A report from Mansion Global. “As the market shifts, home buyers are getting bolder. ‘My advice now is to ask for everything,’ said Ben Stern, managing broker of Buyers Edge Co.’s Dupont Circle office in Washington, D.C. ‘In less-competitive neighborhoods buyers are successfully offering 10% less than the list price, and having a full-blown home inspection with the right to void their offer and the right to negotiate.’ ‘Right now, sellers are accepting offers with a home inspection and negotiations because they know if they don’t, they may have to put their house back on the market,’ said Nina Hatvany, an agent with Compass real estate brokerage in San Francisco. ‘The next buyers are likely to find the same issue, so they may as well give the first buyers a credit and move on.’”
“‘In a big house in the Hamptons, my buyers wanted the sellers to replace all the windows,’ said Kimberly Jay, a broker with Compass real estate brokerage in Manhattan. ‘The sellers gave them a large credit for it because they were eager to sell.’”
From Deseret News. “Yet again, regional housing markets in the Mountain West are among those seeing the largest share of homes for sale with price tags that are getting slashed. Boise, Idaho was again the leading metro in Redfin’s rankings with the largest share of homes for sale that had a price drop in October. More than two-thirds — 68.7% — saw a price drop — a larger share than any other metro Redfin analyzed. Denver saw a 56.8% share of homes for sale with a price drop, followed in Redfin’s analysis by Indianapolis and Salt Lake City, both at 54.7%. Tacoma, Washington, ranked No. 5, with a 52.5% share.”
“Salt Lake City led the nation as the metro area to see the biggest drop in number of homes sold and among the top five for the biggest drop in pending home sales. The number of homes sold fell 47.6% year over year in Salt Lake City in October, according to Redfin. Stockton, California, ranked No 2. with -45.4%, and Cape Coral, Florida, came next with -45.3%. Las Vegas ranked No. 4, with -43.7%, and San Diego rounded out the top five with -41.5%.”
“Pending home sales fell the most in Allentown, Pennsylvania, declining 54.9% year over year. Next came Greensboro, North Carolina (-50.4%), Honolulu, Hawaii (-47.3%), Salt Lake City (-46%) and Jacksonville, Florida (-45.9%).”
From Benzinga. “According to a National Association of Realtors survey, sales of existing homes were down in October compared to a year earlier and down 5.9% from September. There were decreases in every region of the US both month over month and year over year. That was the longest stretch of dropping sales ever recorded, dating back to 1999, and it continues a trend that started slowing in February.”
The Telegraph. “Property sales in America have tanked, affordability is at its worst level since 1985 and house prices have been falling since June. Mick Duchon, of Corcoran real estate agents in Miami Beach, said: ‘I’m seeing buyers expect more negotiability and sellers are more flexible because they know what’s happening in the market.’”
The Gilbert Sun in Arizona. “Big news this week as the Valley shifts into a buyers market. Buyers have reaped the benefits of this rapidly shifting market with nearly 45% of all recent sales involving concessions for mortgage rate buy downs, closing costs, and other seller-paid contributions. But sellers are grappling with the reality that home prices have fallen almost 10% in that same time period and the impact of not being market-ready has risen to two to three times the opportunity cost that it carried in the 2021 market. New construction has returned to the Valley as a viable solution for buyers after two years of inaccessible inventory and inflexible pricing. That is peaking the interest of many who are finding resale inventory to be outdated and priced similarly.”
Tribune News Service. “In Southern California, a mansion is a micro-economy. And whenever these prized properties surface for sale, many dozen more workers enter the fray — tasked with elevating the home to its most beautiful state, keeping it in pristine condition in hopes of luring a buyer willing to spend a fortune to acquire it. They include maids, gardeners, handymen, pool techs, interior designers, limestone specialists and aquarium cleaners. Owners could spend millions just trying to keep the place in salable shape.”
“In April, former Disney chief Michael Eisner offered up his Malibu compound for $225 million but hasn’t yet found a buyer. The Manor, a famous 123-room Holmby Hills mansion, featured rooms dedicated to gift wrapping and flower cutting, hit the market in February for $165 million. No takers. In Beverly Crest, a $100-million mansion has been listed since January 2021. Crickets.”
The Tribune. “The Government and commercial banking industry must have ‘a meeting of the minds’ so the latter can ‘clean up’ its backlog of distressed properties and resume aggressive mortgage lending again, a senior banker urged. Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told an ‘economic resilience’ webinar that the Government was taking ‘a contradictory position’ by focusing on new housing developments rather than directing persons to distressed homes that could be acquired at much-reduced prices.”
“He said the backlog of delinquent mortgage properties, where borrowers have defaulted on their repayments, was tying up bank capital and deterring new lending in the domestic Bahamian housing market for properties worth $1m or less. ‘If things continue to be tight in the domestic environment, the availability of qualified borrowers and mortgages is going to remain restricted. There’s underlying factors to that,’ Mr Bowe told the webinar. ‘There’s a significant inventory of distressed properties that exists in our populace today.’”
CTV News in Canada. “There are nearly 50 per cent less homes being built in Saskatoon compared to last year, according to a new industry report. ‘We did have a very strong start to the year, the first five months of the year were very strong for sales, and cooled off shortly after, as soon as those interest rates started rising quite rapidly,’ CEO of Saskatoon Home Builders’ Association Nicole Burgess told CTV News. ‘Unfortunately, there’s not much cause for celebration. We’ve seen pretty much things come to a grinding halt.’”
“‘Deals collapsed as multiple buyers were not able to secure financing, even those preapproved by the banks,’ the report stated. ‘The demand for new construction homes has hit rock bottom.’”
From Insauga. “With interest rates spiking six times already in 2022 – and the Bank of Canada poised to make one more next month – it’s no wonder real estate prices have plunged this year. The provinces with the most expensive real estate markets experienced the greatest price dips this year, according to Zoocasa and the Toronto and Region Real Estate Board (TRREB). Ontario’s prices have dropped 18.26 per cent from $1,075,800 in February to $879,400 in October, while British Columbia’s prices have fallen 8.51 per cent from $1,048,900 to $959,600 over the same period.”
“Home prices have taken a hit due to the rising rates, with some cities feeling the impact harder than others, especially in the GTA, where housing prices in every city covered by TRREB have declined. London-St. Thomas and Kitchener-Waterloo, for example, have experienced price depreciation of 25 per cent and 24.5 per cent, respectively, while Hamilton Burlington has fallen 21.72 per cent from $1,068,800 in February to $836,800 in October.”
“But the biggest impact has been felt in Durham Region, where some of the biggest downward movers are found. In Brock Township prices fell a whopping 31.05 per cent – the biggest decline of the 14 communities surveyed – from $1,168.477 in February to $805,653 in October, a difference of $362,824: also number one. Percentage-wise, the next biggest drop was in Oshawa, where average housing prices fell 28.89 per cent from $1,099,738 to $782,227. Other Durham towns were also hit hard, with Clarington housing prices falling 27.76 per cent, Ajax down 23.92 per cent and Pickering prices falling 23.5 per cent.”
From The Local. “‘The sellers find it difficult to accept the new situation,’ professor of economics at Södertörn University Mats Bergman explained. Sweden’s central bank (Riksbank) has been raising the key interest rate since Spring, and in line with that, prices in the housing market have fallen. Several banks, including the Riksbank, predict that prices will plummet by 20 percent from their peak level. ‘One should remember that what happened during the pandemic was not healthy either. We are comparing ourselves to a unique period where the market was completely crazy, and we also had low interest rates and low inflation. You might even be able to talk about a normalisation instead of a disaster,’ Claudia Wörmann, housing economist at SBAB, noted.”
“Bergman does not believe that housing prices will rise in the same way as they have in recent decades once prices have stabilised. ‘Prices have risen to a level that is very high in relation to incomes. My prediction is that we cannot count on 20-30 years of rising prices,’ he concluded.”
ERR on Estonia. “A year ago, the average price of a large apartment in Lasnamäe was approximately €170,000 and the sale process was conducted quickly. But the situation is very different today. Properties can stay on the market for months, even those priced at €150,000, Thursday’s ‘Aktuaalne kaamera’ reported. Real estate company Arco Vara’s board member Elari Tamme said owners need to be prepared to accept offers under the asking price if they want to sell. The reduction could be as much as 20 percent. ‘The market works is that if the buyer is not prepared to agree [to the price], then there will be no sale. This means that prices have to fall,’ said Tamm.”
News Corp Australia. “The number of auction sales in Sydney fell off a cliff this year compared with last. For the month of October, auctioneer Damien Cooley had 57 per cent fewer auctions than the year before as sellers became fearful of putting their homes under the hammer. ‘There’s blood in the water … people are trying to sell their properties on the quiet because their prices are inflated,’ Cooley says.”
The Guardian. “Twenty years ago, a youngish economist destined to become a household name in Australia issued a warning to central banks everywhere. ‘[L]owering rates or providing ample liquidity when problems materialise but not raising rates as imbalances build up, can be rather insidious in the longer run,’ he said. ‘They promote a form of moral hazard that can sow the seeds of instability and of costly fluctuations in the real economy.’ So said Philip Lowe, the future Reserve Bank governor, in a paper he co-authored while on secondment at the Bank for International Settlements in Switzerland with senior BIS economist Claudio Borio.”
“Of specific concern were financial imbalances, such as asset bubbles, that might emerge during stints of low inflation. In some circumstances, it would be appropriate for banks to take pre-emptive action ‘to preserve both financial and monetary stability.’”
“How central banks should act – and what they actually do – is at the heart of a fascinating if somewhat alarming new book by UK-based economic commentator Edward Chancellor. The Price of Time explores the history and role of interest rates. Central banks, much like the nursery rhyme about ‘an old lady who swallowed a fly,’ seem inured to solve each bout of market turmoil in a way that begets bigger instability in the future.”
“That interest rates might be climbing in Australia, the US, New Zealand and elsewhere doesn’t diminish Chancellor’s case. As he notes, nominal rates may be off the record lows set during the Covid pandemic but they remain well below inflation, leaving them negative in real terms. ‘The total calculated cost of each crisis is greater than the previous ones,’ Chancellor says. And ‘the geographical reach of them is more extensive.’”
“Excessively low interest rates pump up all manner of asset bubbles as investors desperate for some return on their money snap up property, shares, and until lately, cryptocurrency. ‘All these extraordinary low interest rates [have] got into everything,’ Chancellor told Guardian Australia. ‘And if we say we have the everything bubble, it sort of follows then that you’re going to have the everything bust.’”
“And as for that Borio-Lowe paper, Chancellor says they were on the money: ‘If you looked at real estate booms and credit booms, and put them together, you get what [they call] high-cost recessions.’ ‘It’d be interesting to confront [Lowe] with this research that he wrote,’ he says, noting that the RBA under Lowe had likely acted in a way ‘contradictory’ to his research with Borio on the dangers of allowing asset bubbles to inflate.”
“As to where Lowe now stands on the issue of overly low interest rates – the cash rate sat at a record low of 0.1% for 18 months until May 2022 – a spokesperson provided a short answer: ‘We are unable to help on this one.’”