A report from the Wall Street Journal. “During the fourth quarter, Zillow lost an average of about $25,000 on every home it sold, before interest expense. On Feb. 10, Zillow Group said it lost $881 million on its algorithmic-driven home-flipping business last year. It was the first earnings report since the real estate company shut down that operation in the fall. The full company, which includes Zillow’s profitable home-listing and advertising business, posted a consolidated net loss of $528 million in 2021, mostly because of its home-flipping business, Zillow Offers.”
From Housing Wire. “How long can this last? Compass lost $494 million in 2021, a historically robust year for U.S. real estate, as the New York City brokerage continues to burn through money amid its rapid expansion. The net income loss is 83% greater than Compass’s $270 million loss in 2020, eight-year-old Compass’s final year as a private company.”
From Bloomberg. “First-time home buyers, already getting clobbered by bidding wars, now face a potential knockout punch: higher mortgage rates. The jump in borrowing costs is sapping their purchasing power, preventing them from bidding high enough to have a chance. ‘Housing affordability is set to get crushed,’ said Mark Zandi, chief economist for Moody’s Analytics.”
From Yahoo Money. “For many Americans, low inventory, high prices and — most recently — rising mortgage rates are putting a home purchase out of financial reach. For a time, buyers even found themselves able to afford more expensive homes while keeping their monthly payments manageable. That’s no longer the case. According to Black Knight, the monthly principal and interest payment needed to purchase an average-priced home is at an all-time high of $1,454 — up $350 per month year-over-year.”
The Orange County Register. “Southern California homebuying got off to a slow start in January with both prices and sales dipping. At current rates, a buyer with 20% down would have paid $2,379 monthly on January’s $687,000 median vs. a year earlier’s $1,938 house payment on the $595,000 median. That’s a 23% jump in the mid-range house’s theoretical loan payments.”
From Crosstown on California. “Another reason for the drop in foreclosures may be that as housing prices skyrocket, people refinance their property or take out a home equity loan. Loan amounts are based on the difference between a property’s market price and the mortgage due, which means homeowners may be able to borrow more. The lenders are paying attention. ‘It’s very uncommon for banks to foreclose on properties when the values of their properties are appreciating or going up,’ added Gary Painter, a professor at the USC Sol Price School of Public Policy.”
From Socket Site in California. “Having been expanded, renovated and converted, the now 3,172-square-foot St. Francis Wood house at 250 Santa Paula Avenue was foreclosed upon by Deutsche Bank last year. Listed as a bank-owned property for $4,197,600 this past September, the asking price for 250 Santa Paula Avenue was reduced to $3,987,800 in October, to $3,788,500 in November and then to $3,599,100 in December. And the sale of 250 Santa Paula Avenue has now closed escrow with a contract price of $3,239,200 or roughly $377,000 less than the $3,616,117 Deutche Bank had been owed at the time it foreclosed.”
The Orlando Business Journal in Florida. “The number of metro Orlando homes sold, as well as the median price, dropped from December to January, according to the Orlando Regional Realtor Association. It’s a rare dip for the region’s on-fire housing market, which real estate professionals attribute to a seasonal slowdown and house hunters pulling back from the market amid historic price run-ups and bidding wars.”
“While the busy housing market led to a big year for Winter Park-based Realtor Chirstine Elias, the skyrocketing prices are turning off some would-be buyers, Elias told OBJ. Many of those clients are out-of-state investors wanting a lower price point. Plus, local buyers looking to downsize or upsize also are backing off, said Elias. ‘I have half a dozen clients who got frustrated and pulled back.’”
From This Is Money. “More than £5billion has been wiped off the value of UK housebuilders since the start of the year. Blue-chip builders Taylor Wimpey, Persimmon, Barratt Developments and Berkeley have lost £4.1billion in total – the worst fall since the market crash of March 2020. Mid-cap firms Bellway, Crest Nicholson, Redrow and Vistry Group lost another £1.1billion.”
From Radio New Zealand. “The seemingly out of control housing market is being pegged back, with expectations of a greater fall in prices than previously thought. ASB senior economist Mike Jones said the wind was coming out of the housing market’s sails. ‘We’ve long been expecting a marked slowdown in house price inflation in this year, driven by the confluence of three major macro negatives – higher mortgage rates, tighter credit conditions and rising supply. These are now all in play.’”
From Dow Jones. “A local Chinese court has frozen 640.4 million yuan ($101.0 million) in assets belonging to a subsidiary of China Evergrande Group because of delays in payments for construction. The Guangzhou Intermediate People’s Court ordered the assets of Chengdu Xinyi Real Estate Development Co. to be frozen in a suit brought by a unit of Shanghai Construction Group Co. in December, the company said in a filing to the Shanghai bourse on Tuesday. The order followed Shanghai Construction Group’s statement last week that a Guangzhou court had frozen CNY361.5 million of assets of another Evergrande subsidiary due to overdue payments.”
From Reuters. “Shares of cash-strapped Chinese property developer Shimao Group eased on Thursday, after it sought to extend payments of a $947 million trust loan and reports said that a court had frozen sale of 178 apartments financed by the loan. Shimao proposed to creditors on Wednesday it would repay the onshore trust loan in states in the next three years, of which 1.3 billion yuan ($205.36 million) would become due on Thursday, sources told Reuters The trust loan was used to finance a large mixed-used development in Shenzhen. Financial news website Cailianshe reported 178 unsold apartments in the development have been frozen by judicial authorities.”
“Shimao’s plan to extend loan payments is yet to be approved by creditors, and some creditors said they were not happy with the proposal that did not offer any credit enhancement. The Shanghai-based developer, which defaulted on a trust loan last month, has been scrambling to extend debt with creditors and dispose of assets to raise funds.”