A weekend topic starting with the Staunton News Leader in Virginia. ” According to the Greater Augusta Association of Realtors, there are 370 listings currently active. Previously, it was a challenge to sell over $350,000, but looking at the current market showed a seller’s market with some prices reaching up to $800,000. August showed it transitioning from a seller’s market to a buyer’s market with prices starting at $600,000. Average sales prices have been influx since January. The average sales price dropped 5.8% in January, but jumped back up 19.9% in March. April it was down 7.1% and June it went up 15% only to drop 10.6% in July. August increased 5.4%.”
“It appears that if a property is properly priced, then the number of showings and multiple offers are occurring, which drive the prices up above the listing price,’ Rick Kane, broker for Westhills Realtors said in his report. A potential problem with that is, a home needs to be appraised for the sales price or above. ‘In a rising market, the issue becomes lack of comparable sales in order to justify the higher offers,’ Kane said. ‘It can create issues where a buyer is willing to pay. more, but the lender will not lend them the money due to a lower appraisal.’”
The South Florida Sun Sentinel. “Some home sellers are getting greedy in the scorching housing market, and it’s backfiring on them. Many are setting their prices too high, trying to squeeze out every dollar from buyers who are willing to pay well over the asking price, often with cash. A growing percentage of sellers quickly learn that they’ll have to get real. ‘Many of the price cuts are a result of sellers getting overconfident in this market and asking for too much,’ said Eli Beracha, professor of real estate at Florida International University.”
“But widespread price cuts also can be bad for the overall market, as they cause buyers to be wary of trying to buy and they might back away, said Whitney J Dutton, real estate adviser with the Dutton Group in Fort Lauderdale. ‘When you make price reductions to get them back to the property, they wonder what’s wrong with it. Why doesn’t anyone else want it?’ he said.”
“Real estate agents call the high prices a ‘make-me-move’ price. Sellers want to see how much money they can make rather than moving out of pure necessity, Dutton said. Almost 25% of sellers put their homes on the market just to see how much profit they can make, according to realtor.com. Almost 30% said they were going to ask for more than their home was worth.”
From News 10 on New York. “The real estate market has been hot since the pandemic began—low inventory and high prices. However, some new trends could mean the market is cooling off. Beth Kayser said she plans to put her house on Hunter Hill Road in Ballston Lake up for sale in just a few days. The average home price was $395,000 in August 2020 compared to $204,000 last August. Meaning, the median sale price went up 29.9 percent.”
“‘It’s been a lot of work to make sure it’s in pristine condition and ready for sale. I want to get the best price for my house,’ Kayser said. ‘I’m very nervous about what will happen. What will happen with the market; It’s unsure.’”
Two reports from Market Watch. “Are companies like Zillow and Redfin manipulating home prices by purchasing properties across the country? That’s what one real-estate agent claims. Nevada real-estate agent Sean Gotcher criticizes the ‘iBuying’ business model, in which companies buy and sell homes for a profit. Gotcher argues that the company will buy 30 homes at one price, and then purchase a 31st home at a higher price. ‘What that just did is create a new comp,’ Gotcher says, referring to comparable prices on nearby properties, which appraisers user to determine the value of a home for sale. He then says the company can turn around and sell the other homes at that new, higher price.”
“If you could rig the residential housing market that easily, the Realtors would have done it long ago,’ said Gilles Duranton, a real-estate professor at the University of Pennsylvania’s Wharton School. ‘Doing this would be short-sighted. If house prices keep rising like crazy, they will eventually crash.’”
“The Federal Reserve warned on Wednesday that it’s close to being ready to taper the bond-buying program that’s been in place throughout the COVID-19 pandemic to boost the nation’s economy. In a speech following the central bank’s meeting, Fed Chairman Jerome Powell indicated that the bank could ‘easily move’ to scale back those purchases when it meets again in November. Additionally, the Fed signaled that an interest-rate hike could come sooner than expected in 2022.”
“‘The era of sub 3% mortgage rates may be behind us already by the end of this year,’ said George Ratiu, manager of economic research at Realtor.com.”
From News.com.au in Australia. “Prices are higher than they were before anyone knew what Covid-19 was and have grown at the fastest annual pace since 1989. ‘In dollar terms, the annual increase in national dwelling values equates to approximately $103,400, or $1990 per week,’ CoreLogic research director Tim Lawless said.”
“Apart from those trying to get on the property ladder and struggling, most other players in the market would be celebrating the historic upward movement of the market … right? This week, an unlikely voice joined the growing chorus of concern over the continuing boom, which has continued during lockdowns in the two biggest markets of Sydney and Melbourne. Commonwealth Bank chief executive Matt Comyn said he’s growing ‘increasingly concerned’ by the rapid growth of prices in virtually every city, as well as across major regional areas.”
“Despite being the nation’s largest bank and biggest lender of loans for home purchases, meaning it’s raking in the cash, Mr Comyn told a parliamentary hearing the bank wanted to see steps taken to ‘take some of the heat out of the housing market.’”
“Another bombshell dropped by Mr Comyn on Thursday was that his bank had lifted its serviceability floor in its own attempt to cool the market. That means, the rate at which a bank tests a person’s ability to continue repaying their mortgage if interest rates rise has been brought up for Commonwealth Bank customers. Currently, the official interest rate in Australia is at an all-time low of 0.10 per cent, making the cost of borrowing money extremely cheap.”
The Sydney Morning Herald. “Australian regulators have been urged to cool the booming housing market, with the International Monetary Fund warning a property price correction would pose a significant risk to the nation’s economic stability. Tightening restrictions on lending is among major recommendations from the IMF to take the heat out of the property sector along with ramping up home building and reforming generous housing-related tax benefits.”
“‘Whenever you see such a fast rise in house prices, it will be tempting for some to get ahead of themselves into the housing market in ways that they shouldn’t have done,’ IMF Australia mission chief Harald Finger said.”
The Herald Times. “The median sales price of single-family homes in Monroe County was $265,000 in July, up 15.3% from a year earlier, according to the Indiana Association of Realtors. Data from the Federal Reserve Bank in St. Louis show housing prices in Bloomington rose about 10% annually between 2014 and 2017, but have jumped about 18% per year since then. That’s about three times the rate of annual home price inflation the community saw in the 20-year-period before the Great Recession.”
From Reuters. “Sales of new U.S. single-family homes increased for a second straight month in August, but demand for housing has probably peaked after a COVID-19 pandemic-fueled buying frenzy. The report from the Commerce Department on Friday also showed the supply of new homes on the market last month was the largest in nearly 13 years, with prices unchanged on a monthly basis. It followed on the heels of news on Wednesday that sales of previously owned homes fell in August.”
“‘These data suggest that the surge in new home sales during the pandemic has ebbed and inventories of unsold homes have risen to a more normal level in relation to sales,’ said Conrad DeQuadros, senior economic advisor at Brean Capital in New York. ‘This report and the existing home sales data for August suggest that a considerable portion of the flow adjustment of sales to higher demand may have taken place.’”