A report from Market Place. “Lately, Redfin Chief Economist Daryl Fairweather has been using the term ‘hibernation’ to describe this changing housing market. ‘Just in terms of, like, how little activity is happening right now for both buyers and sellers,’ she said. Buyers are adapting to the fast pace of change, said Jonathan Miller, CEO of real estate appraiser Miller Samuel. But sellers? ‘It’s hard for them to capitulate to market conditions because they’re sort of wedded to what the value is, and then all of a sudden conditions change,’ he said.”
The East Bay Times in California. “Q: My husband is a real estate agent. Last week, the realty firm where he works had five sets of homebuyers cancel their home sales. My husband’s homebuyers canceled first. It’s infuriating. He worked on behalf of his homebuyers for over a year. Today, I learned all the homebuyers ‘are walking away’ from their earnest money deposit. Where does the canceling homebuyer’s money go? To the sellers or realty firms?”
“A: It is not uncommon for a homebuyer to walk away from a sale and proclaim, ‘They can keep my deposit.’ ‘They’ means the sellers. Full stop. Conversely, your husband, a real estate agent, can only be paid by his agency. Lest we forget, he chose commission-only sales. No sale, no paycheck.”
The South Florida Business Journal. “Ron Shuffield, CEO of Berkshire Hathaway HomeServices EWM Realty in Miami, expects home prices to soften amid a considerable rise in luxury listings. After poring over MLS data from between January and mid-June on homes $2 million and up, he found: Single-family home listings in Miami-Dade were up 46% to 702. Condo/townhouse listings in Miami-Dade were up 5% to 793. Single-family home listings in Broward were up 27% to 349. Condo/townhouse listings in Broward were up 13% to 107. Single-family home listings in Palm Beach County were up 61% to 645. Condo/townhouse listings in Palm Beach County were up 42% to 162.”
“‘It tells me a lot of people have been waiting for this moment to take advantage of high prices and list,’ he said. ‘When you have more inventory than you have buyers, prices will come down some. But it won’t crash. I don’t consider it a bubble.’”
“But demand was already softening in South Florida before the rate hike. Florida Realtors data in April showed a dramatic drop in both single-family home and condo sales. ‘The next few months will probably be stressful for sellers who thought they could keep adding a percent or two to the price every month,’ Shuffield said.”
The San Tan News in Arizona. “Valley homeowners who are hoping to sell their house appear to be heading for rocky water, according to several reports last week. The Cromford Report, a leading analyst of housing market trends in the Maricopa and Pinal counties, said one of the biggest factors threatening to dethrone sellers from the catbird seat they‘ve enjoyed in negotiations for several years is a mix of rising supply and falling demand. The Cromford Report called May sales data ‘worrisome’ because of a 16% year-over-year decline in home sales in the Phoenix Metro market. ‘This leads me to conclude that the market is serious about this change of direction and the new trend is likely to continue for some considerable time,’ it said.”
“Greg McBride, chief financial analyst at Bankrate.com cautioned would-be buyers who hope for a significant price correction: ‘Sellers have been putting homes on the market and asking for moonshot prices. In a neighborhood where homes were selling for $600,000 one year ago, a seller may now be asking $800,000. Sure, they may need to cut the price a bit and eventually sell for say, $725,000, but that is still much higher than the $600,000 it would’ve sold for one year ago.’”
From WTAJ in Pennsylvania. “Local realtors say the prices of homes on the could drop due to a dropping demand in homes. The decline comes after mortgage rates have increased to about 6%, nearly doubling the rate from last year. ‘It’s putting a real squeeze on housing affordability,’ said Adam Conrad, owner of Perry Wellington Realty in Hollidaysburg. ‘Buyers shouldn’t being coming in with lowball offers the first day or two a home is listed on the market,’ Conrad said. ‘You’re going to want to wait a couple of weeks before you start making those lower offers.’”
From Fox Business. “‘People who are looking to buy homes right now are still driven by the same factors,’ said Redfin CEO Glenn Kelman. ‘Rents are up 15% year-on-year. They’re really feeling the squeeze…I just think we’re headed for a recession. ‘If you look at pending sales, they’re down about 8%, but demand is off about 15%…that’s a leading indicator that sales will continue their retreat because people’s stock portfolios have been wiped out.’ Kelman said he doesn’t expect the housing market to ‘crash.’ ‘There will be an uptick in foreclosures, but it will be off a very low number. We have seen no distress in the market whatsoever,’ he noted.”
From Fox 5 Atlanta. “A new report from the Consumer Financial Protection Bureau (CFPB) revealed many homeowners are struggling to make their monthly mortgage payments after exiting COVID-19 hardship forbearances. Homeowners are struggling to transition back into restarting their monthly payments, the report showed. By the end of 2021, 330,000 borrowers’ mortgage loans were delinquent and no longer in forbearance. These homeowners had no loss mitigation in place.”
From Blog TO in Canada. “Though it seemed like it would never actually happen as Toronto housing prices continued to spike to unsustainable prices in recent months, the city’s market — along with the rest of the province’s and country’s at large — is finally cooling somewhat, especially when it comes to condos. After a peak in both sales activity and prices across the board in February, things have been gradually tapering, and prices for coveted condo units in the region have fallen an entire 10 per cent since then.”
“A glut of more listings are being met with less fervent demand, which is a trend the Canadian Real Estate Association says is nationwide for all housing types, led by cities in Ontario, as of May. As Strata experts say, condo buyers particularly in Canada’s biggest city now have more options among far more listings and thus are ‘enjoying a comfortable edge over sellers,’ putting the city officially into buyer’s market territory, although modestly. The Toronto Regional Real Estate Board (TRREB) also shows some big shifts this past month, with a huge drop in volume of actual sales in the region and a small drop in the MLS Home Price Index Composite Benchmark — a decrease of more than $100,000 from February’s high. “
The Toronto Sun in Canada. “This past week was a funny one — everyone I met was either completely beside themselves at the state of the economy and/or real estate market, or appeared entirely oblivious to it all.To some, the real estate market is very much hurdling its way towards an epic 90s-level crash, while to others, we are simply in the midst of a blip, nothing more than a rebalancing of the market alongside a surge of inventory after two years of pandemic lunacy.”
“It honestly feels like I’m straddling parallel universes. On the one hand, you have exasperated real estate agents bemoaning the media circus churning out the fear mongering while encouraging their clients to take advantage and jump in while conditions are finally in their favour. Meanwhile, others are sharing horror stories from the trenches of clients ghosting them, deals falling through, and appraisals coming in short, all in the hopes of adding some radical transparency to this tumultuous time.”
“A house in midtown sold in multiple offers for over a million dollars above-asking last week, while one street over there are currently five great houses that would all have gone in a bunfight just months ago now languishing on the vine. As interest rates shoot up far higher and far faster than anyone could ever have anticipated, we have an entirely unprecedented growth in consumer debt servicing costs. There will be far too many people now upside down on their homes that will need to hunker down and ride this out for years and then there will be many who unfortunately simply cannot. Will the rest of us feel it? Hard to say.”
The Daily Mail. “A chief economist has admitted the Bank of England ‘underestimated’ inflation. The two million homeowners with variable rate mortgages and the 1.3 million borrowers with fixed deals due to end this year face significant hikes. Laura Suter, personal finance analyst at investment firm A J Bell, said: ‘Someone who locked into record low mortgage rates in recent years would face a real financial shock if they came to refinance that debt today.’”
From Domain News in Australia. “Winter is here, and it’s brought more than just a cracking cold snap – it’s brought a property market that couldn’t look more different from this time last year if it tried. Last year’s property zeitgeist of never-ending price rises has instead been replaced by rapid-fire interest rate rises (with more forecast to come), slowing or falling prices (depending on your postcode), and a general sense of trepidation.”
“Alex Jordan of McGrath Paddington says Brisbane is holding up better than Sydney and Melbourne but acknowledged the market had changed very quickly. ‘We’re in a new market,’ he says. ‘Buyers are quick to drop their offers and sellers are still hanging on to prices from six months ago. This transition market is the most difficult to sell in.’”
“In Melbourne, sellers have caught on to the changing market already, according to buyer’s advocate Mal James. ‘Yes, Melbourne sellers are meeting the market. The majority of the market has adjusted, but some sellers are choosing not to sell because they can’t get the price they want,’ he says. ‘People are saying the market is going to fall 10 per cent, but it’s already fallen 10 per cent here.’”
From Bloomberg. “As China’s property slump persists, one developer is trying to entice farmers to buy homes by accepting their crops as payment. Central China Real Estate Ltd. is offering to pay farmers as much as 160,000 yuan ($24,000) for their wheat to offset down payments for homes in its River Mansion residential project in Shangqiu, a city in Henan province, according to a Monday marketing post. Weeks ago, it offered to accept garlic from growers looking to buy homes in another project in Kaifeng city.”
“The move reflects how far some developers are willing to go to attract wary homebuyers as the economy slows and the industry endures a crippling cash crunch. Central China, the country’s 37th-largest builder, recently sought state support when its parent company agreed to sell a stake to the provincial government.”
From The Hill. “It would be an understatement to say that the Federal Reserve has a poor forecasting record. Last year, the Fed’s underestimation of the inflation risk led it to maintain an excessively expansive monetary policy stance. Not only did that stance result in an inflationary surge. It also led to the creation of an equity, housing and credit market bubble. One reason to think that the Fed’s shift to a more hawkish monetary policy stance could bring on a recession is that it has already caused the asset and credit market bubbles it created last year to burst. Since the start of the year, equity prices have fallen by around 25 percent, bond prices have declined by more than 20 percent and the cryptocurrency market has lost around 70 percent of its value.“
“These declines have resulted in a cumulative loss in household financial market wealth of some $15 trillion, or 70 percent of GDP. Using the Fed rule of thumb that for every $1 loss in wealth, households reduce spending by 4 cents, the decline in asset prices to date could result in consumers cutting back spending by 3 percentage points of GDP. All of this suggests that history will not judge the Powell Fed kindly. First it gave us multi-decade-high inflation by being asleep at the wheel when the country was receiving its largest peacetime budget stimulus on record. Now it is very likely sending the economy into a hard landing by slamming on the monetary policy brakes too hard when the economy is slowing and the financial markets are reeling.”
The Canadian Press. “Cryptocurrencies are in free fall. One of the world’s largest crypto exchanges is cutting nearly a fifth of its work force. And a major crypto lender is halting all withdrawals and transactions for its customers, citing ‘extreme market conditions.’ Now, crypto-industry leaders are bracing for the next shoe to drop. Andreas Park, a finance professor who co-founded the University of Toronto’s blockchain research lab, said only time will tell whether regulated players in crypto are any different than others. ‘But what we can certainly say is that the whole idea of ‘my token is better than yours, and let’s invest in a new token so we can make easy money’ is going out the window almost entirely,’ he said. ‘And maybe that’s the lesson we’re all learning from this downturn.’”