A report from the Washington Post. “When Larry Frum listed his townhouse in Laurel, Md., this past August, his real estate agent assured him it would sell in three or four days. But that’s not what happened. ‘Three to four days became a week, and then it became two weeks, and then it became a month,’ he says. At two months, Frum reduced the price by $20,000. Peter Anderson is getting ready to sell his home in Coeur D’Alene, Idaho. ‘We needed a new roof, which we went and did this summer, and we had to buy a new heat pump in the spring,’ he says. ‘A year ago, we probably could have sold the house as-is and not had to do that.’”
“For one set of clients, Erika Levack, an agent with Compass in Austin says she approached the builder to say her buyers would have to back out ‘unless you guys do something.’ In return, the builder gave them $46,000 to buy down their rate. A year or two ago, Levack says the reaction would’ve been more along the lines of: ‘Fine, walk away. We’re going to sell this house for more money anyway.’ And now they are struggling to move their inventory and they’re offering all kinds of incentives.’ Levack currently has a listing in Austin with the same floor plan and finishes of a nearby home that sold for over $1 million last November. ‘We are in contract [for] way below that, and that’s just the nature of where things are,’ she says.”
The Columbian in Washington. “The average sale price for homes in Clark County fell 3.5 percent last month, from $605,300 in August to $584,000 in September, according to the MLS report. This downward price trend is unsurprising as the housing market continues to normalize, said Windermere Northwest Living broker Mike Lamb. ‘If there is inventory, it’s a much better environment to buy in now because there’s not this same level of competition there was,’ he said. ‘We were seeing houses sell for more than they were really worth.’”
The Belleville News Democrat in Illinois. “Median home sale prices in St. Clair County took a dive earlier this month when they stood at $220,000, according to Redfin. That downward trend has persisted throughout this month; median home sale price stood at $193,300 as of Oct. 10, Redfin county-metro data shows. An earlier peak for median home sale prices in St. Clair County reached $241,500 in July, and it’s been falling relatively steadily since cresting.”
“Median home sale prices in outlying Washington County, however, have been much more unstable in comparison. In Washington County, median home sale prices reached the Olympian height of $440,000 Oct. 3, Redfin’s data show. It’s since fallen off a cliff, precipitously dropping to $164,000 as of Oct. 10.”
ABC 7 in California. “According to one index, housing prices in the city by the Bay dropped faster in August than in any other city in America – a 4.3 percent decline since July. ‘A couple of months ago, it was academic. We heard that there were changes coming, but I’m sensing on the street that folks are feeling, okay, it’s here. It’s changed,’ said realtor John Yen Wong. ‘Given the market that we had before where they were 10, 15 offers for a property, that was sort of an unreal market.’”
2 Urban Girls in California. “The tide is turning as Inglewood homeowners are lowering prices on their homes as fears of a recession widen. With rising interest rates, coupled with higher fuel costs and a looming recession, homeowners have no choice but to reduce the asking price for their homes. Here are two we found in the 90305 zip code, which is the Morningside Park area of Inglewood, Calif. Two months ago this home located in the Renaissance hit the market with an asking price of $1.35 million. The price has now been reduced to $1,150,000.”
“This single-family home hit the market in early August with an asking price of $907,000. The home is located North of SoFi Stadium and is within walking distance to the venue. The home is now listed at the reduced price of $865,000.”
The Dallas Morning News. “Commercial real estate industry leaders are preparing for tougher times. ‘Inflation is at a decades high and the Fed is very aggressive,’ said Tim Wang, managing director of research for Clarion Partners, a major property owner in North Texas and nationwide. ‘The question is on timing, severity and recovery,’ he said. ‘Winter is coming.’ William Pattison, head of real estate research and strategy for MetLife Investment Management, said builders are being cut off from construction loans. ‘The largest banks stopped or significantly slowed lending back in June, and the smaller banks have pulled back pretty significantly,’ Pattison said.”
“‘It’s really unclear exactly what the values are,’ said Arthur Margon, partner with Rosen Consulting Group. ‘Everybody in this room who is not kidding themselves knows they are lower. The only question is how much lower?’ With fewer properties changing hands, that’s hard to gauge, he said. ‘There are not enough transactions to be statistically significant yet to show that there has been a break in pricing,’ Margon said. “Certainly, there has been in single-family housing. ‘You don’t have to be a genius to figure at 7% mortgages, people aren’t going to pay as much as they did at 2% to buy a house.’”
The New York Post. “The asking price of Greta Garbo’s former apartment in Midtown East has been slashed by $500,000, a handful of months after it hit the market. The aerie, located at 450 E. 52nd St., now asks $6.75 million — a drop from the $7.25 million it initially asked when it went up for sale in June.The current owners, publishing heir John McGraw and his wife already sought to offload the apartment at a loss before the price reduction, having spent $8.5 million for it in 2017. ‘The market is very different today than it was when they bought and lovingly upgraded the treasured residence,’ co-listing broker Brian K. Lewis, of Compass, told The Post.”
The Province in Canada. “Sales of condos and townhomes that won’t be delivered for several years have dramatically slowed to levels not seen in a decade. It comes as buyers in other markets are also sitting on the sidelines due to rising interest rates and economic uncertainty. Altus Analytics looked specifically at sales of new condos sold in the Toronto region for September and found an 89-per-cent year-on-year decline. One Surrey-based realtor said a lot of projects launched in the summer and didn’t do well, but she didn’t want to mention project names. She said that most are offering huge incentives, but they are still not selling briskly, so it makes sense to put a pause on project launches.”
CTV News in Canada. “It’s uncertain financial times for many Canadians as inflation has already taken a big bite out of family budgets. ‘Where it’s really affecting people with these interest rate hikes is with variable mortgages,’ said Tony Zarsadias, CEO of Island Realm Real Estate. Zarsadias says if you’re on a variable mortgage, you’ve already seen your payments increase and they will again after Wednesday’s announcement. ‘There are certainly people in jeopardy of not being able to qualify and I sadly expect people being under pressure for foreclosure,’ said Zarsadias.”
From Market Place. “The Brits typically fix their mortgage interest rates for much shorter terms than Americans. Twenty-six-year-old Alex Nunn knows that only too well. He’s buying his first home just north of London on a $280,000 mortgage, with an interest rate of just over 3% fixed for two years. That term is due to expire early next year, and Nunn was expecting to refinance at a moderately higher rate. Suddenly, Nunn faced the possibility of his mortgage repayments almost doubling.”
“‘We could be in a position where we can’t afford to pay our mortgage,’ he said. ‘That’s why it’s so worrying at the moment. It’s the not knowing, it’s the uncertainty of what’s to come. Of course, when you take out a loan like this, you know there is the potential for the rates to go up — but not to this level.’”
“Thirty-four-year-old Bianka Hamdaoui is also concerned. Her two-year fixed-rate mortgage expires next year, and she could face paying well over double what she pays now. ‘Since the mini-budget, my mind has been in overdrive,’ she said in an interview with the BBC. ‘I don’t know what I will do. I have been thinking about extreme situations, such as moving back to my parents and letting my place out so that I can keep it. I’m just running out of options.’”
Vietnam Investment Review. “Nguyen Hung, a director from a private real estate developer, said that over the last five months, his sales revenue had been almost zero. This caused construction-related activities to stop and he cannot pay salaries. The bank will not give loans, and products remain unsold, all adding to the company’s misery. ‘Currently, I have to pay more than VND30 billion ($1.3 million) for office leasing and salaries per month, but we do not have money left in our pocket,’ Hung told VIR.”
“Statistics from listed real estate businesses show that the number of days of inventory is skyrocketing to an alarming level. The average number of days of inventory has nearly reached 1,500, meaning it takes more than four years to sell out inventory. This number has increased sharply compared to the end of 2021 and approximately doubled compared to the 2019-2020 period. Dr. Can Van Luc, a member of the National Fiscal and Monetary Policy Advisory Council, said that the recent phenomenon of stagnation of capital for businesses was painful, with excess supply, excess resources, and a lack of capital.”
From Domain News in Australia. “Sydney property values have tumbled more than 10 per cent since the market peaked, new figures show, while values in Melbourne and Brisbane have fallen more than 6 per cent and experts predict further falls ahead. Rising interest rates hit Sydney and Melbourne first, said NAB chief economist Alan Oster, but all markets would be affected. ‘It’s basically like a tide, it either strands all boats or sinks all boats, and at the moment it’s sinking all the boats,’ he said.”
From Reuters. “For more than a decade since the global financial crisis, central bankers pumped trillions of dollars of cheap money into the financial system to keep the economy afloat. Now that largesse is coming back to haunt them – and taxpayers. The Federal Reserve and its European peers must make huge interest payments to commercial banks on deposits the institutions themselves created via massive bond purchases and cheap loans.”
“The optics of this are dire enough at a time when millions of citizens struggle with a cost-of-living crisis. Worse, it means they will have little or no money to pay into the governments’ coffers and some central banks in Europe might even need taxpayer help. ‘The Fed won’t be bankrupt financially but it could be politically,’ said Derek Tang, an economist at LH Meyer, a research firm.”
“Ironically, the central banks of the most fiscally prudent countries – the Netherlands, Germany and, to a lesser extent, Belgium – will be the hardest-hit because they warehouse a larger share of bank deposits and the bonds they bought on the ECB’s behalf yield zero or less. They have all warned of upcoming losses and the Dutch central bank openly said it risked needing a bailout.”