A report from the Times Leader in Pennsylvania. “‘Home values in the region saw more growth from 2020 to 2021 than the entire previous decade,’ said Jill Avery-Stoss, Director of Operations at The Institute for Public Policy and Economic Development. ‘Lackawanna and Luzerne Counties saw year-over-year increases of 18% and 26%, respectively. Pennsylvania as a whole saw a 20% increase in home values from 2020 to 2021, equating the previous decade’s growth in just one year.’”
From Inside Tucson Business in Arizona. “‘We are seeing homes stay on the market a little bit longer, and we’re even seeing some home price reductions,’ said Jodi Koch, president of the Tucson Association of Realtors. Tucson’s real estate market remains a seller’s market for homes in certain price ranges, Koch said. But sellers, in general, are not going to be receiving 20 offers and are probably going to have to reduce their price. Buyers, Koch points out, are seeing more opportunities to purchase a home this year. ‘Last year at this time we only could show a buyer one house every few days,’ Koch said. ‘Today, if a buyer calls me, I might have 10 homes to show him.’”
The Colorado Springs Business Journal. “The Colorado Springs real estate market finally began to cool off during June. Active listings of homes for sale in El Paso County were up 108.9 percent in June compared to 2021, and sold listings were down 7.8 percent, CAR reported. There are early signs that the market and high buyer demand is and will trend downward, according to Patrick Muldoon.”
“‘For the buyers who sat on the sidelines, whether on purpose or because they could not swing the insane real estate market, it is going to pay off,’ said Muldoon, a Springs-based realtor and spokesperson for CAR. ‘What we are witnessing in real time, we will all look back at and realize was the slow leak of a once over-inflated real estate market balloon across the Front Range.’”
“Muldoon said it’s an encouraging market for buyers and warned sellers that their ‘time has now come to an end.’ ‘Buyers, you finally have inventory hitting the market that you have not seen in years,’ he said. ‘The inventory is not selling as fast and sellers are price dropping, accepting concessions, and most sellers know that the market has shifted and they are being reasonable.’”
The Tampa Bay Business Journal in Florida. “Nationwide, people are canceling deals to buy homes at the highest rate since the start of the Covid-19 pandemic. The data shows that 23% of pending home sales fell out of contract throughout Tampa Bay last month. In addition to purchase agreement cancellations, homebuilders’ cancellation rates also saw a jump last month, according to research done by John Burns Real Estate Consulting. ‘Home builder cancellation rates jumped in June. Already above end of 2018 levels when rates touched 5% and approaching 2020 COVID panic peak,’ — Rick Palacios Jr.”
From Go Banking Rates. “The data, released by Redfin, indicates that figure (14.9%, to be precise) as the highest percentage of home sale cancellations on record excepting March and April 2020, when the housing market halted due to the onset of the coronavirus pandemic. It is also a significant increase compared to the 11.2% of canceled deals in June of 2021. ‘Buyer’s remorse and cancellations shortly after contract are increasing. Builders state buyers are nervous about a potential recession, struggling to get comfortable with higher payments, or expecting home prices to decline,’ Jody Kahn, senior vice president with JBREC, told CNBC, adding that in her mid-June survey she continued to see cancellations on the rise.”
The Nevada Appeal. “It was just a couple of months ago that we were in a super strong seller’s market. Over the past couple of months, interest rates have about doubled, housing inventory (residential lots included) has increased, and offers are not as forthcoming as they were just a short time ago. Homes can now be on the market for a couple of weeks without seeing an offer. While this is actually quite normal in the real estate world, when it is compared next to the tumultuous market we experienced over the past 18-24 months, it seems as if we are dead in the water.”
“Prices are being adjusted downward a bit, but nothing like the freefall of 2008-09. Some interesting things are occurring, however, that can give pause to ponder. Nationally, 14.9 percent of the active escrows in June canceled. It is risky comparing our Northern Nevada market to national phenomenon as we have limited privately owned land (remember, Nevada is 87 percent federally owned) and we are close to our feeder market, California.”
“Some escrows are being lost due to the loan locks either expiring, or, in some weird instances, the lenders not honoring their rate locks due to the dramatic increase in rates. Either way, escrows are lost. This is impacting builders in a big way as their escrows are extended longer than the average escrow due to the time required to complete the build. If the market falls in a big manner, things like inspections and appraisals become more important. The results can open the exit door for a buyer leaving the seller holding their home. This stops the dominoes from falling in a contingency sale causing tight jaws all around.”
From Candy’s Dirt in Texas. “My phone started ringing off the hook on June 5 with Realtors asking me what the heck was happening and what could they do to move a house faster. I scrolled through luxury home listings last Friday, as I do every week, particularly looking at homes priced at $3 million and above in my search for a worthy Monday Morning Millionaire. Most properties desperately needed staging. I heaved a sigh and thought about how we could help Realtors convince their clients to do what is necessary to market these luxury homes that look, well, not so luxurious.”
“We have luxury homes sitting on the market for 400 and 500 days. We have millions of dollars in price reductions on some of these. It’s time to make some decisions and face reality. If you choose not to, you are going to be in a situation where a listing is on the market for two years and you will have had to lower the price by several million. No one is going to be happy. I called up the stagers that work on our luxury listings to get their insight. I suggest you download this post and put it in your listing presentations. That way, you can weed out the bad clients immediately.”
The Los Angeles Business Journal in California. “The house-buying craze in Los Angeles has lost momentum, in some cases forcing agents to advise clients to lower list prices, rely less on bidding wars and in certain scenarios even cut commission rates. ‘We’ve definitely started to notice a pullback in the market,’ said Jon Grauman, director of estates at The Agency. ‘The market is literally shifting beneath our feet, and until the market finds its footing, it’s hard to get an accurate gauge. But there’s certainly a sense of hesitation in the market.’”
“Kerry Ann Sullivan, a real estate agent at Pardee Properties, said she noticed a shift in the market beginning in May, when talks of rising interest rates began. Between February and April, Sullivan said homes she had on the market were receiving 10 to 15 offers, while now her properties receive one or two.”
“‘That, to me, let me know that buyers are experiencing fatigue and there’s fear now starting to creep in because of what was being talked about in the media and on the news and by economists,’ Sullivan said. ‘By the middle of June, we’re starting to see the sellers who are realizing that their properties aren’t selling for the same prices that they would have sold for in that hot spring market, and we started to see some of the sellers accepting either lower offers or starting to do their price reductions.’”
“Grauman said that agents should have ‘frank, honest, candid’ conversations with their sellers to let them know what is happening and what they can anticipate. ‘We try to have an honest conversation with our clients about the fact that we are likely headed for some type of a dip here and that it starts with a decline in the volume of transactions,’ he said. ‘As that happens, there’s likely to be an adjustment to the housing prices, which will be reflective of whatever the new level of demand is, but the hit to home prices will ultimately be predicated upon how high interest rates go and how long they stay there for.’”
The Los Angeles Times. “Don’t look now, but Southern California’s hot housing market might be cooling off. Sales are down, inventory is up and some properties are even getting price cuts — including a few featured below. East Los Angeles feels like one of the few remaining areas around L.A. where $700,000 buys a lot of house. Not some one-bedroom bungalow with 500 square feet or a possibly illegal accessory dwelling unit tucked behind a property, but a real house with two stories, three bedrooms and maybe even a garage.”
“The largest home on the list at more than 1,800 square feet, this blue abode boasts three bedrooms and three bathrooms, as well as an open floor plan with a fireplace. It’s down $135,000 from its original asking price, and the listing also notes that the seller will pay $5,000 of the buyer’s closing costs. The address: 4121 Zaring St., Los Angeles, 90063. The price: $714,900.”
The Globe and Mail. “Negative equity is a concept Canadian homeowners have not had to deal with in decades, but rising interest rates and falling real estate prices now have advisors bracing for a wave of clients with homes worth considerably less than what they owe their mortgage lenders. Hilliard MacBeth, financial advisor in Edmonton and author of the 2015 book When the Bubble Bursts: Surviving the Canadian Real Estate Crash, warns waiting might not be an option for homeowners who bought during the recent pandemic-fuelled buying frenzy.”
“‘Anybody who bought in the past couple of years is probably very vulnerable to negative equity fairly quickly,’ he says. ‘If you look at some of those suburban markets around Toronto, there are tons of people that bought a home for $1.5-million who now can’t sell it for $1.2-million.’”
“Mr. MacBeth adds that unless they put a substantial down payment of well over 20 per cent, which he doubts, they’re already in negative equity. If any of those homeowners encounter life events such as an illness or job loss and need to sell their home, ‘they’re now in real trouble,’ he says.”
The Daily Telegraph in Australia. “It was once a path to the Aussie dream for those willing to get their hands dirty, but doing home renovations has more recently become the ultimate nightmare for property owners. With materials costs soaring, tradie shortages looming and budget blowouts on the cards, many once exuberant home renovators are now abandoning their projects after numerous setbacks. Some have even called it quits after works had already started. A raft of half-built homes, some stripped to an empty shell of roof beams and structural timbers, have been coming up for sale – often below the prices the vendors paid. Some of these sellers admitted the monetary loss was a better and sometimes cheaper option than completing a renovation in the current climate.”
“Former Northmead resident Bianca Pratt is among the Sydney homeowners who abandoned plans to renovate their homes and said the decision became an obvious one. Her family had ambitious plans to renovate their property but when they realised the cost would blow out to more than $400,000 they decided proceeding with the plan wouldn’t be worth it.”
“‘We would have spent all that money and we still wouldn’t have got all the work we wanted,’ she said. ‘It was also hard to know how long it would take. We tried to get quote for work, but we couldn’t even get a trade to come in and look at the property. They just weren’t interested.’”
The South China Morning Post. “Three quarters of China’s most indebted developers have missed completion and handover deadlines. Known in Chinese as lanweilou, these unfinished apartments, villas and homes lie strewn across an estimated 218 housing projects in more than 80 cities all over the country, sending thousands of buyers into revolt. In defiance, many buyers are refusing to pay their mortgages to their banks, putting pressure on the financial system. The borrower revolt, egged on through open letters circulated on China’s ubiquitous social network WeChat, has spread like wildfire, enveloping the cities of Zhengzhou, Changsha and Xi’an in China’s heartland.”
“‘The hole in China’s housing market is much bigger than the bond defaults or declines in developers’ shares that we saw last year,’ said Tommy Wu, the lead economist of Oxford Economics. ‘[The developers] just do not have enough money, and the spillover effect to ordinary people’s lives and banks could be haemorrhaging.’”
“Sam Chen, who bought a home being built by China South City in eastern Jiangxi province, is one of those who has been drowning in the aftermath of the country’s liquidity tsunami for developers. After signing for the home in July 2020, he has spent two years struggling to pay his 2 million yuan (US$296,000) mortgage at a rate of 7,000 yuan per month.”
“‘What did I do wrong? That is the question that I have constantly asked myself in the past year,’ said Chen, who was supposed to be able to move into his190 square metre condo in the provincial capital Nanchang last September. ‘Probably ever since the moment I decided to buy this house, my whole life just cannot be right again.’”
“After construction halted in mid-2021, Chen and hundreds of other homebuyers did not get a direct answer from the developer. News about China South City finally came in January, when it was revealed that the developer begged its creditors to extend two US dollar-denominated bonds totalling US$700 million. On a recent visit, Chen’s condo sat in a shell of a building among dozens of others, some three kilometre’s walk from the city’s government, with windows and pipes for gas and sewage nowhere to be found.”
“‘Can you believe that a parcel of land that is close to the government can just sit unfinished? I do not know what I can trust nowadays,’ Chen said.”
“Chinese homebuyers are now losing patience. Buyers of properties across nearly 100 projects in more than 50 cities have made public letters they sent to banks to inform their lenders that they would no longer be paying their mortgages, according to China Real Estate Information Corporation (CRIC), one of the country’s largest real estate brokers.”
“‘The contagion is spreading from these property companies’ liquidity issues to banks and it could end up with more pressures on those already distressed companies, as banks will be extremely cautious with mortgages while potential home seekers may step back to the sidelines in the short term,’ said Yan Yuejin, director of the Shanghai-based institution. ‘We are seeing a vicious cycle,’ Yan added.”