A report from USA Today. “Membership in the National Association of Realtors grew from 1.48 million at the end of 2020 to 1.56 million at the end of 2021. Kalyani Dere, a former data analytics professional, entered the field of real estate in 2021. ‘I knew people were relocating to this area during the pandemic,’ says Dere, who works out of Glen Allen, Virginia. ‘And I wanted to catch that wave and make some money.’”
The Idaho Statesman. “Boise real estate agent Kerri O’Hara calls it the fluff on top of housing prices. There was a lot of that floating around when prices in the Boise market boomed throughout the past two years. But that fluff, or juice or froth, as O’Hara puts it, is the first to disappear once the market starts to correct itself. That’s what’s happening now, as prices dropped from May to June, according to the Intermountain Multiple Listing Service. While O’Hara said she thinks fear is driving some of the price drops, she also called it healthy.”
“‘The numbers don’t lie,’ said O’Hara. ‘Instead of having a gradual shift, it seems to have [been] a more dramatic shift. Maybe a month ago was when we started to see it where all of a sudden the demand had dropped off. And just like we saw in July of 2020, when it was like the water turned on, we’ve seen the opposite.’”
“At the end of June, there were 2,135 homes for sale. That’s a 192.9% increase from June 2021 and the highest inventory since September 2016. ‘Buyers know for the first time in a very long time that they have more power,’ O’Hara said. ‘A year ago, you literally had to give a firstborn and a kidney with your offer in order to get something accepted,’ O’Hara. ‘… That seems so jarring, almost 200% increase [in inventory]. Yeah, but 200% from zero. Practically nothing.’”
“‘(Buyers) are not going to pay outrageous prices,’ O’Hara said. ‘The outrageous prices came because of the outrageous demand — that’s over. I think now we return to more of a stable market.’”
From CNBC. “After staggering growth during the pandemic, the U.S. housing market is starting to cool fastest in cities along the West Coast, according to Redfin. The quickest-cooling real estate market is San Jose, California. Six of the top 10 markets are in California, including three in the Bay Area, with four other Western cities rounding out the list. ‘The good news is that these buyers most likely got locked into a lower interest rate, so the payments should be more manageable than someone buying now,’ said Matthew Chancey, a certified financial planner with CoastalOne in Tampa, Florida.”
“If you overbid on the property, you may be ‘underwater’ in the short term, meaning you owe more on the mortgage than the home is worth, he said.”
The South Florida Business Journal. “Billionaire James G. Dinan sold a Miami Beach condo for $18.7 million. He took a loss on the deal. Dinan sold the 4,381-square-foot Unit 14-A in Faena House at 3315 Collins Ave. to the AJT Residence Trust. The price equated to $4,268 a square foot. The condo last traded for $20 million in 2015, so it sold at a loss. While most luxury condos in Miami-Dade County have gained in value recently, luxury condos are a highly speculative investment wherein their value depends not on how much wealthy buyers can afford, but on supply and demand.”
The Silicon Valley Business Journal in California. “While San Jose home values increased 17.8% from May 2021 to an average of $1.56 million this in May, homebuying demand is dropping off. One factor affecting this trend has been a weakened Wall Street since tech employees often have stock equity as part of their compensation packages, the report said. That, combined with an inflated cost of living, makes prospective home-buyers concerned about their budgets and leery of buying a home right now.”
“‘Would-be buyers are shying away because they simply have less money, both for down payments and monthly payments,’ San Francisco Redfin agent Joanna Rose said in the report. In February, the available housing supply was down 43% compared to 2021. As of May, supply was 10% above 2021 levels, a sign that the supply-demand pendulum quickly swung in the opposite direction.”
“Additionally, homes are now taking longer to sell and at a lower price, according to the report. Sacramento and Oakland’s cooling housing markets closely followed San Jose’s at #2 and #3 on the list, respectively. San Francisco, with homes averaging $1.62 million, ranked at #10 on the list.”
The Dallas Morning News. “The North Texas housing market continued to cool down in June from the red-hot environment seen earlier this year. In June, 9,133 preowned single-family homes sold in Dallas-Fort Worth — down 8% from June 2021, according to the Texas Real Estate Research Center at Texas A&M University and North Texas Real Estate Information Systems. Active home listings in D-FW were up 60% in June, according to Texas A&M data. Collin County home sales, including single-family homes, townhomes and condos, decreased the most of the major North Texas counties, according to the MetroTex Association of Realtors.”
The Real Deal. “It was fun while it lasted. Contract activity slowed across New York’s new developments in June, according to a Marketproof. In all, buyers signed 264 contracts, a 26 percent drop from May’s 359 deals. While the numbers show that the market’s sugar high is over — a combination of higher mortgage rates and the end of the spring selling season — some see it as a return to pre-pandemic normalcy.”
“‘Some analysts are sounding the alarm for a correction, but with overall pricing still above 2019 levels, it’s too soon to call this a downturn,’ said Kael Goodman, CEO of Marketproof. Brooklyn had a rougher go of things. Contract activity in the borough slipped below 2019 levels as it recorded its worst month of the year. New developments posted 90 sponsor contracts, a 16 percent decline from June 2019.”
“‘A lot of things are changing right now — we’re in the middle of it,’ Goodman said. ‘Where things land is still unclear.’”
From Forbes. “In a regulatory filing, California-based loanDepot said it has cut about 2,800 jobs this year and expects to cut about 2,000 more by year’s end, as part of a plan to ‘aggressively’ cut costs by about $400 million on an annualized basis; the company currently employs about 8,500 people. ‘After two years of record-breaking volumes, the market has contracted sharply and abruptly in 2022,’ CEO Frank Martell said in a statement. LoanDepot is far from alone in laying off employees: Wells Fargo and JPMorgan have announced rounds of layoffs, cutting thousands of jobs in their home-lending departments, and last month, real estate firms Compass and Redfin cut about 450 jobs each.”
“Mortgage originations jumped from $2.3 trillion in 2019 to more than $4 trillion in 2020 and 2021, but demand has since plummeted to the lowest level in more than two decades.”
From CTV News in Canada. “The rising interest rate is believed to be one factor leading to the housing market cooling in Simcoe County after record-breaking years during the pandemic. Houses in Simcoe County were selling on average for one million dollars at the market’s peak in late 2021 and early 2022 but have since dropped in price. According to the Barrie and District Association of Realtors (BDAR), although prices have dropped around 20 per cent since the peak. ‘You don’t sell a house in 30 seconds. There aren’t 17 people waving their cheque books at you. This is normal stuff,’ said Lance Chilton of Remax Hallmark Chilton Reality.”
Canadian Mortgage Trends. “Last month, Magenta Capital Corp. announced it would temporarily stop taking new loan applications until September. And last week, the Globe and Mail reported that Fisgard Asset Management Corp. was no longer offering new construction financing in select provinces. Both are Mortgage Investment Corporations (MICs), which fall in the alternative lender space and thus have different underwriting and funding processes compared to chartered banks and other ‘A’ lenders.”
“Of course, changing market conditions also played a role in that decision, especially when construction costs have increased and values are declining, said Hali Noble, Fisgard’s senior VP of residential mortgage investments and broker relations. ‘Part of the underwriting process is obtaining a current market value of the ‘as complete’ home. Our appraisers provide us with a value based on what they think it’s going to be worth in today’s market,’ she explained. ‘But of course, 9 to 12 months from now when construction is complete, the value could be quite different, possibly lower than expected.’”
From Bisnow Birmingham. “One of the UK’s highest-profile modular housebuilders suffered a death spiral caused by poor quality work at its Midlands factory. The collapse highlights why the modular sector is not expanding as fast as some had predicted. It also leaves half-built schemes scattered around England.”
From Stockhead. “Across Australia home auction activity has stalled again just days after the central bank lifted the cost of borrowing at a third straight meeting. According to Domain, the early data suggests national auctions activity is more than one fifth quieter than the more than 2,100 auctions held this time last year. The numbers out of Domain suggest Sydney’s auction clearance rate has dropped to its lowest level in years, with almost one in two homes failing to find a buyer.”
“The property platform’s auction clearance rate dropped to 52.1% in June. They now say one in four sellers chose to scrap or postpone their scheduled auction. There was also a fair bit of consternation on social media at the data property firm’s calculations regrading the sudden sharp falls in Sunday’s CoreLogic daily house price series.The number of distressed listings across Australia also grew in June according to SQM Research’s Louis Christopher, with the trend likely to continue winding it’s way back to pre-pandemic levels sooner than later.”
“SQM’s latest work on June distressed listings has uncovered an almost 5% rise month-on-month. There were some 6,014 fast-track sales – a number SQM Research director Louis Christoper notes is more or less consistent nationwide. The strongest distressed listings out of NSW (over 10%) and in Victoria (6.2%).”
The Sydney Morning Herald. “Chinese authorities will start repaying most of the victims in the nation’s biggest bank scam after hundreds of angry customers took to the streets to ratchet up pressure on the government. Hundreds of bank customers protested on Sunday after similar demonstrations broke out in May and again in late June in Zhengzhou, a city of some 10 million people, calling on the authorities to return tens of billions of yuan of deposits in a suspected financial scam. That has prompted the banking watchdog to speed up drafting a plan to resolve risks even as a police investigation is still ongoing.”
“An official probe into the case had found that Henan Xincaifu Group Investment Holding Co, a private investment firm with stakes in the five lenders, colluded with bank employees to take deposits and marketed financial products via other online platforms and then transferred money by fabricating lending agreements. Accounts at the banks were frozen as part of the investigation, and depositors have been unable to access their savings.”
“‘The latest move shows the local government is trying to maintain social stability by advancing a small amount of payments out of their pockets,’ said Liao Zhiming, the chief bank analyst at China Merchant Securities. He expected future large-sum payments to some customers won’t be made in full because the funds aren’t considered as deposits and won’t be protected by the nation’s deposit insurance scheme.”
“Smaller banks, faced with rising nonperforming loans after years of explosive growth and poor internal controls, are seen as particularly vulnerable. China has nearly 4000 small and medium-sized lenders that collectively control almost $US14 trillion ($20 trillion) in assets. But confidence in the these banks has waned since 2019, when the government seized a lender for the first time since 1998 and imposed losses on some creditors.”
From Reuters. “A growing number of homebuyer groups across China wrote to local regulators and banks that they will stop repaying mortgages as a protest against unfinished developments, local media reported. According to real estate news outlet Leju, as of Tuesday afternoon (Jul 12) such letters have been issued for at least 14 developments involving 46,000 homebuyers and 35 billion yuan (US$5.21 billion) worth of properties.”
“The homebuyers, who bought the properties in pre-sales many years ago, were not able to take them over many months after the scheduled dates as the developers failed to make progress or complete the construction. Many of these developments are in lower-tier cities and owned by distressed developers including China Evergrande, China Aoyuan, Sinic and Shimao. In the letters posted online, the homebuyer groups blamed local commercial banks for improperly granting mortgage loans to developers and insufficient oversight of the escrow accounts, resulting in misuse of funds and construction suspension by developers.”
“The letters added the homebuyers will cease mortgage payments unless developers and commercial banks take action to resume construction. The news deepened worries over the debt crisis in the sector, further dragging down the property shares listed in Hong Kong on Wednesday. Country Garden and CIFI closed down over 8 per cent and 13 per cent, respectively.”
From The Street. “It’s not a matter of ‘if’ but a matter of ‘when’ the housing will lose its luster, and residential real estate prices will decline. In fact, evidence is emerging that the downward trend has already started. ‘In the US, mortgage applications have fallen by 28% from their peak, new home sales are down by 17% and housing starts have dropped by 13%,’ said Neil Shearing, chief economist at Capital Economics in a new research note. ‘A similar story is playing out in the UK, Canada, Australia, New Zealand, and Sweden.’”
“The fall is inevitable and the primary question now is how low prices will go for the real estate market. ‘Central bankers giveth and central bankers taketh away,’ Shearing said. ‘It was their low-interest rate policies which helped fuel an extraordinary – and extraordinarily global – rise in house prices. As a generational rise in inflation brings that low-rate era to a rapid close, our earlier warning that housing markets would prove most vulnerable to policy tightening is becoming a reality.’”