A weekend topic starting with WTOP. “‘We’ve seen a huge slowdown in demand. In fact, I’m talking to real estate agents who are canceling open houses because they say nobody is showing up right now,’ said Diana Olick, who has covered real estate for CNBC for two decades. ‘The sky is no longer the limit for homeowners. And that’s what real estate agents are having to tell them.’”
From CBS News. “‘The housing market is in a downturn right now. It’s cyclical, and it just doesn’t support the number of employees we had before,’ Chief Economist of Redfin, Daryl Fairweather, said. Realtor Tina Yassin has been trying to sell a home in Arlington, Texas, for 28 days. The home saw a price drop but still hasn’t attracted buyers. ‘This home, I imagine that, six months ago, would have sold,’ realtor Tina Yassin said. ‘Would not have been on the market two weeks later.’”
“Yassin said the demand drop depends on the market and area. In areas like Dallas-Fort Worth, prices are steady — but most realtors are telling sellers not to expect bidding wars, especially on homes that need some work. Meanwhile, markets like Toledo, Ohio, Rochester, New York and even Chicago and Los Angeles, have seen prices drop.”
The Dallas Business Journal in Texas. “‘While none of the builders want to see a slowdown, we’re in an unhealthy mode right now,” said Ted Wilson, principal with Residential Strategies, Inc. Wilson said builders just adding to the number of units they have under construction is not a good trend. ‘Going forward, they’re going to meter out future starts to more closely approximate how many units they’re actually closing,’ he said. ‘A lot of builders have been maintaining these prospect lists, which is how they’ve gone about selling their houses. What we’re hearing is that the size of those prospect lists is getting whittled down.’”
The Dallas Morning News. “Adam Perdue, an economist for the Texas Real Estate Research Center at Texas A&M University, said the Fed is facing a tightrope walk between raising rates fast enough to tamp down inflation without raising rates too fast and causing a recession. Whatever happens with interest rates could dramatically shift the housing market. ‘If we manage to get back to a normal economy, then we would expect [home] price appreciation to fall for a few years until we get back to our trend line,’ Perdue said. ‘If they end up pushing it too far and we end up in a recession, we might actually see prices fall.’”
From Bloomberg. “On the edges of US Sun Belt suburbia, the wait lists for new houses are gone. And homebuilders are doing something they haven’t done in years: slashing prices.The fastest-rising mortgage rates in decades have cooled demand so abruptly in many hotspots that it took the industry by surprise. Builders that were artificially limiting sales and auctioning houses to the highest bidder now have inventory to move.”
“In the Austin, Texas, and Nashville, Tennessee, metro areas, for instance, the share of new-construction offerings with price cuts has quadrupled from a year earlier, according to Redfin Corp. They tripled in Phoenix and doubled in the Tampa, Florida, region.”
“‘We are in a different place — the builder can no longer name a price and say, ‘pay it or move along,’ said Nicole Freer, a Houston agent who has slashed prices by $2,000 to $20,000 on homes she lists for builders. ‘They’re telling us: ‘Our managers have allowed us to negotiate again.’ Of her roughly 120 listings for builders, about 70% now have cuts, she said. “
“In the Phoenix metropolitan area, 22% of new-home listings had price cuts from May 9 through June 5, up from 7% a year earlier, according to data from Redfin. In Tampa, the share jumped to 21% from 9% a year earlier, and in Austin, it climbed to 13% from just 3%. A PulteGroup Inc. website shows 146 finished homes in Arizona, mostly with price reductions. Jim Zeumer, vice president of investor relations, said those appeared to be typical incentives used to sell spec houses — those built without a buyer in place — that are complete or will be finished soon.”
“A key metric to watch is the contract cancellation rate, said Rick Palacios, research director at John Burns Real Estate Consulting in Irvine, California. It topped 9% nationally in May, according to his company’s survey of builders, up from 6.6% in April. ‘The writing is on the wall that more supply is coming, no matter how you slice and dice the data,’ Palacios said. ‘Builders are trying to get in front of that wave. We could have the double-whammy of the economy cooling and a lot of supply coming on. That’s not the best recipe to sell homes.’”
From ABC 15 in Arizona. “The Valley of the sun’s real estate market is still hot, but cracks are starting to appear. Listing data is where the cracks start to form. Price reductions have been rare in the past few years, but in the past few months, they have spiked to a market share of 9.8% which is just off the five-year high of 9.8% in late 2018. Inventories are starting to rise as well. Home inventories rose 29% in eight months of last year. This year they have risen 21% in four months. More new housing permits typically signal a growing market, but just this past month housing permits dropped by over 1,900, one of the largest drops since record keeping began.”
From Money. “Many markets are slower. Nicole Rueth, producing branch manager at The Rueth Team in Denver, notes that real estate agents she has spoken to have listings with very few showings and no offers. In less competitive areas you don’t have to be as aggressive. During the height of the pandemic buying frenzy, Rueth encountered people who were willing to purchase a house on busy streets with power lines running overhead simply because it was a house and there weren’t any other options available.”
“But now, more inventory is coming onto the market. Active listings increased by 17% year-over-year during the second week of June. Fewer buyers are going to have to settle for whatever happens to be for sale. Instead, they can focus on how that house fits their lifestyle and their financial needs. Rueth says buyers now need to ask themselves: ‘Is this home really worth this amount of money?’”
From WKRN on Tennessee. “Those out-of-town cash buyers and California companies continue to anchor the Nashville market. However, with rising mortgage rates, we are seeing some changes. Active housing inventory is up 45% over last year. ‘We are seeing sellers getting more anxious and realistic about losing the window of opportunity to sell,’ said Jeff Checko, relocation director at RE/MAX Advantage. ‘I really think our values, while we’ll see kind of a screeching halt but a stop to this rampant appreciation, I don’t think we’re going to be looking at people that are upside-down so to speak and having a lot of non-performing assets with bank-owned properties or anything because people in our market will still have opportunities and options.’”
From KMVT on Idaho. “Western Magic Valley Realtor president Lisa Haney said last year the median price for a home in the Magic Valley was just under $300,000. It is now around $380,000. ‘It has just snowballed, and we are finally cooling down. The market is finally slowing down. We are catching up with inventory,’ Haney said. ‘They call this the great disinflation of the housing market and that is clearly underway,’ University of Idaho associate professor Steven Petersen.”
The Oklahoman. “If the spike in interest rates turns around the sellers’ market for homes and puts buyers back in charge, the boom will have gone out with a bang in Oklahoma City, not a wheeze. The increase in listings as sales remained flat pushed the supply of homes for sale through Realtors up 41.7%, enough to last one month, up from 21 days a year ago. ‘We are starting to feel a slow shift in the market but the ‘shift’ is actually normalizing the market,’ said Amanda Kirkpatrick-Lawler, broker-owner of Metro Mark Real Estate. ‘We are still in a sellers market, but sellers are starting to be more realistic than before.’”
“The market still holds challenges for buyers, and some sellers, Will Flanagan, managing partner of Kevo Properties said. ‘I’ve had clients that approached me wanting to make a list price offer, which at this point may as well be considered a lowball offer,’ Flanagan said.”
The Daily Independent on California. “Some buyers are taking this rise rather cautiously as the local housing market has cooled off a bit this week from the buying frenzy that began in the spring of 2020. Local appraisers, home inspectors, and realtors report their workload and pace of activity has tapered off a bit. At present there are 41 site-built homes on the market.”
From Fox 5 in California. “After a rapid increase in home values across San Diego County, recent data shows the first signs of a market that is finally cooling off. ‘If your finger is on the pulse of the market you look at the inventory, look at the reductions, look at the market days. What’s going on here and is it a blip or a trend,’ FOX 5 real estate expert Ken Kaplan said. ‘Homes are receiving one or two offers instead of 20 and not going over asking price, but maybe at asking price.’”
“Kaplan says this slow but steady shift began about 60 to 90 days ago and he’s seeing anywhere from 5 to 20% of the existing inventory being reduced in certain areas. ‘Asking for sellers who’ve been on the market for a little while for closing cost, for help with buying down the rate so you can get that great rate, those things that were off the table previously are now kind of back on the table,’ Kaplan said.”
From 425 Business in Washington. “WaFd Bank CEO Brent Beardall delivered the Midyear Economic Forecast at the Bellevue Chamber’s fourth annual luncheon Thursday. Chief among the stated concerns was the rate of inflation, which he noted is seeing its biggest increase in more than 40 years. ‘Toto, I’ve got a feeling we’re not in Kansas anymore,’ Beardall quipped about the drastic surge. ‘The world has changed — it’s changed dramatically, and it’s changed quickly.’”
“‘Part of the reason for that,’ he said, ‘is the officials at the Federal Reserve were unfortunately mistaken when they saw the first signs of inflation. They said it’s transitory, that it’s not going to be sustainable. And they were unfortunately wrong, at least in the short term.’”
“Moving on to real estate and using the example of a $1.6 million Bellevue home — the average home price in the city according to Beardall’s data — he played out mortgage rate increases thusly: ‘In December last year, the interest rate was about 3.5 percent and your monthly payment was $5,748. Think about what happens if you’re just willing to take the increase in interest rate through to your mortgage. That means your mortgage goes from $5,700 to $7,700, an increase of 35 percent in your mortgage payment to buy the same house.’”
“For some consumers, Beardall said up to 70 percent of their income could solely go to housing in the current market. ‘If you asked me, ‘Brent, are you nervous about home values when you’ve got $6 billion of single-family loans on your books?’ Of course, I’m nervous about home values,’ he told the audience. ‘But do I think it’s a bubble? No. Because if you’re in an inflationary environment, what do you want to own? Real assets.’”
“Beardall recalled previous economic forecasts, during which he urged caution regarding crypto. ‘It’s good to finally be right if you’re stubborn enough like I am,’ he said with a laugh. ‘For those of you that have heard me the last few years, I’ve said cryptocurrencies are the biggest Ponzi scheme of my lifetime. And I think that’s coming to fruition.’”
“Crypto is so volatile because it has no repayment source, “unless there’s a bigger sucker than you,” Beardall said. He went on to point out that earlier this year, the cryptocurrency market had a larger market cap than all the banks in the United States combined. ‘Let that sink in,’ he said. ‘Now, there’s some reason coming into the marketplace.’”