It’ Friday desk clearing time for this blogger. “Housing inventory in the Austin area has reached the highest level since September 2018. Spyglass Realty CEO Ryan Rodenbeck said the market has changed so much in the last couple of months that some of his clients have also found themselves paying significantly more for a home. ‘We had a buyer that was under contract for $530,000 on a home,’ Rodenbeck said. ‘And they [the builder] listed the same floor plan right across the street from the client for $479,000.’ A different client discovered the same. For them, it was a $150,000 difference.”
“Roger Chappell, an associate broker with Coldwell Banker Realty in Austin, said it has taken his last two listings about 30 to 45 days to go under contract. As for the data in the Realtor.com survey, Chappell said: ‘What I have seen is about a 10-12% drop in prices from the peak.’ ‘I think part of the issue lies in sellers’ expectations,’ Chappell said. ‘We all got spoiled with the low interest rates, unbelievably high number of offers and extremely low inventory. Sellers expect to sell in 12 minutes at the same or higher prices than their neighbors did.’”
“In recent months, Ja’Marquis Perkins has watched house prices come down to earth. As a real estate agent in Tuscaloosa, Alabama, he’s begun advising buyers to look for deals where they might once have faced bidding wars. He recently helped a first-time buyer close on a two-bedroom house for $185,000, which was below the listing price. ‘It’s definitely starting to slow down. Homes are going for less than what owners had asked,’ he says.”
“Middle Tennessee’s housing market continued to tilt toward buyers in last month after being a strong seller’s market for much of the past two years. The Greater Nashville Realtor’s Assoc. says there were nearly 10,000 homes on the market across the mid-state during September. Compare that to April when less than half that number of homes were listed for sale. The average closing price for a single-family home stood at $475,000 in September, a drop of $23,000 since May.”
“Brooklyn’s high-end real estate market is beginning to show cracks as volatility on Wall Street and rising closing costs have put buyers on the sidelines. Meanwhile, sales in Long Island City, Queens, plummeted 51.8% in the third quarter, according to a report from Serhant. In addition, the median price dropped 6.8% to $881,500, the data showed. ‘To put it bluntly, Long Island City did not have a great third quarter,’ wrote Garrett Derderian, director of market intelligence at Serhant.”
“A few months ago, buyers would do just about anything to snag a home. Now, they’re reneging on deals at the highest rate seen in years. The trend is even worse in some cities. Jacksonville, Florida, is seeing more than 26% of its home sales fall through, and Las Vegas, Atlanta, Orlando and Fort Lauderdale aren’t far behind. ‘Buyers just aren’t willing to deal with issues right now,’ says Phillip Salem, a real estate agent with Compass in New York.”
“Others, particularly luxury buyers, though, were counting on those investment accounts to fund a more immediate home purchase. Real estate broker Baron Hanson recently had clients in this boat. ‘They had lost so much money in the market that their $2 million Florida vacation home budget vanished into thin air,’ says Hanson, who works with Coldwell Banker in Stuart, Florida. The pair have since backed off buying a new property entirely.”
“A home inside Granville Estates is located next to Copper River Country Club and offers nice views of the golf course. It’s just one of several houses which are part of the company’s year-end sales event. ‘These are some of the homes that were canceled, escrow through other folks or some of our spec inventory that is unsold,’ says CEO Darius Assemi. He hopes an a la carte menu of incentives might attract a few buyers to new neighborhoods being built in both Fresno and in Clovis. ‘We have an array of items to choose from,’ he said.”
“For the first time in a decade, home prices in Southern California are definitively falling. After 10 years of largely uninterrupted gains, home values have turned negative, the result of rising mortgage rates that have squashed demand and caused sales to plummet. Few, if any, major real estate experts predict Southern California home prices will fall like they did during the Great Recession. But values are coming down in many corners of the country, because they have to, according to economists. In individual counties, price declines from the peak range from a 3.6% drop in Ventura County to a 6.7% decrease in Los Angeles County, according to Zillow.”
“According to John Burns Real Estate Consulting, prices in L.A. County are already down 3% from September 2021. Rick Palacios Jr., research director with the consulting firm, said one reason for greater drops in L.A. County could be the sagging stock market has hammered luxury sales in the more rarefied realms of the region, as people saw the money they planned to use for their down payments disappear. Although that’s not Great Recession level, ‘it’s nothing to sneeze at,’ he said. ‘These will probably be the most significant price declines seen outside from maybe a couple other instances in history.’”
“Welcome to the fall market that wasn’t. Lest there be any confusion, while history has shown that Toronto real estate enjoys a unique ability to barrel through most obstacles, this rising rate environment has proven to be largely impenetrable. Sales have dropped off a cliff, prices are drifting down, and sentiment among buyers and sellers has never been worse. It’s pretty rough out there. It turns out that buyers weren’t off on vacation or enjoying a summer free from COVID restrictions instead of real estate. Labour Day didn’t bring them back. They remain sitting on the sidelines, if not out of the game entirely.”
“Sellers are fighting tooth and nail against the idea that February numbers are a distant memory while once eager buyers, staring down the barrel of more rate hikes, aren’t willing to jump back in. The average price of a home in Toronto has now fallen to $1.09 million in September off of February’s peak of $1.33 million. But the stalemate can’t go on forever. At some point, probably sooner than later given the likelihood of further rate increases, some of the sellers who have been banking on their ability to ride this out will have no choice but to blink. And the buyers who have been waiting for blood in the water may decide it’s finally their time.”
“Finance commentator Scott Pape has warned Australian house prices are falling ‘at one of the fastest rates on record’. Consecutive monthly falls in housing values between April and August knocked more than $114,000 off the median house price in Sydney – equivalent to $927 a day. While in Melbourne, the median house price has dropped 4.4 per cent between April and August – equivalent to $51,000, or $415 a day. With further RBA interest rate rises expected, some economists forecast up to 25 per cent could be knocked of the median house price once the hikes take full effect. ‘I wouldn’t be surprised if house prices eventually gave up the 30 per cent gains they made during the Covid period,’ Mr Pape wrote.”
“‘Interest rate rises, credit constraints, the increasing cost of living – it’s a sure-fire recipe for declining home values. Plus there are still new houses coming onto the market up and down the country, putting further downward pressure on prices almost everywhere,’ QV General Manager David Nagel said. Nagel said this will be ‘worrying news’ for Kiwis around New Zealand who are looking to sell their homes and for those who purchased at the peak of the market. Large volumes of listings are giving purchasers plenty of choices and negotiating power, but it certainly looks as though sellers may still be in for a rough ride yet.”
“American businessman Brody Shores’ furniture business in China grew on a model that leaned heavily on the promise of an enduring property boom and homebuyers desperate for fully furnished new apartments. Soon after launching in 2019, his company began selling directly to developers who decked out their units with furniture, a marketing trick that sold flats like hotcakes. Then came the pandemic and a property crisis, and with them, clear evidence of the limits of the debt-fuelled, investment-driven model that had propelled China’s economy and businesses like Shores.”
“‘If people aren’t buying houses, then no one really cares if they’re getting the furniture included for free or not,’ Shores said.”
“In the decade to 2020, China consumed almost 25 times more cement than the United States. By 2021, state-owned China State Railway Group had 5.92 trillion yuan (US$825.66 billion) in liabilities, more than the GDP of Saudi Arabia. In the property market, which now accounts for a quarter of China’s economic activity, businesses took more risks and banks offered mortgages before flats were built, leading to massive oversupply. One business owner Reuters spoke to on the condition of anonymity said his firm at its peak made 150 million yuan a year supplying promotional materials to Evergrande. He now lives in a dormitory and earns 3,000 yuan a month working in a screw factory.”
“Michael Pettis, professor of finance at Peking University in Beijing, said while many economies have followed an investment-driven development model, China’s reliance on it was extreme. ‘You cannot invest 40-45 per cent of gross domestic product (GDP) forever. China has to prepare itself for many, many years of much slower but sustainable growth,’ Pettis said. ‘Those who expect the Chinese economy to be the largest in the world by 2035 will almost certainly be disappointed.’”
“This week, mortgage rates in the United States reached a 16-year high in response to rising interest rates. ‘It’s like a standoff between buyers and sellers. Buyers can’t afford higher prices and sellers don’t want to sell for lower prices,’ said Daryl Fairweather, an economist at Redfin. Things may look bleak in the midst of recession fears, high inflation and high interest rates, but the numbers suggest this is not the Great Recession. And, just like every market, what goes up must come down. Eventually. ‘The good news is that if you can’t afford a home now, keep your eye on the market,’ Fairweather said. ‘You might be able to afford it in a couple of months.’”