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China’s Covid Protests Began With an Apartment Fire in a Remote Region

As smoke crept through the 21-story apartment building in far western China, panicked messages filled the residents’ chat group. “On the 16th floor, we don’t have enough oxygen,” a woman gasped in an audio message. “Soon our children won’t be OK.”

Another person added a plea about the people in apartment 1901: “They wouldn’t be able to open the door. Can you break into it and take a look? There are many children inside.”

Many who heard the reports were shocked, not by a tragedy in the remote city of Urumqi, but because it had taken firefighters three hours to control the fire. People across the country believed the delays happened in part because of the pandemic restrictions that have been a running source of discontent throughout the country. The impact has reached into the heart of Chinese politics.

Excerpts of residents’ panicked conversation began to circulate on social media, along with videos of the emergency response. They showed fire crews struggling to get around barriers to approach the building. Videos showed fire crews’ water streams falling short of the fire as its flames slithered toward the top of the apartment tower.

Pandemic controls imposed by Chinese authorities around, and possibly inside, the apartment building had delayed the fire response, neighbors and family members of those killed have said. That would mean that the death toll, which many believed was much higher than the official tally of 10, was ultimately in part a product of China’s strict, already widely detested zero-tolerance Covid policy. The government denies all that.

Outrage spilled onto the streets of Urumqi, the capital of the heavily Muslim Chinese region of Xinjiang, where residents had been locked down for more than 100 days. Footage of the fire and the protest in Urumqi spread on Chinese social media and on the popular do-everything app

WeChat.

Firefighters sprayed water on a residential-building fire in the city of Urumqi that killed 10 and triggered protests against Covid-19 lockdowns.



Photo:

Associated Press

To large numbers of Chinese people who have had the experience of being locked inside their own apartments because of Covid controls, the words and images flowing out of Xinjiang conjured a scenario that seemed terrifyingly plausible.

“The 100-plus day lockdown is real. The many deaths from Covid controls are real. Discontent has accumulated and is destined to erupt,” said a user on the Twitter-like

Weibo

platform in one widely endorsed comment about the fire.

Within days, the protest would spread throughout China, growing into the largest show of public defiance the Communist Party has faced since the 1989 pro-democracy protests at Tiananmen Square. The demonstrations have posed a rare challenge to the recently extended rule of Chinese leader

Xi Jinping,

compounding the government’s challenges over how to ease its Covid restrictions.

Large protests erupted across China as crowds voiced their frustration at nearly three years of Covid-19 controls. Here’s how a deadly fire in Xinjiang sparked domestic upheaval and a political dilemma for Xi Jinping’s leadership. Photo: Thomas Peter/Reuters

China has experienced public outrage over its strict Covid-19 restrictions before, most of which the authorities had managed to contain online. Going back nearly three years, the death from the coronavirus of Li Wenliang, a doctor who was punished for warning others about the initial outbreak in Wuhan, unleashed a flood of grief and anger.

This September, a bus crash in Guizhou province that killed 27 people who were being sent to quarantine in the middle of the night raised an outcry about steps taken to control the coronavirus.

Mourners in Hong Kong paid their respects in February 2020 to Chinese physician Li Wenliang. Dr. Li raised early alarms about the coronavirus outbreak in Wuhan but was silenced by police, only to die of the disease himself.



Photo:

jerome favre/EPA/Shutterstock

More recently, after an announcement that Covid restrictions would be eased led to little actual change, public frustration spilled out onto the streets. Workers at

Foxconn Technology Group’s

main plant in the city of Zhengzhou, the world’s largest iPhone factory, clashed with police while protesting a contract dispute with roots in pandemic lockdowns. In some Beijing neighborhoods, people argued with officials over the legality of controls.

In maintaining the lockdowns in Xinjiang, local authorities have been able to rely on the country’s most advanced and suffocating security apparatus, originally built to carry out a campaign of ethnic re-engineering against the region’s 14 million Uyghurs and other Turkic Muslims.

Most if not all of the fire’s victims belonged to these groups, according to relatives and overseas Uyghur activists. Discrimination by China’s Han majority against Turkic minorities has long fueled ethnic tensions in the region, which exploded into deadly race riots in Urumqi in 2009.

Yet in the past week, the sides found common cause, at least temporarily, in anger over the fire.

According to an official account published in the state-run Xinjiang Daily newspaper, the blaze began on the 15th floor, in the apartment of a Uyghur woman who was having a bath in a home spa when a circuit breaker flipped. She flipped it back, then was alerted by her daughter to the smell of smoke. When she re-emerged from the bathroom, flames had risen to the wooden ceiling from the bed.

A community worker arrived just as they were fleeing the flames, according to Xinjiang Daily. He called the fire service at 7:49 p.m. last Thursday, then helped rush the pair and their neighbors downstairs.

A still taken from a social media video shows a fire truck shooting water at the burning residential building in Urumqi. The fire and delays in fighting it proved a catalyst for nationwide protests against Covid-19 lockdowns.



Photo:

REUTERS

At the ground level, burning debris had begun falling over the doorway. Those who couldn’t leave through the front gate in time had to climb out of a window from an apartment, the newspaper reported.

Firefighters didn’t reach some of the apartments until around 90 minutes after they were called, according to posts on the chat group.

Video footage showed that traffic-control structures had to be removed as a line of fire trucks waited, causing delays. The government denied the structures had been installed for pandemic-control reasons.

At a press briefing convened late Friday night as protests unfolded, officials said that three fire trucks from a nearby station arrived at the scene five minutes after the fire was reported, but they were blocked by cars that had to be moved.

On social media, residents said those cars had been parked there for months during the fall Covid lockdown, and the engines couldn’t start.

Li Wensheng, Urumqi’s fire chief, said at the press briefing that some residents’ “self-rescue abilities were weak,” a comment that added to the simmering anger.

The Xinjiang and Urumqi governments didn’t respond to requests for comment.

Han residents of Urumqi led the protests that unfolded in the freezing night air the day following the fire. Uyghur residents have faced the strictest lockdowns and largely stayed home out of fear they would bear the brunt of any reprisals, overseas activists said.

Demonstrations were fueled by the group chat conversations and footage of obstructed fire trucks, as well as by videos circulating online that appeared to capture the screams of people from the smoldering building. “Open the gate!” one woman could be heard shouting in horror in one video.

On Saturday night, several female students stood for hours on the campus of Communication University of China in Nanjing, holding blank sheets of paper in silence, widely taken to be a reference to Chinese censorship. A male student from Xinjiang offered a tribute to the victims in Urumqi and to “all other victims nationwide,” saying he had been a coward for too long.

A man was arrested on a Shanghai street when protests erupted following a deadly apartment-building fire in China’s Xinjiang region.



Photo:

hector retamal/AFP/Getty Images

That same night, dozens of people in Shanghai gathered for a vigil with flowers and candles near a street named after Urumqi. Passersby joined in, and the crowd grew into the hundreds. Just past midnight, some demonstrators began chanting for Mr. Xi to step down.

Similar protests emerged in half a dozen Chinese cities and more than a dozen university campuses in the following days. In several instances, demonstrators chanted “We are all Xinjiang people.” Others called for democracy and free speech.

Chinese authorities have devoted enormous resources to building domestic security and surveillance systems specifically designed to prevent such wide and unified outbreaks of dissent. While protests aren’t uncommon, scholars who study China say they are almost always local events with little capacity to spread.

The Cyberspace Administration of China issued guidance to companies on Tuesday, including Tencent Holdings Ltd. and ByteDance Ltd., the Chinese owner of short video apps TikTok and Douyin, asking them to add more staff to internet censorship teams, according to people familiar with the matter. The companies were also asked to pay more attention to content related to the protests, particularly any information being shared about demonstrations at Chinese universities and the fire.

In imposing its stringent Covid controls, human-rights activists and other observers say, the Communist Party created an issue that China’s citizens only have to look out their front door to understand. Some Uyghurs affected by the fire said the fear and frustration stemming from pandemic controls crossed deep-seated ethnic divides.

Marhaba Muhammad, now a resident of Turkey, said she read news of the fire with a sense of horror. She recognized the building as the home of her aunt, whom she last visited in 2016, shortly before leaving China. The family lived in apartment 1901, the subject of one of the desperate messages left in the residents’ chat group.

Ms. Muhammad said she and her family abroad learned that the aunt, Qemernisahan Abdurahman, 48, had died in the apartment, along with four children age 5 to 13.

Ms. Abdurahman’s husband wasn’t there. He and an elder son were detained as part of the crackdown in Xinjiang in 2017 and now are imprisoned, said Ms. Muhammad and her brother, Abdulhafiz Maiamaitimin, who lives in Switzerland.

“This news is so painful. No one imagined,” she said.

Qemernisahan Abdurahman, 48, with 3 of her four children who died in the fire in Urumqi.



Photo:

Marhaba Muhammad

In apartment 1801, directly below where Ms. Muhammad’s aunt and children died, a woman also died along with her children, according to Abduweli Ayup, a Uyghur activist in Norway who spoke with relatives and neighbors of the fire victims.

Han Chinese don’t have to fear the level of oppression faced by Uyghurs, Ms. Muhammad said, referring to the Chinese government’s detention of upwards of a million Uyghurs and other Turkic Muslims in internment camps and prisons—a practice the United Nations has said may constitute a crime against humanity.

Yet “after the fire, they realized that Uyghurs today would be the Chinese tomorrow,” she said.

Police have targeted protest participants by using some of the surveillance techniques honed in Xinjiang to target Uyghurs. In chat rooms used to organize demonstrations, protesters have reported police scanning the smartphones of pedestrians for overseas apps such as Twitter and Telegram, a common experience on the streets of Urumqi.

A lawyer representing more than a dozen protesters taken by police said she believes many of her clients were tracked through mobile-phone data, another echo of the Uyghur experience in Xinjiang.

On Tuesday, Chinese-Australian activist and cartoonist Badiucao, who goes by one name, reposted a widely shared video of police on the Shanghai subway checking the phones of passengers on Twitter. He appended a single phrase: “Xinjiang-ization.”

Protesters in Beijing lighted candles during a protest against China’s strict zero-Covid measures.



Photo:

Kevin Frayer/Getty Images

Write to Austin Ramzy at austin.ramzy@wsj.com and to Wenxin Fan at Wenxin.Fan@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Home prices are expected to keep rising next year: Here’s where

Americans looking to buy a house next year can expect less competition, more homes to choose from and the highest average mortgage rates in nearly two decades. Here’s what they can’t expect: A widespread fall in prices that would bring relief to priced-out homebuyers.

That’s the major takeaway from Realtor.com’s 2023 Housing Forecast released Wednesday. Home price declines “may not happen as quickly as some have anticipated,” said Realtor.com’s chief economist, Danielle Hale. Prices will be elevated during the first half of 2023 and they’ll probably fall or stay flat during the second half of next year, she told CBS MoneyWatch. 

“We expect, for the year as a whole, 2023 is going to be higher,” Hale said. “Shoppers who want to buy might have to wait a little bit.”

The housing market will soon turn the page on 2022, a year that saw skyrocketing mortgage rates alongside soaring home prices. Some cities in particular — like Boise, Idaho; and Austin, Texas — saw double-digit percent increases in prices. The rising cost of homeownership deterred many aspiring buyers, who have opted instead to continue renting.  

Home prices have fallen in many areas during the tail end of 2022, but mortgage rates have continued to climb. The average interest rate for a 30-year fixed mortgage was about 6.6% this week, more than double what the rate was at the start of the year. 


High mortgage rates drive down home sales

02:09

Realtor.com expects mortgage rates to climb even further at the beginning of next year as the Federal Reserve continues to raise its benchmark interest rate. Mortgage rates could reach as high as 7.4% in the first half of 2023 before settling down to around 7.1% toward the second half of the year, the company said. When considering increases in property prices and loan rates, the typical monthly mortgage payment next year will be around $2,430, 28% higher than this year, Realtor.com predicted.

The rapid price run-up has stymied many would-be buyers. In a recent survey from LendingTree, nearly half of respondents said they were postponing major decisions, either renting for longer period of time or putting off major home renovations.

Mortgage rates grew so fast this year that they made it difficult for buyers to figure out how much home they could afford, Hale said. In 2023, interest rates probably won’t fluctuate as much, she said. 

“Having more stability will make it easier for buyers when setting the right budget,” she said. “And that should help encourage people to get back into the housing market.”


30-year fixed-rate mortgage average reaches highest level since 2001

03:05

Largest metropolitan areas

Home prices will likely increase in the nation’s 100 largest metropolitan areas, Realtor.com’s report said. Expect 10% hikes in Grand Rapids, Michigan; Portland, Maine; Providence, Rhode Island; Spokane, Washington and Worcester, Massachusetts.

Higher prices will likely keep away many potential homebuyers, causing rent prices to jump 6.3% and the number of homes sold to decline by 14%, Realtor.com said. However, housing inventory — the number of homes available for sale — is expected to climb nearly 23% next year, potentially giving a wider variety of dwellings to choose from to those who can afford to buy.

To be sure, all of these predictions could change depending how the Federal Reserve handles its fight against inflation next month and early next year, Hale said. The Fed has raised its benchmark rate six times this year, and, with each hike, mortgage rates have climbed as well. Hale and other economists expect the Fed to raise its rate again next month, but perhaps by not as much as previous increases. 

“The housing market has borne the brunt of the Fed’s attempt to control inflation,” Sean Black, CEO of mortgage lender Knock, said in his company’s 2023 housing prediction. “Sellers still hold the advantage in a majority of the nation’s largest metros, and many will continue to favor sellers well into 2023.”

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Airbnb launches first hosting platform for apartment tenants

Airbnb is partnering with several major landlords and management companies to list designated apartment buildings where renters are allowed to offer short-term sublets on the site.

The company said Wednesday that a new page on its website will list so-called Airbnb-friendly buildings, which will give tenants the option to host their apartments just as homeowners can.

Typically, rental buildings prohibit tenants from subletting for short stays.

To start, Airbnb is showcasing 175 apartment buildings in more than 25 major markets, including Los Angeles, San Francisco, Atlanta, Dallas, Houston, Denver, Seattle and Phoenix. Some cities, such as New York City and Washington, D.C., are not available due to local restrictions on short-term rentals.

The platform will help tenants host their rentals, and help the buildings attract tenants who may want to host. How much tenants could earn will vary.

“It depends on the building, depends on the location, there are a lot of different assumptions,” Nathan Blecharczyk, co-founder of Airbnb.

Given how much apartment rents have climbed over the past few years, along with home prices and other rising prices, tenants are increasingly looking for ways to supplement their incomes to make their monthly payments. Rents are starting to ease, but are still up 10% from a year ago, according to Apartment List.

Last year, rents rose more than 15% from the year before.

The new page on Airbnb’s website will also offer a calculator to show how much money the tenant can potentially make per month. The calculation changes depending on the number of bedrooms and the number of nights each building allows, as well as the potential asking rents, given the building’s amenities.

Apartment buildings can also charge the primary tenant a fee of up to 20% of the price of each Airbnb use. For those buildings that have been in test mode so far, Airbnb said tenants have hosted an average of nine nights per month with an average income of $900 per month.

All hosts in the participating buildings must be the primary resident, and the buildings can restrict how many nights per month the apartment can be sublet. That’s generally between 80 and 120 nights per year. The restrictions, which can be enforced since the transactions all take place on the portal, are intended to prevent investors from taking part and subletting the apartments full-time.

The apartment building owner or management company also have the right to review the listings before they go live and deactivate a listing if it does not comply with the building’s standards. They can also mandate a government ID from all potential subletters.

Equity Residential and UDR, which are apartment real estate investment trusts, or REITs, and Greystar, the largest apartment management company in the U.S.,  are among the major names offering apartments with hosting privileges on the new Airbnb platform.

“We believe this platform will provide the right tools for both owners and residents to effectively manage short-term rental activity without impacting overall housing supply,” a Greystar representative said.  “We are collaborating with Airbnb on this innovative approach to participate in the 21st century sharing economy in a thoughtful way.”  

CNBC producer Lisa Rizzolo contributed to this story.

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20 dividend stocks with high yields that have become more attractive right now

Income-seeking investors are looking at an opportunity to scoop up shares of real estate investment trusts. Stocks in that asset class have become more attractive as prices have fallen and cash flow is improving.

Below is a broad screen of REITs that have high dividend yields and are also expected to generate enough excess cash in 2023 to enable increases in dividend payouts.

REIT prices may turn a corner in 2023

REITs distribute most of their income to shareholders to maintain their tax-advantaged status. But the group is cyclical, with pressure on share prices when interest rates rise, as they have this year at an unprecedented scale. A slowing growth rate for the group may have also placed a drag on the stocks.

And now, with talk that the Federal Reserve may begin to temper its cycle of interest-rate increases, we may be nearing the time when REIT prices rise in anticipation of an eventual decline in interest rates. The market always looks ahead, which means long-term investors who have been waiting on the sidelines to buy higher-yielding income-oriented investments may have to make a move soon.

During an interview on Nov 28, James Bullard, president of the Federal Reserve Bank of St. Louis and a member of the Federal Open Market Committee, discussed the central bank’s cycle of interest-rate increases meant to reduce inflation.

When asked about the potential timing of the Fed’s “terminal rate” (the peak federal funds rate for this cycle), Bullard said: “Generally speaking, I have advocated that sooner is better, that you do want to get to the right level of the policy rate for the current data and the current situation.”

Fed’s Bullard says in MarketWatch interview that markets are underpricing the chance of still-higher rates

In August we published this guide to investing in REITs for income. Since the data for that article was pulled on Aug. 24, the S&P 500
SPX,
-0.50%
has declined 4% (despite a 10% rally from its 2022 closing low on Oct. 12), but the benchmark index’s real estate sector has declined 13%.

REITs can be placed broadly into two categories. Mortgage REITs lend money to commercial or residential borrowers and/or invest in mortgage-backed securities, while equity REITs own property and lease it out.

The pressure on share prices can be greater for mortgage REITs, because the mortgage-lending business slows as interest rates rise. In this article we are focusing on equity REITs.

Industry numbers

The National Association of Real Estate Investment Trusts (Nareit) reported that third-quarter funds from operations (FFO) for U.S.-listed equity REITs were up 14% from a year earlier. To put that number in context, the year-over-year growth rate of quarterly FFO has been slowing — it was 35% a year ago. And the third-quarter FFO increase compares to a 23% increase in earnings per share for the S&P 500 from a year earlier, according to FactSet.

The NAREIT report breaks out numbers for 12 categories of equity REITs, and there is great variance in the growth numbers, as you can see here.

FFO is a non-GAAP measure that is commonly used to gauge REITs’ capacity for paying dividends. It adds amortization and depreciation (noncash items) back to earnings, while excluding gains on the sale of property. Adjusted funds from operations (AFFO) goes further, netting out expected capital expenditures to maintain the quality of property investments.

The slowing FFO growth numbers point to the importance of looking at REITs individually, to see if expected cash flow is sufficient to cover dividend payments.

Screen of high-yielding equity REITs

For 2022 through Nov. 28, the S&P 500 has declined 17%, while the real estate sector has fallen 27%, excluding dividends.

Over the very long term, through interest-rate cycles and the liquidity-driven bull market that ended this year, equity REITs have fared well, with an average annual return of 9.3% for 20 years, compared to an average return of 9.6% for the S&P 500, both with dividends reinvested, according to FactSet.

This performance might surprise some investors, when considering the REITs’ income focus and the S&P 500’s heavy weighting for rapidly growing technology companies.

For a broad screen of equity REITs, we began with the Russell 3000 Index
RUA,
-0.18%,
which represents 98% of U.S. companies by market capitalization.

We then narrowed the list to 119 equity REITs that are followed by at least five analysts covered by FactSet for which AFFO estimates are available.

If we divide the expected 2023 AFFO by the current share price, we have an estimated AFFO yield, which can be compared with the current dividend yield to see if there is expected “headroom” for dividend increases.

For example, if we look at Vornado Realty Trust
VNO,
+1.01%,
the current dividend yield is 8.56%. Based on the consensus 2023 AFFO estimate among analysts polled by FactSet, the expected AFFO yield is only 7.25%. This doesn’t mean that Vornado will cut its dividend and it doesn’t even mean the company won’t raise its payout next year. But it might make it less likely to do so.

Among the 119 equity REITs, 104 have expected 2023 AFFO headroom of at least 1.00%.

Here are the 20 equity REITs from our screen with the highest current dividend yields that have at least 1% expected AFFO headroom:

Company Ticker Dividend yield Estimated 2023 AFFO yield Estimated “headroom” Market cap. ($mil) Main concentration
Brandywine Realty Trust BDN,
+1.82%
11.52% 12.82% 1.30% $1,132 Offices
Sabra Health Care REIT Inc. SBRA,
+2.02%
9.70% 12.04% 2.34% $2,857 Health care
Medical Properties Trust Inc. MPW,
+1.90%
9.18% 11.46% 2.29% $7,559 Health care
SL Green Realty Corp. SLG,
+2.18%
9.16% 10.43% 1.28% $2,619 Offices
Hudson Pacific Properties Inc. HPP,
+1.55%
9.12% 12.69% 3.57% $1,546 Offices
Omega Healthcare Investors Inc. OHI,
+1.30%
9.05% 10.13% 1.08% $6,936 Health care
Global Medical REIT Inc. GMRE,
+2.03%
8.75% 10.59% 1.84% $629 Health care
Uniti Group Inc. UNIT,
+0.28%
8.30% 25.00% 16.70% $1,715 Communications infrastructure
EPR Properties EPR,
+0.62%
8.19% 12.24% 4.05% $3,023 Leisure properties
CTO Realty Growth Inc. CTO,
+1.58%
7.51% 9.34% 1.83% $381 Retail
Highwoods Properties Inc. HIW,
+0.76%
6.95% 8.82% 1.86% $3,025 Offices
National Health Investors Inc. NHI,
+1.90%
6.75% 8.32% 1.57% $2,313 Senior housing
Douglas Emmett Inc. DEI,
+0.33%
6.74% 10.30% 3.55% $2,920 Offices
Outfront Media Inc. OUT,
+0.70%
6.68% 11.74% 5.06% $2,950 Billboards
Spirit Realty Capital Inc. SRC,
+0.72%
6.62% 9.07% 2.45% $5,595 Retail
Broadstone Net Lease Inc. BNL,
-0.93%
6.61% 8.70% 2.08% $2,879 Industial
Armada Hoffler Properties Inc. AHH,
-0.08%
6.38% 7.78% 1.41% $807 Offices
Innovative Industrial Properties Inc. IIPR,
+1.09%
6.24% 7.53% 1.29% $3,226 Health care
Simon Property Group Inc. SPG,
+0.95%
6.22% 9.55% 3.33% $37,847 Retail
LTC Properties Inc. LTC,
+1.09%
5.99% 7.60% 1.60% $1,541 Senior housing
Source: FactSet

Click on the tickers for more about each company. You should read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

The list includes each REIT’s main property investment type. However, many REITs are highly diversified. The simplified categories on the table may not cover all of their investment properties.

Knowing what a REIT invests in is part of the research you should do on your own before buying any individual stock. For arbitrary examples, some investors may wish to steer clear of exposure to certain areas of retail or hotels, or they may favor health-care properties.

Largest REITs

Several of the REITs that passed the screen have relatively small market capitalizations. You might be curious to see how the most widely held REITs fared in the screen. So here’s another list of the 20 largest U.S. REITs among the 119 that passed the first cut, sorted by market cap as of Nov. 28:

Company Ticker Dividend yield Estimated 2023 AFFO yield Estimated “headroom” Market cap. ($mil) Main concentration
Prologis Inc. PLD,
+1.29%
2.84% 4.36% 1.52% $102,886 Warehouses and logistics
American Tower Corp. AMT,
+0.68%
2.66% 4.82% 2.16% $99,593 Communications infrastructure
Equinix Inc. EQIX,
+0.62%
1.87% 4.79% 2.91% $61,317 Data centers
Crown Castle Inc. CCI,
+1.03%
4.55% 5.42% 0.86% $59,553 Wireless Infrastructure
Public Storage PSA,
+0.11%
2.77% 5.35% 2.57% $50,680 Self-storage
Realty Income Corp. O,
+0.26%
4.82% 6.46% 1.64% $38,720 Retail
Simon Property Group Inc. SPG,
+0.95%
6.22% 9.55% 3.33% $37,847 Retail
VICI Properties Inc. VICI,
+0.41%
4.69% 6.21% 1.52% $32,013 Leisure properties
SBA Communications Corp. Class A SBAC,
+0.59%
0.97% 4.33% 3.36% $31,662 Communications infrastructure
Welltower Inc. WELL,
+2.37%
3.66% 4.76% 1.10% $31,489 Health care
Digital Realty Trust Inc. DLR,
+0.69%
4.54% 6.18% 1.64% $30,903 Data centers
Alexandria Real Estate Equities Inc. ARE,
+1.38%
3.17% 4.87% 1.70% $24,451 Offices
AvalonBay Communities Inc. AVB,
+0.89%
3.78% 5.69% 1.90% $23,513 Multifamily residential
Equity Residential EQR,
+1.10%
4.02% 5.36% 1.34% $23,503 Multifamily residential
Extra Space Storage Inc. EXR,
+0.29%
3.93% 5.83% 1.90% $20,430 Self-storage
Invitation Homes Inc. INVH,
+1.58%
2.84% 5.12% 2.28% $18,948 Single-family residental
Mid-America Apartment Communities Inc. MAA,
+1.46%
3.16% 5.18% 2.02% $18,260 Multifamily residential
Ventas Inc. VTR,
+1.63%
4.07% 5.95% 1.88% $17,660 Senior housing
Sun Communities Inc. SUI,
+2.09%
2.51% 4.81% 2.30% $17,346 Multifamily residential
Source: FactSet

Simon Property Group Inc.
SPG,
+0.95%
is the only REIT to make both lists.

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Bank of America CEO predicts two years of pain ahead in the housing market


New York
CNN Business
 — 

The CEO of one of the nation’s largest banks is preparing for an economic downturn in 2023. But he’s also hopeful that the likely recession will be brief and “mild.”

Bank of America

(BAC) CEO Brian Moynihan said in an exclusive interview with Poppy Harlow on “CNN This Morning” Tuesday that there is a lot of uncertainty in the global economy due to the potential US freight railroad strike, Russia’s war with Ukraine and Covid shutdowns in China.

So an economic pullback shouldn’t be a major surprise. But Moynihan told Harlow that the worst-case fears for the economy may not materialize — thanks to the continued resilience of American shoppers.

“That was predicted to happen earlier this year. There was going to be a real slowdown,” Moynihan said. “The Fed was going to raise rates and it’s all pushed out largely because of the US consumer.”

Moynihan’s comments about the economy are decidedly more bullish than some of his peers.

JPMorgan Chase

(JPM) CEO Jamie Dimon said earlier this summer that Americans should brace for an economic “hurricane.” And Goldman Sachs

(GS) CEO David Solomon told Harlow in July that there’s a “good chance” the United States has yet to reach peak inflation.

Still, Moynihan is concerned that there could be more tough times ahead for the housing market. Mortgage rates have skyrocketed this year due to the Federal Reserve’s series of aggressive interest rate hikes. That has made it difficult — if not impossible — for many younger Americans to buy a first home.

“This is the toughest thing. You have to slow down the economy. You have to slow down inflation. And the way you do that is raising interest rates,” Moynihan said. “The intended outcome of [the Fed’s] policies doesn’t feel good when you are trying to buy a home.”

Moynihan told Harlow that there could be two years of pain in the housing market before activity returns to normal.

But despite worries about the housing market, Moynihan said he’s still optimistic that the US economy will continue to lead the global recovery, especially given concerns about China’s recent Covid outbreak and the intensifying protests over the country’s strict lockdown policies.

“I think our economy is holding on better than the rest of the world,” he said.

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UK property demand down 44% since market-rocking mini budget: Zoopla

Estate agents “Sold” and “For Sale” signs outside residential properties in the Maida Vale district of London, UK, on Thursday, June 30, 2022.

Bloomberg | Bloomberg | Getty Images

Demand for U.K. residential properties has nearly halved following September’s government budget that spooked financial markets and toppled the prime minister, research Monday showed.

The fiscal package, announced Sept. 23, caused a sell-off in bonds and led to predictions of a potential housing market crash as interest rate expectations rose sharply. In the wake of the budget, a record number of mortgage deals were pulled and many lenders paused offerings as they assessed the volatility.

Buyer demand fell 44% year-on-year in the four weeks to Nov. 20, according to property website Zoopla, while new property sales declined 28%. The stock of homes for sale was up 40% over the same period.

Zoopla said demand had fallen to levels usually seen over Christmas — among the quietest time for property markets — as buyers waited to assess the outlook for mortgages, along with their own jobs and wages.

Richard Donnell, Zoopla’s executive director for research, said the company expected house price falls of up to 5% in 2023.

“But the number of sales going through will remain buoyant for a range of structural, demographic and economic factors,” he said, including ongoing housing scarcity, with the average number of homes on offer per estate agency still a fifth lower than before the pandemic.

Although a fall in house prices is widely predicted, the company’s predictions are less bearish than others.

Economists at Pantheon Macroeconomics forecast a decline of 8% over the next year, while Nationwide, one of the U.K.’s largest mortgage providers, said earlier this month that house prices could collapse by up to 30% in its worst-case scenario.

In contrast, the U.K.’s Office for Budget Responsibility has said it expects house prices to drop 1.2% next year and by 5.7% in 2024.

It comes after a desire for different kinds of property during the pandemic, the suspension of a purchase tax on homes under $500,000 from July 2020 to July 2021 and ongoing supply shortages saw house prices rocket to record highs.

Zoopla said there was currently a “widespread” repricing of homes occurring, but that it was modest in size. It puts U.K. house price growth at 7.8% year-on-year.

Its report described market trends as a “shake-out rather than a pre-cursor to a housing crash” and said the mini budget had “delivered a shock” to sellers and buyers.

“All the leading supply and demand indicators we measure continue to point to a rapid slowdown from very strong market conditions. We do not see any evidence of forced sales or the need for a large, double digit reset in U.K. house prices in 2023,” its report said.

Meanwhile, private rental costs in Britain have risen to record highs amid intense competition for properties, according to separate data published by the website Rightmove last month.

It found rents in London were up 16.1% year-on-year, the highest growth of any region on record.

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Indonesia needs earthquake-proof houses. Building them is a huge challenge



CNN
 — 

A deadly earthquake that reduced buildings to rubble in West Java, Indonesia has once again exposed the dangers of living in poorly built homes in one of the most seismically active zones on the planet.

Since Monday’s quake, survivors have been sleeping rough or in shelters away from homes vulnerable to collapse as aftershocks rattle buildings already compromised by the 5.9-magnitude quake that killed at least 310 people, according to the head of country’s National Agency for Disaster Management (BNPB).

A further 24 people remain missing, Lieutenant General Suharyanto said Friday.

The shallow depth of the earthquake – just 10 kilometers (6 miles) – added to the pressure on structures across West Java, where more than a million people were exposed to very strong tremors, according to the United States Geological Survey (USGS).

Visiting the site on Tuesday, Indonesian President Joko Widodo promised that damaged homes – more than 56,000 of them – would be rebuilt to be earthquake-resistant.

“The houses affected by this earthquake are required to use earthquake-resistant building standards by the Minister of Public Works and Public Housing,” he said. “These earthquakes happen every 20 years. So the houses should be earthquake-resistant.”

But in a developing nation where about 43% of the population live in rural areas, in largely unsafe and poorly constructed homes, the task of making earthquake-resistant buildings remains a huge challenge.

As of Thursday, more than 61,000 people were displaced, according to the National Agency for Disaster Management (BNPB) – and experts say the damage could have been mitigated by proper infrastructure.

Indonesia, an archipelago nation of more than 270 million people, sits along the Ring of Fire – a band around the Pacific Ocean where most active volcanoes lie and most earthquakes happen as tectonic plates push against each other, causing tremors.

Of the 310 people killed in Monday’s quake, at least 100 were children, many of whom were in school when the quake struck. A 6-year-old boy was pulled alive from the rubble of his home two days later, but many others weren’t so lucky.

The quake shook the foundations of buildings, causing the concrete structures to collapse and roofs to cave in. Photos showed broken scraps of metal, timber and bricks. Most of the people killed were crushed or trapped beneath debris, according to West Java’s governor, Ridwan Kamil. Others were killed in landslides.

Cleo Gaida Salima said when she heard about the quake, she tried to phone her mother in Cugenang, Cianjur, but when she failed to answer, she decided to drive there from her home in Bandung by motorbike.

The journey – about 65 kilometers (40 miles) – usually takes less than two hours. But with roads completely blocked by landslides, it took her 24.

“All the houses were covered with dirt and mud,” she said, adding that she was reunited with her family who survived the quake.

“We all cried with emotion and happiness,” she said. “Our whole family immediately ran out to save themselves. The earthquake was very strong.”

In Indonesia, houses were traditionally constructed from organic building materials including timber, bamboo and thatched grasses, owing to the hot and humid climate in the country.

These were considered to be sustainable homes, and largely durable in the event of an earthquake. However, increased deforestation and the high cost of timber led people to choose alternative materials, according to a 2009 study about post-disaster reconstruction in Indonesia from The Architectural Science Association.

More and more homes were built of brick and concrete, and while the facade may have appeared modern, underneath, the construction was poorly held together, the study said.

Moreover, the low quality of concrete and the poor steel reinforcing makes these structures increasingly susceptible to collapsing during a quake – while causing maximum injury owing to the weight of the materials, the report said.

Earthquake-resistant structures are designed to protect buildings from collapse and can work in two ways: by making buildings stronger, or by making them more flexible, so they sway and slide above the shaking ground rather than crumbling.

Architects have been developing this technology for decades, and engineers often adapt materials and techniques local to the region.

Architect Martijn Schildkamp, founder and director of Smart Shelter Consultancy, said his company helped to build about 20 schools in earthquake-prone Pokhara, in Nepal’s central region, seven years before a major quake.

When the quake hit in 2015, more than 8,000 people were killed, but the schools, made from traditional techniques and materials from the landscape, like rubble stone masonry, did not crumble.

“Our schools did not collapse,” he said. “They suffered just some cosmetic damage.”

He said in developed countries like Japan, knowledge, infrastructure and money are readily available to build earthquake-resistant buildings, but the high cost of building such structures makes it more difficult in developing countries.

In Nepal, many people build their homes with mud mortar, which is very brittle, Schildkamp said. “If it is completely unreinforced, there’s no extra strengthening in the building. This is what will collapse very easily,” he said.

Schildkamp’s team used cement mortar and inserted horizontal reinforcement poles into the structure to strengthen it, instead of vertical ones.

Building regulations should prevent the proliferation of shoddily built structures, but in some countries not enough is being done by governments to enforce the rules, Schildkamp said.

“We need knowledge and strategy in these countries. And we need governments to make these building codes mandatory,” he said.

In West Java, hope is fading of pulling more people alive from the quake debris.

Aftershocks are also complicating efforts, and residents are now living in fear the next disaster could once again topple their unstable homes.

While President Widodo said the government would provide compensation of up to about $3,200 each for owners of heavily damaged homes, many families in Cianjur lost everything. And now, they face the nearly impossible task of rebuilding.

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Mortgage rates fall for the second week in a row

Mortgage rates dropped again this week, after plunging nearly half a percentage point last week.

The 30-year fixed-rate mortgage averaged 6.58% in the week ending November 23, down from 6.61% the week before, according to Freddie Mac. A year ago, the 30-year fixed rate was 3.10%.

Mortgage rates have risen throughout most of 2022, spurred by the Federal Reserve’s unprecedented campaign of hiking interest rates in order to tame soaring inflation. But last week, rates tumbled amid reports that indicated inflation may have finally reached its peak.

“This volatility is making it difficult for potential homebuyers to know when to get into the market, and that is reflected in the latest data which shows existing home sales slowing across all price points,” said Sam Khater, Freddie Mac’s chief economist.

The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey only includes borrowers who put 20% down and have excellent credit. But many buyers who put down less money upfront or have less than perfect credit will pay more than the average rate.

The average weekly rates, typically released by Freddie Mac on Thursday, are being released a day early due to the Thanksgiving holiday.

Mortgage rates tend to track the yield on 10-year US Treasury bonds. As investors see or anticipate rate hikes, they make moves which send yields higher and mortgage rates rise.

The 10-year Treasury has been hovering in a lower range of 3.7% to 3.85% since a pair of inflation reports indicating prices rose at a slower pace than expected in October were released almost two weeks ago. That has led to a big reset in investors’ expectations about future interest rate hikes, said Danielle Hale, Realtor.com’s chief economist. Prior to that, the 10-year Treasury had risen above 4.2%.

However, the market may be a bit too quick to celebrate the improvement in inflation, she said.

At the Fed’s November meeting, chairman Jerome Powell pointed to the need for ongoing rate hikes to tame inflation.

“This could mean that mortgage rates may climb again, and that risk goes up if next month’s inflation reading comes in on the higher side,” Hale said.

While it’s difficult to time the market in order to get a low mortgage rate, plenty of would-be homebuyers are seeing a window of opportunity.

“Following generally higher mortgage rates throughout the course of 2022, the recent swing in buyers’ favor is welcome and could save the buyer of a median-priced home more than $100 per month relative to what they would have paid when rates were above 7% just two weeks ago,” said Hale.

As a result of the drop in mortgage rates, both purchase and refinance applications picked up slightly last week. But refinance activity is still more than 80% below last year’s pace when rates were around 3%, according to the Mortgage Bankers Association weekly report.

However, with week-to-week swings in mortgage rates averaging nearly three times those seen in a typical year and home prices still historically high, many potential shoppers have pulled back, said Hale.

“A long-term housing shortage is keeping home prices high, even as the number of homes on the market for sale has increased, and buyers and sellers may find it more challenging to align expectations on price,” she said.

In a separate report released Wednesday, the US Department of Housing and Urban Development and the US Census Bureau reported that new home sales jumped in October, rising 7.5% from September, but were down 5.8% from a year ago.

While that was higher than predicted and bucked a trend of recently falling sales, it’s still below a year ago. Home building has been historically low for a decade and builders have been pulling back as the housing market shows signs of slowing.

“New home sales beat expectations, but a reversal of the general downward trend is doubtful for now given high mortgage rates and builder pessimism,” said Robert Frick, corporate economist at Navy Federal Credit Union.

Despite a general trend of falling sales, prices of new homes remain at record highs.

The median price for a newly constructed home was $493,000 up 15%, from a year ago – the highest price on record.

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Mortgage demand rises as interest rates decline slightly

A home, available for sale, is shown on August 12, 2021 in Houston, Texas.

Brandon Bell | Getty Images

Mortgage applications rose 2.2% last week compared with the previous week, prompted by a slight decline in interest rates, according to the Mortgage Bankers Association’s seasonally adjusted index.

Refinance applications, which are usually most sensitive to weekly rate moves, rose 2% for the week but were still 86% lower than the same week one year ago. Even with interest rates now back from their recent high of 7.16% a month ago, there are precious few who can still benefit from a refinance — just 220,000, according to real estate data firm Black Knight.

Mortgage applications to purchase a home rose 3% for the week, but they were down 41% from a year ago. Some potential buyers may now be venturing back in, hearing that there is less competition and more negotiating power, but there is still a shortage of homes for sale and prices have not come down significantly.

Rates are still twice what they were at the beginning of the year, but they eased somewhat last week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.67% from 6.90%, with points increasing to 0.68 from 0.56 (including the origination fee) for loans with a 20% down payment.

“The decrease in mortgage rates should improve the purchasing power of prospective homebuyers, who have been largely sidelined as mortgage rates have more than doubled in the past year,” Joel Kan, an MBA economist, said in a release. “With the decline in rates, the ARM share [adjustable-rate] of applications also decreased to 8.8% of loans last week, down from the range of 10% and 12% during the past two months.”

Mortgage rates haven’t moved at all this week, as the upcoming Thanksgiving holiday tends to weigh on volumes.

“It’s not that things aren’t moving. They just aren’t moving like normal,” said Matthew Graham, chief operating officer at Mortgage News Daily. “Expect things to get back closer to normal next week, but for the market to continue to wait until December 13 and 14 for the biggest moves.”

That’s when the government releases its next major report on inflation and the Federal Reserve announces its next move on interest rates.

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Inside NYC’s Grinnell co-op where units rarely list for sale

The Grinnell, a stately co-op in upper Manhattan, might just be the city’s best-kept secret — for now.

Replete with spacious homes, a strong sense of community and maintenance fees that are considerably less than in comparable buildings, the property stands in a sleepy corner of Washington Heights, at 800 Riverside Drive. It also rarely has openings — but house hunters and otherwise property-curious locals now have their best chance in years to become members of this exclusive, and under-the-radar, club.

In this 83-unit structure, where residents typically spend decades, there are now an unprecedented four apartments for sale. When they trade hands, they’ll mark the first sales at the Grinnell since 2020, according to StreetEasy, when only two units sold. In 2019, just three units found new owners.

The Grinnell is home to units with dazzling older-world features — such as this wood-paneled dining room inside a $1.99 million listing for unit GRI.
Hauseit
Unit GRI’s kitchen features restored original oak cabinetry.
Hauseit
Hardwood floors and moldings galore round out the features of unit GRI.
Hauseit

“I don’t recall when [four homes] were on the market at the same time,” said Bruce Robertson, 71, a long-time Grinnell resident. Robertson, also a Compass broker, represents the six-room unit 8H, which listed on Saturday for $1.59 million — its first time up for sale in 45 years. Aptly called a “hidden treasure” in its marketing description, this top-floor spread has three bedrooms, a 23-plus-foot-long great room, a windowed kitchen with the original glass-fronted cabinetry, a formal dining room with wainscoting and views of the George Washington Bridge.

One day later, according to StreetEasy, a two-bedroom spread with one bathroom — and tony touches such as picture moldings — listed for $1 million with RE/MAX Sparrow Realty.

Among the other availabilities: Unit GRI, an eight-room duplex, which now asks $1.99 million after listing for $2.2 million in April. It boasts three bedrooms and two full bathrooms. Features include French doors, a wood-paneled dining room, original oak floors and cabinetry, and mirrored mahogany doors. (Instead of a traditional listing, this home — represented by Hauseit — is an assisted for-sale-by-owner offering.)

There’s even unit 2A — a 1,800-square-foot three-bedroom with French doors, crown moldings, and bonus spaces including a library, a foyer, a maid’s room and a pantry. It listed in September for $1.35 million — and is represented by Jamella Swift of Keller Williams NYC.

The light-filled unit 2A, listed for $1.35 million, has French doors.
Keller Williams NYC
Unit 2A also has wainscoting and chic molding details.
Keller Williams NYC

Occupying a full triangle-shaped block between 157th and 158th streets — and Riverside Drive and Edward Morgan Place — the Grinnell offers homes of a bygone New York era. The smallest apartment has five rooms and measures 1,100 square feet; the largest has more than 10 rooms and spans 2,700 square feet. Built in 1911 and designed by architects Schwartz & Gross, it’s a history-rich standout with a Mediterranean-style façade, a porte-cochere entryway to an interior courtyard — and other classic interior details including hardwood floors, leaded glass transoms and 10-foot ceilings. Amenities include a gym, a bike room and a rooftop terrace.

Apart from the grande-dame glamour and million-dollar asking prices, many New Yorkers don’t know it’s a Housing Development Fund Corporation (HDFC) co-op — meaning it’s part of the city’s affordable housing stock and subject to certain income restrictions for home purchases. It’s one of the most successful co-ops of its kind, and that “has worked well to maintain the Grinnell’s large infrastructure over the years,” said Robertson.

That said, the Grinnell is the uptown early-20th century apartment building fit for savvy New York royalty who, with the proper income requirements, can act now to get a coveted deal. It’s no surprise residents end up staying put.

The Grinnell stands on a full triangle-shaped block on Riverside Drive in Washington Heights.
Stefano Giovannini
The mighty building commands views in all directions, this one looking north over West 158th Street.
Stefano Giovannini
The Grinnell dates to 1911.
Stefano Giovannini

“People who purchase in the Grinnell don’t move because it’s a wonderful place to live,” said Robertson, who’s also a former member of the building’s board and has sold 10 units in the building over the years.

Robertson has lived in a two-bedroom, one-bathroom spread with his wife, also a real estate broker, for the past 22 years. They found the apartment on a whim after getting priced out of their Upper East Side condo and immediately knew the building was special. He loves the south-facing windows, bright light, solid construction, high ceilings, hardwood floors and the quiet.

“All in all, it’s hard to encapsulate how the Grinnell is so special and how that came to be. Mostly because it truly is a community of cohesive residents, many families who’ve grown, now being replaced by young families, who care about each other,” Robertson said. “We don’t always agree about issues facing any 102-year-old landmarked building of its size and scope. But we work through them and are proud of a beautiful structure that looks and feels like living in a castle, in a bucolic-feeling area with wonderful neighbors in other comparable buildings.”

Robertson has sold nearly a number of units in the Grinnell over the years.
Stefano Giovannini
Robertson is also a 22-year resident of the building.
Stefano Giovannini
A virtually staged image of unit 8H, which Robertson represents.
Tina Gallo Photography

Other long-time residents agree it’s a building with a lovely spirit.

Bruce Kanze, 74, an adjunct lecturer at the nearby City College of New York, moved to the Grinnell in December 1977 and lived in apartment 3B. He moved to 8F in March 1982, an eight-room, two-bedroom, two-bathroom apartment, with his wife and three kids, where he’s lived ever since.

“There’s a sense of belonging to a community, and we love our neighbors,” Kanze said. He recalled fond memories of climbing the mulberry tree in front of the building and picking berries with his daughters, of setting up summer lemonade stands with them — and of crab fests with the neighbors. “We’d buy bushels and cover the tables with paper bags and see who had the highest pile of crab shells,” he added.

But another reason why people stay so long in the Grinnell is because of its HDFC title. It’s one of 1,100 HDFC co-ops in the city, where residents are shareholders and own the building collectively. The status dates to 1982 when residents successfully bought the Grinnell from the city after a campaign that included the slogan, “Buildings for People, Not for Profit.” Apart from the tony interiors and like-minded community, part of the conditions for ownership include a flip tax, which also keeps residents put. The funds from it go towards the building’s capital reserve.

Unit 8H, on the top floor, also has great exposure to light, in addition to handsome hardwood floors and moldings.
Stefano Giovannini
The kitchen inside unit 8H.
Tina Gallo Photography
The wood-paneled dining room inside 8H.
Stefano Giovannini
8H has northwest views of the George Washington Bridge.
Stefano Giovannini

In addition to the income restrictions, a real-estate tax abatement makes the maintenance less than other co-ops of comparable size and stature. By contrast, a four-room, 2,000-square-foot apartment at 116 Pinehurst Ave. will set you back $1.58 million with $3,400 a month in maintenance. Similarly, a three-bedroom co-op in the century-old Riviera across West 157th Street from the Grinnell is going for $1.79 million with $2,174 a month in maintenance. Robertson’s $1.59 million listing, for instance, has $1,448 per month in maintenance. Both unit GRI and 2A have $1,450 monthly fees, StreetEasy shows.

Wayne Benjamin, 64, an architect who bought a 1,300-square foot, two-bedroom co-op in the Grinnell in 1987 for just $85,000 — about $228,000 today — has no plans to go anywhere. He enjoys cooking in his full-sized kitchen and listening to music on his vinyl record player — or jazz on an old-fashioned FM radio with a pair of speakers. He also enjoys rare New York City cross-ventilation, as every room in the apartment has exposures — so he can open the dining room windows, which face the courtyard, and the French doors and windows in the living room across the hallway, which face the street, and enjoy breezes year-round.

But in the end, it’s the people.

“It comes down to what’s important,” Benjamin said about the pull the Grinnell has keeping him there. “There are things that you share in common with others — common concerns and interests that you come together to address. That is what creates the sense of community that can make a building or neighborhood a vibrant wonderful place to live.”

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