A report from CBS Boston in Massachusetts. “Like the price of just about everything, the price to finance a home is going up. ‘It has a lot to do with inflation,’ said IND Mortgage founder Dick Lee. ‘Inflation is the mortgage rates’ worst enemy.’ The mortgage rate for a 30-year fixed home loan topped 5% this week, up from 2.65% this time last year. These costs, Lee says, stack up quickly. ‘On average, it’s at least $400-to-$500 difference. Monthly, yeah, when you think of the average home sale price in Boston,’ he said.”
“Nicole Vermillion, of LaMacchia Realty, said, ‘I do believe some buyers have had to adjust their purchase price due to the rise in interest rates, but the market is still hot.’”
From Fortune. “Wall Street is buzzing over the shift in Federal Reserve policy—the era of loose, rock-bottom interest rates is out. In are a series of rate hikes as the central bank tries to put the clamps on spending and cool off inflation. The markets will also be closely watching QT, short for quantitative tightening. During the pandemic, the Fed bought up trillions in Treasuries and mortgage-backed securities to keep the economy falling off a cliff during lockdowns. Yesterday, the Fed confirmed it will be winding down its $9 trillion balance sheet, meaning the whale of whales is finally getting out of the market in a big way.”
From KFMB San Diego in California. “Skyrocketing home prices and lack of inventory have put home buyers in the hot seat and caused many to question when they should buy. The deputy chief economist for the California Association of Realtors, Oscar Wei expects prices to rise more slowly which will prevent the bubble from popping. ‘We do not see the quote unquote bubble bursting because we will see some softening in price,’ said Wei.”
The San Fernando Valley Sun. “Gas prices have hit historic highs in California, and motorists are increasingly feeling the pain at the pumps. Arleta resident Marta Vasquez has been struggling so much that she has had to cut back on food to save for gas. ‘Now [my family] has more stress,’ said Vasquez, who was filling up her car at a Chevron station in Pacoima. ‘Now I’m looking for a job because we’re not going to make it. Everything is really expensive.’ ‘We have to buy less food,’ Vasquez said. The family is looking to apply for an EBT card. It has gotten so bad for them, Vazquez said, that her husband put forth the idea of moving to Mexico.”
“When San Fernando Valley Sun/El Sol also asked its readers about the impact the gas prices have had on their lives, they were quick to reply. ‘It’s so ridiculous how we have oil refineries in California, yet we’re paying more for gas than Hawaii [which] is an isolated island and has to import gas,’ Daniel Lopez said. ‘It just shows how corrupted our government is.’”
The New York Post. “This massive Upper East Side penthouse, which first went on the market nine years ago, just got a massive $10 million-plus price slash.The 5,100-plus-square-foot, five-bedroom co-op at 1185 Park Ave. is now asking $16.75 million — down from its $27.5 million ask in 2013.”
The Globe and Mail in Canada. “In the Greater Golden Horseshoe, as the zone that curves around Toronto is known, listings are rising ahead of the upcoming Easter and Passover holidays. Buyers, meanwhile, are detecting the first signs of softening prices. Mortgage rates are less attractive. As sentiment shifts, many are saying, ‘let’s wait and see.’ Dennis Mehravar, broker at Engel & Volkers Waterloo Region, says the market is less frantic in every price range. ‘We are seeing some slight price adjustments,’ he says. Mr. Mehravar estimates that prices have dipped between three per cent and eight per cent, depending on the property, since the beginning of 2022.”
“At the moment, many are wary of overpaying. ‘If they wait two months from now, is this going to be a better deal?’ is a common mindset, he adds. Against a backdrop of uncertainty, Mr. Mehravar is seeing some homeowners who were contemplating retirement in another area in three or four years moving their plans forward in order to take advantage of lofty prices.”
“In Guelph, Ont., real estate agent Aimée Puthon, says the frenzy has left the market now that buyers have more properties to choose from. Ms. Puthon says many properties are still selling on offer night at prices above asking but not for the outrageous premiums that buyers offered in January and February. Ms. Puthon notes that on April 1, the Guelph market had 145 residential properties listed for sale. That’s a significant increase from a typical day in January, when there were between 12 and 15 listings available, she says.”
“Drilling down into the numbers, she found single-family homes had the heaviest weight, with 90 available. There were also 28 apartment-style condos and 27 townhouses listed. ‘People who really needed to sell got their property to market in January and February,’ she says. Some of the sellers she’s seeing now don’t need to sell so much as they hope to take advantage of rich prices. Ms. Puthon says those sellers need to set an asking price suited to the current market instead of looking in the rear-view mirror.”
“On some occasions, she says, houses are not receiving any offers – or any acceptable to the homeowner – on offer night. In that case, the homeowner may want to relist at a higher price. She points to the example of an $800,000 house that failed to sell on offer night relisting for $1.2-million. That’s where homeowners need to understand that they are facing more competition from other sellers now than in January, when lots of buyers were chasing very rare listings. ‘Where is that $1.2-million coming from,’ she wonders. ‘Is it even realistic?’”
From News.com.au. “Aussie homeowners face having to find an extra $332 on average a month to pay their mortgage if interest rates rise, but people in Sydney will be forced to fork out a whopping $561. New research from Canstar found that if interest rates rise in line with some of the major bank forecasts — with some predicting it to hit 1 per cent by the end of the year — close to three-quarters of borrowers would need to forgo certain expenses to afford home loan repayments.”
“Canstar’s research revealed that if the average variable rate of 2.99 per cent soared to 3.89 per cent for a typical home loan of $644,497 nationally, it would mean Aussies would need to find almost $4000 more a year to pay their home loan. It would also cost them $116,000 more in interest over the life of their loan, the analysis found. Canstar’s group executive of financial services, Steve Mickenbecker, said Aussies are set to feel financial pain.”
“‘Costs keep rising for households with petrol prices reaching an eight-year high and supermarket shoppers reporting higher grocery bills, but the sting is about to get worse for some,’ he said. ‘Anyone with a mortgage will likely feel financial pain when the Reserve Bank raises the cash rate this year as predicted by some of the major banks.’ Canstar’s research found the top three expenses borrowers would need to give up to afford higher home loan repayments include restaurant meals and dining out, holidays and entertainment.”
From Newshub New Zealand. “Small-time developers or builders trying to make a buck will most likely be the ones left in the lurch as house prices look to be cooling. Mortgage broker Bruce Patten said anyone who bought in the last couple of years with the hopes of flipping for profit might be in for a rude awakening. ‘A lot of those ones, unfortunately, will end up being your small developers or your builder that gets together with his brother and parents and think they can be developers and buy some land and do some stuff. I think it’s those people that are going to come unstuck.’”
“He said while recent buyers were stress-tested to make home loan repayments on higher interest rates there was no doubt the next few years would be tough for some. ‘There’s genuinely going to be people that bought and paid, certainly in the last 12 months, at 2.5 percent interest and now they’re going to be going at 5 percent… so if you’ve borrowed $1 million your interest cost was $25,000 a year, it’s now going to be $50,000. That’s genuinely going to hurt some people.’”
“Professional renovator and property developer Tom Faye said those who recently purchased properties with the intention of selling quickly might find themselves refinancing or selling for less. ‘That’s the one that’s going to catch people out. Those kinds of people tend to work with a short-term lender, so the short-term lender might give you a six, eight or 12-month loan. Now, if you were expecting to turn that property around within that period, you’re going to start feeling the pinch.’”
“Auckland University associate professor of economics Ryan Greenaway-McGrevy is warning while there was no doubt house prices had become unsustainable, weaning the economy off them would be painful. ‘So I’m talking about a recession… So we see a rise in unemployment, reduction in increases in wages over time, certainly in real terms, if not nominal. That’s the kind of economic pain that I’m talking about.’”
“He said three decades of policymakers had let the economy become too dependent on house price growth. ‘Pinning economic growth to ever-increasing house prices is ultimately going to be unsustainable and exacerbating this is the fact that in order to sustain those increases in house prices, we’ve had households borrowing more and more. Borrowing to fund consumption is not a sustainable way to go about running your economy. And it’s worked well so far but eventually, you’ve got to pay your debts and making that structural adjustment can be rather painful. If our policymakers had been a bit more on the ball, had been paying attention to these things, we would not be in this position now.’”