It’s Friday desk clearing time for this blogger. “In June 2021, when the cryptocurrency markets were soaring, the developers of the Arte condominium in Miami’s Surfside neighborhood announced that a buyer had purchased a penthouse there for $22.5 million in cryptocurrency. The deal was heralded as evidence that cryptocurrency would eventually become commonplace in the real-estate world. Now that same buyer has resold at a loss for $18 million. The deal closed for cash this time, said Danny Hertzberg of Coldwell Banker Realty, one of the listing agents. The unit was listed for $28 million in September 2021 and its price was lowered several times. It was most recently asking $19.9 million.”
“Not surprising to many, that interest rate jump has resulted in a real estate market cool-down that has given buyers an upper hand they didn’t have when interest rates were so low, said Realtor Else Siebert. She sold a home recently in Sudbury to first-time homebuyers who didn’t want to waive a home inspection. She said buyers are taking advantage of the fact they don’t necessarily have to pay over asking price. ‘Buyers are making offers on homes that have been sitting on the market for a few weeks and they’re able to capitalize on this ‘normal’ market and secure a home, under list price. That was unheard of for the past few years,’ said Siebert.”
“One Utah home builder is trying something new to attract buyers . Fieldstone Homes, based in Draper, has just launched new options in several communities for buyers to add accessory dwelling units to their homes – basically, a basement apartment. The builder is already currently offering free finished basements, said vice president of marketing Kellie Little. For a little extra, she said, buyers can expand that to a full apartment that they can rent out for extra income. The options are available in Fieldstone communities in Clearfield, Eagle Mountain, and Saratoga Springs, but Little said more areas may open up in the future. ‘They can use income to help qualify for a loan,’ she said.”
“Prices for newly-constructed homes are starting to flatten in Houston as homebuilders contend with a drop in demand and rising inventories. ‘Builders are trying to prevent having to lower their prices any more than necessary, so the way they are doing that is saying, ‘I won’t cut the price, but I’ll give you, say $10,000 to $20,000 in closing costs or free upgrades,’ Ben Caballero, CEO of HomesUSA, said. ‘Builders are throwing money at incentives and bonuses at agents in an effort to stimulate sales.’”
“Georgetown saw little change in the median price of homes between October and November with it decreasing by 0.15%, according to data from the Austin Board of Realtors. The median cost of homes sold in Georgetown during November was $475,000, down $720 from the previous month, as prices have fallen sharply since the summer when they reached $550,000 in June.”
“As the end of the year nears, the Southern Maryland housing market has seen several significant changes. The average sold price to original list price ratio has decreased by approximately 2.16% from last year, showing buyers are gaining some leverage during transactions. Homes are starting to sell for less than they are listed. Active listings are up 62.17% from last year. Calvert County saw its first price decrease in several years. ‘Home prices are expected to drop from their peak despite inventory challenges, and possible home buyers will feel those impacts heading into 2023 if they haven’t already,’ SMAR 2022-2023 President Michael Funk said.”
“The sale of existing homes in the U.S. continues to slide, and California has seen some of the largest declines in the nation. ‘With home prices cooling and market competition easing in recent months, some qualified buyers who missed out on the hurried market of the last two years are taking advantage of the shift and finding sellers more willing to negotiate than they have been up to this point,’ said CAR President Jennifer Branchini.”
“Home sales fell 35.1% year over year in November on a seasonally-adjusted basis, according to Redfin. That is the largest decline in Redfin’s records that date back to 2012. Pandemic boomtown Las Vegas saw the biggest drop in home sales, down 51.8% year over year in November. Next came San Jose, CA (-50.1%), Salt Lake City (-49.9%), Stockton, CA (-49.8%) and Oxnard, CA (-48.7%). Eleven metros saw year-over-year declines in median sale prices, with San Francisco leading the drop (-11.1%). It was followed by San Jose, Detroit, Pittsburgh and Boise, ID, all down between 2% and 3%.”
“Pandemic boomtowns North Port, FL and Tampa led the increase in the number of homes for sale, with active listings rising 61.3% and 46.1%, respectively. Next came Nashville, TN (45.1%), New Orleans, LA (40.2%) and Seattle (39.2%).”
“Commercial real estate in Chicago rode a wave of ups and downs in 2022. The downtown office market continued to falter and distress spread, major corporations announced plans to move elsewhere, and perceptions of crime and high taxes disincentivized new growth in the eyes of many CRE players. Already, some buildings have been taken over by lenders and more could soon follow. ‘It’ll be interesting to see what happens with the foreclosure market … because you’ve got so many office tenants that are not renewing their leases, and the big vacancies, they’re not going to be able to pay the mortgages,’ said Gloria Materre, managing director of EnTrust Realty Advisors.”
“The better option might be to just tear down some vacant buildings, according to Peak Properties Managing Partner Mike Zucker. ‘The reality is that if people aren’t going back to the office, maybe some old office buildings should really just come down,’ Zucker said.”
“Trying to interpret Portland’s status from the year’s most-read news stories is like reading a fortune in chicken entrails. Sometimes you see the future. Sometimes you just see shit. The death and partial resurrection of Lloyd Center gets all the press, but Portland has another zombie mall in more dire condition 5 miles east. WW broke the news that the Portland Hilton and Duniway and Dossier hotels were all in foreclosure proceedings—a bellwether of what reduced tourism could mean for downtown properties.”
“Those looking to buy a home in 2023 and homeowners with a high mortgage can expect a ‘challenging year’ in Mississauga and Brampton. Sam McDadi, owner of the largest real estate brokerage in Mississauga said they are now seeing homes being sold through power of sale (when a mortgage lender sells the home due to a default in payments) for big losses. One home in Brampton, for example, was bought during the height of the market, at the beginning of 2022, for $2.65 million and it sold through a power of sale for $1.85 million, McDadi said.”
“‘So $800,000 less in just within the span of six to eight months,’ he said. ‘Now that’s probably one of the more exaggerated sales, but it just tells you that people are in a bit of dire straits.’ Homes in more affluent neighbourhoods in south Mississauga saw prices drop about 10 per cent and north Mississauga came down by about 20 per cent this year, he said. And because interest rates are so high, it is nearly impossible for an average person to get a mortgage for a GTA home. Most homes in Brampton and Mississauga are around $1 million but a person or couple needs to make $250,000 to $300,000 a year to get that size of a mortgage. The mortgage stress test adds another two per cent on interest rates so people need to qualify for around eight per cent interest.”
“This time last year, Australia’s property market was closing out on a massive high. The pandemic property boom was in full swing, appearing inexplicably unstoppable as Australians fell over themselves to pour a seemingly endless stream of money into real estate. Sydney’s house prices rose by $1100 a day. Just to repeat: $1100 a day. But the saying ‘nothing lasts forever’ was not coined from fiction. A property cycle is exactly that – a cycle – and while the craziness of 2021 will go down in history as a once-in-a-generation property boom (which, by the way, continued well into 2022 in five of the eight capital cities), that pace of growth was not sustainable.”
“By the September quarter, house prices were falling in every capital city bar Adelaide, where prices flattened. Nationally, house prices have now fallen 4.9 per cent from the March 2022 price peak, down about $53,000. ‘The past two years have been fascinating to watch in real estate. After soaring price growth in 2021, it was inevitable that we would see an adjustment phase of the property cycle in 2022,’ says Domain’s chief of research and economics, Dr Nicola Powell. ‘This year, the market saw a stark contrast with house prices across the combined capital cities switching to their fastest quarterly decline on record.’”
“House prices at the cheaper end of the market have fallen more this year than prices for homes at the upper end have, Quotable Value (QV) says. Lower-end prices across the main urban centres were down by 11.7% from January to November. In contrast, prices at the upper end of the market declined by 8.6% over the same period, while the average national price fell by 10.2% to $945,568. The Wellington region has been hit the hardest by the market downturn, and four of its districts were in QV’s top five biggest lower-end price drops.”
“Prices for lower-end properties in Upper Hutt declined the most, down 23.5% to an average of $544,159. In Lower Hutt and Porirua, the entry-level price falls were not far behind, with drops of 23.3% and 19.1% to averages of $547,292 and $591,014 respectively. The top five was rounded out by central Auckland and Wellington where lower-end prices were down 18.8% to averages of $500,801 and $568,589. Papakura and the North Shore in Auckland, Dunedin, Palmerston North and Hastings made the top 10, with prices at entry-level down by over 13.5% in all of them.”
“QV spokesperson Simon Petersen said these price falls were good news for first-home buyers, and had restored some credibility to the market after the unsustainable capital gains of 2020 to 2021. Prices were still above pre-pandemic levels after climbing almost 30% last year alone, and the threat of a recession and further interest rate rises as forecast by the Reserve Bank last month was bad news, he said. ‘When interest rates hit the roof, house prices are really going to hit the floor, and then there’s the growing likelihood of a recession.’”