It’s Friday desk clearing time for this blogger. “Whenever the housing market slows significantly, layoffs in the mortgage industry follow. And that’s what happened Tuesday at Radian Group Inc., a Wayne firm that sells mortgage insurance and provides other services in the residential real estate industry. Private mortgage insurance such as the policies Radian sells is designed to protect lenders from payment defaults when borrowers make a down payment of less than 20%. Defaults are on the rise, Radian reported: up 18% during the quarter on its portfolio of insured mortgages compared with a year ago.”
“Like other lenders, Rocket continues to experience a year-over-year plunge in mortgage volume, closing $114 billion in loans so far this year through the third quarter, compared with $275 billion for the same nine-month period last year. For the industry as a whole, there are likely more job cuts ahead, said Brian Brown, Rocket’s chief accounting officer. ‘The industry is flooded with loan officers who are struggling to produce,’ he said. ‘In fact, our estimate suggests that industry volume, per loan officer, is near an all-time low, at less than one loan per loan officer per month. The economics are simply unsustainable, and capacity in the industry will continue to come out,’ he added.”
“Yet some consumers are still refinancing. CEO Jay Farner said in response to an analyst’s question that Rocket is ‘doing quite a bit’ of cash-out refinancings, often for customers who intend to use the money to pay down other forms of debt. Industrywide, he estimated that about 90% of consumers who are currently doing a refinancing are ‘pulling some form of cash out when they do.’”
“Opendoor Technologies Inc. reported third-quarter losses that were steeper than expected, after the US housing slump led the company to sell homes for less than anticipated and pushed it to write down the value of its inventory. The results were worse than Opendoor predicted because the company decided to cut prices in a bid to sell homes faster, according to a letter to shareholders Thursday. Opendoor wrote down the value of its inventory by $573 million.”
“A cascade of layoffs and hiring freezes hit the San Francsico Bay Area tech industry this week, signaling continued pain for tech companies. Payment processing company Stripe reported some of the largest layoffs on Thursday, with Stripe CEO Patrick Collison announcing that 14% of the company’s workforce would be let go, leading to roughly 1,100 people losing their jobs, according to CNBC. The layoffs will primarily impact the company’s recruiting department, with Collison also stating Stripe will hire fewer people next year. Financial tech company Chime has also struggled in recent months, with the company this week announcing layoffs of 12% of its staff.”
“The market has been particularly hard on public real estate startups over the past few weeks. A recent analysis from Crunchbase indicated that companies such as Opendoor, WeWork and Compass have lost over $42B in value from their opening prices. In addition to layoffs, a glacial wind is pushing through the tech segment, as several companies such as Apple, Qualcomm, Amazon, Salesforce and Credit Karma have all announced hiring freezes for the foreseeable future.”
“Businesses in California are fleeing the state at a rapid pace amid skyrocketing taxes – and, according to new research, there is ‘no end in sight.’ The rate at which businesses are leaving California more than doubled in 2021 from the previous year, according to a new report from the Hoover Institute at Stanford University. ‘Another consequence will be the negative impact on the housing market,’ said Suparna Chakraborty, UCSF Professor of Economics. ‘We have seen this before during the dot com bust. If businesses leave our region, this will lead to a downward trend in the housing prices. Given that currently, average Bay Area homeowners have most of their equity tied to their house, this is going to have far-reaching consequences on household finances, which in turn, could further depress the economy.’”
“Even in Washington, D.C., which boasts a fairly stable real estate market, things are changing, says Nancy Miranda, a realtor with RE/MAX Allegiance. Though prices haven’t fallen significantly, ‘D.C. has shifted,’ she told the Washington Examiner Magazine. The region, including the nearby Maryland and Virginia suburbs, ‘has shifted into a negotiating market,’ Miranda said. ‘Buyers are able to negotiate repairs, closing help, free things.’”
“The market is taking a hit. Since June, sale prices of Raleigh homes have fallen 9% while they’ve dipped 4% in the combined Fuquay-Varina and Holly Springs market, the report noted. ‘How far house prices will fall? I don’t know,’ said John Wood, owner of Re/Max United in Cary, who has been an agent in the Triangle since 1988.”
“If you’ve been trying to buy a home in the Tampa Bay area, you’ve likely felt the pain of people paying for this price of paradise, but experts think home prices are leveling out. ‘In the last two years, it’s been like the gold rush,’ said Jess Rasemont, a realtor at Sellstate Legacy Realty. ‘Over the past four months, we’ve had a shift in the market. That shift really started mid-June,’ said Rasemont. ‘The market is now leveling out, so where prices were crazy, crazy high, they’re evening out and getting to something more manageable price-wise. We have homes that just aren’t moving because they have been priced probably by a seller and an agent that were looking at comparable sold houses from four months ago, and in a shifting market, you can’t go back in time that far.’”
“According to Redfin, in September 2021, more than half of Portland homes were going for over asking. Now, only about a third are going above the listing price. Samira Sahebi, a real estate broker with Windermere Realty Trust, says the market is starting to benefit buyers, despite higher interest rates. ‘We’re definitely seeing things that we weren’t seeing in the market previously,’ Sahebi said. One of the changes is more price cuts. Sahebi also says buyers are winning when it comes to bargaining. ‘This is the kind of market where you can offer below asking,’ Sahebi said. ‘We used to waive repairs, we used to compensate for appraisal gaps, and now we don’t have to do that, so we can ask for repairs and also we’re asking for credits.’”
“Michele Wood and her husband are ready to retire back home in Arkansas if they could just sell their home in Denton. ‘I was wishing we had done this in August because our house probably would’ve been sold by then,’ said Wood. Their three-bedroom, two-bath home has been on the market for 27 days. There have been some interested buyers, including two competing cash offers that came in under asking, but still no done deal. Realtor Joanne Condi, of Remax DFW Associates in Frisco, said North Texas’ red-hot housing market is cooling after a strong summer. ‘In places like Coppell, if I held an open house there, I’d have 30 couples lined up,’ said Condi.”
“These days, only a handful of prospective buyers show up for open houses. Home prices are dropping. ‘Krum, which is just north of here, has started to drop their prices,’ she said. ‘Frisco has also continued to drop their prices.’ Some sellers are also turning to concessions once again. ‘Keep your house ready at all times for when somebody says: I would like to come over,’ said Wood. ‘Absolutely! Come right over. I’m ready for ya.’”
“As homes sit stagnant on the Colorado Springs housing market, selling for prices lower than this summer, many property owners are deciding to rent out their homes, becoming what realtors are calling ‘accidental landlords.’ Drew Bartlett, a Business Development Manager for Dorman Real Estate, says the phenomenon happens when property owners are unable to get the selling price they hope for. ‘People who were debating if, ‘I’m going to sell or if I’m going to rent’ saying, well, I can’t get that huge number,’ said Bartlett. ‘So renting is probably a better investment option.’”
“Terri Arena received an offer for her home on Long Island, New York, well below asking price after it had been on the market for just six days. She told CBS News she is concerned that ‘there aren’t going to be as many people out there with the same buying power,’ but she’s not ready to drop the price. ‘That’s why I made that decision to put it on the market now, because if I wait until the spring, it definitely will be lower,’ Arena said. ‘So why not try now? Even though the interest rates came up.’ Arena’s broker, Eric Stutz, said that though prices are down, they are still much higher than before the pandemic. ‘I think it is still a great time to sell now,’ Stutz said. ‘But going forward, the market is definitely trending down and I expect home prices to continue to drop well into next year.’”
“Herman Cochrane is the owner of a home in Henderson. He has been trying to sell his house for about three months now, but they still haven’t been able to seal the deal. He says part of it is because of these interest rate spikes making it harder to sell. ‘I haven’t gotten one offer, not one single one,’ Cochrane said. Founder of New Home Experts, Jennifer Graff says Cochrane is not alone. She says as a result of the interest rate hikes, the number of homes on the market has gone up about 123% from this time last year, with about 8400 homes up for sale. ‘Interest rates are out of control, and something has to change, or else I don’t know what people are going to do,’ said Cochrane.”
“Cohen said properties in Greater Boston may stay on the market even longer than that this fall. ‘It’s a bit longer than that right now. That’s the kind of figure that lulls buyers and sellers alike into the false sense that real estate is a readily liquid asset. Depending on the market you’re in, it might not be.’”
“Toronto home prices dropped again in October, contributing to an 18-per cent decline in real estate values since the Bank of Canada started raising interest rates earlier this year. Areas that experienced some of the sharpest price increases during the pandemic’s real estate boom are now losing value the fastest. That includes the Halton region, a wealthy area to the west of the city of Toronto, and Durham, which lies east of the city. Halton is down 23 per cent and Durham is off by 22 per cent. The recent deterioration in home prices in the Toronto region has wiped out gains made over the past year.”
“Norway’s central bank raised its key policy rate again on Thursday, amidst news that housing prices keep falling. ‘We haven’t had such a strong price decline in October since October 2008, the year of the finance crisis,’ said Eiendom Norge’s CEO Henning Lauridsen. State broadcaster NRK reported how one couple in Rana in Nordland has had their home on the market since June with no buyers yet. There’s also been a major decline in the market for holiday homes (hytter), with sales falling 28 percent during the third quarter.”
“Hytte-building and furnishing have become big business in outlying areas, but now some producers are cutting back and laying off workers. Newspaper Dagens Næringsliv (DN) reported that Tinde Hytter was laying off more than 50 employees including carpenters and administrative personnel, just a year after hiring more people at a large workshop in Vinstra. ‘The market is close to being dead,’ Audun Skattebo, CEO at Tinde Hytter, told local newspaper Gudbrandsdølen Dagningen (DG). ‘It’s a serious situation for our branch.’”
“It’s one minute to midnight for a huge proportion of Australian mortgage holders. Mortgage brokerage Aussie indicates more than half of mortgage holders expect to feel significant mortgage stress if the cash rate hits 3 per cent, a rate that is now just 15 basis points away. Money expert Effie Zahos said falling property prices meant some refinancers would face the additional cost of Lenders Mortgage Insurance (LMI). ‘This is an expense that no borrower wants to incur at the best of times, let alone when living costs are steep and interest rates are still rising,’ Ms Zahos said. She said those stuck in ‘mortgage prison’ could consider ‘downsizing’ their loan.”
“Aussie state broking manager Karen Sorrenti said it was important to be ahead of the game when it came to avoiding mortgage stress. ‘If you’ve avoided financial literacy, now is the time – it’s the gateway to managing – or better avoiding – financial distress,’ Ms Sorrenti said. ‘Do some calculations – be one step ahead on what you can afford for repayments and what amount would put you on the path to financial strain.’”
“The apartment absorption rate in Ho Chi Minh City was 15%, the lowest since 2019, while unsold inventories rose to a four-year high of 66% of primary supply, according to property consultancy Savills. Cushman & Wakefield said sales fell by half starting July, and the Vietnam Association of Realtors said property sales have been plunging this year. The shortage of capital is likely to continue throughout next year.”
“Huynh Phuoc Nghia, a senior executive at consultancy GIBC, said most Vietnamese investors seek short-term profits in the property market and long-term investors are rare. This means that when the market goes sideways or declines, people are quick to sell out as they lack the ability to hold on to their asset, he added. ‘Low demand and the lack of resources could push the property market into a long slump.’”
“The bottom has fallen out of the market for bonds from Chinese property developers. The dollar bond prices of real-estate companies in China have plummeted to new lows, with some trading below 10 cents on the dollar. The latest market setback came this week, after a midsize developer, CIFI Holdings Co., said Tuesday that it was suspending all payments on its offshore debt after failing to strike a deal with creditors. The Shanghai-based company said it was no longer in discussions with those creditors about debt repayments.”
“Its bonds have collapsed in the secondary market. A CIFI dollar bond that comes due in 2028 is bid at around 6 cents on the dollar, according to Traddeweb. The company’s shares lost a quarter of their value Tuesday, taking their year-to-date decline to 91%. ‘Everyone is scared,’ said Kenny Chung, portfolio manager of fixed-income hedge-fund manager Astera Capital Partners. He said that even though dollar bonds from Chinese property companies are cheap, ‘there is nothing positive to bet on yet.’”
“Foreign investors have lost billions of dollars on their investments in Chinese property bonds this year. Fidelity International’s Asian high-yield bond fund had a total return of minus 43% by the end of October, according to Morningstar. A similar fund managed by BlackRock Inc. had a total return of minus 34% over the same period. The two funds each have assets of around $1.6 billion.”
“Amid the downturn in China’s property sector, global investors have adopted a ‘sell first, think later’ mentality toward higher-yielding developers, said analysts and investors. In the past weeks, that approach has spread to stronger names. Nicholas Chen, an analyst at debt-research firm CreditSights, said there is a lot of uncertainty about the direction of the property sector, and few concrete developments in the debt restructurings being undertaken by distressed developers. ‘Market technical and investor fear are now the primary drivers of bond prices,’ he said.”