A report from Silicon Valley. “Last year ‘just got really bumpy real quick,’ said Janine Hunt, an agent with Red Oak Realty in Oakland. ‘We knew it was coming. What goes up must come down.’ The median price of existing single-family homes in the Bay Area was $1.08 million in December, according to the California Association of Realtors. That’s an 11.5% reduction from November and a 9.6% drop from December 2021 — both the largest declines of any region in the state.”
From WTOP. “Home prices in the D.C. metro have been falling modestly for several months, but in December, the median price of what sold was lower than it was a year earlier. That hasn’t happened since 2016. The median price of what sold was $513,315 — 1.3% lower than December 2021. Home prices in the D.C. metro peaked in May 2022, and the median price is now 15% below that peak level.”
Hawaiian Real Estate Dreams. “Kona ended the year with 1,003 sales in houses, condos and land. That was 519 fewer than last year, a 34% drop. If you looked at just residential in the fourth quarter you would find a telling tale. When compared to Q4 in 2021, we had 277 sales then and only 141 now, or a 49% decrease. Average prices dropped 15% to just less than $1.1 million and days on the market increased from 20 to 34.”
The Bellevue News Democrat. “Real estate market conditions in southwestern Illinois and St. Louis have brought slowed sales and longer waits for sellers recently. The following areas saw declines, according to Zillow: 62207 median home values decreased by 21.84% to $37,377. 62206 median home values decreased by 19.8% to $39,108. 63106 median home values decreased by 18.53% to $97,103. 63120 median home values decreased by 16.76% to $39,156. 62206 median home values decreased by 7.08% to $39,108.”
Axios Detroit. “Home prices in Detroit fell in December for the first time since spring 2020. As rising interest rates make home-buying less affordable, sale prices dropped 17.2% compared to the same month last year for a median price of $66,250, according to RE/MAX’s Southeast Michigan housing report. ‘We saw prices start to taper off and at the end of the year, we saw the flip (to prices falling instead of rising) actually happen,’ Jeanette Schneider, president of the local RE/MAX, tells Axios.”
From KXAN in Texas. “The Austin housing market has ‘shifted and started to rebalance,’ with homes now spending an average of more than two months on the market. The Austin Board of Realtors President Ashley Jackson made the comments in the December edition of the board’s monthly housing market report. ‘December tells us a lot about how the market has shifted and started to rebalance as there was a sales price drop and a staggering increase in how long homes take to sell,’ Jackson said.”
“Homes that sold in December spent an average of 73 days on the market, almost triple the average from a year ago. The average is the highest since March 2012 — almost 11 years ago — when homes took on average 83 days to sell, according to ABoR data. ‘That shows the ease that a buyer may have right now on getting a house under contract,’ Jackson said. ‘For sellers, what this means is, ‘Hey, your house may sit a little bit longer on the market.’”
The New York Post. “New York City’s golden goose isn’t just losing its feathers, it’s coughing up blood, and the whole structure of government will need to adjust. Per the city Finance Department, the total value of Gotham’s commercial real estate — offices, stores and hotels — is nearly $9 billion short of its most recent high. And it’s likely headed down more, as companies downsize their office footprints and stores across the city close.”
“One of the city’s real-estate giants, Vornado, just got demoted from the S&P 500. As Finance Commissioner Preston Niblack notes, ‘The decline in office occupancy continues to impact retail stores and hotels in the city contributing to the sector’s slow recovery.’ It’s not just a drop in the property-tax take: The Finance Department projects revenue from taxes on commercial transactions to fall nearly 43% this fiscal year — about $465 million. The take from residential transfer taxes will drop 27.3% — down hundreds of millions more. Real-estate taxes are the biggest contributor to New York City’s coffers, covering a third its $106.4 billion budget. Expected future property taxes are also the main backing for Gotham’s $40 billion or so in general-obligation bonds.”
From Motley Fool. “Few were hit as hard as Redfin. Even after a recent rebound, Redfin is down by nearly 95% from its highs. Plus, Redfin made a couple of big acquisitions that (in hindsight) were a case of terrible timing. In 2021, Redfin acquired RentPath for $608 million in cash, and then in April 2022 the company bought mortgage lender Bay Equity Home Loans at the height of the housing boom for $137.8 million. Combined, these deals cost more than Redfin’s entire current market cap and are a big reason Redfin’s debt load went from $146 million heading into 2020 to nearly $1.7 billion now. Fortunately, RedfinNow was relatively small compared with some other iBuyers, but Redfin still reported more than $300 million in inventory at the end of the third quarter of 2022.”
The Globe and Mail in Canada. “The Vancouver region is poised for a record year of condo completions, with 20,468 presale units scheduled for occupancy by year’s end, according to Zonda Urban, marketing analysts. The completion of these condos, often referred to as presales or preconstruction units, is 53 per cent higher this year than the record year of 2021. More than half the units to be completed this year are in high-rise towers. If the lender now values the unit at less than the purchase price, the borrower may no longer qualify for the mortgage amount. That would mean the buyer would have to find the money to make up the difference in value, or try to sell the unit, known as an assignment sale.”
“‘Think of the thousands of presale agreements that are coming up for closing this year,’ says Ron Usher, real estate lawyer and general counsel for the Society of Notaries Public of B.C. ‘Did those people understand the cost of their mortgaging?’ he asks. ‘Did they predict what they thought the value would be? We are seeing collapsing deals of appraisals coming in that are not supporting values. That will be one of the more interesting stories this year, in Vancouver and Toronto particularly. What is going to happen with all these completing presales?’”
“Mortgage broker Alex McFadyen said that most buyers are not aware of the risk. ‘Some properties have appraised at value, but others have been appraising at far under value – as much as a couple of hundred thousand,’ he said. ‘I can confirm that this is happening and will likely continue to be the case over the course of this year. Some individuals have been able to come up with the cash difference, whether it be from the equity of their homes or a gift or savings.’”
This Is Money. “Seven in 10 estate agents say home sellers are being unrealistic about what their properties are worth, according to estate agent membership body, Propertymark. Sellers might get away with that in a hot market, but at the moment demand among those buying homes is on the wane. Data from the Bank of England. It found that new mortgages for property purchases dropped 75 per cent compared with the previous three months. Starved of buyers, sellers are having to come to terms with the reality that their house price may no longer be worth what it was six months ago.”
“It may take time for many sellers to accept the reality of what their home is now worth. Henry Pryor, professional buying agent says: ‘Usually about 1.2million homes are sold every year, but I am expecting a few as 800,000 this year as sellers sit on their hands waiting to see if they can hold out for the price they had hoped they would have got last year.’”
The Independent. “The pausing of construction work at a high-profile Dublin docklands site of 700 high-end apartments, where groundworks had been underway, is seen as just the most public example of the collapse of the apartment building sector in Ireland. ‘Apartments are most definitely dead in the ground,’ said one construction industry source. ‘There’s not a PRS [private rental scheme] person left in Dublin. I’m not aware of anyone in the industry at the moment who is talking to any of the PRS people about funding or developing an apartment complex for them.’”
“‘Builders are building the houses, but are holding off on the apartments – sometimes in the hope that eventually the local authority or an approved housing body will step in and pre-purchase the apartment block,’ said a construction industry source. ‘If the State doesn’t step in, then who is going to pay for them? We won’t be able to sell a two-bed apartment in Clonmel for €480,000 when you can buy a house around the corner for €310,000.’”
From NL Times. “Prices of existing owner-occupied homes fell again in December compared to the previous month. Home prices dropped 2.3 percent compared to November – the strongest decrease in ten years, Statistics Netherlands (CBS) and the Land Registry reported. Prices have been weakening for five consecutive months. The price decrease measured by CBS is not yet as extreme as the decrease recently reported by the Dutch association of realtors NVM. According to the real estate agents, house prices fell by 6.4 percent annually in the past quarter. CBS only processes house sales when civil-law notaries register them with the Land Registry. The NVM figures are incomplete but are based on the moment the purchase contract is signed. That is sooner, meaning the NVM can often identify trends earlier.”
“Economists recently pointed out that most homeowners need not worry about the price falls for now. However, people who bought a house last year at the peak of the housing market will feel the fall in house prices if they want to sell their home now, ABN Amro economist Philip Bokeloh said. ‘That be a reason not to divorce or to keep a house.’”
From Al Jazeera. “When much of the world went through a major recession in 2008-2009, China, through enormous government spending efforts, managed to weather the storm and buoy the global economy. With the world tottering ‘perilously close’ to a global recession, a repeat of a Chinese-led recovery seems less likely. Over the coming years, however, China’s growth rate will slow down to between 2 and 5 percent, according to estimates by economists Al Jazeera spoke with.”
“And even that masks a shift that has already been under way, said economist Michael Pettis, a Beijing-based senior fellow at the Carnegie Endowment for International Peace. Focusing on GDP numbers risks missing the forest for the trees – such figures only give an incomplete, time-delayed picture of the Chinese economy. ‘The high-growth era seems to be ending now as per the numbers, but actually, in terms of productive investment, it ended around 10 to 15 years ago,’ he told Al Jazeera.”
“Pettis said GDP – used initially to measure Western economies – is not built-for-purpose for capturing anomalies caused by China’s ‘soft budget constraints,’ which refers to a model where the state steps in to cover for spending in excess of income earned from a project. For instance, a sewage system built in the Gobi Desert and one in Beijing might add the same value to China’s GDP, despite the former having little economic value. ‘[In China], you can continue losing money for a very long time if it’s politically necessary… but it’s not reflective of the underlying productive capacity of the economy,’ he said.”