A report from Time Magazine. “Jim Ewing is an Airbnb host whose social media post about his property’s occupancy rates sparked the original viral tweet about an Airbnb bust. He’d posted to an ‘Airbnb Superhosts’ Facebook group about his struggles. Ewing told TIME that his property in Desert Hot Springs, Calif., dropped from 80% occupancy to 0% this past spring—and hasn’t rebounded since. ‘We haven’t had a single booking since June,’ he says. Ewing says that he’s currently looking for a long-term tenant for his property instead of continuing to rent it out for shorter periods on Airbnb. ‘It seems like a lot of people are kind of fed up with Airbnb and they’re angry about how some hosts treat them now,’ he says. ‘I’m curious to see if my timing for leaving the short-term market is the right move, and if in six months or 12 months, Airbnb becomes a bad investment for people.’”
WTAQ in Wisconsin. “Sales of existing homes have dropped for eight straight months nationwide. In the Appleton area, it’s no different. In her 30 years in the business, Prospera Credit Union Mortgage Lender Cheryl Ellis has only seen a similar situation once before. She says the recent changes in fixed mortgage rates mirrors what was happening in 2006 and 2007. ‘People were buying their first home, their vacation home, their townhome — things like that. And then the recession hit. So, a lot of that backfired basically. So, we’re close to that. I don’t think it’s going to be that extreme.’”
The Dallas Business Journal. “The downturn in home sales in Dallas-Fort Worth exceeds the collapse in sales experienced during the worst of the Great Recession, according to just-released figures from North Texas Real Estate Information Services.Closed home sales in October were down 37% in Dallas and Collin counties and 32% in Tarrant County compared to the same time last year, according to the latest figures from NTREIS based on Multiple Listing Services data.”
“During the worst impact of the Great Recession on North Texas’ housing market, from 2008 to 2009, closed sales dropped 23% in Dallas County, 26% in Tarrant County and 10% in Collin County year over year, from peak to trough. ‘It’s just crazy,’ said Danny Perez, managing director of DFW-based M&D Real Estate. ‘The numbers are worse than the 2008-2009 drops, which is where we saw the biggest drop in closed sales in the Great Recession. We’ve had a 37% drop in one year, so, we are seeing nearly double what we saw in the Great Recession.’ The number of pending sales, a leading indicator into next month, foretells even slower home sales ahead.”
WKRG in Florida. “The Emerald Coast Association of Realtors presented the latest market and interest rate status’ for the area to the Board of County Commissioners. ECAR treasurer and local realtor Amanda Grandy broke down the housing market from a national range to the local Okaloosa County status. ‘New mortgage originations are down about 50 percent, so if you talk to any lender today they are down half of their business,’ said Grandy. ‘Our sales are going down, our inventory is going up and our buyers are stopping in this market to sell or buy anything.’”
“‘The good thing is a recession is followed by a recovery,’ said Grandy. ‘What the feds are saying is they’re are going to increase interest rates until February, then sit on it for 12 months to let everything kind of stall.’”
From Variety. “Until recently, Los Angeles was the blazing center of a hot national real estate market. Demand was high, inventory low, and tales of feeding frenzies with escalating cash offers from multiple buyers were common. But things cooled down earlier this year. Business manager Eric Fulton of Fulton Management says the impact has been noticeable with his clients, who range from top stars such as Chris Hemsworth and Channing Tatum to up-and-coming digital influencers. Previously, ‘we had anywhere from 10 to 20 refinances or purchases going on at any one time,’ says Fulton. ‘Now it’s really down to a slow dribble.’”
“In New York, many fled the congestion of the city during the pandemic and bought homes in more bucolic upscale areas including the Hamptons. But with the pandemic receding, some of those buyers are regretting their choices. ‘Now, people who somewhat overpaid for properties want to get back to the city,’ New York-based business manager Anthony Bonsignore adds. That spelled trouble for landlords. Property owners in the Hamptons were already having trouble finding renters by early 2022, as travel restrictions finally eased, causing the median rental price in the area to fall by 26% in the first quarter.”
“Multi-family properties including apartment complexes tend to be better bets. Christopher Curry of Forward Business Management had a client who sold five California properties that were earning $40,000 a year and used the proceeds to buy 130 units in Texas that are now bringing in about $850,000 a year.”
KTVB in Idaho. “Most of us have heard the term ‘buyer’s remorse.’ Now we are hearing about some homeowners experiencing just that, but with the house they bought during the start of the pandemic. ‘We’re seeing a big slowdown as far as homes flying off the shelf,’ associate broker at EXP Realty, Greg Langhaim said. Now some folks are experiencing buyer’s remorse. ‘They just didn’t have options,’ Langhaim said. ‘A lot of people waived their home inspections, waived their appraisals, they paid, you know, hundreds of thousands over asking just to get their offer accepted and in hindsight, now they’re thinking, ‘man, maybe we should have waited just a little bit longer, you know, and we would have been able to get what we wanted.’”
The Globe and Mail in Canada. “Marketing a condo in the Toronto real estate landscape is tricky, says veteran agent Robin Pope. It’s even more complex in the shadowy corner of the market where people try to unload their obligation to take possession of an unfinished property. Interest rates have spiked and buyers of preconstruction units must be preapproved for financing and pass a mortgage stress test before they close the deal. Some can’t afford the monthly carrying costs and want out. ‘They are very motivated because they wouldn’t be able to close,’ Mr. Pope says. ‘They’re saying, ‘I don’t want to lose the farm.’”
“Anna Wong, real estate agent at Strata.ca, was already steering her clients away from some preconstruction projects earlier this year because the bet on future value seemed too high-risk, in her opinion. She believes some early buyers will be hurt. ‘Even if they want to let it go as an assignment, they’re going to lose,’ she says. ‘When the closing date comes and they can’t get the mortgage, that’s when you’re going to see some good deals.’”
“Victor Tran, a mortgage specialist with rates.ca, expects many preconstruction buyers to face a challenge in securing financing. ‘They’re in for a bit of a surprise. They’re simply not able to qualify.’ Mr. Tran spoke with one twentysomething purchaser who lives with his parents in Markham, Ont., and handed a developer a deposit on a preconstruction condo in 2018. The young man would gladly sell the assignment in order to be off the hook for the full amount at closing. But the builder is controlling the price and refuses to budge. All of these forces leave the young man in a precarious situation. ‘He’s willing just to offload this and move on with his life. I think I’ll be hearing a lot more of these stories in the next six months.’”
“Mr. Tran does not blame buyers who have become fearful of purchasing in a declining market. ‘I don’t think it’s a good idea to buy when the knife is falling.’”
From Bloomberg. “The crisis in Chinese property dollar bonds has become so extreme that an analyst who’s been covering the market since its inception in 2005 says meaningful analysis is no longer possible. ‘The proven investment approach is that it won’t go wrong being negative or more negative ahead of the market,’ said Zhi Wei Feng, a senior analyst at Loomis Sayles Investments Asia Pte, who was working on credit research at Barclays Capital in 2005, when the first-ever Chinese real estate firm dollar bond was issued. ‘It is very frustrating when the market is no longer analyzable,’ she said.”
“China’s offshore property notes have plummeted to record lows that reflect deep distress, as defaults mount to unprecedented levels. It’s an even worse picture for junk-rated firms. The average price of Chinese high-yield dollar securities, mostly issued by property companies, dropped to a record low of 50.2 cents this week, according to a Bloomberg index.”
“‘Such prices are certainly not justified for any normal market but they are justified for a black box market which is beyond analysis,’ Feng said. ‘We are going back to a sector of policy risk only while investors have lost all confidence towards the sector and the companies.’”
Stuff New Zealand. “Travis Pidwerbesky bought his first home in Lower Hutt with flatmate Karan Malhotra just over 11 months ago, just as prices peaked. Less than a year later, and their bank has told them prices in their suburb of Wainuiomata have fallen so severely that they are now in negative equity – meaning they owe more on their home than it is worth. Their home loan interest rate will also almost double when their renewal date arrives at the end of the month – jumping from 3.6% to 6.9%. With a pair of eight-year-old twins to support, Pidwerbesky said his biggest fear was what would happen next month, and whether he would be able to make ends meet.”
“‘Even with that budgeting in, I am about a week out from when I get paid, and I’ve literally got no money. You look at the accounts, and it’s all zeros, and that’s without any kind of additional expenses. I have fees from the kids’ activities and stuff that they are chasing me up for, I’m missing payments, I’m in a pretty bad place basically.’”
“He has taken on a second casual job on the weekends he does not have his children, while Malhotra has signed up as an Uber Eats driver to earn some extra cash. Pidwerbesky is not alone. The Reserve Bank issued a warning on Wednesday that rising mortgage rates and falling house prices could leave many in negative equity. It estimated about 2% of all home loan borrowers are currently in negative equity and that the number could rise ‘considerably’ if house prices fall further.”
“House prices had fallen 11% from their late 2021 peak throughout the country. Price falls in Wainuiomata, where Pidwerbesky bought, are outpacing all other areas in the Wellington region, with a 17.2% drop recorded by CoreLogic. In the wider city of Lower Hutt prices have fallen nearly 16.8% since their peak late last year, to bring the median price down to $822,278. That compared to a 13% fall in Upper Hutt, 11.7% fall in Wellington city and Porirua, and a 7.4% fall on the Kāpiti Coast.”
“Pidwerbesky said he and Malhotra spoke to the bank, and it had not been helpful. ‘ They basically said this is the interest rate – that is what it is.’ With banks recently reporting record profits, Pidwerbesky wanted to know what profit margins they were making on home loans. ‘Are they passing on just the amount of interest they need to? Because you keep seeing how they are making massive profits, and you see the same things with the grocery stores.’ He said losing his home over missed payments would be ‘life-shattering.’ ‘I would be starting from absolutely nothing. It would put me in a really hopeless place. It would be hopeless, it would be horrible.’”