A report from Business Insider. “The top themes of the homebuilder survey were a slowdown in entry-level housing demand due to ‘payment shock,’ investors pulling back, and a ripple effect of rising rates moving up market, according to Rick Palacios Jr, director of research and John Burns Real Estate Consulting. A homebuilder in Dallas said, ‘interest lists are shrinking or buyers are truly pausing,’ while a Houston homebuilder said, ‘many first-time buyers simply no longer qualify with the increase in interest rates, as their debt-to-income ratio gets out of whack.’”
“‘Traffic has been cut in half since the hike in rates,’ one homebuilder in San Antonio opined. Another homebuilder in San Bernardino said, ‘Cancellations are starting to creep up due to loan declines and job losses. Waiting lists are certainly smaller. Saw an immediate change in buyer behavior when rates climbed over 5%.’”
From CNBC. “‘Sanity seems to be returning,’ said Paul Legere, a buyer agent with Joel Nelson Group in Washington, D.C. He said the lender with whom he works says one in four potential mortgage borrowers have been knocked out of the market due to higher rates. Offers are still strong in the Boston area, even in the luxury sector, said real estate agent Dana Bull of Sotheby’s International Realty. ‘Prices haven’t cooled yet, but some sellers have unrealistic expectations around price. Some hard conversations are being had prior to listing to set expectations with sellers,’ said Bull.”
The Center Square on Colorado. “Denver had more than 3,200 active listings at the end of April, representing a 44% increase from the previous month and a greater-than 23% increase year-over-year, according to the Denver Metro Association of Realtors. ‘While buyers may be thinking they overpaid if they bought two months ago, this is not the case,’ said Andrew Abrams, a metro Denver realtor. ‘They likely got a slightly lower interest rate and the market is continuing to rise, just not as fast.’”
From In Maricopa in Arizona. “It’s not just Maricopa feeling the shortage of inventory. I have been in touch daily with agents throughout the Valley, who say they are experiencing a similar shortage of homes in the rest of the Phoenix Metro area. Homes priced within market parameters are typically receiving offers within the first week, and many of those offers are written by real estate investment trusts (REIT). Many agents and owners are listing homes at inflated prices, then deciding to drop the price due to either: Appraisals coming in below the contract price. Offers not coming in as quickly as expected.”
From Mansion Global on California. “San Francisco’s residential real estate market is starting to show signs of slipping, according to Compass. ‘In San Francisco, the condo market seems to be softening more quickly than the house market. Affluent buyers tend to be deeply influenced by sustained changes in financial markets and economic news,’ Patrick Carlisle, chief market analyst at Compass in the San Francisco Bay Area, said in the report. ‘April sales mostly reflect buyers who locked in mortgage rates before the big late-March/April jumps, and the housing market is beginning to show preliminary reactions to the 69% jump in interest rates and double-digit declines in stock markets year to date.’”
“‘Absent an economic disaster event, major shifts in market conditions, especially from a superheated market, often begin very gradually,’ Mr. Carlisle continued. ‘For example, an initial shift to a new listing receiving two, three or four offers instead of 10 to 12 might not initially affect sales or sales prices, but if that changes to receiving one offer (no multiple-offer overbidding) or no offers, the supply and demand dynamics between buyer and seller start to shift quickly.’”
From ABC 10 in California. “San Diegans who think owning a home here is just a pipe dream could start to see their fortunes change. A new analysis from Zillow says the housing market is showing signs of cooling, a sentiment echoed by local realtors. ‘I’ve seen more property having reductions, I also am seeing more properties start coming on the market,’ said Michelle Silverman, a realtor with Coldwell Banker. ‘If they’re not priced right, you’re going to start seeing reductions, reductions, reductions.’”
From Housing Wire. “Fast-rising interest rates hit Finance of America Companies hard in the first quarter of 2022 and the company cut almost 600 jobs compared to one year ago. ‘We don’t expect interest rates to return to the level we’ve seen earlier in the year,’ said Patti Cook, FoA’s CEO. ‘Credit spreads widened on most financial assets, as investors proceeded to increase risk in the marke. While we are hedged against rising interest rates, we cannot efficiently hedge our balance sheet against widened spreads.’”
From Tech Crunch. “The filing — dated April 24, 2022 — reveals that Better.com swung to a loss of more than $300 million last year, a sharp turnaround from its profitable 2020. The rapid-fire decline in Better.com’s business, brought on by several factors, is notable, as the company is hardly the only concern working in the consumer mortgage space; other companies are taking similar fire. The company is believed to have effectively reduced its headcount from about 10,000 in December to less than 5,000 in less than five months.”
The Georgian Straight in Canada. “Figures released by the regional real-estate board indicate that that median price of a detached home in East Vancouver declined to $2,065,000 in April 2022 as against $2,095,000 in March. Sales of this type of property totalled 110 in April compared to 174 in March. That means a 36.8 percent decline. Meanwhile, the median price for attached properties fell from $1,404,000 in March 2022 to $1,350,000 in April.”
“In a recent report on May 4, Dexter Realty stated in a report by partner and managing broker Kevin Skipworth that April confirmed that the ‘residential super cycle is over in Metro Vancouver.’ ‘As befitting a housing market that has defied all traditions since March 2020, the current calming is happening in midst of what, conventionally, is the most active selling season of the year,’ Skipworth wrote.”
Canadian Mortgage Trends. “Fixed rates are now up roughly 40 bps in just the span of one month. For perspective, a 50-bps rate increase translates into a roughly $25 higher monthly payment per $100,000 of debt, based on a 25-year amortization. While this doesn’t impact most borrowers with fixed rates, new borrowers and those renewing a mortgage are facing significantly higher rates compared to just several months ago, and potentially double for those renewing a mortgage.”
“In the Greater Toronto Area, average prices are so far down roughly 6%, but by as much as 22% depending on the housing type and specific region. Benchmark prices are often a lagging indicator, so further price declines are likely in the months ahead.”
CBC News in Canada. “Hasmukh Patel and his wife thought a brand new townhouse in Richmond Hill, Ont., would be the perfect place for them to retire in a few years. But within a year of signing a pre-construction purchase agreement, the Etobicoke couple’s plan, which included borrowing $250,000 through a line of credit to pay for their deposit, has turned into a nightmare.”
“The secured lenders for the project have started a receivership proceeding to sell the development land near Yonge Street and Bond Crescent to recoup their loans. If the sale is approved by the court, Patel and other freehold townhouse purchasers were told there likely won’t be any money left over to pay back their deposits. ‘I’m basically killed, because what will I do now?’ said Patel. ‘All of my life with my pension money, with my wife’s pension money, everything will be going to the bank.’”
From News.com.au in Australia. “Almost one in three properties in the City of Melbourne sold at a loss in December, according to new property market figures. In the Melbourne city local government area 32.3 per cent of properties sold at a loss, followed by the Melbourne suburbs of Stonnington at 13.6 per cent, Yarra at 10.7 per cent and Boroondara at 10.3 per cent. In contrast only 5.6 per cent of properties sold at a loss in the City of Sydney. The local government areas in Sydney which had the highest proportion of sales that sold at a loss were Parramatta (13.3 per cent), Strathfield (13.1 per cent), Ryde (11.6 per cent) and Botany Bay (11.1 per cent).”
“The medium loss in the City of Melbourne was $60,000 and the total value lost was $13,800,749. The losses can largely be attributed to apartments. The vast majority of loss-making sales (about 93 per cent) across Melbourne were units, and were concentrated in the City of Melbourne, Stonnington and Port Phillip, the report said.”
The Australian Financial Review. “Houses are taking longer to sell as new listings flow into the market faster than pre-existing offerings are getting sold, fuelling a build-up in old stock and forcing some vendors to reduce their asking prices. The recent rate rise could further dampen buyer demand and trigger sharper falls in prices in the months ahead, experts say. In the past week alone, new listings have jumped by 23 per cent in Melbourne and were up by 12 per cent in Sydney, the highest amount of new stock in the last four-week period, data from Domain shows.”
“‘Market conditions continue to shift as more homes are being listed for sale than being purchased, continually nudging greater purchasing power to buyers,’ said Nicola Powell, Domain’s chief of research and economics. ‘The first three months of 2022 saw the highest number of newly advertised homes for sale over a March quarter since 2014, soaring 19 per cent above the five-year average in Melbourne and 15 per cent higher in Sydney.’”
“‘This is a clear indication that absorption rates across the country are slowing and more and more existing vendors are not achieving the price they seek,’ said Louis Christopher, SQM Research managing director. ‘Old listings appear to now be trending up after two notable years of declines. It means absorption rates are falling and stock is accumulating up once again. Vendors are having increasing trouble selling and so days on market are also rising. And if they’re not achieving their desired price, they probably have to discount their asking price.’”
“A growing number of vendors are already reducing their prices, with data from Domain showing 12.8 per cent of properties in Sydney have been discounted during April, the highest level since November 2020.”
From Bloomberg. “Industrial commodities in China continued to slide as markets judge that Beijing isn’t doing enough to support demand, at least when compared to the government’s response to cratering economic activity at the start of the pandemic. ‘Traders increasingly see a risk that we have all been waiting for Godot,’ TD Securities said in a note, ‘as China’s pledge to support the economy fails to quell concerns while the nation prioritizes its zero-Covid objective.’”