A report from Deseret News on Idaho. “‘The sky is not falling,’ said TJ Pierce, a real estate agent in Boise. ‘Everybody knew it wasn’t going to last. It’s just a matter of how long.’ Hop over to a more rural county — like the much smaller Adams County, located three hours north of Boise — and you’ll see some of these markets, with much smaller inventories, posted year-over-year price declines. For example, Adams County’s median sales price of single-family homes fell -37.7% year-over-year in August to $357,500, down from $574,500 in August of 2021.”
From The Gazette. “The Colorado Springs-area housing market had another month of declining home sales and increased inventory — evidence of buyers’ reluctance to purchase homes. The median price of homes sold in September dipped slightly from last month to $460,000, making September the third straight month of falling prices. Despite elevated interest rates, Dean Weissman, a principal with The Platinum Group Realtors, said buyers have ample opportunity to find the right home as prices slip down.”
“‘We are seeing list prices overall kind of settle down just a tad,’ Weissman said. ‘So (with) the optimistic list prices that we were seeing — we’re actually seeing a lot more price reduction. What we seem to have lost is kind of the fluff money. … People are not willing to overpay but we’re still seeing good, clean, well-priced properties — we’re still seeing multiple offers in those situations,’ Weissman said.”
The Tampa Bay Times in Florida. “The last time a major hurricane made landfall on Tampa Bay was in 1921. Tampa historian Rodney Kite-Powell said Tampa’s business leaders were quick to say the storm was just a speed bump. It wasn’t until a hurricane slammed into Miami in 1926 that people started to realize the prohibitively high cost of investing in Florida. At the time, residents were already experiencing supply chain issues from a ship crash in the Biscayne Bay. The storm sped up the bust already underway, Kite-Powell said.”
“‘There were those who were already kind of concerned about the unsustainability of the land boom,’ Kite-Powell said. ‘Just like we’re seeing now with booms and busts. And so those naysayers that already existed were beginning to be proven right a little bit.’”
From Mansion Global on New York. “Like many other U.S. real estate markets, 2022 has been a year of normalization for the Manhattan real estate market. ‘There were only 2,598 listings that reduced prices in the third quarter, down from 4,312 in the second quarter but up from the 2,340 in the first quarter,’ Garrett Derderian, director of market intelligence at SERHANT, said in the report. ‘Fewer reductions signal sellers are capitulating to current conditions and are pricing appropriately.’”
“‘This quarter marked a return to pre-Covid norms rather than the record-highs of 2021 and early 2022 before interest rates rose,’ Stephen Kliegerman, president of Brown Harris Stevens Development Marketing, said in the report. ‘In Manhattan in particular, one of the unique market challenges is that there is a broad disconnect between the average price for actively marketed units in the borough and the average contract signed price.’”
The Houston Chronicle in Texas. “When Nathan and Hailey Wright wanted to sell their house and move to a larger one, they knew they had to act fast. It was May and the housing market appeared at its peak as mortgage rates rose. They put their 2,000-square foot townhome in East Downtown on the market and within a few days had it under contract for 10 percent above asking price. But then the buyer backed out. By the time they put the house back on the market in June, mortgage rates had jumped by about half a percentage point and home prices were reaching record-highs. Suddenly, offers dried up.”
“‘We saw firsthand the market just flipped upside down in a matter of weeks,’ recalled Nathan Wright, a construction management professional in his early 30s. ‘We went from having six offers within a few days to having just two showings a week for several weeks in a row.’ They ended up selling the house in early August for about 5 percent under asking price, he said.”
“The Wrights plan to pick up their home search again next year, when their lease expires. ‘Looking at homes in the Pearland area, you can see the houses not only are sitting on the market longer, they’re getting price reduction,’ Wright said.”
From 30 Action News. “QuoteWizard Senior Analyst Nick VinZant says California has been the hardest hit state. Between June and August, the average price of a house in the Golden State dropped by $12,205. ‘That is a significant change considering that it was just going up and up and up and up,’ he said. ‘Some places, 30-50% in two years.’ Those types of increases were seen here in the Central Valley and at this point, housing prices haven’t seen any significant drops.”
“Now, sellers are having to drop prices in a soft market. ‘If there’s a home on the market for 30-40 days and it has not sold, the market is telling you that that’s not the price anymore,’ says Prosperity Home Loans Mortgage Consultant Scott Reba. ‘It might have been a year ago but today, the market is correcting you.’ The markets where housing prices fell the most between June and August were San Jose, where homes dropped by $93,000 and San Francisco, which saw a $42,000 price decrease.”
The Bakersfield Californian. “Appraiser Gary Crabtree said he’s less optimistic for September’s still unfinished tally, considering how rising interest rates are limiting households’ purchasing power. ‘I expect September’s report will begin to show the data to support that we are entering a protracted real estate recession,’ he wrote. ‘Lenders have stopped lending or increased their rates to prohibitive levels.’”
From Realtor.com. “The U.S. Federal Reserve has completely upended the housing market, taking it from turbocharged to rapid deceleration. Home prices in many markets have even begun falling from their peaks. Now, the question is how far they will drop—and what fissures will be opening elsewhere in the economy to propel these changes. ‘The Fed is determined to cool inflation, and they’re willing to throw housing under the bus to do so,’ says Devyn Bachman, senior vice president of research at John Burns Real Estate Consulting. ‘When you raise [mortgage] rates to the point they’re at today, it breaks the back of housing.’”
“‘There’s going to be a coast-to-coast downturn in the housing market. It’s going to be brutal,’ says Mark Zandi, chief economist at Moody’s Analytics. ‘No part of the market is immune.’”
The Globe and Mail in Canada. “The real estate market in Toronto and surrounding areas is heading into October in a state of calm, but buyers and sellers appear to have some angst about the weeks to come. Ira Jelinek, real estate agent with Harvey Kalles Real Estate Ltd., is seeing an increasing number of ‘opportunistic’ buyers emerge after prices fell from their February peak. Mr. Jelinek describes the opportunistic buyers as those who are firm with their offer but less aggressive than the extreme low ballers.”
“On a property with an asking price of $1.5-million, for example, an opportunistic buyer might offer $1.275-million. When Mr. Jelinek says he’ll take the offer to the seller, the buyer emphasizes that he or she is not willing to negotiate and that the offer is firm. Listing agents often snub an unacceptable offer with a dismissive, ‘I don’t think this property is for them.’”
“When the time comes to set an asking price, Mr. Jelinek shows sellers recent sale prices for comparable properties, he says. In a declining market, they should not expect to exceed those recent benchmarks. Unrealistic sellers, however, face the risk of the property becoming stale if they go through a series of reductions, he points out. ‘It can sometimes lead to death by 1,000 slashes. It’s not fun to go down that path,’ Mr. Jelinek says. In an unforgiving market, by the time the sellers realize they’re not getting the $1.5-million they were aiming for, they may find the $1.3-million they could have received has slipped to $1.2-million, he points out.”
“Tanya Rocca, agent with Royal LePage Burloak Real Estate Services, says an increase in inventory is giving buyers more selection in the Burlington, Ont., area, but many are still hesitant. Ms. Rocca says many potential sellers have a negative mindset when they hear that prices have dropped between 25 and 30 per cent over the past six months. But the market had an unsustainable run-up with a gain of about 60 per cent in some areas over the past couple of years. Many sellers are accepting that giving up some of the gain isn’t so bad given the longer-term appreciation, she says. ‘They’re calling because they want to talk. They want to understand what’s going on,’ she says.”
Maple Ridge News in Canada. “Sales and prices continue to drop in the real estate market in Maple Ridge-Pitt Meadows, which is part of a much wider trend. Houses in Maple Ridge are down 17 per cent to $1.23 million, and in Pitt Meadows they are down 19 per cent to $1.24 million. Townhouses are also down to $751,000 in Maple Ridge, a drop of 17 per cent, while Pitt Meadows’ townhomes are at $819,000 for a drop of 11 per cent. Apartments have fared better, down six per cent in Maple Ridge to $536,000, and down 6.6 per cent to $604,000 in Pitt Meadows.”
From Home Front in the UK. “Can someone please come and collect Liz Truss and Kwasi Kwarteng from aisle five? There’s a terrible spillage: they’ve knocked over the economy and it’s a total mess. The housing market looks like it might need mopping up soon, too. A few weeks ago, I spoke with Neal Hudson for this newsletter, and he said, ‘this is getting scary.’ Yesterday we spoke on the phone, and he said: ‘I had absolutely no sense that this was going to be as scary as it is now.’”
“‘It might not be quite as bad as some of the financial metrics are suggesting today,’ he added. ‘But even so this is going to have a lasting impact on the economy and the housing market. If interest rates go much, much higher then that drastically increases the risk of a house price crash. We’re talking in terms of tens of per cents rather than single digit falls.’”
“‘If mortgage rates, let alone the Bank of England base rate, go to 6 per cent, then that would be incredibly difficult for the housing market,’ Hudson added. The key pinch point is this: 6 per cent mortgage rates may not sound as high as the 16 per cent plus highs of the 1980s but house prices have hit historic highs since the pandemic which means that people borrow more now. ‘Although we’ve got more people on fixed-rate mortgages, there are an awful lot of people who need to refix in coming months and years so, if interest rates do stay this high, it’s going to have a pretty drastic impact on the housing market and also on the economy,’ Hudson concluded.”
From Bloomberg. “New Zealand house prices suffered one of their biggest quarterly drops on record in the three months through September, and the worst may not be over. That’s according to CoreLogic New Zealand, which said the 4.1% quarterly decline is second only to a 4.4% drop in the wake of the global financial crisis 14 years ago. Prices fell for a sixth consecutive month.”
Western Australia Today. “More than half of properties in the City of Perth are selling at a loss, making the area the least profitable in the country, new figures reveal. As the nation’s real estate market moves into the early stages of a downswing, WA councils with a high proportion of apartments recorded the biggest losses for properties sold in the June quarter, according to CoreLogic’s Pain and Gain Report. More than 55 per cent of properties sold in the City of Perth were sold at a loss, with sellers losing on average $66,250 after holding on to the dwelling for 10.3 years. In Subiaco, 28.7 per cent of properties were sold at a loss of around $45,000.”
“Strategic Property Group managing director Trent Fleskens said many who bought during the mining boom would be selling at a loss if they put their property on the market today. ‘Not every investment decision is going to be a good decision,’ he said. ‘It’s more than likely that the people who are choosing to sell at a loss are people who are selling apartments, offloading them because they see them as an inferior investment product going forward. They’re either selling them because they have something better to invest in, or they’re just worn out and tired of having made a loss, they’ve gotten close enough with the value that it’s acceptable for them to cash out and cut their losses.’”