A report from the Pahrump Valley Times in Nevada. “Pahrump home sales and prices slid slightly in the last two months of 2022, according to data released by Las Vegas Realtors. December 2022 was a ‘bust’ compared to the ‘bang’ that was December 2021 when 133 homes sold in Pahrump at a median price of $315,000. While home prices have seen an 8.3 percent decline in Pahrump since then. ‘People should know that these things are cyclical and that the sky is not falling,’ said 2023 LVR President Lee Barrett. ‘With prices leveling off and more homes available for sale, we’re seeing a more balanced market that makes things easier for buyers.’”
The Daily Republic in South Dakota. “At the start of 2022, mortgage interest rates were hovering around 3% and homes were flying off the market in Mitchell. Cory Marek, a local mortgage loan officer at Plains Commerce Bank, was swamped in the early half of last year as home buyers seized on low interest rates. In less than a year, Marek said it went from a seller’s market to a buyer’s market. ‘It’s actually a good time to buy. People were paying $20,000 to $30,000 — well over what prices of homes were listed at,’ Marek said of the housing market in 2021 when interest rates were as low as 2.6% at one point. ‘While prices are dropping a bit, they aren’t going to go down too much anytime soon here because there is just no inventory.’”
Marquette WLUC in Michigan. “Select Realty Associate Broker Don Schinella says buyers will be able to take more time with a less competitive market. ‘You are not going to see competitive bidding as we did before,’ Schinella said. ‘You won’t see buyers putting in offers without inspections and you may even see sellers paying for some of the buyer’s closing costs. We are kind of getting back to normal. The last six months the prices did decrease but they didn’t decrease enough to erase all of the gains that they have had over the last two years,’ Schinella said.”
Houston Public Media in Texas “The winning streak for Houston’s housing market has ended abruptly as local real estate experts look for better news in 2023. Home prices were mostly unchanged in 2022, down only slightly compared to 2021. ‘We didn’t have those huge bubbles like some of the other parts of the west and the east did where they came down really hard,’ HAR Chair Cathy Trevino said. ‘Houston always has taken a gradual incline in sales prices and so I foresee it to go down the same way. It’s going to gradually go down.’”
The San Francisco Business Times in California. “It was a cold December in Bay Area real estate as home prices continued to slump across the region. Regionally, the median home sales price dropped 7% compared with December 2021, according to Compass, and sales volume was down 41% compared with the same period in 2021. Luxury home sales ($3 million plus) were down 60% and ultra luxury home sales ($5 million plus) were down 69%. The average days on the market for homes increased to 44 days last month compared with 31 days in December 2021, and 31% of homes sold over asking, but that number was also down from 51% in December 2021 and 80% from its peak last April.”
“Coldwell Banker agent Joel Goodrich said he foresees that 2023 will probably be somewhat as soft as the latter half of 2022, noting that average price per square foot is down 10-12% in the core luxury areas such as Pacific Heights and 15-20% in the South of Market and South Beach areas. ‘The next two years may be flat to a somewhat softer market as we go through this cycle. Areas such as Pacific Heights, Sea Cliff, Presidio Heights, Russian Hill, Nob Hill as well as the newer luxury markets in Noe Valley/Upper Market will be hit to a lesser extent,’ said Goodrich.”
From Market Watch. “Potential home buyers are more cautious than they were in the middle of last year thanks to higher mortgage rates, ‘persistent’ inflation and an ‘uncertain economy,’ KB Home said Tuesday as it reported a quarterly miss. Market conditions ‘remain challenging,’ KB Home Chief Executive Jeffrey Mezger said. That led the home builder to focus on its backlog of unsold homes and on protecting margins, he said. The CEO also left the door open for possible price cuts.”
“‘Depending on market dynamics and backlog levels in each community, we are getting more aggressive with our pricing ahead of the spring selling season, in order to generate new orders,’ Mezger said. Gross orders for the quarter hit 2,169 units, down 47% on-year.Cancellation rates as a percentage of gross orders jumped 68%, compared to 13% a year ago.”
The Nebraska Examiner. “A judge approved an injunction Tuesday that freezes most assets of a financial adviser involved in one of the largest cases of bank fraud in state history. However, Jesse Hill of Hickman and his wife, under the order, will be able to access two personal banking accounts, and were given permission to obtain a home equity loan to help paying legal and living expenses. The pair, according to state banking officials, made false claims and used fabricated financial statements to obtain $20 million in loans from 14 banks from March 2021 through September 2022. Hill was a partner with Lincoln businessman Aaron Marshbank, who was found dead of a suspected suicide on Nov. 2.”
“Financial institutions in Nebraska and Iowa and Louisiana are seeking repayment of more than $40 million in loans issued to Marshbanks for purchasing and rehabilitating rental properties. Michael Kramer, a partner with Marshbanks in a limited liability company called MKAM, filed a request Monday seeking permission from the court to buy out Marshbanks’ half-interest in 21 properties in Omaha and Lincoln that the company planned to ‘flip.’ The amount of equity was so low, according to court records, because Marshbanks ‘neglected some properties,’ overborrowed on some properties and then took some proceeds from refinanced loan for personal use ‘… all the while without accounting or informing Mr. Kramer of the draining the equity of the LLC.”
Global News in Canada. “Some people have seen a few ‘court-ordered sales’ on homes located in the Okanagan, with the posting showing a half-finished home and the title saying ‘sold as is.’ There are two homes on Boucherie Road, in West Kelowna, that are listed but only 60 per cent complete. The sale is for the properties as-is and there are a number of conditions that buyers would have to meet to move in.”
“You may see foreclosures in other listings but this is different said real estate agent Drew Irvine. ‘What it means is that the builder has likely run out of funding or his costs have now exceeded what the expected sale price would be,’ said Irvine. Kelowna Mortgage Broker Michelle Scheibel, says it is rare to find a home that is only 60 per cent complete. Not only that but often it would be tough to secure a loan or mortgage from a bank, as lenders prefer a home to be at least 97 to 98 per cent complete.”
“‘The reason why, is if they got stuck with that property – the client couldn’t pay for the mortgage for some reason – and the (lenders) are stuck in a foreclosure situation trying to sell that property, it would be very difficult,’ said Scheibel.”
Stuff New Zealand. “Many property investors are playing the wait and see game for the next election before deciding whether to sell their properties, property investor and coach Michael Burge says. A Labour victory would change the mentality of many from trying to keep the properties they had, to realising they had to sell, Burge said. This was particularly true for those who took on big debts or were running properties at a loss and gambling on capital gains, because their ability to deduct mortgage interest payments from rental earnings was pivotal to their ability to afford to keep their rentals.”
“‘If Labour get back in, I think the mentality will change to ‘holy shit, this is real now, the mortgage interest deductibility is here to stay – and we still have high interest rates.’ Burge, who owns 17 properties, said if the tide went out, a lot of property investors would be discovered to be swimming naked, and carrying big liabilities they could not afford to service.”
“Some in the industry had not yet woken up to the new reality. Burge said he was shocked to listen to some commentators, financial advisers, and podcasters who recommended property purchases that would lose the investor hundreds per week. ‘I couldn’t believe it. I hear of people buying new builds which are hundreds of dollars a week cash flow negative from day one, and that’s with interest deductibility,’ he said. ‘I think that’s insanity. I think that’s a recipe for people not being able to hold the properties.’”
“He said the downturn began with the largest centres like Auckland and Wellington, but was now hitting his market as well. ‘You’re seeing stuff sit for ages, and stuff being listed at prices that we probably haven’t seen for two years – maybe six or so months into Covid. ‘Some of it’s not quite back to pre-Covid levels, but some of it’s getting pretty close,’ he said.”
From Bloomberg. “South Korea’s largest-ever apartment complex risks turning from national milestone into financial millstone amid fears that sluggish sales might herald the kind of property slump that sends shockwaves through the economy and credit markets. The vast Dunchon project in Seoul is designed to accommodate more than 10,000 households and has been one of the most anticipated developments in a country that heavily favors apartments. But it has run up against a looming glut of new homes and a string of interest-rate hikes by the Bank of Korea that has pushed up borrowing costs and turned buyers wary.”
“‘Markets see Dunchon as an inflection point,’ said Ahn Jae-kyun, a fixed-income analyst at Shinhan Securities. ‘The bottom line is whether it will threaten construction firms. This all focuses attention on the BOK’s decision.’ ‘As rates rise and the economy deteriorates, there’s great potential corporate defaults will spike,’ said Ju Hyeon, president of the Korea Institute for Industrial Economics and Trade. ‘It’s highly possible that household debt will become the biggest risk factor in the near term.’”