A report from Fox News. “‘For the last seven straight months it has been going down and this is a huge drop – and I think all it says is, ‘Somebody do something or we’re going to go into a recession,’ said National Association of Home Builders CEO Jerry Howard.”
US News and World Reports. “The confidence of homebuilders fell 12 points in July in its sharpest drop since the early days of the coronavirus, the National Association of Homebuilders reported. ‘In another sign of a softening market, 13% of builders in the HMI survey reported reducing home prices in the past month to bolster sales and/or limit cancellations,’ said association Chairman Jerry Konter, a home builder and developer from Savannah, Georgia.”
From Business Insider. “‘This was an accident waiting to happen,’ Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note. ‘Homebuilders have been in denial about the extent of the drop in demand, despite mortgage applications falling by more than a quarter over the first half of the year, with no end in sight to the decline.’ Shepherdson added that buyers now have more choice in the market given the surplus supply of new homes, while the index could fall further. ‘Pretty soon, anyone who has bought a home in recent months will be sitting on a loss,’ he said.”
From WJW on Ohio. “Brendan Durkin, of Rocky River, knows the stress firsthand after recently purchasing a new home prior to selling his previous house. ‘We were excited for five minutes and now we’ve got to sell our house,’ said Durkin. ‘We ran into the mortgage interest rate rise a little bit with our new house.’ ‘Longer time on market which is something we haven’t seen over the last 18 to 24 months,’ said realtor Mark Vittardi of CENTURY 21 DePiero & Associates. ‘Properties coming back to market, that’s something we haven’t seen all that often over the last 24 months as well.’”
“After frustrations trying to find the perfect home, Kia Durham decided to work with a builder to construct a home in a west side suburb. She realizes new construction is not immune to market fluctuation. ‘You absolutely adore this home and you’re making all sorts of bids and you’re like, ‘OK, I’ll put in another bid, I’ll put in extra money,’ and then for other people to outbid you, can’t sleep at night,’ said Durham.”
From Fortune. “The biggest beneficiary of that WFH homebuying wave was undoubtedly Boise—where home prices skyrocketed 53%. But that Boise honeymoon is over. The downward slide in Boise has only just begun, according to Rick Palacios Jr., head of research at John Burns Real Estate Consulting. By December, the real estate research firm projects that home prices will be negative in Boise on a year-over-year basis. In order for that to happen, Boise would not only have to lose all of its 2022 gains—which is already starting to happen—but also fall under its December 2021 price. Boise isn’t the only market that has seen its home price ‘top’ blow off. Markets like Phoenix and Austin have also, Palacios says, entered into a downward slide.”
“‘You could make a strong case that in a lot of housing markets the last 10% of home price appreciation was purely aspirational and irrational, and that’ll come off the top really fast,’ Palacios says. ‘That’s exactly what we’re all seeing right now.’”
“‘Investors sometimes move in a herd. If Phoenix real estate isn’t the cool investment anymore in 2022, it could have a big and quick impact on home sales. If a lot of investors decide to sell…Yikes. Live-in owners don’t sell just because they think it’s the top of the market or because prices are fading but investors will and we have a lot more investor-owned houses now than we used to,’ John Wake, an independent real estate analyst based in Phoenix tells Fortune.”
“Over the past two years, home prices in bubbly markets like Austin and Phoenix have jumped a staggering 61% and 59%, respectively. But don’t be surprised if those markets lose a chunk of it. ‘If you don’t think that we need to give some of that back, then I don’t know what planet you’re on. It doesn’t make sense,’ Palacios says.”
From Deseret News. “Yet again, a city in the West has seen the nation’s largest share of home sellers cutting their asking prices. In May, it was Provo, Utah. In June? Boise, Idaho. That’s according Redfin, which shows nearly two-thirds — 61.5% — of homes for sale in Boise, Idaho, had a price drop in June. Another western city, Denver, took the No. 2 ranking for the city with the largest share of homes that saw price cuts, with 55.1%. Next, in the No. 3 slot, is Salt Lake City — which saw a 51.6% share of homes with asking price cuts.”
“The common denominator for all of these cities? They’re all in the West where housing markets exploded, especially over the last two years. Other cities have also seen larger shares of homes with price cuts in June. Tacoma, Washington, saw 49.5%; Grand Rapids, Michigan, saw 49.3%; Sacramento saw 48.7%; Seattle saw 46.3%; and Portland, Oregon, saw 45.7%.”
“‘Today’s sellers feel they’ve missed out on the hot sellers’ market and in some ways they have,’ said Andy Potarf, a Redfin real estate agent in Denver. ‘They’re probably not going to get multiple offers and sell their home way over asking price, but we can still sell a home for a fair price.’”
The Dallas Morning News in Texas. “Mark Wolfe, owner of Re/Max DFW Associates, said that a quarter of all listings on the market in D-FW are now seeing price reductions, as homes aren’t selling as quickly as sellers and agents expect. Homes seeing price drops were likely overpriced to begin with, he said. The number of showings per listing at Wolfe’s offices are down from eight each week last year to an average of three now. Homes are taking weeks instead of days to sell, and more inventory is available.”
From Bloomberg. “The pace of California home sales plunged 21% in June from a year earlier as soaring mortgage rates took a bite out of buyer interest, the state Realtors group reported Monday. June’s sales were at the lowest level since April 2008, when a housing bubble was bursting. Single-family home prices in the most populous state fell to a median of $863,790 in June, down 4% from the all-time high of $900,170, set in May. Other signs pointing to a cooldown include fewer pending sales, a growing inventory of available homes and a shrinking share of deals closing above the asking price.”
The Financial Post. “The once-red hot Canadian real estate market is beginning to witness a trend that would have been unthinkable just months ago: Homes are starting to sell at a discount. In Victoria, a luxury 5 bedroom listed at $2.25 million ended up selling at $1.93 million — a drop of $320,000. In the same month, a home on the other coast — in Halifax — sold at $140,000 below its list price of $900,000. The Toronto suburbs, in particular, are yielding a near-daily stream of homes sold at discounts of more than $100,000.”
“A detached home in Mississauga, west of Toronto, went on the market in April at $1.6 million. After two months, the sellers let it go for $1.38 million. A four-bedroom mini-mansion in Brampton, 40 km northwest of Toronto, hit the market at $1.8 million but ultimately sold for $1.5 million, a price reduction of $300,000. A similar Brampton home spent 35 days on the market at a list price of $1.4 million before sellers accepted an offer that was more than $250,000 lower.”
“Many other sellers are rejecting low bids outright. Another phenomenon to hit Canadian real estate in recent weeks has been a spike in ‘delistings,’ homes that are taken off the market after failing to attract any bids. In some regions of Ontario right now, more homes have been delisted in the past 30 days than have been sold. If sellers are chronically overestimating the values of their homes, it’s largely because Canadian home sales had spent more than a year being defined by the exact opposite phenomenon. This time in 2021, virtually every real estate market in Canada was seeing homes go to bidding wars that yielded sales up to 20 per cent higher than list prices.”
“The return of ‘sold under ask’ pricing to Canadian real estate is one of the most obvious signals of a market that is entering a period of prolonged freefall. In June alone, Canadian home prices fell by 1.9 per cent, which a Royal Bank analysis called the ‘largest-ever one-month decline.’ ‘Canadian home prices are dropping faster and faster, especially in Ontario and parts of British Columbia,’ it read.”
“The biggest driver for the decline is the looming end of cheap debt.”
From Stockhead. “Nobody seems particularly put out that China’s economy grew by just 0.4% in the second quarter compared with a year earlier. Economists polled by Reuters, because they have time to do that, reckoned China would grow by 1% in the three months to June. The impenetrably complex and frustrating and unverifiable Chinese financial data app Win.d, reckoned 1.1%. Either way: everyone expected crap; they got crapper.”
“But that’ll be the reality of what happens when you apply the theory of shutting down every single moving thing in a city of 22 million for an impossible goal and the economic impact becomes simply too evident to hide. No amount of creative mathematics can rewind the Shanghai and other city lockdowns which made this China’s weakest quarter of the millennium – aside from that COVID-quarter back in 2020, when China fumbled at the bra strap of Wuhan’s early outbreak.”
“China really does appear to be vulnerable to this humungous property snot-bubble that’s been decades in the making. The most recent sighting of the monster’s true form is by far the most frightening – brazen flash-mob style protests by locally organised mortgage boycotters which have quickly spread.Refusing to pay any more for unbuilt homes, protestors gathered, probably hoping not to be beaten, but certainly bracing for it. But it’s the plain clothed police/thugs which are probably most concerning.”
“Last week, off-the-plan buyers of more than 250 mega-properties in almost 100 cities have come manifesting out of internet forums to collectively say screw you jack to agents demanding mortgage payments for the gazillions of unfinished, pre-sold apartments. Like some insane advertising catchphrase: – Where the building has stopped, but not the upfront payments.”
“The mum and dad investors are promising that unless construction gets cracking, no-one’s paying another cent – 种瓜得瓜, (zhòng guā dé guā: literally, ‘plant a melon, get a melon,’ but translates better into ‘you reap what you sow’.) My cracking Mando aside, until someone nuts a Communist Party official, authorities won’t be too bothered by that. If anything, zero-COVID has shown that more than ever they can crush injustices with absolute confidence. But what might be bothersome, even disturbing for officials, is that residential dwelling values are carking it again. The stats people make June the 10th straight month of home value declines.”
“It’s quite easy to beat people for falling victim to a system, but not even provincial government goons can scare the safety back into Chinese property and its inconceivable debts.”