A report from Business Den. “The two-bedroom, one-bathroom home at 3612 Newton St. is a classic Colorado bungalow. But it was something of a nightmare for Opendoor, the data-driven home flipper. The San Francisco-based ‘iBuyer’ paid $779,000 for the Newton Street home on April 20, according to public records. Six months later, on Oct. 11, Opendoor sold the home for $625,000 — $154,000 less than the company paid for it. Opendoor lost at least $50,000 on 10 of the 36 flips, BusinessDen found. The second-worst flip involved a southwest Denver home at 5960 W. Milan Place, which Opendoor bought for $743,200 in May and sold for $645,200 in August — a drop of $98,000.”
“The phenomenon isn’t unique to Denver. Bloomberg, citing research from YipitData, reported that Opendoor lost money on 42 percent of its transactions in August. ‘Opendoor’s metrics are in the danger zone,’ Mike DelPrete, a scholar at the University of Colorado Boulder, told Bloomberg last month. ‘They are very close to where Zillow was in its worst moments.’”
From NPR. “NPR’s Ayesha Rascoe speaks with Natalie Vaughan, a realtor working in the Northern Virginia/DC area about the housing market in today’s economy. ‘Well, look, we’re never going to see 3.5% interest rates, you know, any time in the foreseeable future. I have five or six lenders that I speak to on a regular basis. And some of them are saying we’re going to hit 10%. That’s a scary thought, right? And some of them are saying, no, no, no, we think that things are going to settle down, and we’re going to see maybe a 6%, which – we’re over seven right now. And I think interest rates will probably go up maybe to 8%. Six percent is going to seem like a dream in six months.’”
The Lubbock Avalanche-Journal in Texas. “Newly constructed or continuing construction homes have been popping up all over Lubbock, from $1 million dollar homes to $260,000, despite a cooling market. This influx of new homes helped boost active listings to 51% in September, though closed sales went down by 17%. ‘Earlier this spring, we had no inventory, interest rates were very low,’ said Rich Eberhardt, president of the Lubbock Association of Realtors. ‘Builders recognized that and started building a lot of homes, but it takes time to build a house. Now, our inventory is triple what we had, and a large part of that is new construction.’”
“‘The market has cooled quite a bit,’ he said. ‘Interest rates are much higher now as well, so we are starting to see some builders offer incentives to get their houses sold. Some help with closing costs, offer landscaping allowances, those kind of things. Some subdivisions around Kelsey Park are building million dollar homes and million dollar specs (homes without buyers yet), which hasn’t been done in Lubbock prior to the last few years.’”
“Counting the 907 homes on the market in September, the median price for a home is $243,623. ‘In June, we saw prices increase about 16%, which, in a normal market, we’d see 1-2%, so this year was a real aberration,’ Eberhardt said. ‘I don’t see prices going down, but I don’t see an increase at the same level that they did last year. This is (becoming) a more normal market. I’ve been doing this for 27 years, and I’ve never seen a market like this year’s. It’s a great time to buy, because you’re not pressured into making a decision, or don’t necessarily have to pay a lot more than the list price.’”
Bisnow South Florida. “While Miami might be insulated from the worst of a possible recession, developers aren’t insulated from inflation. Construction costs in particular have risen so much that they are starting to slow down development, Two Roads Development President Brad Meltzer said this week. ‘I think you are either going to see some projects stall a little bit or not happen for a little while,’ he said. ‘A former client of mine, his contracts are currently on hold. He is waiting. It depends on what market sector you are in, whether or not there is a market demand to increase the price or not to absorb some of the construction prices.’”
The Jacksonville Daily Record in Florida. “The median price of a single-family home fell 2.6% in September to $380,000 in the Northeast Florida market comprising Duval, Clay, St. Johns, Baker, Putnam and Nassau counties. It’s the first price decline in the market this year. In Duval County, the September median price fell 1.5% to $335,000. In Clay, it fell 2.9% to $355,990. Baker fell 9.5% to $305,000. Putnam dropped 10.3% to $210,725. ‘While still in a ‘sellers’ market the trend continues to move toward a more balanced market,’ NEFAR President Mark Rosener said. ‘I anticipate that the median price will continue to fluctuate month to month in the 3 to 5% range in either direction for the balance of the year.’”
“September building permits for single-family homes in Clay, Duval, Nassau and St. Johns counties fell to 978 in September, a 17.12% decline from the 1,180 issued in August, according to the Northeast Florida Builders Association. ‘You know, some of it is folks dialing back on what they’re doing and trying to figure out where the economy is heading,’ said Jessie Spradley, NEFBA executive officer.”
The Berkshire Eagle in Massachusetts. “‘It’s definitely caused the market to cool a bit,’ said Tara McCluskey, vice president of mortgage originations at Greylock Federal Credit Union. ‘When we say cooling, we’re not seeing those 10 offers on the table. There are less offers over the asking price. More normal offers are coming in.’ ‘We’ve seen a drastic decline in applications,’ said Jay Anderson, the CEO of Pittsfield Cooperative Bank, referring to people applying for mortgages. That 15 percent decline has occurred mostly over the last 60 days, he said. ‘I think there’s a lag effect when rates go up, and people get to a point where they stop,’ Anderson said.”
KHSB in Missouri. “A local moving company, A Friend With A Truck Movers, is feeling the load of inflation as rising mortgage rates have created a domino effect. Owner John Sheridan says business is down about 25% compared to normal years. As a business that depends on the rise and fall of the housing market, the current decline concerns Sheridan. ‘I think the housing market hit kind of a brick wall there a little bit,’ said Sheridan. ‘The winter season is always naturally slow, so that compacting with the interest rates is a little scary.’”
“Employees are completing about three to four moves per day, down from about five to 10 this time last year. Sheridan hopes people moving into Kansas City will keep the business afloat. Mante Thomas has been a mover with the company for 10 years. While business is slower these days, he says a new trend in the housing market is keeping their services relevant. ‘There’s been a lot of smaller moves, and I see a lot of people moving from houses to apartments,’ said Thomas. ‘Places that are cheaper or they’re moving in with someone.’”
From KHON 2. “Mortgage rates have hit 7% for the first time in two decades, but what does that mean for Hawaii’s real estate market? Amber Ricci with EXP Realty said Hawaii’s strong sellers market is starting to level out and some are thinking outside of the box to buy. ‘What I’m seeing with some of my clients is that they are having their parents co-sign or having their siblings co-sign to help back up that they can get a bigger priced mortgage,’ Ricci said. Ricci said some realtors are even offering concessions out of their commission to secure a sale, so it is a good time to buy even though mortgage rates are at a 20-year high.”
From Bisnow. “Real estate brokerage Compass Inc. named Kalani Reelitz, previously a Cushman & Wakefield executive, as its new chief financial officer, effective Nov. 15. He will ‘focus on building sustained profitability and free cash flow generation,’ according to a statement. The company lost nearly $800M during the 18 months spanning 2021 and the first half of this year and will report further results in the second week of November. In the meantime, investors aren’t too keen on its stock. Trading of Compass shares began on April 1, 2021, at a little more than $20 per share. On Friday, Compass traded for about $2.50.”
“This summer, SoftBank’s Vision Fund said that its stake in Compass had lost about half of its value — down to $543M compared with the $1.08B it invested across three rounds of funding. The New York-based Compass has already taken steps to stem its losses, including a layoff in June that affected about 10% of its full-time workforce and the closing of Modus, a title business that Compass bought in 2020. In September, there was another round of layoffs.”
KPBS in California. “‘Prices in San Diego are down now for the fourth month in a row. So the median home price — that includes every type of house you can imagine — that’s $795,000. So that’s down from our all-time high of $850,000 in May,’ said Phillip Molnar, senior business reporter with The San Diego Union-Tribune. ‘So it’s sort of a substantial drop, a 6% drop in a year.’”
CBS 8 in California. “The Fed raised interest rates to slow the red hot housing market. In some cases, that’s adding an extra $1,800 to a mortgage payment. Jeff Tucker, and economist with Zillow said, ‘It’s looking like a $4500 mortgage payment for the typical home in San Diego after putting 20% down. That’s a lot of money. Frankly that’s more than what a lot of people in San Diego are even paying for rent so that’s the biggest hurdle.’”
“Tucker said those prices have eliminated a lot of buyers out of the running, especially in expensive markets like, San Diego. ‘There’s room to negotiate and those negotiations don’t only go up like they did in 2021,’ Tucker said. Dara is a potential first-time home buyer whose been looking since January of 2021. ‘It’s scary. At the end of every day, it’s like ‘Crap! Should I be doing this? I don’t know,’ he said. Dara said, he’s actually seen this work in buyer’s favor. ‘Before whatever they listed it as is what they get. Now there’s houses sitting on the market for 30 days. They’re sitting on the market for a month and a half. They have to drop their cost and I’m like, okay, I can talk to these people now.’”
The Globe and Mail. “Another Canadian startup that raised significant venture capital during the pandemic technology boom has scaled back its work force as the sector’s troubles mount. RenoRun Inc., a Montreal startup building an Instacart-like service delivering construction materials to contractors, on Thursday cut 43 per cent of its staff, or 210 people. It’s the second recent round of layoffs for the company after it cut 70 employees, or 12 per cent of its staff at the time, in August and froze expansion plans. RenoRun, which had more than 550 employees in July, now has 274. The latest cuts were across the company including three of its eight-person leadership team, CEO Eamonn O’Rourke said in an interview.”
“‘We pride ourselves on our people first, and to have to do something like this is tough for everybody,’ he said. While Mr. O’Rourke expects RenoRun to more than double revenue in 2022 – a consistent pattern for the company – ‘the business environment we’re operating in has fundamentally changed.’”
“Layoffs have swept across the tech sector as companies have had to pivot from a ‘grow-at-all-costs’ mentality to setting out a path to reaching profitability in the face of an expected recession. According to Layoffs.fyi, which tracks startup job losses, more than 700 companies including Shopify, Hootsuite and Clearco have laid off a combined 94,000-plus people in 2022. Mr. O’Rourke had hoped in 2022 for RenoRun to hit US$100-million in revenue, expand from serving five cities – Toronto, Montreal, Boston, Philadelphia and Chicago – to 10 and to keep hiring. But after entering Washington, it decided to stop expanding, trim staff and preserve cash.”
From Globes. “A black cloud hangs over Israel’s office market, which is highly dependent on the tech sector, after tech giants like Microsoft, Google, Amazon, Meta and Intel have all announced planned cutbacks. There have been no layoffs from the tech giants in Israel yet but the local real estate office market is anxious. Avison Young Israel – propertech CEO Guy Amosi said, ‘It causes a situation in which people sit on the fence. It becomes more difficult for them to take decisions in the current climate and creates a situation in which all deals are now halted, even those that were in the pipeline. We had two or three deals involving tens of thousands of square meters just recently in which the companies decided in the middle of proceedings ‘let’s stop for six months and we will see where things are going.’ In other words by the movement of the leaves, you can understand the direction of the wind: there is a halt, and the way to a price drop is not far, in my opinion.’”
“‘We still see occupancy of more than 90% in the quality towers in Tel Aviv but there is undoubtedly a slowdown in demand for commercial real estate in recent months,’ says realtor Osher Ossi who specializes in commercial real estate with an emphasis on high demand areas in Tel Aviv. ‘If the situation continues, the funds in the high-tech companies will run out, and we can already see many of them starting to reduce expenses. The big question is whether the global economy will manage to recover before the high-tech companies spend all their reserves.’”
“Amosi says of the new situation, ‘Suddenly there are thousands of square meters of vacant office space in Tel Aviv. Companies are subleasing areas in towers by the Ramat Gan Diamond Exchange, entire floors in the Vitania tower in Tel Aviv are already subleased, and individual buildings in Tel Aviv, with 2,000 and 3,000 square meters, are mostly empty. The companies rented offices at high prices, and now want to reduce the damage, so they don’t mind renting the spaces for NIS 10-15 per meter less, just to show that they have reduced the damage. The market is currently in a crazy imbalance, which will surely close over time – but right now we have a gap that cannot be bridged, between sellers and renters and buyers and renters. In my opinion, over a range of 12 to 50 months from now, we will see a lot of office space here that will be offered for rent.’”
“Amosi concludes, ‘The best advice right now is to sit and wait. Every Monday I talk to all the real estate advisors in Europe, and every Thursday with the real estate advisors in North America. The picture that emerges from my recent meetings with them is that we are part of the global situation and in New York the situation is no different, and in London the situation is even worse. In any case, the pace of decision-making is much slower today, and I think it is right to pause a little now, see what is happening in the market and only then act.’”
From Womans Day in Australia. “A dark cloud is brewing over the final week of The Block, with a perfect storm seemingly gathering over the show’s much-hyped finale, sending the already stressed contestants into a tailspin as they look set to lose big after months of hard work.It’s not the only disaster threatening to derail the show’s finale. The Block producers fear history could repeat – and some of the houses may fail to sell at auction again.”
“Indeed, the odds have never been more stacked against the reality hit. With house prices in freefall and tipped to drop across the country by another 15 per cent by the end of next year. Winners on The Block New Zealand walked away with a dismal $3046, while the couple who came second took home just $76, leaving fans calling for the show to be axed! ‘We would be upset to walk away with nothing. The auction is the pinnacle of The Block. It’s what we’ve been planning for since day one. It’s the light at the end of the tunnel after the hardest slog of our life,’ Rachel confides to Woman’s Day.”
“Even The Block’s resident foreman Keith says Ankur and Sharon’s house is ‘as bad as it gets,’ and confesses, ‘I don’t think that house will sell.’ This series’ contestants certainly may have regrets about appearing on the show, after they put their lives – and livelihoods – on hold to compete for the cash. Sharon, 35, and Ankur, 41, told Woman’s Day they were relying on the show to ‘bring down that mortgage of ours and assist us financially.’ And the actress has called the build a ‘s–t show,’ and the couple confessed they would ‘do everything differently’ if they had their time over again. ‘I don’t even feel comfortable having anyone walk through with the state of where we’re at.’”
“‘It’s 12 weeks of not sleeping, constant relentless pressure – brutal,’ Sharon says of the experience. ‘And it seems it may all be for nothing.’”