A report from 12 News in Arizona. “‘The market started to cool and Zillow missed the off-ramp,’ said Mike DelPrete, a real estate analyst. iBuyers are responsible for around 10 percent of all listings in the Phoneix market. One of the biggest iBuyers, Zillow, is selling many of those homes for a loss. The median listing price of Zillow’s 250 homes is 6 percent below what they bought the properties for. ‘Zillow will end up losing millions of dollars. But this is a company that has already lost hundreds of millions doing iBuying,’ DelPrete said.”
From CNN Business. “Zillow is getting out of the iBuying business and will shut down its Zillow Offers division, resulting in a 25% reduction in its staff. In its quarterly earnings report on Tuesday, the company said it will see a total write-down of more than $540 million as a result of its exit from the business. The company said on Tuesday that the $304 million inventory write down it recorded in the third quarter from its Homes segment, which includes Zillow Offers, was because it bought homes during the last quarter for prices higher than it believes it can sell them.”
From Bloomberg. “Following the company’s decision to halt new purchases, it became clear that Zillow had misjudged the housing market, tweaking its algorithms to make more aggressive offers just as competitors Opendoor Technologies Inc. and Offerpad Solutions Inc. were growing more cautious. Zillow’s fire sale could continue: The company expects to buy roughly 9,000 homes in the fourth quarter and said it will take a writedown of as much as $265 million on home purchases that will close in the final three months of the year.”
From Market Watch. “‘Monthly home value growth has slowed from its record-breaking pace this summer, inventory is up for the fourth month in a row and more sellers are cutting their list price. This all points to less competition for home shoppers, but make no mistake, the housing market remains clearly tilted in favor of sellers,’ says Zillow senior economist Jeff Tucker. Indeed, the latest Zillow market report released in October notes a slight softening in for-sale markets, with monthly home value appreciation slowing for the first time since January. The Zillow report also reveals that inventory of for-sale listings rose for the fourth month in a row, along with more sale listings cutting prices.”
The Denver Post in Colorado. “Both home sales and active listings in metro Denver dropped in October, with the housing market running much cooler than this time last year, according to the Denver Metro Association of Realtors. Sales of single-family homes and condos fell 8.3% to 5,169 between September and October and they are down by a fifth from October 2020. ‘“Listings are still getting offers but far fewer than we saw this past summer,’ said Jenny Usaj, a member of the DMAR Market Trends Committee, which compiles the report. ‘A few of our recent listings received only two or three offers. As such, the cooler fall season makes it a great time to buy since and — from what we have seen — there appears to be less buyer competition.’”
The Real Deal on New York. “As Manhattan’s luxury market ploughs ahead, soaring discounts saw co-op sales tick up last week. Donna Olshan, the author of the report, said uptick in co-op sales was a function of deepening discounts. Last week’s 10 co-op contracts were last listed at 21 percent below their original asking prices, on average. ‘More things moved in the co-op sector because of the price,’ said Olshan.”
“Another notable co-op deal was for the penthouse at 1045 Fifth Avenue formerly owned by musician Paul McCartney. The Beatle and his wife bought the triplex unit for $15.5 million in 2015 and it went into contract last week asking $10.5 million.”
The San Diego Reader in California. “I spoke to Ash Yousif, a Southern California real estate investor, on November 1. ‘Even if the city and county say you’re able to evict them, or you’re able to get them out of the unit whether they’re paying rent or not paying rent, you need to speak with an attorney. The laws are continually changing. The moratorium was extended numerous times in the last 18 months; city and county moratoriums differ.’”
“Many people on the Nextdoor app asked, ‘Why don’t these people sell their properties?’ Yousif responded, ‘That’s another problem. If you have a tenant that’s not paying, and you want to sell the property, you’re going to have to sell it at a way discounted price or like a fire sale to get out of it. Because nobody wants to touch it. It’s like radioactive.’”
The Globe and Mail in Canada. “While a unit in a boutique building across from Berczy Park sold quickly, other desirable units sit for much longer. ‘We’ve become used to a very effortless, fast pace,’ says Christopher Bibby, broker with ReMax Hallmark Bibby Group Realty, but the market is less predictable now. Ms. Bibby says the condo market slowed markedly toward the end of the summer.”
“In the condo market, buyers have been willing to delay a purchase until they have more to choose from. ‘Buyers were waiting, saying, ‘Let’s see what’s coming,’ Mr. Bibby says. ‘There’s not this same sense of urgency or this need to buy now. It’s quite strange.’”
“Abhilasha Singh, an economist at Moody’s Analytics, says the Canadian housing market is showing signs of returning to earth, after low interest rates and fiscal support encouraged many people to upgrade their lodgings during the pandemic. Ms. Singh says the rapid elevation of prices has put the cost of a house out of reach for many potential buyers. With the Bank of Canada now tapering its asset purchases, interest rates are poised to rise, she says.”
From ABC News on Australia. “CoreLogic research director Tim Lawless says the slower growth is because of worsening housing affordability, rising supply levels, and less stimulus circling throughout the economy. ‘Housing prices continue to outpace wages by a ratio of about 12:1,’ Mr Lawless said. ‘This is one of the reasons why first home buyers are becoming a progressively smaller component of housing demand. New listings have surged by 47 per cent since the recent low in September and housing-focused stimulus such as HomeBuilder and stamp duty concessions have now expired.’”
Two from Bloomberg. “Property developers in China looking to raise badly needed cash by selling assets are finding it hard to strike deals as potential buyers in the sector hoard funds after home sales plunged and Beijing stepped up its borrowing crackdown. For years, developers ranging from Dalian Wanda Group Co. to Seazen Group Ltd. were able to overcome financing stress by selling off parcels of land, construction projects or other assets. Big property rivals, including Evergrande, Sunac China Holdings Ltd. and China Vanke Co., were often willing buyers.”
“That’s no longer the case, with Evergrande’s debt crisis engulfing the sector while Beijing’s crackdown puts a straitjacket on fresh borrowing. ‘As winter has come, everyone feels cold,’ Yu Liang, chairman of China Vanke, told state media Securities Times when asked about potential deals with Evergrande. ‘Before lending help to others, one should ensure its own safety.’”
“Contagion risks are rising in Asia’s offshore credit markets as a clampdown on Chinese property firms prompts rising default risks and threatens a broader economic slowdown. That comes just as mounting global inflation has punished fixed-income markets and caused bond yields to rise amid bets central banks will need to hike rates sooner rather than later. This confluence of factors dragged down dollar bond sales in China last month to $10.6 billion, the least this year.”
“The selloff in developers’ debt is also showing signs of spreading to investment-grade giants, which may further pressure demand for fresh sales in November. Yields on China’s junk-rated dollar debt, which is dominated by real estate firms, are at 21.3%, their highest in at least a decade, a Bloomberg index shows.”