It’s Friday desk clearing time for this blogger. “RE/MAX reported the median sales price in the Los Angeles metropolitan area, including Orange County, in Dec. 2022 was $810,000, a 4.7% drop from the previous year’s $850,000 sales price. The San Francisco Bay Area metro, Honolulu, Hawaii and Seattle saw a 5% and 4% drop in median sales price, respectively. ‘Sellers are shocked,’ said Alex Avilez, broker-owner at REMAX West Covina. ‘A lot of sellers got used to seeing the [bidding wars]. Now that’s not happening. It’s like they list their home, and a week goes by, and they blame their agent for not doing their job. Buyers have always controlled the market.”
“The Treasure Valley housing market has seen a marked decline in the price of single-family homes over the past several months. The median price of a single-family home in Ada County fell by $31,000 to $515,000 in December, according to the Intermountain Multiple Listing Service. In Canyon County, the median price of existing homes in December was $342,000, a 10.9% decrease.”
“Dallas-Fort Worth home prices were down 10% in December from their peak in June, according to data from North Texas Real Estate Information Systems. The median DFW-area home price in December was $390,000. ‘As mortgage rates have gone from about 3% to as high as 7%, all housing activity has come to a standstill,’ said Chris Dougherty, economist for Wells Fargo. ‘Buyers have disappeared, and sellers who refinanced their homes and have 3% mortgage rates aren’t going to trade up into a 7% mortgage rate. So it’s a frozen housing market, and this is the big reason why, especially with the buying side.’”
“Residential sales continued spiraling downward across South Florida, as mortgage rates stayed high compared to their pandemic lows, and housing prices fluctuated, according to Douglas Elliman’s fourth quarter reports. Jonathan Miller, who authors the quarterly Douglas Elliman reports, is adamant that the annual declines in sales aren’t telling the full picture. Miller instead likes to compare recent sales and pricing statistics to 2019. ‘There is a disconnect in what’s happening in using the year-over-year comparisons,’ said Miller, of the appraisal firm Miller Samuel. ‘2021 was such an outlier in performance that anything against it looks like a collapse or significant decline.’”
“Across the board, on-market home and condo sales experienced significant annual drops in sales in the fourth quarter. The combination of a rush of inventory absorbed at the peak of the market, bidding wars driving up pricing, migration patterns shifting, and, of course, mortgage rates surging, have driven the slowdown over the past nine months or so. Many would-be sellers are also ‘wedded’ to their low rates and are less likely to sell, Miller added. ‘I hate people who say this time it’s different, but this time it’s different.’”
“The median sales price of homes in Massachusetts fell last month, but that doesn’t mean the outlook is rosy for buyers. Massachusetts Association of Realtors President David McCarthy says the surge in home sales during the pandemic means there are less people currently looking to move. ‘It almost feels like we’ve stolen sellers from the future,’ he told WBUR.”
“Bankers, traders and others in the financial-services industry historically have used their bonuses as down payments, but Wall Street bank executives are warning that this year’s payouts will be significantly smaller after deal making slumped in 2022. Lisa Chajet, a broker with Coldwell Banker Warburg, said concerns about the economy are spooking buyers, and prices are dropping as a result. ‘I just had a luxury buyer pull out of something very large because he was nervous that there was going to be a recession,’ Ms. Chajet said. ‘Some of these large condos are selling significantly below the asking price.’”
“The days of multiple offers above asking may be over for sellers in the New Orleans Metro area, and local real estate experts say it’s time for buyers to be in the spotlight. Mirambell Realty CEO Craig Mirambell said things have been slow in the New Orleans area market for several months, but he said he has seen the market in worse shape. ‘It’s not like we’re seeing bubbles or crashes or things like that,’ Mirambell said. ‘We’re not there, and we don’t expect to be there. It’s just slower than it was, and it was at a frantic pace during COVID.’”
“The real estate market in Toronto, Ottawa and many Ontario cities is off to a slow start in January. In many cases, sellers are stubbornly unrealistic about their asking price, says Andre Kutyan, broker with Harvey Kalles Real Estate Ltd., pointing to the days on market. One condo unit Mr. Kutyan visited with clients had been on the market for 207 days. ‘You’re the first one here in a while,’ the concierge said when he signed in. Mr. Kutyan points to one new listing he is currently bringing to market at 96 Duplex Ave. in midtown Toronto. A builder renovated the older house and listed it for sale with another agent in the fall for $3.25-million. The house failed to attract a buyer and the builder asked Mr. Kutyan to take over the listing. He recommended a significant cut in the asking price to $2.849-million. ‘In the short term, I think there’s going to be some pain,’ he says.”
“In Burlington, Ont., Tanya Rocca of the Rocca Sisters Team at Royal LePage Burloak Real Estate says the average price jumped about 65 per cent during the pandemic, then dropped 25 per cent from the peak in February of last year. Some homeowners have lamented missing the high water mark, but Ms. Rocca believes they are getting past that now. ‘I feel like people are starting to come around to reality.’”
“For decades, investing in land in Kenya’s capital, Nairobi was a sure bet and a safe haven in a market where prices doubled every two years driven by speculation, a bulging middle class and a club of high-net-worth earners chasing after assured returns at low-risk. But a Business Daily analysis of data covering the past five years challenges this trend, showing that at least seven of the high-end suburbs in Nairobi have lost value by up to 11 percent between 2018 and 2022, reflecting the stagnating demand for Grade A office space and high-end residential apartments as a result of oversupply.”
“‘Kilimani and Upperhill have experienced supply saturation and because of that the market is now correcting itself as demand goes down in those localities…these places are fully developed and people had overpriced their land over time, so the market is correcting and with time the prices will tend to go down significantly,’ said Stephen Katei, the CEO of Regent Management.”
“From 1 January to 31 December last year, the largest recorded drop in average home value across NZ’s main urban centres occurred in the Wellington region (-18.6%). Palmerston North (-15.7%), Hastings (-13.4%), Auckland (-12.3%), and Napier (-11.6%). Local QV valuer Hugh Robson commented: ‘The Auckland market has continued to slow down – a trend that first began in December 2021 and has continued throughout 2022. It’s predicted that this downward trend will continue until at least midway through 2023. Many buyers are now waiting to see how far sale prices will eventually fall. Some agents have reported that numerous ‘cheeky’ offers are now being presented to sellers, while the number of development land sales has also dropped off considerably, indicating developers are now being very cautious due to rising building costs and declining sale prices,’ he added.”
“Hong Kong developers are likely to roll out incentives to lure buyers after a dismal year that saw home sales – both new and second-hand – plunge to a record low, according to CBRE. In the first 11 months of 2022, lived-in home prices fell by 13.8 per cent. From a peak of 398.1 in September 2021, the lived-in home price index data compiled by the Rating and Valuation Department is down by 14.75 per cent. With unsold stock of between 16,000 and 18,000 units currently, and new supply in the pipeline, about 45,000 new flats are likely to become available this year, the property consultancy said in its latest report. That is about four times more flats than were sold in the whole of last year.”
“China’s reopening last month after pandemic-inspired restrictions has big potential implications for American business and commercial real estate. Being open to investment and inspiring a burst of optimism is one thing, but it’s only part of the picture. Until recently the economic growth mecca of the world, China took a turn for the worse during the pandemic. On Tuesday, the Chinese government reported that the country’s population shrank for the first time in about 60 years, when Mao Zedong’s failed economic experiment, the Great Leap Forward, led to famine and the death of millions. This time around the event is less horrific, but real nonetheless, as a legacy of earlier draconian population control efforts — and the country’s growing middle class with less ambition to have children — has slowed the birth rate dramatically.”
“‘[China] will no longer be the young, vibrant, growing population,’ Wang Feng, a professor of sociology at the University of California at Irvine who specializes in China’s demographics, told The New York Times. ‘We will start to appreciate China, in terms of its population, as an old and shrinking population.’”
“Now that China is open, experienced investors might have reasons to be glad, but less experienced ones still have reason to pause, according to University of New Haven associate professor Robert Sanders, a geopolitical risk expert. The problems go beyond current tensions, he adds. Some longstanding issues with investing in China have yet to be resolved. ‘For instance, does their legal system have not just equality, but even equity in terms of outside investors who are foreigners, and natives? No,’ Sanders said. ‘The government is trying to cover up the real effects of the pandemic on their country,’ Sanders said. ‘So we don’t really know how Covid-19 is affecting China. We just know what they want us to know at this point. And as a result, there’s a bit of shooting in the dark for investors.’”
“The slump in the world’s biggest asset class has spread from the housing market to commercial real estate, threatening to unleash waves of credit turmoil across the economy. Almost $175 billion of real estate credit is already distressed, according to data compiled by Bloomberg — about four times more than the next biggest industry. As the toll from higher interest rates and the end of easy money mounts, many real estate markets are almost frozen with some lenders telling borrowers to sell assets or risk foreclosure amid demands for additional capital from landlords.”
“Distress levels in European real estate are at the highest in a decade, in part because of a decline in liquidity, according to a study by law firm Weil, Gotshal & Manges. UK commercial property values fell more than 20% in the second half of 2022, MSCI Inc. data show. In the US, the drop was about 9%, according to Green Street.”
“‘What we have in this downturn is a fairly unique set of economic circumstances. Interest rates are tightening instead of softening the blow for real estate and other corporates,’ said Ian Guthrie, a senior managing director at the loan advisory team at Jones Lang LaSalle Inc., a real estate broker. ‘You have a pipeline of potentially defaulting loans’ where ‘values are under pressure and cash flows are under pressure.’ This year, he added, ‘is when those problems will start to manifest themselves.’”
“The abrupt halt to more than a decade of easy money has been made worse for property companies by a pandemic that has changed the way people work and live, leaving many commercial real estate owners high and dry. The repercussions are being felt across the world. ‘We expect to see some casualties’ among UK developers, said Nicole Lux, who studies real estate credit at Bayes Business School. ‘There will be fire sales.’”
“Commercial property — from offices to shopping malls — is more sensitive to economic conditions than other asset classes, said Andreas Dombret, who served on the boards of Germany’s Bundesbank and the Bank for International Settlements, adding that ‘in the past, when the bubble did burst, very often this was related to commercial real estate.’ ‘But it’s ever so hard to ruin the party,’ added Dombret. ‘This is why regulators often shy away from introducing countercyclical buffers at the right time: when there is no stress in the real estate market.’”