A report from KIRO in Washington. “Inventory is up, prices are down but buyers are backing out of the Seattle housing market. The Emerald City just scored the top spot on Redfin’s list of fast-cooling real estate markets in the United States. Tacoma also made the list, ranked at number 10. Local realtor, Nelya Calev says the red-hot days of this past spring are long gone. ‘The homes don’t sell in the first 10 minutes and you’re not going to get 40 offers in the first 10 minutes,’ said Calev.”
The Denver Post. “The average price of a home in Colorado has declined by $5,665 or just shy of 1% to $580,275 between the end of June and the end of August, according to the study, which used home values from Zillow. That represented the third-largest dollar decline after California, down by $12,205, and Utah, down by $9,917. On a percentage basis, Colorado’s price decline ranks as the fifth largest after Utah, California, Arizona and Oregon.”
“‘Home prices in Colorado increased by 40% in less than two years, so I think what we are seeing now is a little bit of correction. Rising interest rates are tightening the market and I think we are switching from a seller’s market to a buyer’s one,’ Nick VinZant, a senior research analyst at the insurance research site. ‘Watching prices decline can be scary and frustrating for people who bought at the top of the market but remember, we aren’t making any more land, home prices will eventually go back up again and your home is a valuable asset,’ he said.”
12 News in Arizona. “The Phoenix housing market has changed rapidly from its peak in May. After several years of prices jumping more than 10% annually, prices are down. ‘It was wonderful, it was a great time to be alive,’ Steve Trang, a home flipper, said about the past years. 12News meet Trang at a home in West Central Phoenix. ‘When we closed on it in May, we were going to crush it,’ Trang said. ‘We were thinking (of selling it for) $325,000. A bidding war, maybe $325 or $340,000.’”
“The deal made sense in May. Prices back then were up more than 25% from the year before, and the market showed continued growth. Trang said he knows flippers that invested even more in the May housing market. ‘Hey, this party feels like it’s going to keep going, and there is no reason for it to stop,’ Trang said, ‘And then the music stopped.’”
“Trang doesn’t believe a repeat of 2007 is coming, but homes that had ready-made buyers days ago are now dropping in prices. That includes the Phoenix home Trang believed was a slam dunk just months ago. ‘We are going back on the market today,’ Trang said. ‘Right now we are going to list it for $305,000, and if we can get $300,000, we will be pretty happy.’”
The Herald Tribune. “A Florida State University economist said he believes the United States will enter a recession in the next nine months. ‘The probability of the U.S. going into a recession is 100%,’ Jerry Parrish said. ‘I do not see how we can manage a soft landing,’ he said, using the term for a Federal Reserve balancing act in raising interest rates to tame inflation without causing a recession. ‘We were too late raising interest rates,’ he continued.”
“‘If you’re thinking we’re going to have another housing crash like we did in ’08-’09 you can forget it,’ Parrish said, then listed a couple of reasons. ‘Are people going to lose their house? You bet,’ he added. ‘Are people going to lose their car – they paid premiums for over the last couple years? It’s already happening.’”
From Tech Crunch. “Digital mortgage lender Better.com continues to lay off staff, and seemingly in as callous a way as possible. ‘James’ started at Better.com in spring of 2021, thinking that he was ‘joining the darling of NYC tech.’ Having sat not far from Garg’s desk, James — like many — witnessed the CEO at ‘peak happiness and full charisma.’ When the executive wasn’t upbeat, he was ‘profusely sweating and screaming,’ James recalls. He ended up being among a group of employees who were recently laid off and who received just two weeks’ severance.”
“‘Better made terrible bets on the refi market, and it made up 90% of revenue,’ James said. ‘As soon as rates increased, everything dried up. The company was left purchasing mortgages, which is still a developing part of the business.’ The fact that people are still funding their home purchases with Better Mortgage, in James’ view, is ‘baffling.’ ‘If they’re starting the process now, it’s possible that in a couple of months’ time, the company can’t even fund the loan,’ he said.”
“‘Better had a burn rate that was well over $2 million a day, with around $500 million in cash as of August,’ James projects. ‘If the company doesn’t get new financing by the end of the year, the likelihood of it becoming insolvent, or selling itself off, is very high.’”
From Market Watch. “Billionaire investor Stanley Druckenmiller sees a ‘hard landing’ for the U.S. economy by the end of 2023 as the Federal Reserve’s aggressive monetary tightening will result in a recession. According to Druckenmiller, the Fed made mistakes on the risk-reward bet they made, and the repercussions of that are ‘going to be with us for a long, long time.’ ‘We come up with this ridiculous theory of ‘transitory’, so we have 5 trillion in fiscal stimulus, we have 5 trillion in QE,’ he said. ‘And if you remember, the monetary framework in the fall of 2020, they (Fed) were no longer going to forecast. They were going to be data-dependent and wait until they see the whites of inflation’s eyes. So guess what? They saw the whites of their eyes.’”
Bisnow on Texas. “Rents have begun to stabilize in Dallas-Fort Worth and in the state’s other metros after reaching historic highs in 2021.Owners, saddled with their own heightened expenses, began charging more per unit, causing rent growth to hit nearly 19% last year, far exceeding the long-term average of 6%, ApartmentData.com President Bruce McClenny said. ‘That’s three years of average rent growth pushed through in one ear,’ he said. ‘You just can’t expect that to continue — it’s going to settle back down.’”
“The hit to Class-B occupancy is creating a negative absorption phenomenon that feels antithetical to the unbridled success of DFW’s multifamily industry. So far this year, 11,600 units have been added to the DFW market, but only 7,600 have been absorbed. Last year, the market absorbed 44,700 units but added only 25,700 units. Job growth has slowed as recession-leery bosses pull back on hiring, and fewer people may be able to afford lofty rents. Widespread negative leverage has also been reported, which could get worse as the prospect of raising rents on cash-strapped tenants becomes less tenable.”
“‘We are on a collision course with poor economic times,’ McClenny said. ‘The Fed is just absolutely hellbent to drive us into that. It’s a shame — just how they messed up going up, they’re going to mess up coming down.’”
The Orange County Register. “‘Mailbag’ gives insight into the comments I get from my readers — good, bad or in-between — and my thoughts about their feedback. California housing is unaffordable. Yes? And inflation is bad. Yes? Just don’t suggest that home prices will deflate even though depreciation creates affordability. Still, I remain Pollyanna-ish about the problem-solving potential of spirited yet civil dialogue — even if a recent email started with ‘Dear moron’ …”
“A reader writes: ‘The doom-and-gloom seems to be a continuing pattern of negativity about the housing market. Are you trying to negatively influence the housing market?’ My response: Assuming that the folks who highlight real estate risks have only sinister motivations is sadly part of the swings in homebuying psychology. This reader continued: ‘Jordan Levine, the California Association of Realtors’ chief economist, says the “sky is not falling” and predicts a modest, single-digit drop in prices for 2023. So as a consumer reading one article of gloom-and-doom and the other of a negligible drop in prices, who is one to believe?’”
“My response: Anybody thinking about a big investment like a home should seek numerous opinions before buying. As for a ‘modest single-digit drop,’ we’ve already had that! The Realtors’ California median sales price for existing single-family homes shows that August’s $839,500 was down 6.7% from the all-time high of $900,000 in May. Only in 2008, in the heat of the last market crash, did we see a bigger May-to-August price drop in records dating to 1990.”
The Globe and Mail in Canada. “Real estate buyers are finding a few more listings to choose from after a slow start to the fall market in the Toronto area, but buyers are clashing over some properties and leaving others to languish. While the market appears balanced – with a fairly good equilibrium between supply and demand – buyers are fickle, says Patrick Rocca, broker with Bosley Real Estate Ltd., who sold one property with seven bids last week and saw another one sit without a single offer.”
“In Davisville, Mr. Rocca recently listed a three-bedroom semi-detached house at 292 Forman Ave., with an asking price of $1.099-million. After seven rivals vied for the house, the property sold for $1.245-million. The seller anticipated a higher sale price but was satisfied with the outcome in the end, he says, adding that the home needs an extensive renovation. Still, prices have softened in the area. ‘This house probably would have got $1.4-million in February.’”
“Mr. Rocca says two of the offers were strong, a handful were clustered in the middle, and the rest were lowballs. ‘The lowballs are the unrealistic people,’ he says, pointing out that a seller with seven buyers competing is not likely to sell at a discount. Another property priced around the $1-million mark has been sitting, he adds, despite its desirable location on a cul-de-sac. He warns sellers that setting an asking price below market value and holding back offers until a scheduled date does not guaranteed an eye-popping sale price. ‘You may get two offers and you still may get under asking,’ he says.”
“Manu Singh, real estate agent with Right at Home Realty Inc., often works with real estate investors; many of those clients are stuck in a holding pattern as they wait for more clarity about the direction of financial markets, he says. Meanwhile, the rental market is strong, so investors who at one time contemplated selling are finding tenants for now, he adds. ‘In the condo market, my investor clients that wanted to sell – to see if they could get a decent number – well they didn’t get that number, so they are renting instead.’”
From Reuters. “A surge in borrowing costs and a likely slowdown in economic growth threaten to trigger a selloff in Britain’s housing market with consequences for personal wealth and the broader economy that could resonate for decades. The tumultuous unveiling of the country’s new economic strategy has left lenders scrambling to keep up with wild swings in the sterling funding markets that determine what mortgage rates they offer to homeowners, whose sense of wealth is intimately tied to the value of their property.”
“‘The mortgage crisis is going to be bigger than energy now,’ said Richard Murphy, professor of accounting practice at Sheffield University, warning of a drop in house prices that could leave many with debt greater than the value of their home. ‘This will end in tears.’”