A report from Twin Falls KMVT. “In markets saturated with buyers, like many areas of Idaho, buyers backing away from the market should mean stronger negotiating power and, eventually, lower prices. According to mortgage expert GP Theriot, the market is showing signs of returning to normal after two years of rates and prices unlikely to be repeated. ‘That’s a good thing, we’re getting back to normal. I mean these prices; it was crazy, and people were willing to pay it. Now’s the time, better than ever, for these first-time homebuyers, or anybody, that were frustrated the past twelve months, get in the game now,’ said Therio.”
From KRDO Newsradio. “Jay Garvens of Churchill Mortgage believes despite the higher interest rates, it’s actually a buyer’s market because of the incentives that buyers haven’t had here in years. ‘You can now make an offer on a house and get asking price or $10,000 below. You can have an inspection. You can have an open house,’ he says. Garvens also believes the cost of living in Colorado Springs may never be any lower than it is now. ‘The cost of living in Colorado Springs will never go down. And if you’re having a hard time with debt, and if you’re having a hard time buying a house, you may consider moving to a more affordable community,’ he said.”
The Boston Globe. “Many older residents in Massachusetts who’d like to downsize — and turn over spacious dwellings to younger buyers desperate for room to expand —are finding it difficult, if not impossible. ‘It’s a circular stuck-ness that’s hard on everyone,’ said Newton City Councilor Andrea Kelley, 69, a landscape architect who sold her five-bedroom house five years ago, but, unable to find a smaller one, remains with her husband on the first floor of a two-family rental home. ‘None of our kids would be able to afford a home in Newton today.’”
The Kitsap Sun. “The median residential home price in Kitsap dropped to $538,000 in July as the inventory of homes on the market expanded, according to the Northwest Multiple Listing Service. In June, the median price had jumped to $600,000 in Kitsap County, up from about $550,000 the month before in May. Kitsap’s trend mimicked the trend across Washington state, where median residential home prices fell to $650,000 after hitting $675,000 the month before.”
From WRAL in North Carolina. “Multiple real estate agents told WRAL TechWire this week that the slowing market with regard to median home sale prices could have been predicted, and may in fact be a resumption of seasonal trends that have been observed historically. Still, no one is certain. And the median sale price dropped in both Wake County and Durham County – about 5%, in Durham compared to the prior month. ‘This year is very strong,’ said Seth Gold, a REALTOR licensed real estate agent who specializes in homes in Chatham County and across the Triangle. ‘But we are starting to see a little bit of a shift.’”
“‘What we’re seeing is a plateauing of price appreciation,’ said Tony Fink, a licensed real estate agent in Raleigh. ‘Which was expected. We’re seeing a higher percentage of home sell at or below list price.’ Even though there may be signs of a slowing market, this slowdown may be a return to seasonal norms, Fink noted. ‘I don’t think that’s a bad thing,’ said Fink. ‘Seasonality went out the window in 2020, because of COVID.’”
Business Observer Florida. “The ones likely to suffer most are those who bought homes when prices were at their peak. These are the people who will, when the comes to time to sell, face completely different market dynamics from when they bought. Gone will be the multiple offers and escalator clauses that helped get them into their homes.”
“Redfin’s senior economist, Sheharyar Bokahri says that during the pandemic home prices rose at an ‘unsustainable rate in many pandemic homebuying hot spots’ as people took advantage of low interest rates to buy second homes and for remote workers to relocate. In North Port, home prices increased 30.5% from 2021 in May, the fastest in the country, followed by Tampa, which saw home prices rise 28.1%. The demand pushed the prices up, he says, and with it gone, the prices will adjust, ‘a trend that has already begun.’”
“Another factor is that in markets where people have high debt there are more foreclosures or homes sold at a loss. Bokahri, says in the study that ‘a recession — or even a continued economic downturn that doesn’t reach recession levels — would impact some local housing markets more than others, and there are a few factors that put certain areas at risk. First, what goes up must come down.’”
The Redlands Daily Facts in California. “Industrial has hit the pause button from its meteoric rise in values, office suites abound with goodies for those willing to sign a term, and retail are taking their lumps. With gasoline and food prices soaring, few can afford discretionary spending like before. As commercial real estate practitioners, uncertainty is the attitude that causes the most pain. Now the market is changing from a seller’s market to an ‘equal’ market. Meaning the halcyon days of multiple offers and TBD pricing are likely ending.”
“It’s was 2014 when I last saw a ‘broker premium’ offered for a deal completed by Sept. 30. What is that owner seeing and trying to avoid? A costly vacancy, that’s what. Since interest rates have spiked recently by a point or two, many buyers have taken a pencils-down approach to pursuing purchases. Any combination of the above can cause a change in motivation. In my experience, this is the one thing that can cause a real estate transaction to collapse. Let’s hope for good attitudes, a balanced inventory and affordable interest rates!!”
From Bisnow New York. “Rate hikes, construction cost rises and soaring inflation are vexing the multifamily development market right now — and extraordinary rent increases aren’t providing much comfort. ‘We’ve kind of bought a ticket for a roller coaster, but we don’t know if we’ve bought a ticket for a local fun park or Six Flags, because what’s going to happen here over the next 18 months is pretty unpredictable,’ said Peter Hills, the head of capital markets at Vorea Group, which just finished construction on an 80K SF mixed-use project in Jackson Square. ‘For a generation of investors, we’ve seen sort of 2%-3% pricing,’ Hills said. ‘So, you know, to be able to get your head around making deals work with this new cost of capital, it’s gonna take some time to work itself through the system.’”
From McKnight‘s Senior Living. “Senior housing borrowers are looking to secure loan terms, Jessica Johnson, manager of Healthcare Banking for BOK Financial told the McKnight’s Business Daily. ‘At some point, I believe that cap rates will rise, and I think that prices will come down to help counteract some of the impact of rising interest rates,’ the banker said. ‘Once upon a time, we could provide 75% loan to cost with the provider putting in 25% equity. We’re now having to curtail that back and look at 60% to 65% of cost because otherwise, the projects just don’t make sense, because they don’t make money,’ Johnson said.”
From WWL Radio in Louisiana. “A federal bankruptcy judge seized control of six blighted apartment complexes from landlord Joshua Bruno, after Bruno was accused of ‘potentially fraudulent’ money transfers. Bruno owns several properties in disrepair across the New Orleans metro area including the abandoned 336-unit Oakmont Apartments in Algiers. According to Nola.com, U.S. Bankruptcy Judge Meredith Grabill wrote that Bruno could not account for $800,000 of hurricane insurance money saying Bruno allowed the money to, ‘vanish in the wind without one receipt, cancelled check, or other primary-source support to show that the proceeds were spent on repairs to the properties.’”
“The judge ordered Bruno to hand over financial records, cash, and any other assets for the six blighted properties he owns. She also appointed a trustee following Bruno filing for bankruptcy protection to avoid foreclosure on five properties he owns in Orleans Parish and one he owns in Jefferson Parish.”
Bisnow Washington DC. “Rising interest rates and construction costs have made it harder for affordable housing deals to pencil, and developers say D.C. regulations that lengthen the time before the groundbreaking are exacerbating the uncertainty and putting projects at risk. ‘I urge everyone … to continue thinking of other solutions,’ Fairstead Managing Partner of Development Brett Meringoff said. ‘I think the challenges are things we haven’t faced in a long time, probably since 2008.’”
“The lending environment has also become more difficult as rising interest rates have made deals harder to pencil, United Bank Managing Director Joseph LeMense said. ‘The interest clock is ticking,’ LeMense said. ‘You get to a point where you’re 70% through a project and you’re just out of money.’”
News.com.au in Australia. “PropTrack recorded a 56.9 per cent preliminary clearance rate from 736 recorded results last week, with a further 691 auctions scheduled for this week.When the price declines were first noted, the clearance rate was hovering about 85 per cent. On Saturday, a three-bedroom home in Blackburn sold for $1.16m after passing in at its auction. The 3 Park St pad was listed by Woodards Blackurn auctioneer Luke Banitsiotis.”
“Mr Banitsiotis said Melbourne was coming out of a rising market when vendors’ expectations could be slightly above a property’s value and ‘the market would catch up to and exceed that price by auction.’ ‘Buyers are now fearing overpaying instead of missing out,’ he added.”
The Globe and Mail in Canada. “127 Southcrest Dr., Kawartha Lakes, Ont. Asking price: $849,900 (Mid May, 2022). Previous asking price: $999,900 (Early May, 2022). Selling price: $840,000 (Late May, 2022). This two-bedroom bungalow near Lake Scugog underwent a months-long transformation, complete with staged furnishings, in an attempt to lure buyer to make the trip about 100 kilometres northeast from Toronto. Priced at $999,900, it attracted no offers, but with the sticker price slashed by $150,000 to $849,900, one visitor hashed out a $840,000 deal.”
“‘It’s not a very big street, but there were three homes on the market, and this was the only one that sold,’ said agent Deborah Glover. ‘The other homes were overpriced, as ours was at the beginning because of the downturn of the market, but they didn’t adjust [their prices].’”
Kelowna Now in Canada. “Kelowna’s housing market is undoubtedly cooling and slowing. Last month, compared to July 2021, sales plunged 47% each to 124 for single-family homes and 52 for townhouses and plummeted 52% to 85 for condominiums. After a buying frenzy pushed home prices to record-highs in April, a slide started. In July, the benchmark selling prices of a typical single-family home was $1,060,400, down $51,600 from June’s $1,112,000 and a $71,600 drop from the record-high $1,132,000 in April.”
InHome Canada. The prices for single-family houses took the biggest hit as they fell in each of the sub-regions. Worst off was the Central Okanagan with the average single-family house selling for about $89,000 less than in June, at $1,077,431 in July. Prices in the North Okanagan dropped about $70,500 to $762,368. Kamloops was down about $37,000 to $750,830 and the South Okanagan got off the easiest with a decline of about $10,400 to $762,368.”
“Condo prices in the North Okanagan took a $92,500 drop and Kamloops saw a decline of almost $30,000.The number of sales for the entire region covered by the association dropped by 33.3% compared to July 2021. The association includes the Shuswap/Revelstoke, Kootenay and South Peace regions as well. The slowdown in the region’s housing market is typical of what’s happening across the country.”
The Agassiz Harrison Observer in Canada. “Chilliwack’s real estate market just experienced its slowest July in more than two decades. With the full impact of rising interest rates kicking in, a total of 133 residential properties sold last month, falling sharply from the 310 that were sold in July of 2021. ‘On the supply side we’re still seeing a very healthy dose of new listings come onto the market,’ said CADRED president Daryl Moniz. ‘However, given the current imbalance between supply and demand, it’s likely that it will take some time for sellers to adjust their pricing expectations to what buyers can afford.’”
The Toronto Sun in Canada. “Market stats for July were released last week and it should come as no surprise they are pretty abysmal. In spite of their best efforts, even the TikTok realtors are struggling to find anything even remotely hopeful to cling on to. For the fourth straight month, the Toronto housing market reported declining sales and falling average sale prices. Far from February’s average sale price of $1,334,000, July was down a full 19% to $1,074,754, reported sales down by almost half. Hard to spin anything there.”
“Lest there be any confusion about what is behind this seemingly abrupt turn, it’s not a summer slowdown nor a return to pre-COVID market rhythms — it’s interest rates. And with all signs pointing to the Bank of Canada continuing their rate hikes in an effort to curb rampant inflation, we can expect more of the same to play out in the marketplace in the months ahead. For all of the talk of supply and demand, shifting buyer priorities, population growth and immigration targets, it turns out that what should have been the most obvious element of all has also been the most impactful.”
“Cheap money and swelling home values enabled speculative activity and investment, and offered up homebuyers a deeper pot from which to spend more than they might have otherwise. The steadily rising prices only served as evidence that homeownership isn’t about owning a home for your family, it’s also a smart investment and wealth-building vehicle.”
“Of course that only works if nothing gets in the way of the meteoric rise. Increasing carrying costs on a depreciating asset flips the value proposition right around. And now that money is no longer free, one has to wonder what comes next.”
“Meanwhile, the cries for help are already starting. Predictions abound that the government will step in and do away with the stress test, extend amortization periods, or offer payment vacations. Forgetting of course that the government we would be asking to save us is the very same that used every tool available to prop up our housing market through the pandemic, allowing this bubble to form in the first place.”