the asking price, but they lost out every time.

For example, a buyer who plans to put 20% down on a $500,000 purchase expects to pay $100,000. But if the home is appraised at $450,000, the cash payment goes up to $140,000—the sum of the $50,000 shortfall plus a $90,000 down payment.

Many buyers are still getting offers accepted without putting 20% down. First-time home buyers who used mortgages paid 9.1% down on average year-to-date through mid-May, though that is up from 8.4% for all of 2020, according to CoreLogic. Repeat buyers paid 16.6% down on average.

SHARE YOUR THOUGHTS

Have you bought a home during the pandemic? Join the conversation below.

Briana Stansbury, who works at a community college in Portland, Ore., recently made an offer on a two-bedroom house. She used a 5%-down loan program that Freddie Mac offers for first-time buyers, and she agreed to go through with the purchase even if the appraisal came in as much as $10,000 below her purchase price of $371,500.

That put Ms. Stansbury at risk of having to come up with extra cash in a hurry, but she had lost out on bids for other houses and thought it would give her a leg up.

Ms. Stansbury lost sleep while she waited for the appraisal. But it came back above the sale price, and she closed on the house in May.

Danyell Allen of Cedar Park, Texas, felt ready to buy a house this year. She had saved up for a 5% down payment. Her children wanted to paint their walls and adopt a pet, which they can’t do in their rental house.

But after losing out on more than 10 offers, she called off the search. “The lowest I heard I was beat out on any home was $30,000 over asking price,” she said. “That’s not something I can do.”

Prices are surging in part because there aren’t enough homes on the market to meet demand.

Write to Nicole Friedman at [email protected] and Ben Eisen at [email protected]

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Latest News Today – Mumbai Registers Property Registrations Of 5,360 Units


The Mumbai BMC region, which covers Churchgate to Dahisar and Colaba to Mulund, registered property registrations of 5,360 units in May 2021, marking a decline of 47 per cent month-on-month, compared to April 2021. According to a recent research report by leading real estate consultancy Knight Frank, the property registrations were down 15 per cent in May, compared to 6,270 units registered in May 2019. However, new registrations grew 25 times last month, compared to May 2020, as a result of the base effect.

According to the report, only 29 per cent of registrations last month were from new residential sales concluded in the month, while 71 per cent of the registered properties were from sales concluded in the period between December 2020 – April 2021. These registrations got recorded in May and out of the total sales in May 2021, 62 per cent were in sub Rs 1 crore category, said Knight Frank in its report.



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How to Consider Tapping Your Home Equity as House Prices Rise | Sidnaz Blog


More Americans are tapping their homes for cash, taking advantage of low interest rates and the rise in home values.

Total home equity cashed out in the first quarter of this year is estimated at $49.6 billion, up nearly 80% from a year earlier, according to data from

Freddie Mac.

It is the highest level on record since 2007, but still below the $84 billion quarterly cash-out volume in 2006.

Jenny Puls is one such homeowner. After looking for a larger house for more than a year, Mrs. Puls decided she was better off adding a second floor to her family’s 1,600 square-foot craftsman-style home than buying in this year’s overheated market.

“We just ran out of room; my office had to become the nursery,” says Mrs. Puls, a Realtor who has a 9-month-old daughter.

Her Houston-area home had appreciated to $645,000 from the $220,000 she paid a decade ago. She cashed out $336,000 and refinanced to a new 30-year fixed mortgage of $500,000 at 3% in order to add two bedrooms, an extra living room and a kitchen expansion. Though her monthly mortgage payments doubled, and she has had to pull $40,000 out-of-pocket to finish financing the renovations, she says this was the better option for her.

When Jenny Puls couldn’t find a home in this hot market, she cashed out $336,000 of equity to finance a second-floor addition on her home, shown in 2017.



Photo:

Jenny Puls

“I think the inability to find what you want has caused people to really rethink, ’Can I stay where I am? What would make me happy?’” says

Stacy London,

a certified mortgage consultant who helped Mrs. Puls with her loan. “And yes, they have chosen to refinance and pull out some equity so they can improve their home and be happy where they are.”

If you are also thinking about pulling equity out of your home, here is what you should consider.

Learn the basics

How much equity will you take out, and what happens if home prices slip in the near future?

In general, you can extract as much as 80% of the equity you have accrued in your home. For example, say you bought a home for $250,000, putting down 20% at the time. You have since paid off $50,000 of your original mortgage, and the home’s value has risen to $650,000. You could potentially refinance with a new, $520,000 mortgage and take $370,000 of that in cash; the remainder would go to pay off your existing loan.

The U.S. mortgage market involves some key players that play important roles in the process. Here’s what investors should understand and what risks they take when investing in the industry. WSJ’s Telis Demos explains. Photo: Getty Images/Martin Barraud

How much you should take out depends on your financial situation. If you have great job security and you are using the money for something that can pay dividends into the future, like renovating your home, then it is possible that maxing out your equity could make sense.

“While we’re seeing an increase in the use of cash-out refis, it’s still a low level of home-equity withdrawal compared to what we saw during the financial crisis,” says

Mike Fratantoni,

chief economist at the Mortgage Bankers Association. “U.S. consumers are more cautious now than they were before.”

Prior to the 2008 subprime-mortgage crisis, many homeowners overextended and pulled too much equity out of their homes when prices were booming. Once prices crashed, many owed much more than their house was worth.

Make sure that you can afford the new monthly mortgage-payment amount, which could increase significantly. If you stretch your monthly budget too far and there is an economic downturn, you could lose your house.

Pay attention to taxes and value-adds

If you use the money to improve your home, ensure that it adds substantial value. Certain frills like high-end materials or luxury upgrades might not go the distance in the same way that modernizing a kitchen and bathrooms would.

If you don’t use the money for home improvement, you will no longer be eligible for the mortgage interest deduction in your taxes. If you use the money to start a business, however, it is possible that you may be eligible for another tax break, so speak with your tax adviser about the tax implications of home equity loans for your specific situation.

Another way to use the money is to pay off high-interest debt. While it doesn’t include tax benefits, it could result in significant interest savings.

Know the difference between a cash-out refinance and a Heloc

In a cash-out refinance, you get a new mortgage on your home’s current value and cash out some of the equity that you have in the home, which has likely increased along with higher prices.

The interest rate for a cash-out refinance at the $548,250 Fannie Mae limit is hovering at about 3.25%-3.75% for a 30-year fixed loan. Any amount you take out above the limit might have a higher interest rate.

A home-equity line of credit, or Heloc, has a variable interest rate attached to it and works more like a credit card. Instead of getting the money all at once, you open up a line of credit against your house with a limit.

The interest rate for a Heloc is closer to 4%, with closing costs around 2% of the loan amount.

Doug Henning, a software developer in Jacksonville, Fla., took out a Heloc 15 years ago to help pay for his daughter’s wedding. His limit was set at $50,000, but he dipped into only a portion of it. After the Tax Cuts and Jobs Act of 2017 made Helocs no longer eligible for the mortgage interest deduction, he paid off the Heloc and a few credit cards with a cash-out refinance in 2019. Last year when interest rates dropped, he refinanced his mortgage again, down to 2.75% from 4.5%.

“To me this is like taking advantage of the system, as long as you’re knowledgeable enough to not get way in over your head,” says Mr. Henning.

SHARE YOUR THOUGHTS

How do you think about the equity you have in your home? Join the conversation below.

Write to Deborah Acosta at [email protected]

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Selling to Buy a Bigger Home? It May Be Rough in This Hot Market | Sidnaz Blog


Luis Gazitua

put his Florida home up for sale in April when he saw the influx of clients coming from out of state to buy homes at prices he had never dreamed of.

Within days of listing it, his three-bed, three-bath, 2,800-square-foot home on an acre lot received three all-cash offers of $1.7 million each. That is $700,000 more than he paid in 2018.

But before the bidding war began, the Miami insurance broker and father of 9-year-old twins, pulled his home off the market.

“We fell into the hype; it became enticing. You’re going to sell your house and make more money than you ever have, but then where are you gonna go?” says Mr. Gazitua, who couldn’t find anything he liked under $3 million.

After a long year spent cramped at home, many homeowners are eager to move into larger spaces. These sellers stand to benefit from the hot housing market, but trading up could be tricky.

Here’s how to look at the financials and logistics of sizing up this seller’s market.

With a larger home, the costs of upkeep will rise, too; a for-sale sign in Westwood, Mass., last year.



Photo:

Steven Senne/Associated Press

Are you ready for higher costs of everything?

Some buyers overlook the fact that larger homes in nicer neighborhoods tend to come with a steep property tax on top of other expanded expenses.

“The first question I ask clients is: Can you afford the property taxes in that new place?” says

Amir Noor,

the director of financial planning at United Financial Group, based in Long Island, N.Y.

With a larger home, the costs of upkeep will rise substantially, too. Don’t forget to consider the upkeep of any new amenities as well, such as a pool or outdoor area. Any fixes you may need to make on a larger home will cost more as well.

Timing the sale of your home, and timing the buy

It is risky to sell your home before you know where you are going to land.

Some real-estate agents recommend that you include in your contract that the sale of your home is contingent on finding a new home to buy, and you can also stipulate that you would like to close escrows simultaneously.

“It used to be that people were wary about that,” says

Jose Luis Mejia,

a Realtor in the Los Angeles area. “But since it’s such a strong and competitive market, the more a buyer helps the seller make their move, the more likely they are to have their offer accepted.”

But while you may have this kind of flexibility as a seller, you suddenly have to deal with a competitive market as a buyer, and your seller may not want to wait for you when dozens of offers pour in at once.

“In this market, with a contingency you’re not going to get that new house, someone else is going to sweep it out from under you,” says Mr. Noor.

Ryan Firth,

a certified public accountant and personal financial specialist based in Houston, recommends doing a sale-leaseback from the people who are buying your current home, so you can have the cash on hand to purchase the new property without any contingencies, while still having a place to lay your head.

Taxes, taxes, taxes

If you have lived in your home for more than two years, and you are married filing jointly, you can avoid paying taxes on as much as $500,000 of the profits made on the sale of your home. If you are single, you can avoid paying taxes on $250,000 worth of gains.

But if you have been in your home for less than two years, or it isn’t your primary home, you will likely have to pay capital-gains taxes on all of the profits of the sale.

You will have to fill out a 1099-S form to report the gains, which you can request to be included as part of your closing documents. For more information on the tax implications of buying and selling a home, take a look at Publication 530 from the IRS.

Consider looking in other housing markets

A housing market other than the one you are in may have options for you to consider.

Geoffrey Ley,

who is relocating for a new job, just sold his 4,000-square-foot home in Dallas to buy a slightly less expensive one in Kansas City, sight unseen, with 7,500 square feet and a pool.

“The market in Kansas City is just as tight as it is in Dallas,” he said. “We found a house that was way bigger than what we wanted, but at least it had everything we wanted in it.”

However, if you leave an area that’s booming, keep in mind that you may not be able to afford to come back. Mr. Gazitua saw his neighbor caught in this situation when he sold his home for a million dollars before the pandemic to move to Chicago, but then changed his mind during quarantine. He tried to buy back in his old neighborhood, but found that in nine months, homes had doubled in price.

“I call it high-stakes real estate,” said Mr. Gazitua. “Any decision you make now will have life-altering consequences, either positive or negative.”

What should your new budget be?

As an upsizer, you have an advantage over first-time home buyers in that the sale of your home will usually leave you with a lot more liquidity, provided that you have accrued some equity. After your down payment, budget no more than 40% of your monthly gross income on your mortgage payment, including maintenance, taxes and insurance.

If you will have a decent amount of cash left over once you sell, consider where it will go.

While it might seem reasonable to lower your monthly costs by making a large down payment, Mr. Noor advises against putting down any more than 25%

“A lot of people think that by making the mortgage payments smaller, they’ll save more,” he says. Instead, he recommends keeping your down payment at or under 20% and investing the rest of your money.

“If you reduce your monthly mortgage payment by $500, you’ll likely spend it on going out to restaurants, getting another car, whatever. If you have $50,000, you almost feel like you have to do something responsible with it because it’s so much money,” he says.

Typically, the more money you put down on your mortgage, the better the interest rate you’ll get from the bank. However, with interest rates so low already, the incentive isn’t as strong right now.

Mr. Noor also warns that once you put money down toward your mortgage, you can’t take it back out as easily if you need it to improve the home and make repairs, or for some other emergency.

“Your house is only an asset insofar as it gives you housing security,” he said.

Write to Deborah Acosta at [email protected]

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Buying a Home? Don’t Lose Your Head in a Crazy Market. | Sidnaz Blog


Albert and Jin Lee started looking for a home in the Boston area in December. So far, they haven’t had any luck in a red-hot housing market.

The couple, who need more space for their newborn, have a budget of between $700,000 and $1 million. Now, the Lees are thinking about stretching it.

“It’s been kind of a crazy, super-seller’s market,” Mr. Lee said. “Real-estate agents have been saying that some houses get 80 offers.”

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Have you bought a home in the last year? Share your experience below.

In March, there was 28.2% less housing inventory versus a year earlier, according to the National Association of Realtors. At the same time, superlow mortgage rates are spurring demand for homes, sparking bidding wars that send prices higher.

Debbie Barrera,

a broker dealer at Realty Austin in Austin, Texas, said she has never seen a market like this before. In some cases, buyers are offering $100,000 above asking prices. In one case, she said, a buyer offered $500,000 above asking for a home with a pool.

“It’s just crazy, there’s no other word to describe it,” she said. “It’s a frenzy.”

In this overheated market, striking a balance between a competitive offer and what you can afford requires a cool head. Here are some questions to consider if you are thinking of going beyond your original budget to buy a home.

How much house can you afford?

A general rule of thumb is to spend only between a quarter and a third of your monthly gross income on your mortgage payment, and between 35% and 45% of your monthly gross income if you include maintenance, taxes and insurance.

“There’s this idea from a balanced investment perspective: You don’t want to be so invested in your house that you don’t have any money left for anything else,” said

Sarah Behr,

a San Francisco-based financial adviser.

If you make $100,000 a year, you should try to spend around $2,340 a month on your mortgage, or a bit more or less, depending on financial goals including spending, paying off debts and saving for retirement. Finally, don’t forget to factor in closing costs, which can range from 2% to 5% of your loan amount.

What if I qualify for a higher loan amount?

Because of the subprime mortgage crisis in 2008, lenders now follow strict debt-to-income guides to calculate whether or not you can afford to buy a home. Since they don’t know your particular financial goals, you could qualify for a lot more home than might be in your best financial interest.

“There’s what’s reasonable and what you should do, and then there’s what you can get away with,” said

Peter Donisanu,

chief financial strategist at

Franklin Madison

Advisors in Pittsburgh. “In the current lending environment, there are banks that will lend you in some cases up to 50% of your gross income. Just because you can borrow that much doesn’t necessarily mean you should.”

For your down payment, 20% of the cost of the home is the gold standard but not always required. If you put down less than 20%, expect to pay mortgage insurance. This can cost from $30 to $70 a month for every $100,000 borrowed, according to Freddie Mac, until you have paid enough principal to hit the 20% equity level.

Whatever you decide to put down, make sure you are reserving six months’ worth of expenses in case of an emergency. Certain repairs and improvements, such as a leaky roof, can’t wait.

A home stood for sale in Brooklyn, N.Y., in March, when there was 28.2% less housing inventory in the U.S. versus a year earlier, according to the National Association of Realtors.



Photo:

Spencer Platt/Getty Images

Are you ready for lifestyle changes?

Look at your budget during a six-month period before the pandemic to get a real sense of what your spending will look like. Then consider what you would be willing to cut out.

Ms. Behr cautions that even if you do commit to lifestyle changes, it is unrealistic to think you’ll be able to curb your spending drastically.

“I don’t think it’s realistic to take people who like to travel to Hawaii every year, and drive a nice car, and assume that they’ll just eat rice and beans or never vacation again,” she says. “People don’t just dramatically change their habits.”

On the flip side, you might realize that you can afford more house than you had originally planned. One of Ms. Behr’s clients who moved from the Bay Area to Houston couldn’t find anything she liked under her original budget of $800,000. After calculating the costs of preschool, yearly vacations, child care and other financial priorities, her client realized her budget could stretch without making huge sacrifices.

The U.S. mortgage market involves some key players that play important roles in the process. Here’s what investors should understand and what risks they take when investing in the industry. WSJ’s Telis Demos explains. Photo: Getty Images/Martin Barraud
What is it going to cost you to wait to buy a home?

If you’re in an area that has been experiencing job growth and a large migration of people—like Austin, for example—then it could be a lot more expensive to buy a home in that area in the future.

But if you’re able to wait things out for a year or two, it might make sense to hold off. If more homes shake loose into the market, creating fewer bidding wars, there could be more opportunities to buy at reasonable prices.

“Certainly prices can continue to go up for months. But, like other asset prices, home values aren’t likely to go up in a straight line forever,” said Mr. Donisanu. “You have buyer’s markets and seller’s markets. We’re in a seller’s market today.”

In Miami,

Anibal Torres,

a mortgage lender at Regions Bank, anticipates there might be more inventory once mortgage forbearance expires in the summer. For clients that can’t find anything in Miami and aren’t willing to look slightly further north or south, he advises that they wait, too.

Why are you buying a home right now?

It’s important to carefully weigh the pros and cons of buying a home at this time: Are you doing it because of pressure from family and friends, or the fear of missing out?

“You could put the money to better use and pay down high-cost debt first instead of stretching your budget,” said Mr. Donisanu, who added that homes in Pittsburgh sometimes receive 20 to 30 bids.

Things like credit-card debt and student loans might be worth paying down before diving into the current real-estate market. “You could put yourself in a better financial situation first before taking that extra stretch,” he said.

Write to Deborah Acosta at [email protected]

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