Real estate market conditions

After a few red-hot years for home sellers, rising mortgage and interest rates along with widespread economic uncertainty have cooled the market, leaving many buyers out in the cold and forcing sellers to reevaluate their pricing strategies. In recent months, we started to see rates drop — for example in January 2023, they were at their lowest in four months (then in February, rates crept up again ).

But keep in mind that mortgage rates hit a 20-year high (subscription required) in late 2022 at more than 7%, so we’re still better positioned than we were last year. In fact, I’ve noticed that offer activity seems to be resuming as buyers return to the table with pent-up demand; this should help balance out higher interest rates.

Regardless of market conditions, the decision to sell your home is generally based on personal circumstances like stage of life, financial situation, family changes or career moves. Some homeowners can wait until the market starts trending up again, while others will have to sell despite market conditions.

The more homeowners know about their selling options, the better equipped they are to take control of their sale and come out ahead, even in a slower market. Assuming a relocation is in your future this spring, here’s what you need to know.

The Factors Driving Home Selling Success: Exposure and Price

The more buyers you reach, the more offers you’re likely to get. One of the easiest ways to widen exposure is by listing your home on the Multiple Listing Service ( MLS ). This can be done either through a real estate broker or a licensed online home selling platform (but it’s not available to “For Sale By Owner” (FSBO) sellers). When your home is on the MLS, it will automatically appear on the biggest real estate search sites (e.g., Zillow, Redfin, Trulia and Realtor.com) — and hopefully capture the attention of buyers nationwide.

Marketing your home through the MLS is only one key step; equally important is setting the sale price. Educate yourself about what homes are selling for in your neighborhood, how your home compares to current inventory (known as “comps”) and how long comparable homes are generally on the market. Over-pricing a home usually means it languishes — and the longer a house is on the market, the more it seems stale or even undesirable to prospective buyers. Finding the sweet spot (sometimes even slightly under-pricing the property) could lead to the coveted bidding war.

By considering these factors in advance, you can maximize your chances of success.

Budget for Pre-inspections, Repairs and Staging

Before you dive into the home selling process, make sure you budget for repairs and staging.

First, determine if there are any issues that need to be addressed before listing—this is known as a pre-inspection. Consider hiring a certified home inspector to conduct a pre-inspection, evaluating factors like the HVAC, furnace, windows, water heater, plumbing, appliances, toilets and even kitchen cabinets. It’s smart to invest in large repairs up front, rather than waiting for issues to be discovered during the buyer’s inspection. More deals fall apart during that phase than any other, and it’s usually due to buyers learning the home needs a significant amount of unforeseen work.

Next, budgeting for staging, which includes painting in neutral tones and upping curb appeal through yard work and minor landscaping, can go a long way in making a strong first impression. You can also consider making small improvements if they fit in your budget, like adding smart thermostats or energy-efficient appliances.

But not everything about prepping your home costs money. It’s key to disconnect yourself from the personal character of your home. Buyers want to picture it as theirs, not yours — and you can achieve this for free. Family photos, knickknacks and kids’ trophies detract from this illusion, so declutter and depersonalize as much as possible. Make sure every countertop and surface is bare and bookcases are minimally but tastefully styled. And color code your closets so they look neater, better organized and bigger; buyers care about storage space.

Choose the Best Selling Approach for Your Situation

As I wrote recently, there’s more than one way to sell your home. Options include working with an agent, FSBO or online selling platforms — and it’s up to you to figure out which best meets your individual needs.

Working with a real estate professional is still the most popular option, but it comes at a steep price (usually 6% commission). For some, the full-service offering real estate agents provide justifies the price; others may prefer a route that allows them to preserve more equity and control.

For example, a number of technology platforms are helping to democratize a market that estate agents once had a monopoly over. (Full disclosure: My company is one such platform.) They generally charge a flat fee rather than a percentage of the sales price. These tools can help home sellers streamline and automate the selling process and retain more control throughout. But not all platforms offer the same value; look for those that are easy to use, harness advanced technology and include guidance from licensed real estate professionals.

Finally, you can sell your home yourself and avoid paying commission, but keep in mind that FSBO homes can sell for up to 26% less than assisted real estate transactions. However, FSBO may make sense if you already have a potential buyer in mind.

Of course, you need to account for seller closing costs, which will be deducted from your equity payout. Generally, closing costs for a seller can amount to roughly 6% to 10% of the sale price , including agent commissions, transfer taxes and fees.

Final Thoughts

Sellers looking to capitalize on the spring market should start planning now. Take the time to carefully think through every aspect, from pricing and listing all the way to fixing creaky cabinets and dusting behind the furniture. The more ownership you take of the process early on, the better positioned you will be for long-term success.

Land law adjustments aim to protect entities as well as the real estate market, photo Le Toan

In a seminar to collect opinions from enterprises and experts regarding amendments to the Law on Land held last week in Ho Chi Minh City, Seck Yee Chung, a representative of the Vietnam Business Forum’s Trade and Investment Working Group, said that Article 35.d of the draft law provided that domestic companies only have the right to mortgages with their land and properties attached to the land at credit institutions licensed to operate in Vietnam.

“This means that companies in Vietnam cannot mortgage their factory or land through foreign lenders, which creates great challenges for them to access competitive financing resources outside the country,” Chung said at the seminar, which was organised by the International Finance Corporation (IFC) and Ministry of Natural Resources and Environment (MoNRE).

“Foreign lenders will look for security assets of Vietnamese companies to secure their lending in here. The most valuable assets of a company include its rights over the project’s land and the construction works attached to the land,” Chung added. “This regulation must be revised because if foreign lenders cannot receive land use rights as secured assets, they would be reluctant to lend through a Vietnamese company.”

A presentative from the IFC, said that mortgaging of land use rights and assets attached to land for loans at international financial institutions is an important avenue that has been applied in many countries. Morgage restriction reduces foreign funding for the Vietnamese private sector and increases the borrowing costs of domestic enterprises, leading to a significant decrease in a competitive advantage over their foreign peers, he explained.

“The cost of foreign loans of Vietnamese enterprises will be increased because loan risks are higher than usual, and the lender will factor this into the loan interest rate. This especially affects large infrastructure and manufacturing projects, which must mobilise foreign financing as domestic investors and credit institutions are not able to meet the large and long-term financing needs of such projects,” the representative said, adding, “In addition, due to regulations on risk management, domestic credit institutions cannot lend to a project or business beyond a certain limit.”

According to the Law on Housing, foreign entities and individuals are entitled to possess houses in commercial housing construction projects. However, according to the draft land law, land users who are entitled to be granted certificates exclude foreigners.

“Consequently, foreigners in Vietnam have been seeking ways to circumvent the law if they desire to possess and conduct transactions on housing; meanwhile, they are not being protected by the Law on Land nor are they entitled to certificates,” Seck Yee Chung said.

Participants at the seminar last week recommended that the legislation’s drafting team consider and supplement regulations on land users in the draft to stipulate that foreign entities and individuals are subject to land use rights recognised by the state. At the same time, consideration should be given to supplementing regulations on the rights and obligations of foreign entities and individuals to use land in Vietnam.

“Without this protection, there is a high risk of black-market developments, real estate bubbles, and distorted housing prices in the top-line segment of residential real estate,” Chung added. “The legislator can counteract these developments by granting foreigners a limited land use right, which is certified in a publicly acceptable form.”

Speaking at the event, MoNRE Deputy Minister Le Minh Ngan acknowledged the large scale of the land law changes. “Preparation and construction must focus on investing effort and intelligence, not only of the agencies directly involved in the legislative process, but all agencies in both the political system and in society,” Ngan said.

The draft Law on Land is set to contain policies such as renewing and improving the quality of land use planning; fulfilling regulations on land allocation, lease, and land use change; regulations on compensation, resettlement, and land recovery for security purposes; and land price determination mechanisms, among other aspects. Policies related to the use of land by enterprises are also included, such as specific provisions on land allocation and lease without auction, land lease with one-time or annual payment, and supplementing regulations for small- and medium-sized enterprises to access land.

According to Ngan, since early this year, over 8,000 direct opinions and 75 documents from individuals and organisations have been sent to the MoNRE. All comments are being fully absorbed by the drafting agency. “We’re determined that the revised law creates a transparent mechanism to improve the efficiency of state management of land, ensure the promotion of resources, and also meet the requirements of the Party and the people,” he stressed.

Jerome Buzenet-Partner, DFDL

Countries like China, Indonesia, Malaysia, South Korea, and Thailand permit foreign lenders to receive direct security over land use rights of the borrower, but it is not the case in Vietnam. They do so with some restrictions, notably in respect of some areas like sensitive areas, and subject to certain conditions. Most such countries do not allow foreign lenders to take possession or ownership over the collateral in case of enforcement, which protects the genuine national interest. In that scenario, the foreign lender would only be able to enforce the security over land use rights by way of sale to buyers that are qualified to purchase land use rights under the local laws, and would only be allowed to receive the proceeds of such sale. Some other countries like Myanmar allow foreign lenders to receive indirect mortgages over land use rights through a credit institution acting as a security agency or trustee, which is in charge of the sale of the land use rights to buyers.

Nguyen Van Hau-Vice chairman, Ho Chi Minh City Bar Association

Currently, there are two opinions that are given as allowing “direct mortgage for foreign financial institutions” or “indirect mortgage for domestic credit institutions based on entrustment of foreign lenders”. The latter proposal is more feasible in practice and ensures compliance with the principle of establishing land use rights and real estate ownership according to law. The provisions of the draft Law on Land itself include the right to mortgage land use rights for credit institutions licensed to operate in Vietnam. We can only add a provision that allows mortgages through foreign credit institutions and bank branches licensed to operate in Vietnam to act as the secured party to borrow capital from foreign lenders, and set up some more regulations on loan limits; this way handling security assets and adjusting in detail the issue of establishing land use rights when handling security assets. Because the credit institution accepting the mortgage is based on the trust of the foreign lender, it is necessary to have specific legal provisions on the rights and obligations of the parties in this case. It is necessary to ensure that the land use rights in the whole process do not belong to a foreign organisation but will be processed for resale or transfer by the mortgage credit institutions.

Nguyen Hong Van-Deputy director of Consulting and Valuation Savills Hanoi

Determining land prices according to the market will ensure fairness for real estate-related entities. Currently, this takes place under the 2-price mechanism, which consists of land prices according to the state’s land price list and land prices in the free market. Accordingly, the land price according to the state land price list after applying the annual adjustment coefficient is still lower than 60 per cent of the market price. Current problems still revolve around the harmonious settlement of relationships and expectations between people, the state, and businesses to be able to determine a reasonable market land price. To apply land valuation according to market prices, we need to make real estate more transparent. Transaction information in the Vietnamese market has not been made public as well as there is no reasonable and strict mechanism to collect real trading data in the market. Meanwhile, real estate brokers in the market are not well-trained and they do not have strict supervision and management.

Ted Lai-Vice president Finance and Accounting Frasers Property Vietnam

Based on the wording of the current draft Law on Land, it can be implied that upfront payment of land use fee/land use rent (LUF) for the full land use period is no longer allowed for commercial land. Payment of the annual LUF may only be fixed for up to 5 years and should be re-assessed and paid every 5 years based on the prevailing market price. We believe investors would value greater guidance on the rationale, framework, and methodology in relation to the above. For long-term investors, they look for certainty in their investments. Without clarity on the guidance and mechanism and certainty in deriving the LUF after the fifth year, investors will not be able to estimate the total LUF for the entire lifespan properly, which contributes significantly to the total project development costs. In turn, this creates uncertainty on the return of the project, which then affects the decisions of investors. On a related note, such guidance and mechanisms could similarly guide investors in determining the value of the extension of the land use rights.

By Bich Ngoc

When you unshackle 1.4 billion consumers who have been penned up at home for three years, it’s reasonable to expect some fireworks.

For the residents of Mainland China, life under “zero COVID” policies was a dreary round of rolling travel restrictions and lockdowns – as if the United States was permanently stuck on a skipping record of the Spring of 2020. While most of the population was able to find a way to get back to work eventually, the everyday routines of travel, dining out, and visiting friends and family were severely curtailed. Wallets stayed snapped shut.

Since China executed its “COVID pivot” in late December 2022, economists have been scrutinizing the data to see if the country will be able to achieve its goal of 5% growth in 2023. If achieved, China will serve as an engine to help developed economies avoid tipping into recession. This is particularly relevant in the new era of higher interest rates, shrinking money supply, and rolling banking jitters.

Initial government data for the first two months provided some early hints. China’s retail sales jumped by 3.5% in January and February of 2023 after a decline of 1.8% last December. Spending on catering leaped by 9.2% after dropping by 14.1% in December. Clearly, Chinese consumers are beginning to find their footing. China has also indicated the need to expand domestic demand and prioritize expansion of consumption.

The Chinese government appears to be turning on the taps of fiscal stimulus, with infrastructure investment surging by 9% during the first two months this year. However, property buyers mostly stayed on the sidelines, with investment dropping by 5.7%. This raises the question of how long the government coffers can float the economy, given that the finances of so many local entities are already stressed from the burdens of financing years of COVID containment amid declining revenues from property sales.

Further, China’s fabled export machine appears to be still stuck in the mud. Exports slid by 6.8% by January and February, and imports were down by 10.2% in the same period, missing analysts’ estimates by a country mile. The hopes of Australian raw materials producers and German machinery manufacturers’ that China will enable them to dodge a downturn may be a mirage.

A Generation at Risk

The statistic that should catch the authorities’ attention is youth unemployment, which remained stubbornly high at 18.1% for those aged 16 to 24 in February. These young people are the most educated and invested generation in China’s history, with nearly 58% of Chinese enrolling in tertiary education in 2021 , up from just 12.5% in 2000 and 3.4% in 1990. These are the children whose parents have sacrificed everything to lift them to the next rung on the ladder of educational attainment and financial security. Now many are “lying flat” or sidelined by a lack of jobs.

If China is to leap into a technologically advanced, wealthy society, it must allow this generation to recognize its full productive and economic potential. Because if this cohort of talent is squandered, China indeed risks “getting old before it gets rich.”

China has an opportunity to build a more sustainable, balanced economic model that policymakers have recognized as desirable for over a decade.

1. Reopening – While China has lifted most of the formal travel obstacles, tremendous logistical friction remains. Airliners must be removed from mothballs, and routes to popular overseas destinations restored. After three years, China just announced that it would begin issuing tourist visas to U.S. citizens on March 15th. Hong Kong fully reopened to Mainland China in February 2023. Before this, even American CEOs have had to wait a month or more to visit their operations in the PRC, inhibiting their understanding of conditions on the ground and willingness to invest in growth. Chinese citizens wishing to visit Hong Kong or travel overseas must compete for a limited supply of visas. More important than the flow of tourists, China has now lifted the travel restrictions on Chinese students studying overseas, which peaked at more than 700,000 students in 2019 but has subsequently dropped by half. The U.S. government has also played a role in discouraging the flow through sometimes baseless harassment of students and scholars in STEM fields. If China truly wishes to grow into a global leadership position in the coming decades, it will need a generation that can understand and negotiate various cultural, political, and business environments. Today, the post-COVID youth generation – the so-called “Generation N” – is reported to be both pessimistic and isolated and more nationalistic than their predecessors. Optimism is essential to embracing careers, starting families, and launching new businesses – all ingredients China desperately needs.
2. Rebalancing – For the past decade, Chinese policymakers have explicitly acknowledged that the asset-intensive growth model driven by speculative real estate development and infrastructure investment is inherently unstable. Capital investment rose from 24% of GDP in 1990 to 45% in 2013 and has remained in the low- to mid-40% range ever since. There has been increased recognition that much of this investment has gone toward piling up non-productive investment that increases the debt stock without producing economic returns. President Xi Jinping announced as much when he wrote that China needs “to shift focus to improving the quality and returns of economic growth, to promoting sustained and healthy development rather than inflated GDP growth.” Yet whenever the government has moved to restrain the non-productive, highly leveraged real estate sector, it has backed off for fear of instability. As economist Michael Pettis has pointed out, China’s household consumption accounts for less than 40% of GDP . Combined with 10 to 15% of government consumption, China has the lowest consumption share of any economy in the world. Coming out of the COVID era, the Chinese government can now act boldly to rebalance the economy toward private consumption, services, and internal demand. This will require putting in place more robust systems of social and health insurance to reduce China’s outsized savings rate, continuing to support robust capital markets that funnel savings towards productive enterprises, and creating incentives for family formation that make it feasible to raise more than one child in an ultra-competitive educational system.
3. Rallying the Private Sector – The undeniable economic miracle that took place in China had two central pillars. First, a state sector that prioritized economic growth and provided world-class infrastructure and a trained, plentiful workforce has proved irresistible to multinationals seeking to become more competitive in a globalizing world. Second, China made a very conscious decision to unleash the entrepreneurial energies of its people by destigmatizing the accumulation of wealth and promoting domestic champions through various implicit and explicit means. According to Harvard’s Kennedy School , China’s private sector contributes to 60% of China’s GDP but 70% of innovation, 80% of urban employment, and 90% of new jobs. Put another way, a bright future for China’s young college graduates is intrinsically tied to a vibrant private sector economy. Unfortunately, the combination of economic dampening during COVID and the drive to reign in the economic influence of China’s private technology sector has diminished the private sector’s expansion and business confidence. For the first time since the beginning of the reform era, the private sector’s share of employment and market value dropped significantly in 2020 and 2021. In recent weeks, Xi Jinping has been quoted in state media about the vital role of the private sector in economic development, saying on March 7th that “We should improve the development environment for private enterprises, remove the institutional obstacles that prevent them from fairly participating in market competition, and safeguard the property rights of private enterprises and the rights and the interests of private entrepreneurs according to law. We should… support the development of the private sector and the growth of private enterprises and boost market expectations and confidence.” If the government follows these warm words with consistent and predictable actions, the animal spirits of a revived private sector will provide a powerful “third leg” to the post-COVID snapback.

The markets appear confused about what to make of China’s COVID comeback prospects. After an explosive 55% rally between November and late January to 22,688 points, Hong Kong’s Hang Seng Index has retraced about half of its gains. The word on the street is that no buyer wanted to get steamrolled by the COVID reopening train, but they were not “conviction owners” of the rally.

Investors will likely have the chance to dip their toes back into Chinese equities in the second half of 2023. Based on market activity, we expect many China tech names to seek to launch overseas IPOs, particularly via the SPAC vehicle. Of note, beginning on March 31st, China’s securities regulator, the CSRC, will, for the first time, implement a system for reviewing and approving overseas listings. Although this presents an additional hurdle to clear, it means that these issuers will have the government’s imprimatur as appropriate for foreign ownership – removing one major risk factor for those who want to play the China comeback.

The Chinese government has also shown a tremendous talent for keeping equity investors on their toes, if not to say tearing out their hair. But if we begin to see the consistent implementation of the three “Policy Rs” outlined above, it would be foolish to bet against the vast, untapped commercial energies and appetite for a better life of China’s 1.4 billion people.

A woman is carrying out a daily sit-down protest against massive rent hikes – after a London property company snapped up her entire Welsh village for £1m.

Sara Lewis, 55, fears she is being driven out of her historic country village after all 16 homes were bought up in an investment deal.

She says her rent went up from £300 a month to £500 – but vowed she would “rather die than leave” after living in her beloved community for 22 years.

The historic village – built for workers at a former Welsh slate mine – was bought by a London-based real estate company.

Families revealed they are facing a 60 per cent rise in rent prices following the sale in Aberllefenni, Gwynedd near Machynlleth, Powys.

The 16 houses were finally sold after six years on the market to property developers Walsh Investment Properties.

Sara says her rent has increased by £200 each month after the 16 former quarrymen’s homes were bought.

She has now launched a protest against her landlords by sitting on a village bench outside in the cold despite suffering with lung condition emphysema.

Sara said: “I would rather die than leave this village. I’ve lived here for 22 years, my support network is here, my family is from here. It’s become my haven and I don’t want to live anywhere else.

”I believe I am going to be made homeless because I cannot get help.

“My Universal Credit covers £300. The council will not be paying the extra cost. I’ve been told I’ll need to pay it myself with my benefits but I can’t afford £200 extra a month.”

Sara, who can’t work due to her illness, has applied to Gwynedd council for discretionary funding support.

But she claims she has now been “told no” by the council regarding any financial support.

She is now staging a one-woman protest on the village bench to highlight her plight – knowing it could make her seriously ill.

A spokesman for Gwynedd council said: “We are committed to supporting any individual facing difficulties as a result of the housing crisis. All applications for Discretionary Housing Funding presented to us are assessed by our benefits team as a matter of urgency.

“Whilst we cannot comment in detail on individual cases, we can confirm that this particular application is currently being assessed.”

Chris Walsh, of Walsh Investment Properties, said: “Most of the properties have been paying a low rent for a number of years, unfortunately this is not sustainable in the current economy.

“We feel it is fair and reasonable to charge a market rent. All properties were surveyed in January 2023 to enable us to plan any required upgrade works.

“We believe this will allow us to gain a better understanding of each individual tenant’s situation. This direct approach should alleviate any miscommunication and misunderstanding.

“This will also allow us to build a strong and sustainable rapport with all of our tenants.”