A report from KLAS in Nevada. “Housing prices continued to tumble in November, according to Las Vegas Realtors. Prices have nearly fallen to where they were a year ago — a median price of $420,000 in November 2021 — erasing gains that peaked in a record price of $482,000 in May. Home sales were down by more than a half compared to November 2021. ‘Local home prices are starting to look more like they did a year ago. But we’re certainly in a different place than we were last year, when prices were soaring and setting records,’ Brandon Roberts, president of LVR said. ‘Of course, as we said at the time, those conditions were not sustainable.’”
425 Business in Washington. “On King County’s Eastside, the median sales price of single-family homes dropped to $1.3 million in November, down 7.8 percent from a year ago. The Eastside submarket with the highest median price, Bellevue west of I-405, had a median of $3.2 million, down 12.6 percent.”
The Bellingham Herald. “Median home sale prices in Whatcom County plummeted last month, while statewide home prices slightly decreased. Whatcom county’s median home sale price fluctuated throughout November, jumping up to $618,000 on Nov. 7 from a $500,000 median home sale price on Oct. 31. After the extreme increase, prices plummeted back down to $525,500 on Nov. 14, and back up to $555,000 on Nov. 21, according to Redfin. Whatcom County home prices were down 1.8% in October 2022 compared to October 2021. Across Washington state, home prices have decreased by 6.25% between March and September, as September reached a median home value price of $589,900, according to RedFin.”
The Olympian in Washington. “The Thurston County housing market has made a hairpin turn, according to Northwest Multiple Listing Service. The data also shows that buyers aren’t all that interested: Sales here fell 53 percent last month from November 2021. The median price also was unchanged from a year ago at $474,990 — and was down from $500,000 in October. ‘Sellers realize they must actually compete with other sellers to gain a buyer’s attention and an offer,’ said Dick Beeson, managing broker at Re/Max Northwest.”
The San Francisco Chronicle in California. “When it first went to market two months ago, 3450 Washington St. boasted a price tag of $45 million, the most expensive home on the San Francisco market. Now, fresh from a $5.5 million price cut, this Presidio Heights mansion could be yours for $39.5 million. Despite the clear opulence on offer, the home did not find a buyer for its $45 million original ask. People have shown interest, however, according to listing agent Antoine Crumeyrolle of Compass, who told SFGATE, ‘We have had over 15 showings in the last 60 days, which is excellent for a house at this price point.’”
“The price cut, said Crumeyrolle, ‘is a sign to let buyers know that the sellers are serious about selling the house sooner than later.’ The discounted price also leaves San Francisco without a single-family home listing over $40 million.”
From Bisnow. “Multifamily has been a darling asset class for U.S. commercial real estate investors for years. As interest rates have shot up, those complex capital stacks could soon lead to overleveraged owners, creating opportunities for distressed asset investors to swoop in for a deal, industry experts said at Bisnow’s Multifamily Annual Conference. ‘That is an incredibly fertile hunting ground right now,’ Harbor Group International Managing Director Matt Jones said. ‘There’s some pretty easy ways to find high probability default or distress situations, even with a generally positive multifamily operating overlay. If you look back over the last 18 months, there’s a lot of capital stacks that are quite precarious relative to the interest rate environment right now and the availability of capital that we have right now.’”
“Now, equity investors and lenders at the event said they are bearish on the multifamily market over the next year or two. If rents start growing again, they could continue fueling persistent inflation, which is precisely what the Federal Reserve is moving aggressively to tamp down with rising interest rates. Its aggressive campaign of rate hikes has driven a rise in negative leverage, which happens when interest payments exceed the underwritten returns on an investment. ‘That negative leverage phenomenon is a real issue for us over the next 12 to 24 months,’ said Tom Noble, senior vice president of Archway Capital. ‘If you’re buying multifamily property today and you’re assuming rental growth, you’re assuming higher rates, and that’s a problem.’”
“The buyers frenzy that occurred before the interest rate hikes also led firms that typically commit to long-term holds to begin selling assets for favorable prices, said Jason Morgan, president of special situations at Morgan Properties. Morgan said the firm, which is typically a long-term owner, sold $1.5B worth of real estate assets over the last 12 to 18 months, sometimes to buyers that would take on a 3% cap rate or less and syndicate out all of their revenue. ‘There was tremendous euphoria out there from a lot of groups,’ Morgan said. ‘They really were expecting rates to stay low for longer, lease trade-outs to continue forever. And it’s just not going to play out.’”
From Reuters. “Blackstone Inc Chief Executive Stephen Schwarzman said on Wednesday that redemptions in his firm’s $69 billion non-traded real estate income trust (REIT) were driven by investors roiled by market volatility rather than dissatisfaction with the fund. Blackstone shares have lost 15% of their value since Dec. 1, when the New York-based firm disclosed it had for the first time limited redemptions from the REIT. Large redemptions have been seen at other such funds, with investment firm Starwood Capital informing investors last week that its $14.6 billion non-traded REIT also had raised the gates. There has also been a wave of redemptions at other non-traded Blackstone funds marketed to high net-worth investors.”
“Schwarzman told the conference that individual investors were hit particularly hard by a liquidity crunch in Asia, as the Hang Seng Index nosedived and many also had to cover positions they amassed with debt, causing financial distress. ‘If you are an investor who’s got margin debt and your market goes down 40%, you can imagine what it was like to be one of those individuals … As the world is busy shrinking, people get scared,’ Schwarzman said.”
From NBC News. “The tech industry accounts for about one-quarter of this year’s job cuts, Challenger data show. Approximately two-thirds of the job cuts in tech were announced in November alone. ‘The tech sector was special. They overexpanded and overhired,’ said William Lee, chief economist at the Milken Institute. ‘They thought their ad revenues would continue forever, and once those started getting cut off in the post-pandemic era, they said, ‘My God, we’ve got too many people.’”
“The automotive industry has had 30,669 job cuts announced, compared with 10,277 through November 2021. And real estate has had 7,919 cuts announced this year, compared with 2,762 in 2021 year-to-date. ‘As interest rates have gone up, Americans are spending less on big ticket items,’ Challenger said. ‘We’ve seen a lot of job cuts around mortgage origination and fintech firms in mortgages. And then also on the housing side real estate agents — cuts around finding, buying and selling property.’”
From CBC News in Canada. “The price of real estate in the London area continued its decline for a ninth consecutive month in November. The London St. Thomas Association of Realtors (LSTAR) said that the average price of a home in the London region was $615,247, down 10 per cent from the same time in 2021. Higher inventories and the dramatically slower pace of sales in November compared with a year ago underscores the spectacular reversal in the housing market over a period of just nine months. The average price of a home in the region has fallen more than $210,000 since the market hit its peak in February.”
The Globe and Mail in Canada. “111 Whitburn St., Whitby, Ont. Asking price: $1.46-million (September, 2022). Selling price: $1,325,000 (October, 2022). When the neighbours slashed their asking prices from roughly $1.6-million to $1.4-million, agent Judy Weeks grew alarmed her seller might have to drop their price as well. Instead, a workable offer came forward and the sellers cut a deal for $1,325,000 – $135,000 under asking.”
“‘When one house dropped to $1.399-million, the likelihood of us getting $1.4-million or $1.38-million was highly unlikely,’ Ms. Weeks said. ‘The marketing was changing and prices were dropping, but we ended up getting an offer in the nick of time.’”
This Is Money in the UK. “My husband and I are selling our home to downsize and free up capital we need in our retirement. We have seen a couple of places we would like to offer on, but are waiting for our own house to sell before we do so. The estate agent originally advised us to put our house on the market for £550,000 but we have thus far, received very little interest. Just a smattering of viewings and very little feedback. It has only been on the market for about five weeks, but already the estate agent’s manager is telling us that the price is too high and that we need to reduce the price by £50,000.”
“I know house prices might be falling a little but that’s almost a 10 per cent cut. Surely cutting the price to £525,000 would make more sense? And surely five weeks is not long enough to be justification for cutting the price?”
“Ed Magnus of This is Money replies: This is no doubt a conundrum for many sellers up and down the country at the moment. In recent weeks, the number of buyers out house hunting has fallen off a cliff, according to Zoopla. It has found that buyer demand across its website over the past four weeks is 47 per cent lower than what it was this time last year. The number of property sales agreed is down 28 per cent compared to the same time last year. All this, when the stock of homes for sale is apparently up 40 per cent on the same period last year.”
“Before even accepting an offer below asking price, many sellers are first finding they are having to drop the price to even attract buyers. Zoopla says that it is now seeing increasing numbers of sellers opting to bring down their asking prices by 5 per cent or more. Ultimately, you will likely want to avoid your property lingering on the market for too long. Often the longer it remains, the less interest it will attract. Potential buyers may deem the months of marketing as a clear sign there must be something wrong. Who wants to buy something that clearly nobody else does?”
From Fortune. “In an interview with CNBC, Jamie Dimon, CEO of JPMorgan referred to crypto as ‘a complete sideshow’ and said the broadcaster spends ‘too much time [focusing] on it.’ ‘Cryptocurrencies that don’t do anything, I don’t understand why people spend any time [thinking about them],’ he said, adding that JPMorgan was ‘not even sure that [Bitcoin] is a real market.’ ‘Crypto tokens are like pet rocks,’ he said, adding that people were just ‘hyping this stuff up.’”