Chinese property developer Fantasia just missed a $206 million repayment deadline, a sign that China’s real estate woes extend beyond Evergrande

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    • #448509
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      • Fantasia Holdings, a Chinese property developer, failed to pay $206 million in loans on Monday.
      • Just two weeks ago, Fantasia’s chairman said the company had no liquidity issues.
      • The default indicates that real estate giant Evergrande is not alone in battling a mountain of debt.


    • #448519
      • Total Posts: 2,336

      Too much speculation and borrowing on a booming real estate market.

      Could the same thing happen here in the U.S.?

      China’s real estate has cooled off while in the U.S., home prices and sales are still rising.

      Here’s a couple of articles about Zillow flipping homes and issuing bonds to get their hands on more money so they can buy more real estate, similar to what China was doing, but so far, on a smaller scale.

      iBuyer bonds attracting Wall Street capital — Zillow raised $450M from bonds.

      The increasing commodification of residential real estate is leading iBuyers — led by Zillow — to Wall Street.

      Last month, Zillow raised $450 million from a bond backed by homes it planned to flip — in other words, homes that Zillow purchased, but hadn’t yet sold. The borrowing facility was modeled after how car dealerships finance floor models.

      The offering, which was led by Credit Suisse Group AG, was oversubscribed, leading Zillow to sell an additional $700 million in bonds, according to Bloomberg.

      Zillow moved into the iBuying sphere in 2018. Users of the company’s platform can choose to sell their home to Zillow for a “Zestimate,” derived from the company’s algorithm for determining a home’s likely sale price. Zillow then has the option of renovating the home to increase its value before flipping it to a buyer.
      In addition to the recent Credit Suisse bond, Zillow also has $500 million separate credit facilities from each of Credit Suisse, Goldman Sachs and Citigroup.

      Zillow isn’t alone in capitalizing on Wall Street’s interest in the housing market. Competitor Opendoor was in talks for a $2 billion revolving credit facility last month.


      Bloomberg: Zillow’s Home-Flipping Bonds Draw Wall Street Deeper Into Housing

      More such offerings are almost certainly coming. Zillow is one of a growing field of tech companies, often known as iBuyers, who are taking advantage of the surge in investor demand to fund purchases of houses.

      They’re still a small part of the overall market, but as the mortgage meltdown of 2007-2010 showed in the extreme, the mix of housing, easy money, and new forms of financing can be combustible.

      “We could very quickly be talking about more than $100 billion in debt,” says Tomasz Piskorski, a professor of real estate finance at Columbia Business School.

      Zillow’s stock price has dropped over 100 points this year….

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