A report from Arlington Now in Virginia. “We’ve seen an upward tick in new listings by approximately 10 percent compared to last week. We’ve also tracked a nearly 400 percent increase in the number of Just Reduced properties week-over-week. In a nutshell, for those whose properties sat on the market through the holidays, they are now stepping up their game that much more. So, we’re experiencing a bit more aggression and flexibility on their part price-wise.”
From Boise Dev in Idaho. “The total number of homes for sale on the last day of December, according to IMLS, stood at 1,094 between the two counties. While that’s the third straight month where the inventory level has dropped, it follows a seasonal pattern — and is more than double the number of houses on the market one year ago. For a time in October and November, 12% of all listings had cut their price. The percentage of listings with price reductions quickly fell back to earth, with about 6.2% of listings having cut their price on the market in December — though that’s still higher than the same time frame in any of the previous four years.”
From Detroit Business. “According to the RE/MAX of Southeastern Michigan December 2021 Housing Report, the region’s housing market ended the year with a dip in month-over-month sales prices and sales both month-over-month and year-over-year. ‘The drop in home prices is welcome news for buyers and signals some of the normal seasonality we see in the market at this time of the year,’ says Jeanette Schneider, president of Troy’s RE/MAX of Southeastern Michigan.”
From Socket Site in California. “The net number of homes on the market in San Francisco (510) ticked up 9 percent over the past week. And while listed inventory levels are 35 percent lower than at the start of 2021, they’re 25 percent higher than they were prior to the pandemic and over twice as high as they were in January of 2015.”
From KOB 4. “‘We’re seeing people from the Midwest from the northeast, quite a few California buyers,’ said Damon Maddox with the New Mexico Realtors Association. ‘It’s because they’re coming from places where the housing is more expensive. You know, they’ve sold their home, say for California, and they’ve sold that property for you know, eight or $900,000. And they come into Mexico, they can buy the same size property for about three or $400,000,’ Maddox said.”
“So why not increase the supply to meet the demand? ‘The issue we have with building houses is the cost of building a house right now. So you know, there are a lot of builders out there that aren’t building because they can’t, you know, price that property well enough to make a profit,’ said Maddox.”
From Bloomberg. “Deals by investors — including a smaller portion of flippers — helped push up prices more than 20% on average, squeezing out normal buyers, according to an analysis by Mark Zandi, chief economist for Moody’s Analytics. Investors accounted for 26% of single-family purchases in the third quarter, up from 15% a year earlier, the study shows.”
“If investors lose interest, the housing market in areas where they were most active would be vulnerable to price declines, Zandi said. Already, mortgage rates are beginning to rise, making homes more unaffordable for typical buyers. ‘This is not a healthy market,’ he said. ‘It feels like it is getting very stretched. Investors will buy until it no longer pencils out. Then what happens with prices?’”
The Financial Post in Canada. “The federal government is planning to review the rules surrounding down payments on investment properties in a bid to curb speculation in red hot housing markets, with increases in the downpayment or restriction on the source of funds the most likely measures it might pursue, according to industry experts. John Pasalis, president of Toronto housing data firm Realosophy Realty Inc., agreed that increasing the minimum down payment requirement would be the simplest way to curb speculative demand, but warned that it wasn’t just pure speculators who buy investment properties.”
“‘The other segment of investors … is people who own properties and are upsizing, but keep their current home as an investment property,’ Pasalis said. ‘It makes it harder to hold on to two properties at once when you increase the amount of capital you need to finance that secondary property.’”
“‘Damage from a housing sell-off can drive the whole economy into recession if it’s severe enough, given the wealth and liquidity of millions of Canadians’ are tied to their home value,’ said mortgage expert Rob McLister.”
The Australian Financial Review. “After notching the fastest annual price growth in decades last year, Australia’s biggest housing markets now face the prospect of falling prices that could last for years, if past downturns are any indication. With many economists and property experts predicting housing prices to peak later this year, there are worries the downturn could be more severe and longer this time around.”
“‘Once a market peaks, the typical trend is that values will experience a period of decline. But it’s impossible to know the timing, duration or magnitude of the housing downturn as it depends on so many factors, especially at the moment with so much uncertainty,’ said Tim Lawless, CoreLogic research director. ‘It’s likely that interest rates will normalise over several years rather than a rapid return to average levels which should help to cushion the size of any housing downturn, but if credit policies become overly restrictive, it could amplify the downside.’”
From Bloomberg. “An ill-fated push into property lending has instead turned China Minsheng Banking Corp. into one of the biggest casualties of the real estate debt crisis that’s roiling Asia’s largest economy. People familiar with Minsheng’s operations say the bank, founded in 1996 as China’s first non-state controlled lender, is now in damage control mode. The bank will need years to work through its bad debt problem and a capital injection from a stronger rival can’t be ruled out, said Shen Meng, director at Chanson & Co., a Beijing-based boutique investment bank.”
“‘The pursuit of high growth and returns to its private shareholders pushed the bank to take on lots of high-risk investments,’ Shen said. ‘Chairman Gao Yingxin, who joined Minsheng from Bank of ChinaLtd. in 2020, pledged to address the lender’s challenges at a shareholders’ meeting in June. ‘Ten years ago we were the pearl on the crown, but now our gap with peers is widening,’ Gao said. ‘Corporate governance will switch from short-sightedness to long-termism.’”
“More pain is all but guaranteed. The bank is one of the biggest creditors to Evergrande, whose debt crisis has rattled global markets over the past year and sparked financial contagion across China’s property industry. Minsheng had about 29 billion yuan of exposure to Evergrandeas of June 2020, according to a letter seen by Bloomberg.”
From El Pais. “Housing will continue to get more expensive in 2022 in line with economic growth and inflation. Though the European Central Bank (ECB) has flagged up the sector’s ‘exuberance’ – a term used to substitute ‘bubble’ – it appears to be referring to the housing market in other countries rather than in Spain. But in a sector increasingly exposed to global investment trends, a degree of contamination cannot be ruled out.”
“The international outlook is bleak. As early as mid-2021, a Bloomberg analysis concluded that ‘real estate prices around the world are flashing the kind of bubble warnings that haven’t been seen since the run-up to the 2008 financial crisis.’ Later in the year, supervisory bodies such as the ECB and the Federal Reserve warned of ‘exuberance’ and ‘vulnerabilities’ in housing markets.”
“All the economic scenarios appear to lead to the ECB and the withdrawal of monetary stimulus. The balance, Gonzalo Bernardos, director of the Master’s degree in Real Estate Consultancy, Management and Development at Barcelona University warns, is not simple: ‘If we assume that we have learned the lessons of 2008, and it’s unclear that we have, bubbles are always burst by an excessively rapid rise in interest rates.’”