A report from the Nevada Current. “The Federal Reserve’s bump in its benchmark rate brings it to the .25% to .50% range, after historic pandemic-era lows. As a result, the market may be stabilizing, at least in some places. The median price of a home in Reno fell by almost 2.5 percent from January to February, according to RSAR. ‘For 12 years, we’ve been saying ‘rates are at an all-time low,’ says Derek Parent of PRMG in Las Vegas. ‘That is no longer the truth.’”
“With home values increasing close to 30 percent in the last year and income growth in the low single digits, Las Vegas Realtors president Brandon Roberts acknowledges prices are unsustainable. Maybe. ‘They are but they’re not,’ he says. ‘They’re unsustainable for the majority of the working class in Nevada, but they are selling. That’s the weird thing.’”
From 27 East in New York. “Bill Wright, a partner at PAR East Mortgage in Southampton, agreed that the initial impact of higher rates would be felt by those ‘marginal borrowers,’ who already had a hard time qualifying for a mortgage, when even a 1 percent increase can add a couple hundred dollars to their monthly payment. ‘The housing market has been insane for the past two years, where you’re seeing 20 to 30 people bidding on a house,’ he said. ‘That market is going to die out.’”
The Lehigh Acres Citizen in Florida. “Land, new home sales and development expert Randy Thibaut, founder of LSI Companies, stated that while usually the national real estate cycle fluctuates every seven years, the country is in currently on the 11th year of an uptick in new single-family homes sold. ‘We thought we were going to see softening, but then something happened — it was COVID-19,’ Randy said. ‘It was the spark that lit the fuse in our market. Our permits soared in spite of the pandemic.’”
“Randy used a subdivision house in Cape Coral that in 2020, sold for $267,000. In Quarter 4 of 2021, that house is now valued at $366,000 — a 37% increase. ‘A house in the North Cape could be $500,000 this year,’ he said. An eye-opening statistic was that 25% of new single-family home permits in Southwest Florida were pulled in Cape Coral — notably in the north Cape. ‘I don’t see that stopping,’ he said. ‘People are flocking there because of affordability.’”
Colorado Public Radio. “Andrew Friedson, an associate professor of economics at the University of Colorado Denver, said such a notable shortage of new homes coming on the market can cause price spikes, creating a sort of self-fulfilling collective psychology. ‘Prices are made up, right?’ Friedson said. ‘If what you have is realtors convincing a critical mass of people to bid very large numbers, then those very large numbers become the price.’”
“Friedson said it was market tendencies similar to those he is seeing now that caused the housing bubble of the late 2000s, leading to the Great Recession. ‘It’s a question of ‘Are these houses worth this money or is this speculative and people are trying to get in now before it goes crazy?’ he said.”
The Los Angeles Times in California. “The $141-million offer by Richard Saghian for the Bel-Air mega-mansion known as ‘The One’ was approved Monday by a U.S. Bankruptcy Court judge. The 105,000-square-foot marble-and-glass home on a Bel-Air hilltop remains unfinished and carries more than $250 million in claimed debts. Saghian’s $126-million bid, which totaled $141 million after auction fees, means many creditors are facing substantial and even total losses for the house.”
From Macleans in Canada. “In May 2021, Molly Fleming and her brother Matthew leaped into southern Ontario’s pandemic-fuelled real estate frenzy, buying a postwar bungalow in Hamilton they intended to use as an investment property. First-time homebuyers both, they paid above the $500,000 asking price for the modest property. A couple of months after they took possession, their new upstairs tenant called to complain about a musty smell wafting from the closet. Molly went to investigate, and soon spotted other worrying issues they hadn’t noticed on their only walk-through before they bid.”
“What’s more, says Andy Christie, owner of Safe Homes Canada, an inspection service based in Barrie, Ont., some listing agents are not fans of rigorous home inspectors. Last summer, Christie was doing an inspection for a client looking to buy a century home in Newmarket, Ont. The seller’s inspection report suggested the house was fine, but Christie discovered that most of the crawl spaces were inaccessible, making it almost impossible to assess the foundation or floor structure. Any repair work down there would be costly and difficult.”
“He persuaded his clients not to buy it. Days later, Christie drove by to see a ‘sold’ sign in front of the home and now wonders if whoever bought it was aware of the sagging, shifting or cracking that was sure to come. ‘Buyers are getting screwed every day,’ he says.”
“In nearby Halton Hills, Lisa Song had the chance to buy her country dream home in early 2020; but only if she passed on a home inspection, the listing agent told her. After they moved in, Song and her family discovered defects, like a lack of well water being pumped into the house and major problems with the septic system. Cost of repairs: more than $120,000. ‘I almost fell to pieces knowing I would have to get a mortgage to fix the septic,’ Song told CTV News.”
“How long the dizzying ride will continue is anyone’s guess, but for now the Flemings look back on the risk they took as the price of entry: if they’d missed out on the house because they asked for an inspection, their window to own might have slammed shut. ‘And that,’ says Molly, ‘would have been a way bigger regret for me.’”
From The Guardian. “China Evergrande Group has blamed a ‘drastic change’ in the company’s prospects for a delay to publishing its annual results but has promised investors that it will reveal how it plans to restructure its massive debts of $300bn by the end of July. The turmoil at the stricken company was underlined when it also announced its property services unit had discovered a $2bn hole in its accounts. The seizure of the funds, which the property services unit discovered when it was preparing its annual report, underscores the turmoil at Evergrande and has baffled investors.”
“Andrew Chan, an analyst at Bloomberg Intelligence, said: ‘It’s peculiar because investors expect Evergrande management should be aware of where the cash went rather than instead setting up an investigation committee to find out.’ It will also increase fears among foreign creditors that they will never see their money.”