A report from the Fort Myers News Press in Florida. “In a nutshell: ‘The peak insanity is over,’ said Denny Grimes, president of his team at Keller Williams Realty. That’s bad news for sellers. ‘We are starting to see prices level,’ Grimes said. ‘We are starting to see inventory slightly grow. If sellers wanted to sell at the very peak, they missed it,’ he said ‘It’s going to correct and it’s already started.’”
“Signs of a correction appeared a few months ago, when buyers began to balk at the high prices driven up by a combination of strong demand and low inventory. ‘We just experienced a market in a million,’ he said. ‘That is over and now we are moving from insane, back to rational.’”
The Red Rock News in Arizona. “The new median priced home in Sedona is averaging $850,000, and million-dollar homes are in high demand. With the rising cost of homes, low inventory, more and more short-term rentals and limited rental housing available, will Sedona’s bubble burst? Will there be an adjustment in home sale prices? Are we going to experience another market crash similar to 2007-2008?”
“Many real estate agents interviewed said that at least half or more of the buyers are coming from California. ‘Locally title companies are telling us of a sharp decline in new escrows in Sedona and statewide for June and July,’ according to Roy Grimm, a broker with RE/MAX Sedona. ‘And, we are seeing more and more list prices decrease as sellers begin to back off some of the overweening valuations.’”
The Santa Monica Mirror in California. “Santa Monicans face the usual fears of crime, Covid-19 and its collapsing job and housing impact including the coming eviction avalanche. Unfortunately, interest groups in Sacramento keep trying to monetize these crises by forcing cities and counties to amp up construction using a janga pile of dangerous new zoning regulations that are unnecessary and beyond financial and ecological sustainability. These financial interests, including financiers, realtors and construction unions want to cash out before the whole enterprise, fueled by federal debt, screeches to a halt.”
“The Governor actually started the Big Lie when he ran 3 years ago on the bogus numbers that the State needed 3.5 million new housing units: the real number was about 23% of that, or 820,000 over the next 8 years. That would require 102,500 units per year. So far, in 2021, construction permits are averaging around a 123,000 annual rate, before any feeding frenzy legislation was passed.”
“During the last five years, the State, County, LA City, and SM City populations have all either essentially flatlined or declined; Santa Monica has lost roughly 400 residents in that period. Again housing quantity is not the problem. But, all this has not stopped the lie from metastasizing. The problem is not the supply of housing, it is the over supply of investment capital chasing high profit residential housing throughout the state, but especially along the coast.”
“Part of the Big Lie is that if we build more housing, outside capital will magically stop deciding to land on California’s monopoly board. By upzoning the entire City along S9 & SB10’s lines, all we are doing is providing more speculative opportunities. In Santa Monica, with all our construction and traffic gridlock over the last 10 years, our population rose slightly from 89,736 to 93,076, a gain of 3,340 or +3.7%. Our household count rose from 46,917 to 47,438, a gain of 521 or +1.1%.”
“During this same 10-year period, vacancies rose 956 units, from 3,995 to 4,951 (+23.9%). A city whose increase in vacant units is 6.5X the population growth does not have a housing quantity problem (which SB9 & SB10 try to maximize). It has an affordability problem: incomes have simply not kept up with housing prices.”
The Buffalo News in New York. “Fannie Mae has taken control of the Towne Gardens low-income housing complex east of downtown Buffalo, more than three years after the former owner defaulted on a mortgage. The government-sponsored entity completed a $16.4 million foreclosure of the 360-unit subsidized property at 161 Hickory St. and 407-409 William St., after placing the highest bid at a foreclosure auction. The foreclosure will not affect tenants.”
“The sprawling 22.61-acre complex – which also has a 440 Clinton St. address – had previously been owned by Moshe M. Florans of Brooklyn and his Towne Gardens LLC, which acquired it at a previous foreclosure auction in February 2007 for $4.8 million. Florans had borrowed $11.5 million from Arbor Commercial Funding in a 10-year mortgage in December 2007, with the remaining principal and interest due by Jan. 1, 2018. As of late 2017, he owed $9.8 million, plus interest, late fees and other unspecified sums, according to documents filed at the time in state Supreme Court in Erie County.”
From RBC Economics in Canada. “As the summer draws to a close, it’s becoming increasingly evident the fireworks have ended in housing markets across Canada. Signs of fatigue have emerged. Waning buyer fervour is producing a diminished pace of price increases. Some markets such as Ottawa, Montreal and Edmonton have even seen property values level off in recent months. We expect this trend to spread to other markets as affordability issues weigh more heavily on buyers.”
“August provided the strongest sign yet Montreal’s housing market is off the boil. Home resales fell 30% y/y. By our own calculation, this corresponded to a sizable 15% decline from July on a seasonally-adjusted basis. The slowdown in activity was widespread across the region and housing segments. Prices have levelled off since June though this mainly reflected the situation for single-family homes.”
The National Post in Canada. “The CityPlace developer Concord Adex made headlines when it unveiled SkyBridge, Canada’s highest and largest suspended suite, sitting 300 feet in the air at its Parade project, located at the foot of Front and Spadina. In its latest offering, Condord Adex is going big again, this time at the 52-storey Central, a condominium rising at the corner of Widmer and Adelaide, where every penthouse purchaser will receive a free, high-performance electric Porsche Taycan with their suite.”
“‘This is one of the first buildings we started branching out from CityPlace. That’s why we tacked a lot of goodies onto it,’ says Isaac Chan, senior vice-president of marketing for Concord Adex. He notes there were six two-level luxury suites on the 52nd storey up for grabs; two have sold, and with them went two Porches.”
The Local Denmark. “House prices in Denmark have soared upwards during the Covid-19 pandemic, but there are now signs of a slowdown. A recent slowdown in house prices, which have otherwise sharply increased over the last 18 months, could be enough to prevent government intervention to control the market, according to an expert. ‘This certainly relieves concerns that there could be a genuine housing bubble,’ Aarhus University economics professor Michael Svarer told news wire Ritzau.”
“‘There is concern that (house) prices are increasing at such a speed that people are buying for a speculative profit and thereby keeping prices artificially high,’ Svarer explained. ‘In light of that, the fall in prices reduces the need for regulation.’”
From In The Black. “The Australian property market has grown exponentially over the past few decades, defying the global financial crisis (GFC) and now a pandemic. What makes it so resilient, and should steps be taken to cool it down? For almost two decades, the unstoppable march of the residential market has been one of the dominant narratives of the Australian property sector. It is an enduring story of smashed sales records, desperate first home buyers and packed crowds at auctions, fearful of missing the boat.”
“Dr Cameron Murray, an independent economist says we need to cast our minds back to three years prior to the pandemic, when the Australian property market experienced a large price adjustment. ‘You don’t usually get crashes after three years of nothing. You get crashes after three years of unbelievable price growth,’ he notes.”
“Murray points out that, in the US state of Arizona, prices rose by 30 per cent over the course of this year, while Auckland has seen a more than 20 per cent rise in housing prices. There have been steady rises in Europe as well, particularly in Germany and Denmark. ‘It’s important to remember that it is very hard for [Australia] to just crash all on our own,’ Murray says.”
“Another contributing factor in Australia has been historically low interest rates, which makes money cheap to borrow. ‘I think we also forget that Australia had an outsized stimulus last year,” Murray says. ‘I calculated it was five times bigger than the post-GFC stimulus in terms of cash payments to households.’”
“Dr Andrea Sharam, senior lecturer with the School of Property, Construction and Project Management at RMIT University, highlights the inherent conflict in housing being both an essential need and a highly lucrative investment. ‘Australia does not have a coherent national housing policy, and this is unlike many countries that see it as a very important duty to house people,’ Sharam says. ‘In terms of policy, we have one foot on the accelerator and one on the brake.’”
“Far from making home ownership more accessible, these schemes ‘add fuel to the fire,’ says Sharam. Murray agrees and says these are the sorts of policies governments announce when they ‘don’t want to do anything serious about the housing market.’ However, Murray is not a fan of manipulating the asset price through tax settings, and sees this as a political ‘hot potato’ that no government would touch.”
“The housing market is already worth A$8 Trillion, he says. ‘If you try to intervene in that market to halve the cost of housing, there’s A$4 trillion disappeared off the balance sheets of the wealthiest 60 per cent of home owners, concentrated in the wealthiest 18 per cent who are landlords, and it’s a political impossibility. There’s never been a wealth redistribution in history that large without a war or a revolution.’”
“Instead, Murray floats the possibility of a ‘parallel system’ in which the property buying and investor classes are untouched, but the federal government opens ‘a secret door’ to the market at cost price. ‘For example, a national housing developer could build 50,000 dwellings a year [on the condition] that they can only sell to people who don’t already own housing, at construction cost price with a discount line,’ he says. ‘Then, you flood the market with supply.’”