It’s Friday desk clearing time for this blogger. “Some listings are still getting multiple offers, but it’s not the frenzy that was happening six months ago, according to Youngstown Columbiana Association of Realtors President Dennis Gonatas. Gonatas said he had a client that had to withdraw an offer on a property because of the rise in interest rates. ‘They went from 3% to 5.75%. They were in the 3s, but you are not locked into your interest rate until you have an executed contract. If that takes you two, three, four months, you can only get the interest rate the market is offering at the time you get an executed contract. Unfortunately, it’s changed drastically,’ Gonatas said.”
“That change in interest rates changed the buyer’s payment by $700 a month. ‘I’m seeing some stabilization. You are still getting multiple offers, but instead of having 12 offers, you are getting two or three. I had a whole bunch of showings on a house a few weeks ago. It was a great listing, it sold within one day, and we only had one offer that was an acceptable offer to the seller. We weren’t in multiple offers, we didn’t go over asking price. If that would have been six months ago, it would have gone $5,000 over, $10,000 over,’ Gonatas said.”
“The housing market in South Florida is experiencing some mixed signals: There’s also been a slight bump in sellers dropping their prices. Real estate agents report that recently, they’ve seen an uptick in new inventory heading back to the market, in part due to sellers wanting to partake in the hot market. ‘I do expect our marketplace to see an uptick in additional inventory across Palm Beach County, as I have had a notable number of sellers calling me to list their luxury homes this past week — [more] than in the past 30 days,’ said Bonnie Heatzig, executive director of luxury sales at Douglas Elliman in Boca Raton.”
“Sellers reducing the price of their homes in South Florida were at 13% in Palm Beach County, 11% in Broward County and about 9% in Miami-Dade County in March, representing a small increase from the month before, according to data from RedFin. ‘We have seen more price reductions lately, which is another indication of the market leveling off,’ said Brian Pearl, principal agent with the Pearl Antonacci Group in Boca Raton. ‘We have definitely seen more inventory come to market in the last month, which is great, but also a telling sign of what’s to come. This is the beginning of the market leveling off or correcting itself.’”
“Wells Fargo & Co. is laying off employees in home lending, with analysts saying the cuts were likely across all markets. San Francisco-based Wells Fargo confirmed the layoffs, issuing the following statement: ‘The home lending displacements last week were the result of cyclical changes in the broader home-lending environment. The employees affected by these changes have each been an essential part of our success. We are carrying out displacements in a transparent and thoughtful manner and providing assistance, such as severance and career counseling.’”
“Tom Brown, CEO at Second Curve Capital, said via email he thinks the layoffs were across all markets. He’s expecting a tough couple of years for mortgages. Dick Bove, an analyst at Odeon Capital Group, also thinks the layoffs were widespread. Bove believes the housing market has peaked. He estimates prices will start coming down in most markets by the second half of this year. ‘Mortgage banking is an accordion for banks,’ Bove said. ‘It’s not that, for example, North Carolina all of a sudden is getting hit by a major reduction in refinancing or home sales, and therefore, that’s impacting Wells in North Carolina, while South Dakota is doing fine. It just doesn’t work that way.’”
“Aaron Farmer, a Realtor at Texas Discount Realty, saw last winter as a perfect time to list a property, with prices at an all-time high and bidding wars fetching offers far above asking prices. Little did he know what he was in for. Farmer listed a south Austin condo at $359,900 for a client, and the bids poured in. The highest offer at $425,000 was 18% higher than the asking price. Just as Farmer was on the phone telling the second-highest bidder they lost, he learned that the first bidder had withdrawn the offer.”
“The first bidder likely ‘got cold feet and thought, ‘I’m overpaying,’ Farmer says. ‘I think my seller thought I was messing with him. He was a little upset because he saw $50,000 vanish.’”
“There are homeowners who bought in recent years and have enjoyed seeing their home equity increase in the double-digit percentages largely due to an unusual spike in home price appreciation. If these owners get ready to sell with the expectation that home prices will always appreciate 20% every year, they may be in for a rude awakening, housing experts say. ‘There are a lot of people who paid way too much for their house in the past two years,’ says Nicole Bachaud, a Zillow economist.”
“Boom times in residential real estate may soon be coming to an end. Average housing prices in Quebec are projected to fall 4.7 per cent in 2023 as rising mortgage rates begin to squeeze first-time buyers out of the market, Mouvement Desjardins said. ‘Even though many people seem to think this effervescence will go on forever, it’s getting very late and the party’s almost over,’ senior economist Hélène Bégin, who wrote the report, Desjardins is Quebec’s biggest residential mortgage lender.”
“‘A decline of 10 per cent for the Island of Montreal is very plausible because of the overbidding situation,’ Bégin said. ‘There’s a big gap between the price and the real value of the asset. People may have a hard time believing this now, but as soon as there are only two or three interested buyers, multiple bids become less frequent and prices start dropping.’ Homeowners who bought at the top of the market and need to sell quickly ‘will be the big losers,” Bégin predicted. ‘They probably won’t get back that $50,000 that they paid on top of the asking price. It’s a return to a certain normality.’”
“In the past 12 months mortgage broker Mark Mitchell has been hearing from a growing cohort of homeowners who want to join the booming business of private mortgage lending, despite the inherently higher risks. ‘The new ones who have called me say they are accessing the equity in their home via a Home Equity Line of Credit and they want to lend it out at 12 per cent,’ said Mr. Mitchell, a London, Ont.-based mortgage broker. What does he think happens when he turns them down? ‘I think they go down the list on Google and look for a broker that will take them on. That’s going to end well,’ he says wryly.”
“Some believe much of the damage may already have been done as the real estate market finally shows signs of cooling in 2022. ‘We’re going to find out a lot of people didn’t understand their private lending, a lot of investors and customers are going to say ‘I was misled.’ … It’s the classic tide going out thing,’ said Ron Butler of Butler Mortgage Inc. ‘The number of calls we get from people saying ‘I can’t sell my house, I need a private bridge.’ … These calls are up 400 per cent in two weeks.’”
“House prices are back to where they were a year ago in the Wellington region, according to the latest Real Estate Institute of New Zealand’s House Price Index. Trade Me’s Property Price Index for March shows the number of listings in the Wellington region was up 78% compared to the year before, the highest number of properties for sale on record in the region. ‘While supply skyrocketed in Wellington last month, demand in the region grew by a comparatively small 2% year-on-year in March,’ Trade Me property sales director Gavin Lloyd said.”
“Lowe and Co estate agent Adam Cockburn said the number of homes for sale had reached the highest point since June 2015. Cockburn said before homeowners became too fixated on value falls, they should keep in mind they had enjoyed five years of the biggest capital gains on record. He said a lack of properties on the market was a common complaint in recent times and fed into the idea there were not enough homes, but what it actually meant was sales were outpacing listings.”
“Outer suburban electorates of major cities, already home to many of Australia’s most financially stressed households, are facing a ‘huge cliff’ in coming years as their fixed-rate loans expire and they are hit with higher interest rates, analysts say. ‘It’s not strictly speaking mortgage stress,’ Prof Hal Pawson from UNSW said. ‘It’s people who are in financial stress who also have a mortgage.’ For those on an average mortgage of $600,000, adding three percentage points to the borrowing costs could swell repayments by $1,500 a month or more. ‘That’s going to be a lot for any household to swallow.’”
“‘There’s going to be some households that really have to take a long hard look at their budgets, and potentially make hefty cuts in numerous places to just keep their heads above water and their mortgage repayments up,’ said Sally Tindall, a senior researcher at RateCity. ‘We’re looking down the barrel at not just one rate hike in isolation. There’s going to be multiple hikes.’ In addition, ‘anyone who bought recently and potentially overstretched themselves to get into an overheated property market, they will feel the heat of these rate hikes, that’s for certain,’ Tindall said.”
“The Block auctioneer Tom Panos has warned real estate agents to brace for the looming housing price drop – with one of Australia’s biggest banks forecasting a plunge. The dramatic developments led Mr Panos to warn real estate agents that they may find themselves forced out of the profession and back to their old jobs in fast food. The KFC managers are going to leave real estate and head back to KFC,’ the real estate guru said. ‘And you know who’s going to stay behind – professionals, people who are going to know how to negotiate, and create urgency, where there is no urgency.’”