A report from KELO in South Dakota. “A report from the Realtor Association of the Sioux Empire shows closed home sales were down more than 22 percent in the Sioux Falls area in August. ‘Where last year we would get 20 offers and go $50,000 over asking price, this year we’re seeing where we’re getting eight offers and $20,000 over asking or a little less than that,’ Tyler Goff, the team leader at the Tyler Goff group said.”
From Alabama.com. “Huntsville area home sales continued to fall off 2021′s record pace in July, and local real estate agents believe rising interest rates have had something to do with that. Knox said most averages dipped in August, with Athens having an average price of $346,000, Huntsville $350,000, Madison $433,000 and Decatur $282,000. ‘I think prices are adjusting downward to where they should have been,’ Tim Knox of Revolved Realty said. ‘We’ve been in an inflated market over the last year and home prices had just reached a level where they really lacked logic. It was an emotional market.’”
“‘Interest rates have affected the buyer pool,’ added Realtor Matt Curtis. ‘There’s been a lot of new construction cancellations since many buyers who contracted when rates were at 3% now can no longer afford at more than 6%. This has created a temporary opportunity to get a new deal on construction.’”
WNEM in Michigan. “After many have struggled with the competitive housing market, real estate experts say hopeful homeowners could soon have a sigh of relief. ‘The average price of a home has gone from 375,000 in June of 2020 to 525,000 in June of 2022,’ said Tim Nash, economist at Northwood University. That price increase is why Nash says a price correction is on the horizon. ‘People just can’t buy homes,’ Nash said. ‘They can’t afford it with that scenario, that three-pun scenario of lower real wages, higher interest rates, and higher prices. So we think that prices are going to decline, sales are going to decline by the end of the year.’”
“Dr. Spenser Robinson, Director of Real Estate at Central Michigan University, said that the government will have to step in to prevent the market from crashing. Robinson tells why the drop is happening now. ‘We saw growth that was more than normal over the last few years,’ Robinson said. ‘The reasons for that were increase in demands for housing in the pandemic because people wanted larger places to live, as there’s a lot of work from home and will continue to be. And then the federal reserve printed $4 trillion of money. So some of this decline is just retreating back to where things really out to be in their more natural, intrinsic price.’”
WTOP on Washington DC. “The number of contracts signed to buy a house or a condo in the D.C. metro was down 26.3% in August compared to the same time last year. Closed sales — deals likely inked in June or July — were down 25.3%, further evidence of quickly slowing local housing market. The biggest decline in buyer demand was for higher-priced single-family homes. ‘The frenetic pace of the housing market over the past two years was not sustainable,’ Bright MLS said in a statement.”
The Daily Independent. “July 28 was a damper day in the housing market nationally and locally. There are now 91 site-built homes on the market which is a 35% increase from 11 weeks ago. Of the 91 ‘for sale’ site-built homes, 26 homes, or 25% have had a price adjustment in the past 30 days. For the ‘in escrow’ homes, nine had a price adjustment before they had an offer accepted. That’s a total of 38% experiencing a price adjustment in the past 30 days. The accelerated market we had in the past two years is not returning any time soon. As a result, there are more homes gradually coming on the market to choose from.”
The San Francisco Standard in California. “Imagine a slow-moving train coming towards you. The lights are shining, the horn is blaring, but it’s just far enough in the distance that the risk doesn’t seem real just yet. That’s a fitting-enough analogy for the state of San Francisco’s commercial real estate market, which is tilting towards a collapse in property values, leaving the city, its budget and its ability to provide services tied to the tracks.”
“Signal lights of the city’s tenuous fiscal future are starting to flash. Major tech employers like Yelp and Airbnb have fled or gone fully remote, leading to mass office vacancies. A swath of commercial landlords are seeking massive reductions in their assessed property values—and associated tax bills. And a recent report from the Urban Displacement Project ranked the city’s downtown recovery as dead last among more than 60 cities across North America.”
“In the case of 550 California St., a downtown office tower owned by Wells Fargo, bids came in at 60% to 70% under what the building would have sold for in 2019, real estate brokers said. ‘We’re way above anything that was happening in the Great Recession and dot-com era days,’ said Jay Shaffer, a principal at Colton Commercial & Partners. ‘We have this shadow market of sublease availability in seemingly uncharted territories. And sublease inventory is still rising.’”
The Commercial Observer. “As Brad Zampa, senior partner on CBRE’s Northern California capital markets team, explains, the environment for commercial refinancing, especially for less desirable office properties, has become unmoored by today’s uncertainty. ‘The office market is a falling knife right now,’ Zampa said, adding the situation is dire nationally but especially in the West Coast markets he covers, including San Francisco, Los Angeles and Seattle. ‘The top 10 to 20 percent of the buildings in every central business district are going to capture the market share of workers who are going back to the office. And we’re left with a huge swath of buildings where nobody knows.’”
“‘The lenders are saying, ‘No one is here, how do I underwrite this?’ Zampa said. ‘They’re just taking the buildings with good tenants, and that’s a huge problem.’”
From Bloomberg. “Regional bank executives are seeing more signs of strain across mortgage businesses as higher interest rates slow home purchases. ‘We’re near the bottom of where revenues are going to be, and you’re starting to see people give up the ghost,’ said Citizens Financial Group Inc. Chief Executive Officer Bruce Van Saun. ‘People are saying there’s too much capacity,’ leading to layoffs.”
The Dallas Morning News in Texas. “Redfin is looking for a new tenant to take over the Frisco office space that housed its now-shuttered mortgage division. Seattle-based Redfin put more than 22,199 square feet of office space at Hall Park in Frisco up for sublease. Dallas-based brokerage Cresa is marketing the space at 2611 Internet Blvd., which was the primary office of Redfin Mortgage. Redfin said in January that it would consolidate its lending operations into Bay Equity Home Loans, a San Francisco Bay Area-based firm it bought for $137.8 million in April.“
“Several other real estate companies with a presence in the Dallas-Fort Worth area cut employees in response to lower mortgage demand. Ann Arbor, Mich.-based Home Point Financial Corp., also known as Homepoint, plans to lay off 526 employees tied to its Farmers Branch office in November, Coppell-based Mr. Cooper Group Inc. cut almost 700 jobs this year and Plano-based First Guaranty Mortgage Corp. cut more than 400 jobs this summer.”
From Axios on Texas. “The Austin home-market has indubitably cooled off, with inventory up and asking prices routinely slashed, leaving some homeowners suddenly anxious about their selling prospects. Realtor Lilly Rockwell breaks down the local market: ‘I find myself playing the therapist now more than ever to panicked sellers who have emotionally spiraled into a dark place thinking they have missed the boat forever and it will be impossible to sell.’”
The Strayroy Age Dispatch in Canada. “August’s 267 new real estate listings in the Sarnia area broke a decade-long record and have helped take some pressure off the local market, the president of the Sarnia-Lambton Real Estate Board says. ‘August was a 10-year new record for the number of new listings … which is a good thing,’ board president Rob Longo said. ‘Any time you see stories about the housing market they’re predominantly going to be driven by Toronto and Vancouver,’ he said. ‘They have seen a bit of a retraction this year. Toronto’s down in areas 15 or 20 per cent in sale prices.’”
From News.com.au in Australia. “A Sydney homeowner was forced to slash a whopping $250,000 from their asking price after their property failed to sell at auction. The 2.5-bed terrace house on a 116sq m block in the upscale inner city suburb of Paddington had already been renovated but still had potential to add more value by extending either downstairs or by extending into the roof. On the market for four weeks prior to the auction, real estate agent Randal Kemp from Ray White Woollahra-Paddington expected the property to fetch between $2.6 million and $2.7 million.”
“Despite 90 potential buyers viewing the property, the Paddington property was passed in at auction. Mr Kemp said the property was a ‘little bit overpriced from initial expectations.’ ‘We’ve got multiple buyers still wanting to buy, it’s just we’ve got a situation where you have three to four people standing at an auction and no one bids,’ he told the Australian Financial Review. ‘Everyone is looking for value in the market at the moment. Buyers are just very nervous. You’ve got to stay on top of what is available in the market and have a price guide in line with where buyers see value. Gone are the days in which someone will pay 10 per cent on top of what the last one sold for so no-one else will buy it. To have a discussion with a vendor to say their house, their property, is devalued by 10 per cent to 15 per cent in a matter of weeks is a hard pill to swallow.’”
From WION. “The crisis in China’s property sector is going from bad to worse. As per reports, in the country, a demolition campaign is gaining speed. After massive quantities of debt-fueled construction, China now has enormous, uninhabited ‘ghost cities,’ and when builders run out of money, demolitions happen. According to a report in the Telegraph, analysts have warned Beijing has adopted a ‘build, pause, demolish, repeat’ policy as Chinese officials try to limit supply to prevent a drop in property prices and increase economic activity through additional construction.”
“In an effort to revive the slumping real estate market, the Chinese government is reportedly demolishing tower blocks and halting work on structures that could accommodate 75 million people or more than the entire UK population.The Chinese property research institute Bic Research Institute (BRI) has issued a warning in its most recent study, noting that China has no scarcity of homes, sitting unoccupied, and that ‘such high vacancy is risky.’ ‘A large potential supply is represented by vacant homes. When predictions for the housing market turn negative, a significant number of vacant homes will be put on the market, which could add to downward pressure on home prices,’ it added.”
From Nikkei Asia. “Japan will likely see an excess supply of 10 million dwelling units in 2023, due partly to government housing policy through the 2000s that ignored falling demand caused by a shrinking population. The glut will further aggravate the problem of unoccupied homes, which topped 8.49 million in 2018. According to the internal affairs and communications ministry, Japan had a total of 62.41 million dwelling units as of 2018. Nomura Research Institute expects the number will increase to as many as 65.46 million in 2023.”
“As the number of households stops growing, ‘the number of excess housing units could rise further to 20 million or 30 million,’ said Ken Miura, a professor at Kyoto University’s graduate school of engineering. ‘It was a remnant of the high-growth era. Despite an expected decline in population, the government did not change its policy and pushed the housing industry to build more homes.’”
“Crassone, a Nagoya-based company that helps match owners of unoccupied houses with demolition specialists, has made more than 10,000 such arrangements. Using its data and expertise, Crassone in 2021 began helping local governments simulate the costs of tearing down vacant homes. About 30 municipalities have already signed up for the service.”
From Market Watch. “Americans’ real wealth dropped by a record 20.9% in the second quarter, according to a MarketWatch inflation adjustment to new Federal Reserve data on household wealth. The figure accounts for the size of bank accounts, but also stock market holdings. The perceived chances of missing a minimum debt payment increased in the most recent survey, they noted. Just over 12% said there was a chance they’d miss a minimum payment in the upcoming three months. That echoes numbers from the pandemic’s early days. The 12.2% was the highest reading since May 2020, researchers noted.”