A report from NPR. “‘People are stuck,’ says Lawrence Yun, chief economist with the National Association of Realtors. Yun and others describe the market as frozen, one in which home sales activity has declined for 10 months straight, according to NAR. It’s the longest streak of declines since the group started tracking sales in the late 1990s. At an open house for a charming starter home in Hollywood one recent weekend, agent Elijah Shin didn’t see many people swing through like he did a year ago. ‘A year ago, this probably would’ve already sold,’ he says. ‘This home will sell, too. It’s just going to take a little bit longer.’ Or a lot longer. The cottage first went on the market back in August. Four months later, it’s still waiting for an offer.”
From Money. “Lawrence Yun, chief economist at NAR thinks the 30-year mortgage rate will end 2023 at around 5.5%. ‘I think the peak has already occurred and we are on a downward path,’ said Yun, during the Real Estate Forecast Summit.”
From Mansion Global. “If you’ve ever wished to live in a house where no one has cooked a meal or taken a bath before you, 2023 may be your year. Newly built homes grew to represent an increasing share of homes for sale in the U.S. this year up to a record high of 29% of single-family listings during the third quarter of the year, according to Redfin. ‘In the Raleigh [North Carolina] market, we have more newly built homes available now and 37% of new single-family homes have sold for less than the asking price in the past 90 days,’ said Deb Brown, a real estate agent with Century 21 Triangle Group in Raleigh. ‘But some of this may be due to the fact that it’s the end of the year and builders are trying to get inventory off their books.’”
“Whether you’re looking in a market with a large or limited supply of newly built homes, real estate agents say you can negotiate with the builder. ‘Be brave and ask for a price reduction—all they can do is say no,’ said Tracy Kasper, owner of Berkshire Hathaway HomeServices Silverhawk Realty in Boise. ‘But typically, it’s better to negotiate on financial incentives, upgrades or a landscape package.’”
From Marketplace. “We’re in a very different housing market, said Igor Popov, chief economist at the online rental marketplace Apartment List. ‘It’s like the housing market stepped out of a sauna in 2021 into a cold, air-conditioned room in 2022,’ he said. ‘It felt good at first, but now it’s really cold.’”
From Bankrate. “‘The housing recession is here,’ says Marty Green, principal at mortgage law firm Polunsky Beitel Green. ‘The big question now is how quickly it spreads to the rest of the economy.’ Adjustable rate mortgages are growing more tempting, but Greg McBride, CFA, Bankrate’s chief financial analyst says borrowers should steer clear. ‘Don’t fall into the trap of using an adjustable-rate mortgage as a crutch of affordability,’ says McBride. ‘There is little in the way of up-front savings, an average of just one-half percentage point for the first five years, but the risk of higher rates in future years looms large. New adjustable mortgage products are structured to change every six months rather than every 12 months, which had previously been the norm.’”
From Lew Sichelman. “Buyer’s remorse is likely to take on a more sinister turn in the coming months, as people who purchased their houses at the top of the market take out their frustrations on their real estate agents. Historical precedent suggests that as housing values stagnate and then fall, the ‘last batch’ of buyers often become resentful – so much so that they may lash out at their agents or other professionals involved in the process, according to Victor Insurance Managers. The firm, a major vendor of errors-and-omissions policies to agents and brokers, said that realty companies should expect to see a jump in the number of lawsuits filed against their agents in the coming months. When tempers rise, matters ordinarily considered minor inconveniences could become major issues to be litigated.”
“As the firm points out, agents who are sued in these market conditions face no greater liability of being found at fault than they would any other time. But that doesn’t lessen the ordeal of defending themselves in a court of law. Some builders are even offering cash bonuses or higher commissions to agents who bring buyers to their doors. Now, price cuts are imminent – or already taking place, said Ben Caballero of HomesUSA. The Dallas-based brokerage lists new homes for sale for more than 60 builders in the four major Texas markets. ‘Builders offer the incentives and bonuses before lowering prices,’ Caballero told me. ‘They are now lowering prices.’”
From Community Impact in Texas. “As the housing market in Round Rock, Pflugerville and Hutto continues to normalize, the area is seeing lower prices and higher inventory levels, according to the Austin Board of Realtors’ November market report. The report shows the median price of a home sold across all three cities in November was $431,000—the lowest median price so far in 2022. That price is down 5.87% from $457,876 the previous month and up just 0.81% from $427,550 in November 2021. Round Rock, Pflugerville and Hutto combined had 1,169 active home listings in November, up more than threefold over 372 listings last November.”
From Alabama.com. “‘The market here is not going to collapse,’ said Tim Knox of Revolved Realty. ‘That’s not what we have going here, Everybody’s in agreement. Next year is probably going to start off a little slow.’ ‘The market has been irrational,’ said Bennie Waller, William Cary Hulsey Faculty Fellow with the Department of Economics at the University of Alabama. ‘I just think we’re going to see a reversion to the middle.’”
“‘We’re seeing prices kind of come back down a little bit,’ Knox said. ‘Prices here really peaked in October. They were down a little bit toward the end of October. They actually had gone up just a little in Madison. Huntsville’s kind of flat. This isn’t the bottom falling out. It’s really prices settling back down to reasonable levels.’”
From The Real Deal in Illinois. “Chicago housing prices are getting hit harder than they have in a decade by rising interest rates. Data from Illinois Realtors found that the median price of a home sold in Chicago last month dropped more than 6 percent from the same time last year, Crain’s reported. The decline is the steepest tumble Chicago home prices have taken since November 2011, when the housing market was recovering from the Great Recession’s housing crash and foreclosure crisis.”
“Only 1,522 homes in the city of Chicago sold in November, which is the lowest number in more than a decade. Sales were down by more than 36 percent year-over-year in the city and 35 percent in the larger area. The steep drop aligns with the nationwide number of homes sold dropping by 35.4 percent last month.”
The New York Post. “A newly built Southampton home that’s on the market for $14.98 million is facing foreclosure after allegations that the owners defaulted on their mortgage and now owe $6.9 million. An anonymous Cayman Islands company, Blue Sky Ltd., is pursuing the foreclosure in federal court in addition to the UCC sale to assure that they get paid, according to the Real Deal. Court documents allege that Mark and Nicole Gallagher of Port Jefferson Station defaulted on their mortgage on Oct. 1, 2021, citing multiple judgments and tax liens.”
“The two purchased the land for $1.02 million in 2017. The home was completed by 2021. The home initially listed for sale in Feb. 2021 for $18 million. If successful, Blue Sky Ltd. will take possession of the six-bedroom, eight-bathroom estate, located at 145 Wickapogue Rd., which spans 10,000 square feet. While the loans remain in default, interest rates skyrocket to a whopping 24%. The loan was sold several times before landing in the hands of Blue Sky, TRD said. The Gallaghers are now in a race to sell the home before the UCC sale, which is expected to take place on Jan. 12. Potential buyers have until Jan. 10 to submit a bid.”
From Better Dwelling. “Canadian real estate is in the largest bubble the county has ever experienced. RBC warns that housing affordability has eroded right across the country in November. In a research note to investors, the bank explains it’s now even harder to buy a home than during the 1980s bubble. A correction is now required to stabilize the economy, and even then it won’t be quick.”
“Canadian households have never needed to spend a larger share of their income to own a home. November home buyers would need to spend 62.7% of their household income to service a mortgage. It’s 14.5 points higher than last year, an incredibly sharp increase, and that’s right across the country. The bank emphasized the country has never seen affordability erode to this level. Not in the 1990s bubble. Not even the 1980s bubble, when mortgage rates briefly rose above 14%. This is a challenge Canada has never seen before, and it’s no longer just a Toronto and Vancouver issue.”
“Every market in Canada is seeing homeownership spiral, but not like Ontario and BC. In Toronto a household needs to spend 85.2% of its income to service a mortgage. Nearly a third of that increase occurred over the past two years, as prices surged. RBC sees the market giving back some of those gains not so far into the future. Meanwhile in BC, its major real estate market is now one of the hardest markets to buy in the world. Vancouver buyers need to dedicate 95.8% of their income to service a mortgage. No other generation in Canada’s history has ever seen home prices outrun the incomes on such a scale. ‘It will likely take years to fully reverse the tremendous deterioration that took place since 2021,’ said Robert Hogue, RBC’s assistant chief economist.”
From Globes. “So far in 2022, there have been 224 homes bought for more than NIS 10 million, according to the Israel Tax Authority including eight deals worth more than NIS 30 million. But this is less than half the number of homes bought for more than NIS 10 million in 2021 and 2023 is likely to see even less deals. Past experience has shown that the high-end market jumps quickly, as we saw in 2020-2021, but also that fades quickly. The rapid contraction of 2022 is reminiscent of the real estate crisis that hit the country in the first decade of the 2000s. At that time, there was talk of a very large decrease in the number of deals, sometimes even accompanied by sharp price drops.”
The Herald Sun in Australia. “Sellers who strike it rich — especially in a short amount of time — are often celebrated in real estate. But there is, of course, a sadder side to the market. Victorian vendors who copped significant losses on the property market after buying homes in 2021 and then selling in 2022 have been revealed in new PropTrack data. Check out the residential biggest re-sale losses between 2021 purchases and 2022 sales below.”
“6 Montpellier Drive, Avondale Heights. BOUGHT FOR: 9/12/2021 $1.175. SOLD FOR: 25/10/2022, $915,000. 11 Viola Ave, Brooklyn. BOUGHT FOR: 1/7/2021 $905,000. SOLD FOR: 27/4/2022, $720,000. 20 Balonne Close, Taylors Lakes. BOUGHT FOR: 11/6/2021, $1.2m. SOLD FOR: 27/4/2022, $985,000. 17 Tamar St, Ringwood North. BOUGHT FOR: 4/12/2021, $1.07m. SOLD FOR: 5/10/2022, $900,000.”