A report from Wicked Local. “The Massachusetts residential real estate market is correcting for past excesses. ‘The Massachusetts single family market finally hit the wall we’ve all been anticipating,’ said Tim Warren, CEO of The Warren Group. ‘For the last few years, housing market activity has been so hot that inventory was unable to keep up and our numbers reflect that.’ New data from GBAR shows sales of single family homes and condominiums in Greater Boston each fell by roughly one-third in December from year ago levels while median selling prices in this part of the state declined on both an annual and month-to-month basis, which is an indication the market likely has plateaued.”
“‘The real estate market is slowing down. Competition is reduced. Bidding wars and offers over asking price are a thing of the past,’ said Warren. ‘Some improvement has been made in reducing inflation and interest rates, but a real fix to those issues will take years, not months.’ Sellers who have had their home on the market for several months may decide to accept a price below their asking price, said Warren. ‘A year or two ago this was unheard of. Now, it is happening more frequently. I would urge anyone making an offer to purchase a home to think things through carefully,’ said Warren.”
In Maricopa in Arizona. “In the past, describing the Maricopa real estate market in a few words was easy. This past year was different, though, because the market made a huge shift in the middle of the year from ‘many buyers, minimal homes’ to ‘minimal buyers, many homes.’ The average selling price for a home in Maricopa in January 2022 was $375,000. Eleven months later, by mid-December, the average selling price was $372,352, marking the first year-over-year decline in many years. Although the starting numbers and finishing numbers don’t show it, Maricopa sales prices rocketed from January to July ($431,078) and then skidded, creating the rare drop.”
“In mid-December, there were approximately 700 homes for sale, roughly double the average Maricopa market normal of 300 to 350 homes. For sellers, buyers are out there but they have a huge number of homes from which to choose. 2022 had months with the highest inventory of homes for sale since in 2006. A slowdown of brand-new homes being built did not prevent a huge number to choose from. Many are completed or nearly completed, and may have been started for a different buyer, who never finished the transaction. Of the mid-December homes for sale in Maricopa, 265 were brand-new, in process or recently completed.”
Bisnow Washington DC. “While several office-to-residential conversions are moving forward in D.C., experts say only a small fraction of the region’s hundreds of old office buildings have layouts that make it possible to transform the existing structure. But if office valuations keep falling the way they have been, that may not matter. ‘We’re in a situation now where spot values for some of this office are so low that it’s just a teardown and start over,’ TMG partner Gary Block said. As the Federal Reserve has continued rapidly hiking interest rates, property values have kept dropping. ‘That sledgehammer has just destroyed asset values,’ Block said.”
“D.C. has also suffered from people leaving the city over the last two years, a trend that leaders say is hurting its economic prospects. Between April 2020 and July 2022, D.C. experienced a net loss of 17,743 people, a 2.6% drop, according to the Census Bureau‘s American Community Survey. This put D.C. in a tie with New York for the highest percentage population loss of any state or territory.”
The Cardinal News. “The Weldon Cooper Center for Public Service at the University of Virginia has just released its annual population estimates, and they contain more bombshells than supermarket tabloids. The biggest population losses are from Northern Virginia.Yes, you read that right. The second biggest population losses are from Hampton Roads. Yes, you read that right, too. ‘Domestic out-migration is about as high as we have seen it since 2012,’ says Hamilton Lombard, a demographer with the Weldon Cooper Center.”
Pleasanton Weekly in California. “Barring a sudden return to pre-pandemic ridership levels, BART’s long-term future will likely hinge on a future ballot measure that would partially subsidize the transit agency, officials said Thursday. The San Francisco and San Jose metropolitan areas have the lowest office occupancy rates among the top-10 biggest metros in the country, with San Francisco sitting at just 20.8% according to badge swipe data from Kastle Security. By comparison, an average of 32.8% of office space is occupied among the 10 largest metro areas, which includes the two Bay Area cities as well as Los Angeles, New York, Chicago and Austin.”
“‘We built our budget around peak worker riders, and when they went away, it sort of broke our back, it broke the budget,’ BART Board member Mark Foley said. Without additional revenue from fares, new taxes or some other source, BART is on track to run out of pandemic-era emergency relief funding by mid-2025. At that point, BART officials estimate that the agency would have to eliminate service on the Richmond-Millbrae and San Jose-Daly City lines, close roughly nine stations, reduce service to weekdays only and limit trains to arriving once every hour just to break even.”
CBS Los Angeles. “Southern California’s super red-hot housing market has started to cool in the past year. Across the Southland, home prices have been falling as interest rates have been climbing. From May 2022 to December 2022, prices have dropped 11% in Orange County, 10% in Los Angeles County, 8% in Riverside County, and 6% in San Bernardino County. ‘The inventory is super low right now,’ said Dana Point realtor Gaetano Lo Grande. ‘There were multiple offers on every home last year,’ said Lo Grande. ‘That is still the case now but very rare.’”
“‘From the perspective of buyers, yes, prices are falling but interest rates are a lot higher, which makes it harder to buy a home,’ said Jack Liebersohn, an assistant professor of economics at the University of California, Irvine. He added it is an unusual situation for prices to be falling as home sales are down.”
The Globe and Mail. “National Bank of Canada has reversed its decision to cancel mortgage portability on existing customers. The bank pulled its portability option last summer but news of it just hit the market last week. The backlash was swift and intense, given that the bank made no formal public communication of the change. Portability is a mortgage feature that allows customers to transfer their existing mortgage to a newly purchased property, allowing them keep the low interest rates they secured before the recent surge in borrowing costs.”
“‘We wanted to clarify the confusion’ following last week’s news, Tarek Naguib, National Bank’s vice-president of retail financing solutions, said in a phone interview. He said the bank eliminated its portability option amid surging interest rates, essentially because it was too costly. At the time, the bank had allowed up to 180 days to port instead of the industry average of 60 to 90 days.”
“It’s been a tense year for homeowners in floating-rate mortgages. They’ve watched their interest rates catapult 400 basis points in just nine months. (There are 100 basis points in a percentage point.) To put that in perspective, imagine you got a $400,000 mortgage in February. At a typical variable rate of 1.45 per cent back then, your notional five-year interest cost would have been $26,495 – assuming rates didn’t change. At today’s rates (5.45 per cent), again assuming static rates, that very same mortgage over five years would cost you a stunning $102,280 in interest, almost four times as much.”
ABC News in Australia. “Brisbane and Hobart house prices have fallen sharper and faster than ever before after a ‘spectacular upswing’ through COVID-19, according to CoreLogic. Values rose 43 per cent in Greater Brisbane after a pandemic population surge, but have gone down 10.9 per cent from its peak in June 2022 to January 28. In Hobart, prices dropped 9.3 per cent in the past eight months after a five-year upswing.”
“In Sydney, prices dropped nearly 14 per cent, but it was not yet record-breaking in the capital, said Tim Lawless, from CoreLogic. ‘Through the previous downturn, for example, which ran between the middle of 2017 and the middle of 2019, Sydney housing prices were down nearly 15 per cent through that trough,’ said Lawless. ‘So Sydney is not quite at a record level of decline, but it’s probably a matter of time considering we’re still seeing values falling at around 1 per cent month-on-month in that market.’”
“Recent homeowners may find their property is worth less now than what they paid, but Mr Lawless said it’s unlikely many would go into negative equity. ‘At the moment buyers do have time on their hands, there’s no real urgency to buy into the market like what there was a back in 2020 and 21. They can negotiate and if they don’t get the price they think is fair market value they can move on to the next property . For sellers, they really need to be realistic about their pricing expectations.’”