A report from the Denver Post in Colorado. “Metro Denver single-family home prices, after dancing between an annual loss and gain in January, crossed over to the dark side with both feet in February. The median price of a single-family home sold in metro Denver last month was $600,000, down 5.7% from the same month a year earlier, according to a monthly update from the Denver Metro Association of Realtors. ‘Buyers are watching rates closely and patiently waiting for new inventory to hit the market,’ said Libby Levinson-Kataz, head of the DMAR Market Trends Committee. ‘They are more discerning about home prices, less willing to compete and will only jump into a bidding war if the house is move-in ready and suits their needs.’”
The Dallas Morning News in Texas. “The Dallas Builders Association reported an upswing in homebuying in the first months of this year. Land investors and developers are having trouble making deals pencil out financially as the cost of buying and developing land soared. ‘There’s a lot of liquidity on the sidelines, so it is making it challenging to get deals financed,’ said Andrew Pieper, vice president of Dallas-based developer Hillwood Communities. ‘There’s land out there, but you’re gonna way overpay for it,’ said Adam Lingenfelter, president of luxury builder Lingenfelter Custom Homes. ‘We’ve got enough lots right now for the next two or three years. But beyond that, we’re really, really struggling to find lots.’”
From Arizona‘s Family. “Edward Aguirre says he should be pretty excited about his brand-new home that was recently built. But Edward says he’s more frustrated than excited. ‘I’m wondering if my house is the only one like this on my block or is every other house like this and nobody has said or done anything about it,’ he told On Your Side. The home builder claims the house is ready to move in, Edward says, but this new homebuyer says for the money he paid, there are too many things that need to be fixed before moving in. For example, he says his front window was installed crooked making it almost impossible to be opened or closed. On Your Side’s Gary Harper tried to open the window and realized what Edward was talking about. ‘Yea, this is really tough,’ Harper said as he tried to open and close the window. ‘That should not be that way.’”
“Cy Porter is a home inspector. He tells On Your Side that he finds more red flags in newly built homes than in older homes that are for sale. ‘In about 2021, we started to see the market had a huge decrease in workmanship,’ Cy said. One reason, he says, is that new homes are being built at lightning speed across the Valley, and he believes attention to small details diminishes greatly. Edward believes new homes like his are going up too fast without proper manpower and supervision. ‘How are they going to keep up with every single thing in every single house for all these houses,’ Edward said. ‘There’s no way they can.’”
WWNO in Louisiana. “The New Orleans City Council advanced a measure to limit short-term rentals to one per square block in residential neighborhoods at a special meeting on Thursday. In Tremé/Lafitte, there were 410 Airbnb listings as of December, and only 89 had city permits. Jane Place estimates that 10% of all housing units in the neighborhood are whole-home Airbnbs. Some short-term rental owners said they’re nervous about the possibility of losing extra income they say helps them cover rising housing costs if the council passes any kind of density restriction.”
“‘I’m very much against the block square – I think it’s an overreaction,’ said Amy Lewis, who runs an STR in Algiers Point that she said helps her make ends meet as a single parent. ‘People are going to be forced to sell their houses when these restrictions go into place.’”
The Real Deal on California. “Home prices in San Francisco are down more than anywhere else in the nation, according to a new report from Parcl Labs, which shows that the price per square foot dropped nearly a quarter in January compared to the metro’s April 2022 peak. San Jose was only slightly better: the price per square foot in the South Bay was down 20 percent from its May 2022 peak, according to the data company. In terms of dollars, a Compass report put the January median home price in San Francisco at $1.5 million, while the peak in early summer 2022 was just over $2 million. For Santa Clara County, which includes San Jose, another Compass report put the January median price at $1.5 million, compared to about $1.85 million during the peak last year. These numbers roughly confirm the Parcl Labs analysis, which does not include dollar amounts.”
“The data on San Francisco’s drop from peak prices matches similar Compass figures from January, but Parcl gives the decline a nationwide perspective. Its analysis found that while all markets are down, the national average is only 10 percent, with significantly bigger drops in the West Coast and in the Bay Area in particular. The Pacific region, which includes California, Oregon and Washington, is the worst performing section of the nation, with prices down nearly 15 percent from their 2022 highs. Condos lost more value — 16 percent compared to 13 percent for single-family homes in the area.”
The New York Post. “Mindy Kaling is about to take a hit on the sale of her downtown Manhattan loft. The two-bedroom, two-bathroom home at One Kenmare Square, at the crossroads of Soho and Nolita, hit the market for $2.75 million last September and is now in contract. Kaling bought the 210 Lafayette St. spread for $3.1 million in 2017. The contract price isn’t clear, but we hear it’s less than the purchase price.”
The Toronto Star in Canada. “Welcome to Milton, a hive of development activity that’s also arguably ground zero of Canada’s mortgage crisis. As interest rates have surged over the past year, with eight central bank rate hikes driving up mortgage costs and in many cases adding hundreds or even thousands of dollars to monthly bills, it’s already having a noticeable impact here in Milton — from a spike in food bank usage to investors off-loading properties to panic over approaching renewals.”
“These newer builds are one reason why Katherine Barnett, a Milton realtor, believes the town is so heavily mortgaged. ‘They could afford so much because their money was almost free,’ she said, referring to the historic low borrowing costs that fed the GTA housing frenzy of the past decade. The average household income here is $138,800 a year, with an average home price of $1.06 million in February 2023, according to the Toronto Regional Real Estate Board — down 24 per cent from last year.”
“What might have seemed safe in recent years is fast becoming a burden. Local mortgage agent Agnes Mocko, said she’s ‘definitely seeing a lot of people struggling to keep up with their mortgage payments’ especially those with variable rates, after eight rate hikes. ‘A lot of these people are struggling now because they couldn’t really afford it to begin with,’ Mocko said. Mocko is ‘slowly starting to see people get into sticky situations,’ including those with a variable mortgage, as well as people who might have locked into a low fixed rate in 2018/19 and are facing renewal this year or next.”
The Globe and Mail. “Twenty per cent of Canadian Imperial Bank of Commerce mortgage holders are seeing their loan balances grow, as rising interest rates make it harder for them to pay off their homes. New data from CIBC show that $52-billion worth of mortgages – the equivalent of 20 per cent of the bank’s $263-billion residential loan portfolio – were in a position where the borrower’s monthly payment was not high enough to cover even the interest portion of the loans. The bank has allowed these borrowers to stretch out the length of time it takes to pay off the loan, which is known as the amortization period. As well, borrowers are adding unpaid interest onto their original loan or principal.”
“The disclosure, contained in a footnote in CIBC’s recent quarterly financial results, is the first from a major bank outlining the amount of variable-rate loans where payments no longer cover interest costs. It shows the financial duress homeowners are under because of the jump in interest rates. It also highlights the growing risk borrowers face when it comes time to renew their mortgages and their amortization periods are required to shrink back to the lengths of time specified in the original contracts. Then, the borrower will face much higher monthly payments.”
“‘It’s absolutely a sign of stress to come. It’s just the stress isn’t here yet,’ said Mike Rizvanovic, financial services analyst with investment bank KBW. At least two other major lenders, Toronto-Dominion Bank and Bank of Montreal, offer similar products that allow mortgages to negatively amortize. However, TD and BMO did not provide any disclosure on the share of borrowers that have a negative amortization. ‘Higher mortgage rates have resulted in a greater portion of fixed-payment variable mortgages where the monthly mortgage payment does not cover interest and principal,’ said Nigel D’Souza, financial services analyst with Veritas Investment Research. ‘The full impact of higher mortgage rates will be reflected on renewal.’”
The Telegraph. “The beleaguered online estate agent Purplebricks has hung up a ‘for sale’ board after a share price rout that has sent its value plunging from a peak of £1bn to just £23m. The business – which said it has received several credible expressions of interest – is now facing a battle to find a buyer in a falling property market where competition for customers is only becoming more fierce. Even if a deal is struck, it will land massive losses on investors who bought into the company’s much-vaunted stock market listing on the promise it would upend the traditional estate agent hierarchy.”
“The company’s woes follow falling sales and a catalogue of costly blunders that have left its dream of transforming the property market in tatters. ‘It was a disruptive business but it had an overambitious business model,’ says David Reynolds, an analyst at Davy. ‘It expanded prematurely and its international operation was a failure.’”
Stuff New Zealand. “New Zealand’s rate of consents being issued for standalone houses fell by the largest amount in more than a decade in January, which may help to stabilise falling prices. Infometrics said it was a sign that residential builds were losing their popularity as the housing market cooled and rising interest rates made construction less affordable. ‘House prices are now more than 16% lower than their peak in November 2021, and with residential building cost inflation still running at 13% per annum, the attractiveness of constructing new dwellings is reducing significantly.’”
“Chief forecaster Gareth Kiernan said to maintain activity would probably require a significant increase in land available, because much of the building cost increases of recent years were unlikely to be reversed. ‘Developers will not commit to building a $600,000 home on a $400,000 section if market conditions dictate that they can only sell it for $800,000.’”
From Sky News. “Block after block, shell after shell of unfinished developments. This city is the worst affected place in a country with a major housing market plight. It has the potential to drag down the entire economy. On the city outskirts, the village of Da Wang Zhuang is a case study of sorts for just how cruel the Chinese housing boom can be. Not long ago it was almost entirely farmland and home to some 200 households.”
“But many people here did a deal with a developer – their land in exchange for new homes in the high rises that would stand where their farms had once been. They were told the building would take three years, but eight years later, with their old homes long gone, they are still waiting. There is a modest compound of temporary accommodation in the shadow of the unfinished blocks. Here the elderly and more vulnerable can live while they wait, but the younger and more able have to rent elsewhere. It’s in this compound we meet Wang Fang and her mother.”
“The space they have here is small – there is only space for the two grandparents and occasionally one of Wang Fang’s sons. It has mould growing all over the walls. It has rats, she says, and is significantly worse than what they gave up. To add to her difficulties, she also lost her job in the pandemic and was widowed three years ago. She is a single mother, struggling to find work, who now needs to care for both her children and her ailing parents.”
“‘We have no idea how many more years we have to wait,’ she says. ‘We just have to wait patiently. The developer does not have any money, the house cannot be built. Of course I’m anxious. If you rent a room you have to pay the rent, don’t you?’”
“Outside the village, there are remnants everywhere of people’s shattered lives. Construction on a major highway was started and it now literally stops midway through what was once the village. No one has cleared the vast amount of rubble around it. But cases like this are far from isolated in China. For years developers have over-leveraged themselves to satisfy a seemingly insatiable appetite for development. The industry had its worst year in recent memory, sales plunged and home prices fell for 16 months straight through to December.”