A report from the Salt Lake Tribune in Utah. “It’s just two weeks into 2023, and Utah real estate agents are already being told to look to 2024 for things to improve. Hundreds of them broke into a slow nervous laugh Friday when one of the state’s top housing economists offered them advice after delivering a series of forecasts of more interest rate hikes, falling home sales and other bleak markers this year. ‘Just hang in there,’ Jim Wood of the University of Utah’s Kem C. Gardner Policy Institute told. ‘2024 will be better.’ The median sales price for single-family homes, condominiums, town homes and duplexes combined in the county fell to $485,829 in December, from $565,600 in May.”
“Home prices are dropping relative to their big run-up since 2020 — and nearly a decade before that, for that matter — and they’ll probably keep ticking downward well into this year. But sustained drops amounting to a housing bubble are, in Wood’s words, ‘extremely unlikely.’ Gary Cannon, a veteran broker, joked that an era of relatively challenge-free residential sales was over. ‘It’s nice to see all these faces again,’ Cannon said, ‘working after five or six years of paid vacation.’”
The Deseret News. “The West was ground zero for the pandemic housing frenzy and has also been one of the first areas to see home listing prices getting slashed as the market corrects. In Utah, housing prices have begun to decline, down from their peak in May, when the median sales price of Salt Lake County homes was $565,600. After the next seven months, the median price fell by 14% to $485,829, erasing month-over-month percent increases until ‘finally turning negative 2.1% in December,’ Wood wrote in his report.”
CNBC on Florida. “On ultra-exclusive Fisher Island, there is one crane on one construction site. It is the last plot of land available for development and an unlikely bet on luxury real estate at a time when the housing market appears to be in freefall. Jorge Perez, also known as ‘the condo king of Miami,’ and his Related Group are behind the 10-story, 50-unit project that boasts a sell-out price of $1.2 billion. They paid $122.6 million for the land, at the top of the market. He does, however, worry about the broader economy and the broader real estate market.”
“‘Of course, it bothers me. It bothers me every day. I wake up every day thinking about you know what is going to happen in the economy,’ said Perez. ‘We’re thinking that interest rates and inflation has pretty much peaked. We’re going to have a rough, in my opinion, one year to a year and a half, two years. And we are ready to weather that storm should it happen.’”
The Denver Post. “Single-family home sales declined by a fifth and condo and townhome sales were down by 23% in Colorado last year, while price increases softened and the inventory of properties available for sale surged, according to a monthly update from the Colorado Association of Realtors. ‘To say this was a strange year for housing would be the largest understatement I could say about housing. What started out as another year of record-breaking price increases and buyers getting slaughtered, ended as a year where sellers saw values flip, buyers began getting concessions, price drops and double the inventory to choose from,’ said Colorado Springs-area Realtor Patrick Muldoon.”
The Albuquerque Journal in New Mexico. “The Albuquerque metro area’s real estate market remains hot, but signs of cooling continued to show as December brought a fourth straight month where the median sales price on a single-family detached home dropped. According to the Greater Albuquerque Association of Realtors, the median sales price stood at $326,750 last month — the fourth lowest median sales price in 2022 and a drop from $328,000 in November. The median sales price is much lower than in the spring and summer, when the metro area market hovered in the $334,000 and $340,500 range, according to GAAR data.”
“Carrie Traub, the GAAR president for 2023, told the Journal an indicator of the market cooling is looking at the inventory in December, which stood at 1,105. That number is up more than 50% from the previous year. ‘Our inventory is up from (December 2021) about 50%, which is good because we need more inventory,’ Traub said, adding that she’s also ‘seeing corrections in prices.’”
The Odessa American. “Texas’ manufactured-housing industry ended the year on a low note, according to the latest Texas Manufactured Housing Survey. Respondents unanimously noted a decrease in business activity relative to November. The industry extended a year-long pullback on production as higher interest rates shocked demand and reset the housing market more broadly. ‘Housing manufacturers are still grappling with decreased demand, forcing them to cut payrolls and reduce workweeks,’ Wesley Miller, senior research associate at the Texas Real Estate Research Center, stated in the press release. ‘Inventories are building up on the retail side, resulting in fewer orders for manufacturers until more homes are moved.’”
The Santa Barbara Independent in California. “We started this year’s market in a very interesting way. National headlines show doom and gloom and recession, and while our local market has changed quite a bit since January of last year, it continues to move and remain strong. One of the struggles is some buyers are operating in the future. They feel that pricing will go down, rates will drop, and then they will jump in. At the same time, we have sellers that are operating in the past. They feel that the last two years’ pricing can still be attained and they are still fully leveraged.”
“The only thing we can say for sure is that a market shift is always happening, and it is shifting now. I heard a great quote from Peter Rupert talking about recession at the State of Santa Barbara County Chamber Event at the end of November. He was showing some great evidence, with a strong labor market and strong consumer spending, that we are not in a recession, but I loved his answer to are we in a recession. ‘If we are not in one, we are heading towards one, of course. Dumb question.’”
The Almanac in California. “A surprising trend is expected to hit one Menlo Park school district in the next five years: significant enrollment decline. The Menlo Park City School District student body will stand at around 2,500 students in 2027, down 7.4% from 2,700 today, according to a report by Demographer Thomas R. Williams presented to the school board on Dec. 15. Current kindergarten enrollment is the lowest since before 2006, despite the impacts of the pandemic otherwise easing this year, demographers said. District students come from Menlo Park and Atherton, which boast some of the wealthiest ZIP codes in the country.”
“‘All of my clients are hemorrhaging kids,’ said Williams. ‘You’re actually doing better than everybody else. Cupertino is down thousands of kids. … It’s been a crazy few years.’”
The Globe and Mail in Canada. “The fog of uncertainty that has kept real estate sellers and buyers on the sidelines in recent months will start to clear in 2023, predicts Benjamin Tal, deputy chief economist at CIBC World Markets. With stability in the market, sellers will be encouraged to list in greater numbers, Mr. Tal expects, and some distressed borrowers will add to the supply. ‘I have little doubt the delinquency rate will rise,’ he says. Mr. Tal also expects obstinate sellers to become more realistic about the price they will accept when they realize the conditions that led to the February 2022 peak won’t be returning soon. ‘The market will not go back to what it was, because what it was, was insane.’”
“In Toronto, Patrick Rocca, broker with Bosley Real Estate Ltd., has been hearing from some homeowners who are gearing up to list out of the gate in 2023 after a dismal December. Most of the homeowners he is hearing from understand that prices have dropped 20 per cent from their peak in midtown Toronto, he says. ‘Some want to sell, but at early 2022 prices,’ he says. ‘It’s a very short conversation.’”
“In the Leaside and Davisville neighbourhoods where he does much of his business, a semi-detached house that would have fetched $1.9 million at the peak can now be had for $1.5 million or so, he says. Mr. Rocca believes prices are likely near the bottom, but he is concerned about the possibility that homeowners who have high mortgage debt may be forced to sell. Even in Toronto’s most established neighbourhoods, where prices tend to be more stable, he knows of people who are fearful about whether they will be able to hold onto their houses.”
“Broker Davelle Morrison of Bosley says the new year is a time when people tend to ruminate about their focus in life and where they want to be in the coming months. She has been hearing from the full spectrum of buyers, including first-time, move-up, and downsizing. Some are people who moved out of the city early in the pandemic and now want to return. Traffic in the GTA has become monumentally worse in the past couple of years, she points out, and some workers have returned to offices downtown. ‘If you’ve got to sit through traffic hell, you may start to wonder, why did I move so far out?’”
“Sellers in the coming weeks will need to set an asking price in line with the current reality, she says. ‘If sellers go out with overheated expectations, they will not get showings,’ she says. ‘Buyers have wised up.’”
From CTV News. “As Toronto’s real estate market continues to struggle amid the Bank of Canada’s aggressive campaign to hike interest rates, some agents say that they are increasingly hearing from buyers of pre-construction condos who are worried about closing the deal. Realtor Jordan Scrinko, of precondo.ca, a website portal for pre-construction projects in Canada, said several of his clients have expressed concerns about being able to afford their pre-construction investment, which many purchased when interest rates came in at under two per cent.”
“Last month, Scrinko and his team worked with roughly 70 clients who had purchased-pre-construction units in two large Toronto condominium developments. ‘Everyone successfully closed, but it was a lot of work. … There was a lot of putting out fires,’ he said, adding in some cases clients used private lenders to complete their deal. ‘There were definitely some clients who came to us to liquidate their units before closing,’ he said, adding that he and his team always advise buyers to do everything possible to hold on to their investment.”
“Like Scrinko, Ara Mamourian, a broker and the managing director of The Spring Team Real Estate, said some of his clients have also begun inquiring about how they can get out of their developer purchase agreements. Mamourian said it is OK for buyers who are closing soon to feel concerned about how they’ll be able to afford their pre-construction property. But, he said it ‘is not the time to panic.’ ‘A lot of people are very scared about interest rates, but they can still close. … There are so many options out there one way or the other to not lose a property,’ he told CP24.com. ‘Most people should do what ever they can to complete the deal. My number one advice is to do what ever you can to hold on to a property. Your future self will thank you.’”
“Mamourian said this especially applies to those in the Toronto market, where the average price of a home across all property types has now declined by 9.2 per cent year-over-year. ‘I’m expecting good news from the Bank of Canada, maybe not (an interest) rate drop, but I think there will be a halt to the hike cycle, hopefully by March,’ he said. ‘We’ve seen worse times in the (housing) market. … In the grand scheme of things, the market as a whole will be okay.’”
“Research from Urbanation has suggested that a record 32,000 new condominium units will be completed in the GTA in 2023. Mamourian, whose firm does roughly 20 per cent of its business in pre-construction condos, said people who invested in the market with a long-term intention of holding, moving in, or renting it should be in good shape. However, those who purchased this type of property to make a quick buck without fully understanding what they were getting into, could face some challenges, he conceded.”
“‘There are some people who are in a lot of trouble and are going to lose money in this market now,’ he said, adding in many cases those buyers put their faith in a ‘bad apple’ agent who did and said whatever it took to make a deal.”