A report from the Ledger in Florida. “Thomas Gebregergis had $100,000 in cash and was looking to secure a spacious second home. He turned to the foreclosure market and offered $28,100 on what he thought would be a dream property for him and his family. Instead, he ended up with a nightmare: a home gutted by fire at 2121 Blue Highlands Drive, in a relatively young and pristine development off Airport Road in west Lakeland. When he found out his offer had been accepted on May 28, Gebregergis’ initial reaction was to jump for joy with his wife. He couldn’t believe his luck. ‘I just pay immediately from my bank because I felt like someone — I was just kind of nervous, ‘Oh, they’re gonna cancel the sale,’ Gebregergis said.”
“The next day, Gebregergis, his wife and kids drove 45 minutes from their home in Kissimmee to view the property in person for the very first time. A week later, Gebregergis filed in court to have the sale thrown out. Gebregergis said he just wants to make sure everyone is safe. ‘I don’t want anyone to be hurt just because of my poor decision,’ Gebregergis said. ‘I messed up, I lose money, on top of that, I don’t want anyone to be hurt. That’s my goal. After that, we’ll see if I’m lucky. If God will give it to me and at least I can sell it or I can recover my money.’”
From CBS News. “Heather Kruayai is a Redfin real estate agent in Jacksonville. Kruayai: You are seeing a lot of these Wall Street investors that are coming in. You know, you put a house on the market, and within an hour I’m getting offers full price, cash. And so these– the sellers are seeing that, and– “Oh, okay. Cash. We can close in 15 days.” It’s very enticing to people when they see that offer come across.’”
“Lesley Stahl: So when you sell, are you having to stage the house? Paint it? Put furniture in, make it look really nice? Heather Kruayai: Not now. It’s not necessary now in this– this way, the way the market’s going now. You really don’t need to do anything to your house to sell it. Typically the– investors never look at the home. Never.”
“Lesley Stahl: They don’t even look at the home? Heather Kruayai: ‘They never look at it.’ That, plus the fact that investors often waive inspections, puts would-be first-time home buyers at a serious disadvantage. Before they can even see a starter house, it’s gone.”
The Phoenix Business Journal. “Lennar Corp.’s increasingly profitable homebuilding operations were dragged down by losses from volatile venture capital investments in its first fiscal quarter of 2022. The LENx website has 24 companies listed in its portfolio, including six that are publicly traded. That includes San Francisco-based Opendoor Technologies, which has a large Arizona presence; Scottsdale-based SmartRent; Houston-based Sunnova Energy International, San Francisco-based Doma Holdings, and Palo Alto, California-based Hippo Holdings, which all had declines in stock prices in recent months.”
“In 2021, Lennar announced plans to spin off its LENx portfolio, its multifamily business, its single-family rental business and its land investments into a separate company, temporarily identified as SpinCo. It is currently working with the U.S. Securities and Exchange Commission and the NYSE to finalize the spinoff and stock listing. The question is whether now is the best time for the spinoff, with higher interest rates and the increasing cost of building supplies impacting the housing market, plus the decline in stock value of the LENx portfolio.”
“‘Unfortunately, we think Lennar missed the window to capture high returns for LEN shareholders with a SpinCo,’ said Kenneth Leon, research director at New York-based CFRA Research.”
The Financial Post. “Most agree that Canada’s housing boom during the pandemic has been unprecedented. Low interest rates, pandemic shifts in homebuyers’ preferences, excess household savings, ever higher price expectations and speculators and investors piling in have worked together to send home prices 50% above pre-pandemic levels as of February. Now Oxford Economics argues that the aftermath of this boom will be unparalleled too. Tony Stillo, director of Canada Economics at Oxford, predicts that a housing correction beginning this autumn will see home prices decline 24% by mid-2024.”
“Oxford sees three triggers for the correction. First, and perhaps foremost, is the market itself. By late 2021, home prices were 19% beyond the borrowing capacity of median-income households in Canada, the report says, and the gains since then have just made it worse. Oxford expects by mid-year home prices will be an unprecedented 38% above what the average household can afford. ‘We believe this will cause the housing market to reach a breaking point and crash under the weight of its own success before year end,’ Stillo said in the report.”
From News.com.au in Australia. “The first sign that Sydney’s turbocharged housing market is slowing down has emerged. More than one in ten homes in the NSW capital are selling for less than they were initially priced at, according to Domain. An estimated 10 per cent of dwellings are having to sell at a substantially discounted price because of the phenomenon.That number isn’t much better in Melbourne, with nine per cent of properties having to sell for less to entice buyers.”
“The trend is reportedly because the real estate industry is saturated, with too many people wanting to sell and not enough buyers to go around. Domain’s head of research and economics, Dr Nicola Powell, told news.com.au: ‘Homes are now coming to the market quicker than they’ve been able to sell.’”
“In bad news for sellers but great news for buyers, one Sydney home relisted $100,000 cheaper than its original asking price. Dr Powell warned that buyers were getting choosier, which was leading to a housing slowdown. ‘Buyers are getting more careful of paying too much [for a property] rather than paying out of fear of missing out,’ she said. There are too many homes on offer, according to Dr Powell. ‘We’re seeing demand ease and views per listing have been pulled back, whereas demand was outpacing supply last year.’”
“Homeowners most likely saw now as a good time to sell their properties because ‘they’re timing it when prices are at their peak and interest rates haven’t gone up,’ she explained. However, this had the added side effect of flooding the market with housing stock. With interest rates expected to rise in the next several months, Dr Powell expects to see more houses forced to re-list at a cheaper rate. ‘We’re likely to see it [the number of discounted houses] track higher as we see the market slow down more, I do think we’ll probably see it proportionally rise,’ she added.”
From Stuff New Zealand. “The median house price in Auckland City has fallen by nearly a fifth since peaking in November, according to data from the Real Estate Institute. The institute’s (Reinz) data shows the median price of residential properties in the city fell from about $1.54 million in November to $1.25m in February.”
“The fall was also noted by property data firm CoreLogic, which also recorded a 19 per cent median sale price drop between the December quarter and the year to date. CoreLogic head of research Nick Goodall said the drop was in part due to a rise in the proportion of flats and apartments selling, and a fall in the number of freestanding homes sold, which was probably driven by house owners’ price expectations being too high.”
“The owners of traditional houses that managed to sell were probably the ones accepting lower prices, Goodall said. He said these probably included motivated sellers who had already bought another property and investors who would accept prices below what they would have been three months ago, given the capital gain was still large. ‘It does show an adjustment in the market where lower prices are being achieved,’ he said.”
From CNBC. “A slew of Chinese real estate developers said this week that they are either not able to release their financial results on time or have yet to set board meetings for them. Among them is troubled property developer Evergrande which shook investment markets last year as a result of its debt crisis. The developers gave a variety of reasons for not being able to do so. In a filing to the Hong Kong exchange on Tuesday, Evergrande said that due to the ‘drastic changes’ in its operational environment since the second half of last year, its auditor added ‘a large number of additional audit procedures’ this year.”
“Other developers said the resignation of auditors meant they could not issue their financial year (FY) 2021 earnings on time, according to Japanese bank Nomura. Developer Ronshine said Monday that PricewaterhouseCoopers (PwC) has quit, citing insufficient time for the audit as well as the Covid resurgence in China as two main reasons for the resignation. In the past two months, developers such as Aoyuan, Shanghai Shimao and Hopson also announced change of auditors.”
“‘When developers change auditors ahead of their full-year results season, it typically raises red flags regarding potential auditing issues and should lead to serious market concerns about the trustworthiness of their financial numbers,’ Nomura said in a Monday note.”