A report from Fox Business. “‘We are starting to see more and more potential buyers walk away and say they just can’t afford to pay these prices,’ National Association of Home Builders Chairman Jerry Konter, a builder and developer from Savannah, Ga told Varney on Tuesday. ‘We’ve had escalator clauses in the contracts, builders have been trying to eat some of the increased costs, but now we are at a point where we can’t do that anymore,’ he continued. He also noted that increasing mortgage rates have ‘a significant impact’ on the industry ‘and once you get over a 5% mortgage rate, you see a real decline in demand, and we are seeing that start to happen.’”
From CNBC. “‘We’re seeing an inflection point,’ housing analyst Ivy Zelman said in an interview on CNBC. ‘Our survey did see a pickup in cancellation rates,’ Zelman said. ‘We did see a tick up in incentives, and some of the cancellations, we’ve heard from some of the hotter markets, were actually private investors.’”
A press release. “‘Added RE/MAX Masters real estate agent Josh Horner, who is based in Salt Lake City, UT, ‘The [local] real estate market has shifted in April. With the inventory of established homes or new construction homes for sale still in short supply, the recent and expected rate hikes have sent a segment of homebuyers to the sidelines to sit it out a bit.’”
From KXAN in Texas. “April home sales in the Austin area decreased for the second month in a row, according to a new report from the Austin Board of Realtors. Active listings jumped 52.5% year over year to 2,763, marking the biggest gain in housing inventory year over year since the summer of 2017.”
The Ukiah Daily Journal in California. “For all of the areas covered by our Multiple Listing Service (BAREIS), which includes Marin, Mendocino, Napa, Solano and Sonoma Counties, there is an inventory of 1,686 homes and condominiums for sale at the end of April. Inventory is slightly above that of a year ago (1,635) and it is 19 percent above the inventory last month (1,423). This is the first time in two-and-a-half years where inventory in a current month has exceeded inventory one year prior. This indicates a shift in the market.”
“The inventory of homes and condominiums available in Mendocino County at the end of April stands at 246. This is 92 percent above the inventory in April 2021 (128) and it is 15 percent above the inventory last month (214). The inventory of homes and condominiums for sale at the end of April in Redwood Valley and Calpella is 29 homes. This is the highest that we’ve ever seen in this area. The inventory of homes and condominiums available in Lake County at the end of April stands at 440. Approximately 30 percent of the inventory (114 homes) is in the communities of Clearlake. The countywide inventory is 75 percent above the inventory in April 2021 (251) and it is 29 percent above the inventory last month (341).”
The Ahwatukee Foothills News in Arizona. “‘Your negotiation power is dissipating at a rapid rate,’ the Cromford Report warned sellers in a post last week. ‘It will take several months of this trend continuing to reach a balanced market, but this no longer looks like such a far-fetched idea.’ One sign of a sea shift in the market – and the reason for the Cromford Report’s pessimistic message to sellers – is its market index.”
“‘All 17 cities are cooling quickly and their CMI is dropping 10% or more over the past month. 9 cities have fallen by 20% or more over the last month and one – Queen Creek – by as much as 30%,’ the Cromford Report said. Stating that its index as early as May 9 ‘was the first indicator to sound the alarm about the current market direction,’ the Cromford Report adds, ‘We can now see several other early indicators fall like a sequence of dominoes toppling over. Supply is growing in almost all areas thanks to a plentiful and growing flow of new listings, while homes are going under contract at a slower rate than we have seen for a long time. While all the numbers are low in absolute terms, the 2022 line is shooting skywards like a missile. This tells us that supply is increasing very quickly relative to demand.’”
From Reuters on Canada. “There’s a big risk that asset markets such as the housing sector ‘end up collapsing as rates rise,’ said David Rosenberg, chief economist & strategist, at Rosenberg Research. ‘The bottom line is (that) central banks … overestimated the amount of stimulus that was required last year,’ said Darcy Briggs, a portfolio manager at Franklin Templeton Canada. ‘They overstayed their welcome.’”
The Canadian Press. “A wave of buyer’s remorse is taking shape in several heated real estate markets, after housing prices started dropping and the number of sales slowed over the last two months. Realtors and lawyers in Toronto and Vancouver say they have noticed buyers looking at what options they have to get out of a purchase and sellers hoping to ensure one goes through because conditions have shifted dramatically from the previous highs and frenzied pace.”
“‘With today’s real estate prices, there’s really no option but to go all in and if you’re going all in, and then suddenly you’re realizing that perhaps you made a bad bet and there’s a way out of that bet, you’re going to do whatever you can to get out,’ said Mark Morris, a Toronto real estate lawyer. In recent weeks, he has seen nine cases where buyers want to back out of deals but on Monday alone was approached by three sellers keen to use legal channels to keep purchasers from walking away.”
“Morris doesn’t call the encounters a trend because it’s unclear how many other lawyers are seeing the same spate, but three queries in a day is his new record. He used to see one case of that nature every few months. ‘Purchasers are looking at the existing crisis, and in the best of times, they feel they overpaid, but now they have objective proof that they’ve done so because markets have started to pummel and fall and really shows no signs of slowing down,’ said Morris. ‘Many of those buyers are faced with the option of moving forward or upping and walking.’”
“While Tirajeh Mazaheri hasn’t seen legal action in Vancouver, the Coldwell Banker Prestige Realty agent has seen buyer’s remorse and worry crop up among investors who purchased pre-construction homes a few years ago but have yet to take possession of them. ‘A lot of those people are thinking, ‘Is the market going to be able to justify this price or keep up with the price I paid and can I get this money back if I want to sell in a year?’ she said.”
The Daily Telegraph in Australia. “Home sellers have had a tough time trying to offload their properties at auction this weekend as buyers spooked by interest rate rises and a falling market pulled back from bidding. In Waverley, a cottage described as ‘blank canvas’ for renovators or builders, sold for $2.95m but only after a lengthy pause in proceedings during which it’s understood the vendors dropped their reserve. The auctioneer could be heard telling bidders: ‘if this was last year we’d be fielding offers around $3.5m.’”
“Auctioneer Michael Garofolo said there would be more results like these until vendors started to drop their expectations to ‘meet the market,’ but he warned some perspective was needed. ‘You might be going lower than what you’d get a few months ago, but if you compare it to two years ago, you’re still going to get a fantastic price.’”
From Scoop in New Zealand. “The latest QV House Price Index shows the housing market is under increasing pressure from rising interest rates. Loan affordability constraints are limiting buyers, and those who are in the market are spoilt for choice as listing levels far outstrip demand. Wellington posted the second largest home value drop of New Zealand’s main centres this quarter.”
“QV property consultant Derek Turnwald said Tauranga’s peaking property market was old news for increasing numbers of sellers. ‘There are more and more properties coming to market as owners who have held off until now realise that the market has reached its peak. Listing periods are also extending as supply increases and demand decreases,’ he said. ‘Demand for housing of all values has declined and is now generally subdued. It is a buyers’ market now, with agents also experiencing noticeably less interest from Auckland buyers. With the international borders opening, returning expats could pick up some of the slack, but equally we can expect to see many Kiwis head off overseas as soon as they’re able.’”
The South China Morning Post. “China’s home prices fell across the board last month, with newly completed abodes marking their first monthly decline in almost seven years, as a resurgent Covid-19 outbreak in several major cities exacerbated the slumping property market. ‘The signal is very meaningful,’ said Yan Yuejin, research director at Shanghai-based E-house China Research and Development Institute. ‘The turning point in housing prices fully shows that the real estate market is facing downward pressure.’”
“The data shows the lack of interest by buyers to commit to big-ticket financial commitments like property, said Li Yujia, senior economist at the Guangdong Urban and Rural Planning and Design Institute, a policy advisory body. The second-hand housing market, which suffers from the lack of cachet and marketing support, discounts and promotions for new launches, is even more vulnerable than new projects, Li said. In cities such as Hangzhou, new homes are priced cheaper than lived-in property, putting pressure on the second-hand market, Li added.”