A report from West Hawaii Today. “Realtor Gretchen Osgood, principal broker at Hawaiian Isle Real Estate, said homes that have sold for $1 million are now being sold for $900,000 as sellers reduce their prices to attract buyers. Even though there are still some cash buyers purchasing homes on the island after selling on the mainland, Osgood agreed that buyers have become more hesitant. ‘I think they could end up going down by $400,000 before this is over,’ Osgood said, adding that some sellers are still taking ‘a long time to get a reality check’ but will eventually have to accept a lower price than what they want. ‘My advice here is: If you think you’re going to move soon or lose your job soon, sell your house now,’ Osgood said. ‘Don’t wait until next year.’”
San Francisco Bay View in California. “The Treasure Island-Yerba Buena Island development project is crucially important to the City and County of San Francisco. Developers were counting on the huge project at Yerba Buena and Treasure Island standing as a centerpiece of new housing, some of it affordable. At the center of the centerpiece are the astronomically priced Yerba Buena Island condos. Because San Francisco’s reputation is so damaged, ‘They’re having trouble selling those condos,’ asserted Lotus Yee Fong. ‘Also,’ she said, ‘They overbuild. They planned it and built it when they thought that they could fill it,’ said Fong, ‘and nobody’s coming.’”
“San Francisco is filled with citizens in tents ranged along sidewalks next to desperate fentanyl hawkers and people dead from drug overdoses. This has given the City a reputation as a place where, as Fong put it, ‘conventions and tourists don’t necessarily want to come. Also, the tech bubble has burst so companies are moving out of the City and the state. The convention business has started coming back to a small degree but not like it used to be. And the mental health and homeless issues – the reputation is everywhere now, so people don’t want to come to San Francisco anymore.’”
“‘There are too many residential and commercial (buildings) at high rates, and they are not filling them. That’s why the people with money are in trouble.’ The assumption has been that the YBI condos will be bought up by rich Chinese. Fong cautioned, ‘You can’t be planning for people who aren’t even going to live here. We have to look at the big picture and the big strings.’ Referring to ‘the new money in the city,’ she said, ‘a lot of wealthy people don’t want to live here.’”
The Seattle Times in Washington. “Seattle home sellers are waiting longer to find a willing buyer despite lower prices, signaling a dramatic shift from the bidding wars of just six months ago. Look no further than Snohomish County, where there were three times as many homes still for sale at the end of October than at the same time last year. Compared to the market’s peak in May, October median home prices were down 10% each in King and Snohomish counties, 8% in Pierce County and 7% in Kitsap County, according to Northwest Multiple Listing Service data.”
“Zillow senior economist Nicole Bachaud predicts Seattle-area prices will stay flat between now and next fall. That’s in part because the huge price hikes in 2020 and 2021 were ‘completely unsustainable,’ Bachaud said. ‘We can’t have 20% growth every year, and the reason why is because of affordability,’ Bachaud said. ‘Incomes have grown, but they have not grown nearly as much as home values did. So, there’s not going to be anybody left to buy homes at a certain point.’”
“Poulsbo broker Frank Wilsonhad advice for potential sellers looking to price their home right. ‘What your neighbor’s house sold for six months ago has very little bearing on your home’s value today.’”
Ahwatukee Foothills News in Arizona. “The Valley’s housing market is not only worsening for sellers but also looking not so hot for builders, a leading local analyst of the local market said last week. The Cromford Report offered a dismal outlook on the new-home construction scene in the Valley, stating that the number of permits being issued for new homes is plummeting and that the industry here is ‘slamming on the brakes.’ Reporting that ‘things are getting worse for sellers,’ the Cromford Report said its index of Valley home sub-markets – based on a variety of sales and price data – shows ‘the deterioration in the market continues to fall.’”
“‘Eleven cities are buyer’s markets, three are balance and three are still seller’s markets, though all three are deteriorating rapidly,’ the Cromford Report said.The ‘deteriorating markets’ are Fountain Hills, Paradise Valley and Scottsdale. It said that of those submarkets, Queen Creek now offered the least favorable market for sellers.”
From CNBC. “The historic run-up in home prices during the first two years of the pandemic gave homeowners record amounts of new home equity. Since May, however, about $1.5 trillion of that has vanished, according to Black Knight. The average borrower has lost $30,000 in equity. Less than 500,000 borrowers are currently underwater on their mortgages, but that is still double what it was in May. Those who purchased their homes in the past year will be most at risk of going underwater since they bought at the peak of the market.”
From Bankrate. “The pessimists compare home prices to median incomes, a basic measure of affordability. If the median home price is $360,000, for instance, and median family incomes are $90,000, then the price-to-income ratio is 4. During the pandemic, Americans experienced some boosts to income, but their homebuying power shot up mostly because of the plunge in mortgage rates. That allowed buyers to absorb large increases in home prices — and sent the price-to-income ratio above the levels seen during the housing bubble of 2005 to 2007, says James Knightley, chief international economist at ING Bank.”
“‘We’ve gone from 4 to 5.3 in the space of two years. That is a shockingly large number,’ he says. ‘The worrying thing is, to get back to 4, we need home prices to fall 20 to 25 percent.’”
The Globe and Mail. “A growing share of mortgage loans made by major Canadian banks have amortization periods of more than 30 years, a sign of the rising stress borrowers are under as interest rates soar. A larger proportion of mortgages with long amortizations gives an indication of the number of borrowers who could face significant hikes to monthly payments. ‘The vulnerability is spreading,’ said Robert Colangelo, senior credit officer with credit rating agency Moody’s Investors Service. ‘If that percentage increases, it implies that more variable-rate mortgage holders are vulnerable to a much higher mortgage payment.’”
“Samantha Brookes, chief executive of mortgage brokerage Mortgages of Canada, said it would be difficult for many households to come up with the extra cash to service their loans. For example, a homeowner who got a $800,000 mortgage with a variable rate of 1.35 per cent in January with a 25-year amortization would have paid $3,143.42 monthly, with the bulk of the mortgage payment going toward paying down the loan, according to Ms. Brookes. With today’s variable rate of 5.1 per cent, that same homeowner would pay $4,723.45 per month, and most of the payment would go toward interest.”
From IFA Magazine. “Jon Halbert, mortgage and protection adviser at Ormskirk-based Key Financial Associates: ‘House prices falls are a nailed-on certainty. It’s not so much headwinds the property market is facing but a hurricane. As demand for property drops off due to the Bank of England’s rate hikes, sales will inevitably slump. But this alone will not reduce property prices. When people become desperate to sell and reduce the sale price of their home below that of the current market value, all the homes in the same street reduce in value to the same level. This is the domino effect that triggers house price falls. The rising cost of borrowing will force a growing number of homeowners to sell because their affordability on the new rates when they come to remortgage, coupled with the cost of living, will become impossible. Repossessions will also rise as a result of recent rate rises. If lenders relax their criteria around interest-only mortgages, many will be able to survive potential repossession.’”
“Andrew Simmonds, director at Bristol-based Parker’s Estate Agents: ‘Since the summer, I’ve been telling vendors that their house is worth what it was worth 12 months ago. I’ve lost instructions because they’ve said ‘nah.’ This is mainly because of deluded competitors who feed them bull. Plenty have since come back to me saying ‘you were right.’ I’m expecting average prices to be down 20% by March.’”
“Paul Holland, mortgage broker at Chatham-based Henchurch Lane Financial Services: ‘The property market has seen gargantuan price growth over the past 2-3 years. Healthy and sustainable house price growth is annual growth of circa 2%-3%, not 10%+. When that happens, the wheels invariably come off.’”