A report from My Northwest in Washington. “Seattle economist Matthew Gardner, the Chief Economist for Windermere Real Estate, told Dave Ross that looking at home prices year-over-year doesn’t tell the whole story. ‘To compare, literally this month to this month, rather than looking at it on an annual average, is a better way to look at it. If you just compare this coming April and May, the numbers are going to be horrible. There’s no doubt about it,’ Gardner explained.”
KTVZ in Oregon. “Bend and Redmond median home sales prices held fairly steady in January, though the number of sales in Bend hit a recent low of 84, a report indicated. In the first report of the new year from Redmond’s Beacon Appraisal Group, Bend’s median home sales price edged upward to $685,000 in January, a $7,000 rise from December. But the number of sales fell to 84, the lowest figure in at least the past three years, appraiser Donnie Montagner said. The median days on market for Bend’s sold properties hit a recent peak of 36 days, highest since early 2020. Redmond, meanwhile, saw its median home sale price dip by $5,000, to $420,000, the report based on Multiple Listing Service figures said.”
From WINK News in Florida. “Collier County realtor Nick Sweat told WINK News that May or June may be your best bet for a good deal. Around that time, visitors from up north tend to leave the area. And a handful chooses to offload their properties before heading out of town. Sweat told WINK News buyers looking around in Naples are in luck regarding options. ‘The increase in inventory is huge,’ Sweat said. This time last year, Sweat explained less than 850 Naples homes were on the market. But just a year later, nearly 3,000 are up for grabs in the city. And there might not be much of a fight for the house you want. Another realtor WINK News spoke with said that over the last seven days in Collier County, there have been more than 300 price drops.”
KLAS in Nevada. “Home prices leveled out in January, remaining at $425,000 for the second-straight month. The median home price of a single-family home peaked in May 2022 at $482,000. The same was true for condos and townhomes, hitting $285,000 in May. But since then, single-family homes have dropped or stayed the same for eight straight months, now down 11.9% since May. ‘What a difference a year makes,’ said 2023 Las Vegas Realtors President Lee Barrett. ‘After seeing mortgage rates rise for several months, rates settled down recently. We’re still seeing more homes listed for sale and fewer people buying – especially when you compare what’s happening now to where we were a year ago.’”
“By the end of January 2023, LVR reported 5,450 single-family homes listed for sale without any sort of offer. That’s up 199.3% from the same time last year. A total of 1,723 existing local homes, condos and townhomes were sold in January. Compared to January 2022, sales were down 48.3% for homes and down 44.0% for condos and townhomes.”
The Almanac in California. “The Bay Area real estate market took a wild run in 2022 as the mortgage interest rate saw its fastest rise since 1972 and the hype of the tech economy created during the pandemic began to unwind. The year started with record highs and ended with a big cooldown. This is a very different picture than the start of 2022 when home prices surged to record numbers in early spring before falling about 25% (based on Santa Clara County monthly data) toward the end of the year. Approximately half of the decline was seasonal, and the other reflected the drastically changing economic environment, which we find ourselves in now.”
“Demand fell more quickly than supply. The number of homes sold in Palo Alto and Los Altos declined by 33%, and Menlo Park was down by more than 40%. The annual median price, however, held well. The median price of a single-family home in Palo Alto was $3.6 million for 2022, on par with 2021. In Los Altos, it was $4.2 million, up 2% year over year, and Menlo Park was $3.14 million, up 5% year over year. On an annual basis, home prices are still at a record high for all three cities.”
The Wall Street Journal. “Ribbon Home Inc. had a fast-growing business during the housing boom. The New York City-based startup purchased homes with cash on behalf of buyers. Then it sold the homes to the buyers at the same price, plus a fee, once the buyers got a mortgage. Ribbon has been active in hot markets such as Atlanta and Charlotte. But last year as mortgage rates surged, some Ribbon customers backed out of their purchases or needed more time to get financing. That left the company owning nearly 400 homes, according to property records analyzed by Attom Data Solutions and confirmed by the company.”
“Orchard Technologies Inc., another power buyer that has been active in places such as Denver and Dallas, helps customers buy a new home and move before selling their previous home. If clients can’t sell their homes after four months, Orchard agrees to buy them. The company now owns about 200 homes its customers were unable to sell, said its Chief Executive Court Cunningham. Mr. Cunningham said Orchard has had to buy homes from customers three times as frequently over the past six months.”
“The unanticipated glut of homes these firms are carrying is an example of how housing-oriented companies that thrived when mortgage rates were super low are struggling to survive in a higher rate environment. Ribbon has let go of about 170 employees, or 85% of its staff, but it still needs to unload its surplus of houses. ‘There was sort of a power shift, from the power sitting with the seller knowing that their home is going to sell within a day, to the power sitting with the buyer,’ said Tim Heyl, founder of the Austin-based power buyer Homeward Inc.”
“‘People were doing all sorts of things to outbid or be the most competitive offer,’ said Diane Vanna, a real-estate agent at Baird & Warner in Chicago, who in 2021 represented a buyer who won a bidding war against 36 other offers. ‘Now it’s really leveled off.’”
From Bisnow. “Commercial real estate values continue to drop, but after a year of rapid interest rate hikes, investment advisory and research firm Green Street says the bottom is close — or already here. Green Street’s Commercial Property Price Index, which tracks all sectors of CRE, is down 14% from its peak reached last March, falling 0.6% from December to January. Core sectors — office, industrial, multifamily and retail — are down 17% from their peak, per Green Street’s latest report.”
“When it comes to asset types, apartment values have taken the biggest hit — down 20% in the last year, the index shows, with a 1% fall in the last month. Malls are also down 20% in the last 12 months, with a 2 month-over-month drop. Office prices are down 17% from their March peak but their price decline is accelerating with a 4% fall in the last month. Industrial prices are down 15% but haven’t fallen at all in the last month. Rising interest rates have brought sales to a screeching halt. Nationa investment sales were down 63% year-over-year in the fourth quarter, according to CBRE.”
“Meanwhile, there is significant loan volume maturing in the city, largely in the office market. In total, more than $16B in CMBS loans backed by New York City commercial real estate will mature through 2023, according to Trepp data. ‘I think more lenders are going to be accommodating, because at this point in time, potentially there’s a 50% devaluation in the asset class,’ Square Mile Capital Managing Director Samir Tejpaul said of office properties. ‘So [lenders are] all incentivized to try and find you more time to work through the situation.”
Storeys in Canada. “Tenants all across Ontario have been dealing with an apparent influx of unlawful rent increases — and threats of eviction — since mortgage costs began rising in March of last year. For Sam, a renter in Barrie who asked that her last name be withheld, her landlord advised her in December that he would be raising the rent on her 2011-built house from $2,200 to $3,000. ‘My soul kind of left my body for a minute,’ Sam said. ‘But I said ‘Listen, the only problem I’m having here is that legally, you’re only allowed to ask me for 2.5%,’ and his response was, ‘I know, but I could be making more money. I’m not even breaking even on the unit anymore.’”
“Increases like these are in violation of Ontario’s rent increase guideline, which caps 2023 rent hikes to 2.5% for all units occupied for residential purposes before November 2018. (Although dubbed a ‘guideline,’ landlords are required to follow it). The problem with these smaller landlords who blindly jump into the industry is two-fold, says Daniel English, paralegal. ‘Number one, a sense of entitlement — it’s my property, I should be able to do whatever I want with it,’ English said. ‘Then the second part is gross ignorance of the law. Now, when you combine a sense of entitlement with not knowing the law, you end up with a fool.’”
“‘I know of some landlords who have unfortunately had to let their house go to power of sale because they cannot afford to pay the carrying costs even after receiving rent from the tenant,’ says Varun Sriskanda, Board Member at Small Ownership Landlords of Ontario . ‘There is no shortage of power of sale listings on MLS that contain stipulations where the buyer must assume the existing tenant who is permitted to remain in the house.’”
The Globe and Mail in Canada. “64 Humber Valley Cres., King City, Ont. Asking price: $2,325,000 (August, 2022). Selling price: $2,020,000 (November, 2022). This 37-year-old bungalow on a half-acre lot in King City, about 50 kilometres north of downtown Toronto, was officially sold for $2.325-million during the spring housing boom in May. Three months later, the buyers couldn’t close the deal. The seller had little choice but to settle the matter out of court and relist the property for $2.325-million in a cooler market.”
“‘This is not uncommon,’ said agent Joel Carcone. ‘This is just what happens when the market changes. I had the same issues back in 2016/2017 when the market swung at that time, so some people get caught in the crossfire.’”
From Bloomberg. “Danny Blanchflower, a former Bank of England policy maker, said ‘collapsing’ house prices will push the UK central bank into a rapid pivot toward interest rate cuts. Blanchflower, a professor of economics at Dartmouth College, said the BOE will have to ‘respond to really bad data’ as previous rate increases continue to feed through to the economy. The economist was known as an arch dove during his time on the BOE’s Monetary Policy Committee between 2006 and 2009, pushing for lower rates more than most others.”
“The housing market has slowed sharply since the euphoric highs of the pandemic with monthly prices falling and mortgage approvals slumping. ‘We are seeing house prices tumbling,’ Blanchflower said in an interview on Bloomberg Radio. You’re going to start to see really bad stuff appearing as these economies slow fast and the central bank and the markets are then going to respond to that. What people should see is a collapsing housing market, a slowing economy and the reason is that these interest rate hikes that have been going crazily haven’t actually impacted the economy yet.’”
News.com.au in Australia. “A single dad struggling with ballooning monthly repayments has likened mortgage stress to self-imposed ‘social lockdown’ as the Reserve Bank of Australia is poised for a ninth consecutive interest rate hike when it meets on Tuesday. Melbourne father Steve Whittington told Today his monthly repayments would increase from $2100 in May to $3600, if Tuesday’s forecast 25 basis point increase was implemented.”
“‘That is a massive rise for me,’ he told host, Karl Stefanovic. ‘Takeaway coffees are no longer a discretionary item that I am going near, never mind UberEats or a restaurant out. It’s almost like social lockdown, financially self-imposed.’ Mr Whittington called on the RBA to reconsider its approach as it attempts to bring down inflation, which rose to 7.8 per cent in December. A 25 basis point hike will bring the official cash rate from 3.1 per cent to 3.35 per cent; however, some economist say the RBA could impose as much as half a percentage point rise. ‘The lag is so great surely someone has to be telling the RBA that there is a new paradigm and continued increases are hurting too many people too greatly,’ he said.”
“Canstar Blue finance expert Steve Mickenbecker warns there is still a lot of financial pressure to come, forecasting at least another two more rate increases. ‘I just don’t think anyone can really say there’s not more bad news for borrowers,’ Mr Mickenbecker told NCA NewsWire. ‘Living costs are going up irrespective, the CPI covers almost everything and they’re going up across the board. You pile that with mortgage rates, the reserve bank probably has at least another two increases of 2.5 per cent before it can decide to take its foot off the accelerator.’”