KeNo's Housing and Economic Portal: Friday July 22 2016 Housing and Economic stories

TOP STORIES:

Luxury home sales plunge in Long Island's tony Hamptons - (www.reuters.com) Overall sales plunged by about half and home prices fell sharply in the second quarter in the toniest enclaves of the Hamptons, New York's weekend haunt for the wealthy, as stock market jitters earlier in the year damped the appetite to buy. Total sales volume in East Hampton fell 53 percent from a year ago to $44.7 million as the median sale price fell 54 percent to $2.38 million, according to realtor Town & Country Real Estate. In Southampton, total sales fell 48 percent from the second quarter of 2015 to $45.3 million, with the median sale price falling 21 percent to $1.65 million, data showed. Only 12 homes were sold in East Hampton and 17 in larger Southampton, due to a lack of inventory and because sales typically lag when the stock market underperforms, said Judi Desiderio, chief executive at Town & Country.

These Sicilian Mortgages Show How Difficult It Is to Rescue Italian Banks - (www.bloomberg.com) Down the cobbled streets of Palermo, past baroque churches and gothic palaces, a lesson is lurking for Italy's government as it hatches a plan to save the country's banks. Sicily’s biggest city is the focal point of a 2007 securitization of non-performing loans, or NPLs, that shows just how long it can take to resolve soured loans in the country. The deal, known as Island Refinancing, should also act as a warning for investors of the dangers of buying similar securities as Italian banks gear up to sell more of them. The Island bonds are backed by two portfolios of NPLs originated by a Sicilian bank that's now a subsidiary of UniCredit SpA. Just under half of the loans originated in the 1990s and they include residential mortgages as well as loans financing hotels and industrial buildings. Unlike other asset-backed securities where interest and principal are paid through cash flows from mortgage or auto credit borrowers, investors in NPL securitizations depend on getting money back from soured loans — typically through the courts.

Soaring Temperatures Will Make It Too Hot to Work, UN Warns - (www.bloomberg.com) Searing temperatures caused by climate change may cost global economies more than $2 trillion by 2030, restricting working hours in some of the poorest parts of the world, according to United Nations research. As many as 43 countries, especially those in Asia, including China, Indonesia, and Malaysia, will experience declines in their economies because of heat stress, says Tord Kjellstrom, a director at the Health and Environment International Trust, based in Nelson, New Zealand. As a result, China’s gross domestic product would be reduced 1 percent and Indonesia’s by 6 percent by 2030. Extreme heat in Southeast Asia already curbs annual working hours by 15 to 20 percent, and that figure could double by 2050 as climate change progresses, according to the paper published in Asia-Pacific Journal of Public Health on Tuesday.

EU Stance in Italian Bank Bail-In Talks Boosted by Top Court - (www.bloomberg.com) The European Union’s top court backed EU guidelines designed to prevent taxpayers from footing the bill for bailing out stricken lenders, strengthening the hand of Brussels regulators as Italy fights to shield some bondholders caught up in the nation’s banking crisis. Tuesday’s decision is a show of support for the European Commission, which updated its crisis rules for banks in 2013 as part of a shift from taxpayer-funded bailouts to bail-in, the practice of imposing possible losses on investors before public money can flow. “Burden-sharing by shareholders and subordinated creditors as a prerequisite for the authorization, by the commission, of state aid to a bank with a shortfall is not contrary to EU law,” according to the EU Court of Justice. The Luxembourg-based court’s decision is binding and can’t be appealed. The “banking communication” sets out rules for when burden-sharing should be applied to shareholders and subordinated creditors, and when it can be avoided. The court said that “burden-sharing measures can be understood as being designed to prevent recourse to state aid merely as a tool to overcome the financial difficulties of the banks concerned.”

London Housing Bubble Melts Down - (www.wolfstreet.com) London Housing Bubble Melts Down. But don’t just blame Brexit. In Central London – the 30 most central postal codes and one of the most ludicrously expensive housing markets in the world – eager home sellers are slashing their asking prices to unload their properties. But even that isn’t working. In the 12 days after the Brexit vote, cuts to asking prices have soared by 163% compared to the 12 days before the vote, according to the Financial Times. Yet sales have plunged 18% from before the Brexit vote. Sales had already taken a big beating before then and are now down a mind-boggling 43% from where they’d been a year ago! So Brexit did it? Um, well, sort of. But it’s more than Brexit. Home prices on a £-per-square-foot basis had peaked in Q2 2014, according to real-estate data provider LonRes. Since then, the market in Central London has been hissing hot air. By Q1 2016, prices for homes above £5 million had dropped 8% from their 2014 peak, and prices for homes from £2 million to £5 million had plunged 10%.

OTHER STORIES:

Coup turmoil endangers Turkey's investment-grade rating - (www.reuters.com)
German and French firms take biggest share of ECB credit splurge - (www.reuters.com)
Bond ETF funds attract $73bn this year - (www.ft.com)