A weekend topic starting with Twin Falls KMVT in Idaho. “Desirae Williams owns Revista Realty. She is discussing a big new change in how realtors help people buy or sell a home after the National Association of Realtors settled a federal class action lawsuit. Sellers no longer must pay for both agents, meaning buyers may have to pay for their realtor’s services. ‘We have been talking with some lenders, and basically it sounds like they’ll be able to wrap that into the buyer’s loan so that they can still pay for our services without having to come up with the cash out of pocket,’ Williams said. ‘So that’s kind of great.’”
From Lew Sichelman. “Attention, buyers: How are you going to pay your share of the sales commission on the house you want to buy? There’s a lot more to the financing equation than just money. For one very important thing, the two quasi-government secondary market outfits that keep the mortgage money flowing by purchasing loans from primary lenders and rolling them into securities for sale to investors worldwide have yet to say whether they would buy loans that include commissions.”
“If Fannie Mae and Freddie Mac decide against making an exception for commission amounts, more than half of all mortgages including the charge would be ineligible for purchase. And since most lenders follow Fannie and Freddie’s guidelines, a lot more loans than that will fall by the wayside. Then there’s the question of your loan-to-value ratio. If the loan amount includes the commission, your LTV will be higher, which could kick you into another mortgage program with a higher interest rate and would require an even larger down payment. You might even be required to pay a higher mortgage insurance premium.”
The Tampa Bay Times in Florida. “It was the serenity of The Enclave at Twin Rivers that pushed Kelly Phillips to buy the house in Manatee County last year. But soon after Phillips moved in, residents discovered the builder had sold around 100 houses in the neighborhood to Invitation Homes — an investment company with thousands of rental properties across the state. The corporation gained a controlling share of the 126-home community. When it came time to vote for the three-person board for the homeowners association, Invitation installed two employees on the board. Both live in Texas. Homeowners feel like their slice of paradise was sold from under them, Phillips said.”
“The same corporations have sprawled around fast-growing metro areas like Jacksonville and Orlando. Most of those homes were eventually sold to individuals and families. But the nation’s largest rental companies were also frequent buyers — sometimes scooping up dozens of homes at once, bought directly from the builders. The Times found hundreds of Polk County homes purchased by investment firms, from construction companies, since 2019. Though bylaws allow for investor purchases and rentals, Phillips said residents were surprised the community would become primarily renters. Lennar did not respond to requests for comment before publication. ‘We feel taken advantage of,’ Phillips said. Some have explored selling. With a corporation in control, it doesn’t feel like residents have a say anymore. ‘People are upset,’ said Phillips. ‘They feel like there’s just nothing anyone can do.’”
From Bisnow. “South Florida’s thousands of aging condos are at a crossroads. For unit owners it’s a crisis that will likely force hundreds of people out of their homes. For developers, it’s an opportunity to snap up some of the region’s most desirable development sites to build new luxury towers. This month Florida Senate President Kathleen Passidomo sent a letter to her colleagues rejecting a request to convene a special session to amend the law. In the six-page letter, Passidomo said she was ‘increasingly concerned by what I see as a growing narrative, ripe with misconceptions and inaccuracies’ regarding the post-Surfside law. ‘The problem is, as with all lifestyles, condominium living comes at a price,’ she wrote, adding later that ‘too many of our condo buildings are in need of critical life and safety upgrades’ because condo associations opted to waive fees for decades.”
“The gap between where condo owners value their units and what developers are willing to pay to knock their building down remains wide, often because a broker has promised the seller an unachievable price point before bringing their property to market. ‘They’re trying to not only save themselves but hit the jackpot,’ said Edgardo Defortuna, CEO of the prolific South Florida real estate firm Fortune International Group . ‘Sometimes that doesn’t work.’”
“Some owners know they’re facing a steep repair bill that will not add much value to their property, but they’re still holding out for a better offer. Peter Zalewski, the founder of Condo Vultures cautioned that those bigger payouts are unlikely to materialize. ‘Developers will offer a lowball price versus what a seller thinks their gorgeous dream home is worth, but they’re simply bleeding out the illness,’ Zalewski said. ‘Developers will sit back until the seller feels very lucky to unload at a price they never would have accepted before.’”
From StrongTowns.org. “The U.S. is in a massive housing bubble. Prices are artificially high due primarily to the downstream effects of financialization. Localized supply and demand dynamics — which today are also downstream of financialization — are a mess. Decades of housing subsidies, down payment assistance, artificially low interest rates, money printing and endless bank support have turned the American home into a financial product first and a place of shelter second. I wrote earlier in this piece that, in a market dominated by fraud, bad actors crowd out those foolish enough to follow the rules. The only reason these concerns are starting to be raised now is because, as they say in the business, the music is slowing and people are starting to look for chairs.”
“Those of you looking to Wall Street and Washington to help you finance a revolution in housing construction seem likely to be disappointed yet again. As I wrote earlier this year, Fannie Mae — and all the other purveyors of centralized capital — are not interested in pursuing strategies that make housing broadly affordable. In fact, they will oppose any policy that actually makes prices go down.”
NBC Bay Area. “The many Bay Area homeowners who say an ADU builder scammed them out of tens of thousands of dollars each are now learning the hard way that a state safety net will basically be useless to them. At issue is the contractor’s bond. The state requires all contractors to have a bond to pay back customers if a contractor fails. But, it turns out California’s bond offers far less protection than you might expect. All around the Bay Area, homeowners tell us they hired Anchored Tiny Homes to build a backyard accessory dwelling unit, or ADU. Many families prepaid for some or all of the work. But now, these families have unfinished projects.”
“‘I feel scammed,’ said San Leandro homeowner Katie Lucas, while standing in her shell of an ADU. ‘They got me,’ said Rohnert Park ADU buyer Steve Sonza. The people who’ve contacted NBC Bay Area Responds say they’re out more than $1.2 million, collectively. Others, in a Facebook group, say they’ve lost at least another $4 million. It doesn’t matter whether you’re a solo builder doing one small project at a time or you’re Anchored Tiny Homes, reportedly building hundreds of ADUs, the state of California only requires $25,000. One size fits all. Customers said if their claim is approved, the insurance company will divide that $25,000.”
“‘It’s split up against the 400 — or however many — people have applied for that bond,’ Sonza said. ‘So, it’s not per person. It’s split.’ If the $25,000 is divided equally by 400, that works out to a mere $62.50 payout per customer. ‘That’s insane,’ Sonza said. ‘Why are we allowing that? [The bond] should be much higher. If we’re dealing with hundreds of thousands of dollars, $25,000 is not going to cover it.’”
The Globe and Mail in Canada. “The Toronto real estate market has been a quagmire in recent months as sellers hold out for high prices while buyers keep their decisions on hold. Agents are expecting another jump in listings after Labour Day, but whether buyers will feel reinvigorated is the bigger question. Dino Capocci, real estate agent with Royal LePage Real Estate Services said the sporadic sales this summer have made setting an asking price extremely challenging. The risk if it’s too high is that the house sits and buyers begin thinking there must be a reason why others have passed it by. In Deer Park, Mr. Capocci has decided to bring a house to market at the end of August in order to get out ahead of the stream of listings he expects after Labour Day. ‘Why compete with five or six neighbours?’ is the advice he gave the homeowners.”
“Meanwhile, many homeowners who purchased when interest rates were ultralow are facing mortgage renewals in the coming year or two. Some may have to sell if they see a big jump in their payments. ‘We might see a flood of listings,’ said Mr. Capocci.”
From News.com.au. “Experts have revealed some worrying signs that Australia’s property boom might end. Home values across regional Australia have plummeted 1.3 per cent over three months to July, down from a recent high of 2.2 per cent in April, property researcher CoreLogic found. Lower level of demand from buyers due to fewer people moving to live out in the country compared to during the Covid-19 lockdown has allowed the number of unsold homes to accumulate. Some property owners are also under pressure from higher mortgage repayments and would take advantage of longer-term rises in value and sell to clear their debts, CoreLogic economist Kaytlin Ezzy explained, adding to the amount of homes for sale. This has meant that most regional areas across New South Wales and Victoria have an above-average amount of homes for sale now, compared to during Covid.”
“Values in Coffs Harbour fell most, down 3.8 per cent in three months, while elsewhere in NSW, Orange (-3.1 per cent) and Wagga Wagga (-2.6 per cent) also eased. The second-largest fall was in Ballarat, down 3.4 per cent in three months, and other Victorian towns to drop included Wangaratta (-2.7 per cent), Colac (-2.4 per cent) and Castlemaine (-2.2 per cent). A build-up of listings have contributed to plummeting value, Ezzy explained. Sales in Ballarat are also about 5 per cent below average, but listing volumes are almost double what they were usual for this time of year. ‘Those buyers don’t have to negotiate as much, they have more choice, more options and that’s taking steam out of the market,’ she explained.”