A report from the Post Star in New York. “‘I showed a house the minute it came on the market, and I wrote an offer on the hood of the car, that’s how quick,’ said agent Barbara Kenison with Coldwell Banker Prime Properties. During the month of July, the tide has started to turn, and agents are finding that inventory is increasing and offers are decreasing. Densay Sengsoulavong, the CEO of Southern Adirondack Realtors said the July numbers that will be released in mid-August will show signs of slowing down. ‘I would reiterate ‘slowing down’ is relative,’ Sengsoulavong said. ‘In my opinion, it would be more of a market correction to where a normal market would be.’”
The News Press in Florida. “Jeff Jones, Broker at Keller Williams Naples, remarked that “in June 2019 we had the same number of price reductions as this past June, but during June 2019 we had three times the number of properties in inventory. That said, nearly 50 percent of our inventory this past June had a price reduction. These price reductions should be viewed as new listings because the newly lowered price is now attractive to a larger pool of buyers. Thus, there are more opportunities available for home buyers.’”
“Median closed prices in June increased 31.8 percent to $604,000 from $458,281 in June 2021, but median closed prices for single family homes in June decreased 7.7 percent to $750,000 from $812,500 in May.”
The Review Journal. “In more ways than one, Las Vegas’ housing market is getting doused with cold water. People are buying fewer homes, sellers are slashing their prices, and availability is soaring. Southern Nevada is far from alone in seeing its once-sizzling market cool off lately. But in some key ways, recent reports show, Las Vegas seems to be hitting the brakes harder than other metro areas.”
“Just over 27 percent of pending sales in the Las Vegas area fell through in June, the highest cancellation rate in the nation, according to Redfin, which reported that home sales nationally were nixed at the highest rate since the onset of the pandemic. Moreover, 20.3 percent of Southern Nevada listings had a price cut in June, the fourth-highest share in the U.S., and inventory jumped 22.2 percent month to month, the biggest gain in the country, Zillow reported.”
“Las Vegas ‘stands out’ with the biggest monthly and annual inventory growth among the 50 largest metro areas in the U.S., said Zillow senior economist Jeff Tucker. But in most other ways, the ‘largest slowdowns’ seem to be in the nation’s most expensive markets and those with the biggest price jumps throughout the pandemic, he added.”
The Daily Journal of Commerce in Washington. “Well over a year ago, mid-pandemic, Concord Pacific and local shop HB Management completed a very deep pit at 2300 Sixth Ave. That’s the west of two rival high-rise projects on the same block.(Onni Group’s 2301 Seventh Ave. is the other, with no excavation yet begun.) The 2300 Sixth pit has been quiet since then. Now HB Management has confirmed with Puget Sound Business Journal that the two 45-story towers, once slated to be mostly condos, will instead proceed as a 1,130-unit rental project.”
The Salt Lake Tribune in Utah. “Call it our ‘new abnormal’ for housing. Home sales across the Wasatch Front — already on a downward slide due to escalating prices and a lack of inventory — have plunged to deeper lows due to rising interest rates, data released Thursday shows. About 7,148 single-family houses changed hands from April through June across the five-county area centered on Salt Lake City — volume so low you have to go back to 2012, when the Beehive State started to climb out of the Great Recession, to find smaller quarterly sales numbers. It is down almost 10% from a year ago, led by Salt Lake County, which saw its sales dive by 15% year over year.”
“Active listings of homes for sale shot up across Salt Lake, Utah, Weber, Davis and Tooele counties in the second quarter, soaring by 175%. That has lifted inventory almost to pre-pandemic levels. ‘Sellers are not getting their asking price,’ said Dave Anderton, spokesperson for the Salt Lake Board of Realtors. ‘In 2020 and 2021, the asking price was where it started and people were getting $30,000, $50,000 or $100,000 over that. ‘That’s gone away,’ he said, ‘and multiple offers have gone away, too.’”
Bisnow Atlanta. “Some commercial real estate deals are falling apart across the country as the market reels from the highest interest rate environment in over a decade and clouds of economic uncertainty are gathering. As borrowing costs rise, the prices for everything from out-of-favor assets like office buildings and retail to warehouses and apartments are declining as buyers get nervous about future values. ‘No one’s immune,’ said Eddie Lorin, an affordable, workforce and mixed-income housing developer who co-founded California-based Alliant Strategic Development. ‘Everybody is getting repriced.’ Lorin said he is seeing anywhere from 5% to 10% drops in apartment pricing as a result of economic uncertainty and the Fed’s coming rate hike.”
“‘That’s on everybody’s mind right now. There’s a disconnect between the buyer and a disconnect between the seller on what the values are for properties today. And that probably won’t be fixed for a few months,’ Old Capital National Underwriter Paul Peebles said. ‘I told a lot of people to take the summer off, because this is not going to get any better.’ Peebles said a deal on which he was working saw the buyer walk away from a $700K deposit on a $40M apartment deal under contract in Texas. After the June rate hike, the buyer asked to shave $5M from the purchase price, Peebles said, but the seller balked.”
“Maria King, a multifamily broker in Atlanta, said she had two apartment deals fall apart over the past summer, including one buyer walking away from a 50-unit, $12M deal because of rising interest rates. ‘That offer still might stand at $10M,’ King said. ‘The money, the amount they were borrowing before, is not the same as interest rates have gone up. They’re not penciling out anymore.’”
“Rosalie Manansala, the founder of DOT Capital Advisor, an investment consultant, said she has seen a rise in the number of properties that had to adjust the agreed-upon purchase price due to rising interest rates. On top of that, capitalization rates across property types are on the rise. ‘I feel that there are going to be more price adjustments in the marketplace,’ Manansala said. ‘To what extent, I’m not sure.’”
“Years of cheap debt fueled by historically low interest rates have made for a consistent financing environment for many new development projects across the country, but that has changed in a matter of months. ‘Everything you believed over the last couple of years doesn’t necessarily hold these days,’ said ACRES Capital CEO Mark Fogel.”
From KXAN in Texas. “Almost a third of all homes listed for sale in the Austin metro saw a price reduction last month, according to a new report. Preston Salce, an assisting agent with Legacy Real Estate Group in Austin, says he finds a lot of listings are still priced as if the market hasn’t shifted. ‘The majority of these listings sitting on the market could have easily sold at their original list price back when the market was more active, the keywords being ‘back when,’ Salce said. ‘In most cases, sellers are being naïve thinking they can still sell their property ‘as is’ for top dollar, and the honest truth is that way of thinking leads to price reductions.’”
“‘I think we are seeing an increase of sellers cutting their price because they originally listed with the mindset of still being in the springtime market, and that has been long gone for a while now,’ Salce said. ‘One of the most impactful pieces of advice I have received over the last month in terms of talking to sellers was getting them to understand that we have to live in the future. If you list where the market is today, there is going to be a good chance of you chasing down the market in the weeks to come.’”
“‘I think 2020 set a new level of expectations from the general public on what the housing market should look like,’ Salce said. ‘Any agent can, and will, tell you time and time again, 2021 was not normal, and I think people continuously forget that.’”
NBC Los Angeles in California. “What was a sellers’ market that saw bidding wars catapulting offers above asking prices three months ago is shifting to a buyers’ market, real estate brokers said. The Inland Empire has been a hot housing market during the pandemic. But in recent months, home sales have cooled off. Oscar Tortola, a real estate broker, said homes in the metropolitan area are sitting longer on the market, causing the housing market to shift toward the buyer.”
“‘The interest rates went up, and it priced out a lot of buyers out of the homes they were thinking of buying,’ Tortola said. ‘The serious buyers who need to get into something right now are looking out there, and they are getting deals.’ Those deals can be found in new construction, according to some experts like Doreen Pottios. She said newly-constructed homes are going up all over the Inland Empire and that it is a good deal for homebuyers.”
The Globe and Mail. “BMO senior economist Robert Kavcic continues to follow Canada’s fading housing market. ‘Next week will start to bring the July housing market results from Canada’s major cities. The numbers will look bad, but here are some other things to think about that won’t show up in the official data: De-listings: These are rampant in the GTA now as sellers aren’t getting any traffic and, if they are, offers are coming in light. Many seem to be either re-listing for less, pulling their property for another time, or rolling it onto the strong rental market.’”
“‘In other areas (like the rest of Ontario), the situation looks more serious. Sold over under asking: It’s a buyers’ market now, where conditions and negotiating are things again. Failed closings: Let’s just say that we’d be bullish on real estate lawyers this year. Buyers watching property values fall are anecdotally trying to back out of some deals. In other cases, appraisals are falling short, forcing buyers to scratch together bigger down payments. Investors: Cash-flow negative properties at 1.5% mortgage rates are now deeply so at 4.5%. Without expectations of price gains, investors are gone … Less supply??? With demand cracking, there is already chatter about project cancelations. Building 5.8 mln units was ambitious in the best of times—now it might be a dream.’”
From The Local. “In the first half of 2022, 8,644 owner-occupied apartments were sold in Denmark, down a third from 2021’s tally of 12,947 flats sold by that time, broadcaster TV2 reports based on data from Boligsiden. A loss of momentum in the market has been expected and signs have been apparent in recent months, explained Mira Lie Nielsen, housing economist at Nykredit, one of Denmark’s major banks and the country’s largest mortgage lender. ‘Now it is starting to be more of a buyer’s market, where sellers also have to realise that if they want to sell they have to lower the prices,’ she said.”
Channel News Asia. “South Korea’s property market has abruptly gone from sizzling hot to floundering, piling pressure on some of the world’s most debt-saddled consumers as the sector experiences the fastest interest rate hikes on record. Prices of Seoul apartments last week reported their sharpest decline in 26 months, while transaction volumes in the capital dropped 73 per cent in June from a year earlier. Ordinary Koreans are already feeling the squeeze – for Jane Jaeon, a 36-year-old mother of a six-month old in central Seoul, growing mortgage stress means she has had to make some hard choices.”
“‘My husband’s pay now isn’t enough to cover our monthly repayment so I need to cut my maternity leave short and return to work,’ said Jaeon, who had initially planned to take 15 months off. Her family now pays 720,000 won more each month than last year for their 500 million won mortgage, which her broker said will probably rise further by year-end, bringing their total monthly repayment to almost 4 million won, or 70 per cent of her husband’s pay.”
From Reuters. “China Evergrande Group will offer its offshore creditors asset packages that may include shares in two overseas-listed units as a sweetener, the developer said on Friday, as a stifling liquidity crisis in the property sector continues. Some bondholders were left unimpressed by the update on Friday. ‘It is disappointing but sort of expected… There is nothing they could offer because we all know the company is pretty much a zombie now,’ said one onshore Evergrande bondholder.”
From Fortune. “Edward Chancellor, a financial historian, journalist, and investment strategist who has been described as ‘one of the great financial writers of our era,’ argues central bankers are to blame. In his view, central banks’ unsustainable policies have created an ‘everything bubble,’ leaving the global economy with an inflation ‘hangover.’ Chancellor explained how during these first rounds of QE, the money the Fed created ‘never fed through to the real economy,’ leading central bankers to ignore inflation and become ‘complacent.’”
“When the COVID-19 pandemic hit, however, and QE was ramped up again, it was a different story. Central banks around the world cut interest rates and ‘printed collectively around $8 trillion.’ The issue this time was that the money was used to ‘finance roughly the same amount of government spending,’ which contributed to ‘the largest peacetime deficits in history.’”
“On top of that, near-zero interest rates and excess liquidity in the financial system encouraged investors to buy risky assets, creating an ‘everything bubble,’ as evidenced by the extreme rise in tech stocks, cryptocurrencies, meme stocks, and even collectibles like baseball cards in 2020 and 2021. ‘And, surprise, surprise, we now have rising and unstable inflation,’ Chancellor said. ‘We are now waking up to a big hangover from this monetary extremism.’”