A report from CBS News. “The following is a transcript of an interview with JPMorgan Chase CEO Jamie Dimon that aired Sunday, Dec. 11, 2022. MARGARET BRENNAN: But in this moment we’re in right now – you have mortgage rates -what? About 7%? DIMON: 6 1/2 % yeah. MARGARET BRENNAN: Yeah, right around there. It’s hard to get access, but the Fed’s also trying to cool off a housing market bubble. DIMON: Yeah. MARGARET BRENNAN: A critic would say a big bad Wall Street bank is loading debt onto poor people. How do you respond to that? Because- DIMON: That’s a fairly ignorant person.”
The Review Journal. “Following last year’s cheap-money-fueled buying frenzy, house hunters have been largely pumping the brakes for months in Southern Nevada. Resale prices have tumbled to their lowest level of the year, sales have plunged from 2021 tallies, and builders have offered more incentives to buyers and higher commissions to agents who bring them in. Las Vegas’ market — with its track record of accelerating, hitting the brakes, and repeating — has been slowing faster than the nation overall in key ways.”
“Sales volume is also shrinking faster here. Among the 50 most populous metro areas in the nation, pending sales recently dropped the most in Las Vegas, falling 65 percent year-over-year in the four weeks ending Nov. 27, according to Redfin. On the resale side, 1,521 houses traded hands in November, down 53.5 percent from the same month last year, trade association Las Vegas Realtors reported. Last month, single-family homes sold for a median price of $430,990, the lowest of the year and down from a record-high $482,000 in May, according to association data.”
From WTOP. “In a span of 12 weeks ending Nov. 20, Redfin reported a record 2% of homes for sale were delisted each week. In the D.C. metro area, Redfin data shows one in 10 homes for sale are eventually delisted. If a home hasn’t found a buyer in about a month, it is considered stale. Even in a normal market, sellers in the slow fall season may take the home off the market and re-list it again in the busy spring market a few months later. If the Federal Reserve continues raising rates, and inflation does not moderate, that might not be a workable strategy.”
“‘The big problem is that we might not have enough demand out there to support sellers coming back. So they might decide to, rather than waiting for spring, wait for another year or two,’ said Taylor Marr, deputy chief economist at Redfin.”
From The Real Deal. “After months of whiplash in residential markets, November brought some welcome stability to new development sales in New York. The contracts were for apartments asking a combined $548.5 million, up nearly 50 percent from October’s total. The median price of the units was $2.4 million, down about 10 percent. As the merely wealthy begin buying again, developers have started to add incentives. The builders of CBSK Ironstate’s 547 West 47th Street are offering two years of waived common charges. Other sweeteners are becoming more common.”
“‘All those things are enough to keep the prices up,’ said Kael Goodman, founder of Marketproof. ‘What we’re not really seeing is the prices coming down in any significant way.’ Still, concessions can only go so far. ‘Discounts are next,’ Goodman said.”
Your Observer in Florida. “Inflation and interest rates are putting downtown market pressure on home sales in the North Port-Sarasota-Bradenton metro area. Earlier this year, the median sold single-family home price in Sarasota topped $500,000. According to realtor.com, the median listing home price is now $535,000 and the median sold home price is $464,000. Meanwhile, the neighboring Punta Gorda area ranks No. 1 among the nation’s small metro areas with a home sales decline of 51.7%, which also ranks first among all metros regardless of size.”
Bisnow San Francisco in California. “Apartment rents in San Francisco are down 10.9% since Q1 2020, the quarter before the bottom fell out of the city’s office market. San Francisco Chief Economist Ted Egan suggested to the San Francisco Business Times that the neighborhoods hit hardest by the rent declines were those that were previously occupied by downtown office workers, noting that units east of Van Ness Avenue or north of Cesar Chavez Street saw larger declines in rent compared to neighborhoods in the western and southern portions of the city.”
KXAN in Texas. “Austin City Council members want to crack down on short-term rentals that aren’t licensed with the city. The city’s code department told KXAN there are about 11,000 short-term rentals in Austin, but only 1,875 are currently licensed. A spokesperson said unlicensed operators could be fined up to $2,000. Laura Martinez is among the relative few who has gotten her rental licensed with the city. She thinks the rule enforcement may help free up Austin homes for longer-term rent or for sale. ‘It’s just like, ‘Okay, they caught up on what we’re doing. So, let’s go somewhere else,’ Martinez said.”
Blog TO in Canada. “A freehold townhouse in Brampton that’s been sold four times over the past three years shows just how much home prices have changed since 2019 in the GTA. The 3+2 bedroom home, located at 8 Pennycross Crescent in Brampton was first sold in July 2019 for $704,000. Just two years later, in September 2021, the townhouse was sold for $1,105,000. The 4-bathroom house was then sold for $1,260,000 in December 2021, before finally being sold for $919,000 this past month. Similar to many other houses in the GTA, the townhouse’s price has varied dramatically over the course of the past few years. In fact, the house has roughly varied up to $500,000 in price from 2019 to 2022.”
“According to a release by the Canadian Real Estate Association, the average price of a house in the GTA was $1,159,763 in October 2021. Just one year later, the average price had declined down to $1,098,502, representing a 5 per cent change. Recent data from the Toronto Region Real Estate Board also shows the average price across all property types was $1,079,398 in November 2022, compared to $1,089,428 in October, decreasing by roughly $10,000.”
From Moneywise. “‘We know that when interest rates rise, housing is the first area of the economy to respond,’ says James Orlando, director at TD Economics. ‘We’ve seen the drop in sales, we’ve seen the decline in prices, it’s been swift.’ According to a recent National Bank of Canada report, it now takes 67.3 per cent of a household income to pay a mortgage on the average home — the highest percentage in 41 years. ‘It’s definitely slowed things,’ says Jeneen Marchant, a realtor with RE/MAX Real Estate in Edmonton. ‘And with each increase, you could see it slow a bit more and a bit more.’”
The Jamaica Observer. “‘The central bank’s benchmark interest rate [that influences all other lending rates] has been pushed up again, now to 7 per cent. This means further dampening of spending power. Rising mortgage rates, with so much residential construction underway, should be, ahm, ‘interesting’,’ said Damien King, a senior economist and former head of the Department of Economics at The University of the West Indies. ‘It raises concerns about the possibility of a property crisis with too many units coming on the market while potential homebuyers are disincentivised by higher mortgage rates.’”
The Phnom Pen Post. “Housing Development Association of Cambodia secretary-general Huy Vanna told The Post on December 5 that, when compared to a year earlier, there were no significant changes in the low numbers of construction projects that broke ground in the July-September quarter, especially when it comes to large foreign-owned projects. ‘On the ground, barely any new projects began construction in the third quarter – work merely progressed on existing developments,’ Vanna said.”
“Global Real Estate Association president Sam Soknoeun remarked that real estate transactions and rentals have been very quiet in the second half of 2022, comparable to 2020-2021. ‘As I see it, the real estate market has not improved in the third and fourth quarters. The sluggishness of the market will linger on,’ he predicted. Soknoeun blamed the declines in construction activity and home transactions seen in recent months to a supply glut as consumers continue to save money.”
The New Straights Times. “The Johor state government will work together with the federal government to study the implementation of the Malaysia My Second Home policy. At the state assembly sitting today, Menteri Besar Datuk Onn Hafiz Ghazi said the collaboration was to address the glut of unsold luxury homes. Meanwhile Onn Hafiz also said that the Johor government would also establish a special committee to achieve the mission of Zero Slums in Johor by 2035.He said the special committee has been set up to coordinate the relocation of squatters in Johor.”
From Vietnam Express. “Apartment investors and speculators in HCMC are now willing to accept losses of VND500-600 million (US$20,800-25,000), compared to the earlier VND300 million, to dispose of their units. A man who identified himself as only Lu said he has doubled the discount on an apartment he is trying to sell from VND300 million in the third quarter. ‘I have failed to sell the apartment worth VND3 billion over the past year. Now I am willing to accept a loss of VND600 million.’ He noted that the interest rate on a bank loan he took increased recently from 9% to over 13%.”
“Meanwhile, prices of land for townhouses in Thu Duc City have dropped by around 27% since mid-2022. The prices of apartments and land are also plummeting in Districts 7 Binh Chanh, Nha Be, Can Gio and others.”
From Lemonde. “For four decades, real estate development accounted for one-third of China’s gross national product (GNP) growth rate. Over the past 15 years, the construction boom, driven by the expansion of cheap credit, caused housing prices to double on average. By 2019, investor euphoria was at its peak. Real estate’s share of household wealth was now at 70%. The illusion of wealth created by the continuous rise in housing prices encouraged investors to take more risks. Investments became speculative in a market where over 20% of new homes were empty.”
“With this in mind, the accumulation of debt by Evergrande, the country’s largest real estate group, looked more and more like a Ponzi scheme. The group was repaying its debt with advances paid by new clients. In 2021, the accumulation of bad debt in the sector reached €228 billion nationwide, up 18% from 2020. Real estate debt accounted for half of the GNP in 2021, twice the size of Germany’s economy!”
“All the makings of a financial crisis were there. All that was missing was an exogenous shock to trigger it. According to economist Hyman Minsky (1919-1996), famous for his analysis of economic crises, this shock (the ‘Minsky moment’) is generally caused by the intervention of the central bank. But in China’s case, the source of the shock was rather unexpected, since it came directly from the highest level of government.”
“In August 2020, Chinese President Xi Jinping decided to put a stop to speculation by imposing the ‘three red lines’ on real estate companies, which limited the debt-to-total-assets ratio, reduced the net debt-to-equity ratio and built up cash reserves. The publication of these three lines marked the tipping point, or the ‘Minsky moment,’ for the market. As for the households that were still solvent, they were no longer interested in making advance payments to real estate developers, because the trust was well and truly broken. By 2022, sales collapsed by 22% and new home prices fell by 1.4%. The debt burden of the real estate sector was increasing and the crisis spread to the entire economy in an environment that was already overburdened by the zero-Covid policy.”
Daily Mail Australia. “Another major builder has joined the growing list of construction companies that have collapsed amid soaring material costs, labour shortages and disruptions. Elderton Homes, based in NSW, announced on Monday it had appointed administrators to manage its operations going forward. The boutique builder said the ‘difficult decision was the result of a number of factors’ citing the bushfires and floods, Covid pandemic and economic downturn.”
“The company is the latest in a long list of construction firms which have folded in the last 12 months including big players like ProBuild and Condev Constructions along with smaller firms such as Hotondo Homes Hobart, New Sensation Homes and Pindan Group. Just last week Queensland-based builder Lanskey Constructions went into liquidation, following fellow Sunshine State firms Oracle Platinum Homes and Besse Construction in August. The collapses across the industry have left hundreds of staff without jobs, thousands of homes incomplete, and customers and subcontractors owed tens of millions of dollars.”