A report from DS News. “A case study of two nationwide cohorts of properties brought to foreclosure in Q4 2022 reveals that proactive pricing is key to optimal distress disposition during a housing slowdown, according to Auction.com. ‘With home prices now down more than 9% from their May 2022 peak and forecast to fall further in many markets, sellers who price proactively will minimize the risk of taking on properties that are losing value every day,’ said Ali Haralson, Auction.com President.”
“The report also shows demand for distressed properties shifting lower in the last three quarters of 2022 as buyers at foreclosure auction and REO auction anticipated the downshift in the retail housing market and began bidding more conservatively. Bidding behavior at auction acts as a reliable predictor of future price appreciation in the retail market, and this bidding behavior points to falling home prices in 40% of the nation’s largest metro areas in early 2023.”
The American Statesman. “With rising mortgage interest rates continuing to batter the Austin-area housing market, median home-sales prices — both in Central Texas and the city of Austin — saw their largest declines on record in 12 years, the Austin Board of Realtors said. Prices for the homes that did sell dropped to their lowest levels since the board’s record-keeping began in 2011. In January, 2,248 homes had price decreases in the city of Austin, up almost 250% from 643 the previous January, the board’s numbers show. In the Austin region as a whole, there were 7,078 price drops compared with 1,737 in January 2022, a 307% increase.”
“Along with ‘a modest change in days on market,’ new listings jumped 63.4% to 2,988 in January compared with December, said Ashley Jackson, president of the Austin Board of Realtors.”
Community Impact. “Home prices are continuing to trend downward, and housing inventory is on a steady uptick in Central Austin. This trend was reflected throughout the Austin-Round Rock area, where median home prices decreased 6.3% to $450,000, the largest drop since July 2011, according to ABoR.”
Bisnow South Florida. “Multifamily vacancy in South Florida hit 4.6% in the fourth quarter, up from 3.2% a year earlier, according to Lee & Associates. Developers delivered nearly 15,000 units to the market over the course of the year, and the construction pipeline grew from 36,408 units to 51,569. Allen Morris Co. CEO Allen Morris said high-end apartment rents in Miami have dropped about 5%, which is not as steep of a decline as in Atlanta, where high-end multifamily rents fell 9%. ‘A lot of projects are being tabled because people think you can’t do pie-in-the-sky rents, it’s just not going to be built. They’re going to wait till the numbers make sense,’ said Morris and Lee & Associates principal Matthew Jacocks.”
“‘We’re not seeing those really low interest rates we saw in the beginning of the pandemic when there was a buying frenzy on home,’ MG Developer Chief Development Officer Catie Naranjo said. ‘I think we’re in a different situation now where we’re going to see a lot more people inclined to rent. And probably some homebuyers that bought during that time might even regret it at this point in time.’”
CBS Bay Area. “Nearly all of the most expensive places to buy are in the West and half of the 10 most expensive cities are in California. Several of those places are seeing prices fall the most. San Jose was the most expensive place to purchase a home in the United States in the fourth quarter. But that median price of $1,577,500 is actually down 5.8% from a year ago — and prices there have already dropped 17% from the peak $1,900,000 median price in the second quarter of last year, according to NAR.”
“San Francisco had the biggest price drop in the country, year over year, last quarter, with the median price of $1,230,000 — down 6.1% from a year ago. Prices for San Francisco homes are already down 21% in the fourth quarter from the peak median price of $1,550,000 in the second quarter.”
Havasu News in Arizona. “Single family home prices in Lake Havasu City declined over the last six months of 2022, on the heels of more than a year of extremely rapid price growth fueled by the covid pandemic. By the end of 2022, the average price of a home in Havasu in December was lower than it had been the year before. According to the Lake Havasu Association of Realtors, the average sale price of a home in Havasu peaked above $600,000 in May last year before starting to drift back down. The association reported that the average price of a home in October was $539,771, dropping to $492,675 in November.”
The Financial Post in Canada. “21,782 new condominiums were sold in 2022 in the Greater Toronto Area (GTA) alone, even though last year’s slowdown in housing demand hit sales, which were down 30 per cent from 2021, according to a report by Urbanation Inc. Unsold inventory in the fourth quarter last year was about 15,000 units, which is in line with the 15-year average. The market slowdown was more pronounced in the fourth quarter when sales dropped by 68 per cent compared to the same time a year ago. While the 21,782 new condo sales in 2022 are in line with the long-term average, the bulk of those sales were realized in the first half of the year.”
“New condo prices in the GTA had been rising at 10 per cent annually. The recent price slowdown, similar to the previous decline that coincided with the great recession, might force some investors to pause. The estimated ownership cost for newer units is currently $4.59 psf, while the market rent for a similar quality condo is $3.98 psf, resulting in a monthly loss of $452 psf for an average-size condominium. If investors choose not to sell, they will likely subsidize tenants even with the current elevated rent levels.”
NCA NewsWire in Australia. “Former residents of a faulty Sydney building have called on state the government to buy back their homes in a plea to end what one owner described as ‘four years of psychological trauma.’ Severe structural defects and safety fears forced Mascot Towers owners to evacuate their homes in June 2019, with the building still unliveable. However, residents still face escalating mortgages, strata fees that range from $3000 to $8500 a quarter, and a $10m loan for failed remediation plans.”
“Owners were hit with new concerns on Tuesday after some people were told vandals had broken into the abandoned property. Brendan Stubbs and Hardeep Saini said owners weren’t aware of which apartments had been broken into; however, there were reports trespassers had taken up residence in some of the units. ‘Apparently, people have broken in and are squatting in the units, and there’s a rat infestation,’ Mr Stubbs told NCA NewsWire. ‘I was quite shocked by that. It’s just so upsetting.’”
“After a large-scale $50,000 renovation of their apartment, Mr Stubbs and Mr Saini only had nine months in their home before it was deemed unsafe. ‘Our unit sits directly above the support beams where the damage was, so they’ve completely gutted our unit,’ said Mr Stubbs. ‘It’s a concrete shell now. It’s just really depressing to go in there and see it.’”
“Fellow owner Derek Williams said what was once he and his wife Rachel’s ‘forever home’ had turned into ‘four years of psychological trauma.’ ‘People are facing bankruptcy. That money was meant to be used to remediate the building, but the defects got worse and we’re not able to remediate the building at all based on that,’ Mr Williams said. They argue a buyback plan would allow they to get closure, instead of a remediation plan, which would still tie them to the property once the building was fixed.”
“‘The banks will never lend against these properties because they’re essentially worthless,’ Mr Williams said. ‘You can’t borrow any more money for anything else. You’re financially ruined. It’s like a cancer people are having in their bodies, and they just want to get rid of it and have it fixed.’”
Vietnam Investment Review. “For several months, Nguyen Ngoc Thanh, a Ho Chi Minh City resident, has repeatedly offered for sale his 5,000-square metre land plot in Bao Lam district in the Central Highlands province of Lam Dong. Despite three rounds of price discounts and accepting a loss amounting to 30 per cent, he still could not find a buyer.”
“Late in 2021, Thanh had used financial leverage to buy the land plot for nearly $435,000 for speculative purposes. As the plot is in a good location, a buyer immediately asked him to sell at over $540,000, but Thanh refused. Now, as his bank loans reach maturity, Thanh has to sell for debt repayment. ‘At a feverish time, people rush to buy at any price, but when the market faces doldrums no-one cares despite the remarkable price discounts,’ Thanh lamented.”
“An experienced investor in the southern province of Ba Ria-Vung Tau, Le Hung is also downbeat at being shackled with many plots of land. Hung had been snapping up pieces of land for many years, in a province that is deemed a lucrative market with high liquidity. Early in 2022, news lingered that the province had allured many big investors. Hung, as a result, put up all his money and borrowed more from banks to possess many valuable land lots in diverse districts in the province such as Chau Duc, Xuyen Moc, and Phu My.”
“Not long after that, banks began to tighten credit and the market cooled down. ‘If you don’t have to borrow from banks, then you don’t have to worry, because sooner or later you will be able to sell. As I had to borrow a relatively big sum from banks amid interest rate spikes, I have struggled to find ways to sell some to take back money for debt repayment,’ Hung said.”
“From an investment perspective, Duong Minh Tien, general director of Asia New Time, is quite optimistic. ‘The real estate market is struggling due to tight credit, but psychology is the main factor causing liquidity loss. A difficult market also provides a golden opportunity for investors to ‘bottom-fish’ and buy real estate at a good price,’ Tien said.”
The Korea Times. “Young people in Korea are either closing down or opting not to open a housing subscription savings account as the real estate market here continues to remain in the doldrums. Falling home prices and a low annual deposit interest rate are also cited as the reasons behind this trend. A housing subscription savings account enables an adult to become eligible to purchase a state-subsidized or private apartment after a raffle after making deposits for a given period. It has been considered as a must for those who wish to buy their own house.”
“‘The account is kind of a white elephant for me. I’m holding it because I have poured a lot of money into it for about five years, but I feel very uncertain whether I can buy my house with that in the future,’ an office worker who asked to be identified only by her surname Jeong told The Korea Times. ‘I watched some videos that recommended transferring the money to an installment savings account that guarantees more profits now. I’m seriously considering closing down the account,’ the 27-year-old said.”