A report from Yahoo Money. “About 270,000 homebuyers who bought during the red-hot housing market this year already owe more than their house is worth, a new analysis found. Among the 450,000 underwater borrowers in the third quarter, nearly 60% had mortgages originated in the first nine months of 2022, Black Knight found. Borrowers with purchase loans backed by the Federal Housing Administration (FHA) or Veterans Affairs (VA) were most likely to have slipped underwater, the report found. These are more popular among first-time and lower-income buyers.”
“Early-payment defaults (EDP) — loans delinquent within six months of origination — were also rising across product types in recent months with the largest increases among FHA borrowers over the past year. As of October, EDP rates for FHA loans were 150% above 2013-2018 levels, and 25% above their early 2000 averages, the report found. ‘Such loans [FHA] rely on rising home values and principal pay-downs over time to gradually improve their equity position,’ said Ben Graboske, president of Black Knight data and analytics.”
From Realtor.com. “To close sales, more sellers are dropping asking prices than at any point in the past few years. In some parts of the country, as many as half of the homes on the market have had their price cut. It turns out, sellers are slashing prices largely in the areas that had been hottest for the past two years. So dramatic was the fall in values and demand that entire neighborhoods in the suburbs on the edge of the Phoenix metro area were filled with brand-new homes that remained empty after buyer demand evaporated.”
“‘We’ve never experienced anything like we did in 2020 and 2021,’ says Andrea Crouch, the Phoenix Realtors® board president. ‘It is a correction that needed to happen. As soon as interest rates increased in April, our price reductions started going through the roof.’ Again, Nevada is at the top of the list of where the housing market has turned. For shoppers looking in the Silver State, it’s not hard to find homes with reduced price tags. These new three-bedroom townhomes in Sparks, east of Reno, for example, are marked down $44,000, or about 12.5% from their initial listing six months ago.”
“After the run-up in values, prices are down around 12% in a place like Ogden, the Utah city with the highest portion of homes marked down, at 42%. The metro, about 30 minutes north of Salt Lake City, saw prices rise by 75% between late 2019 and mid-2022. So even with the price reductions, homes are still well above their pre-pandemic price. And it doesn’t take much searching to find the big discounts. This new, large four-bedroom home in Saratoga Springs, about 45 minutes south of Salt Lake City, is now listed for $654,000, after being listed for $730,000 in June.”
“Almost 30% of all homes for sale right now in Colorado have had their price chopped. In Colorado Springs, where the figure is even higher, at 39% of listings with a price reduction, this medium-sized, three-bedroom home is now listed with a 7% price reduction, which is just a little below the metro’s 9% decline in median listing price since June. South Carolina is another of the Southern states that saw pandemic buyers flocking there. But in some of the Palmetto State’s bigger cities, prices are down close to 10% since the peak earlier this year.”
The Review Journal. “Las Vegas house prices dropped to their lowest level of the year last month. Southern Nevada home prices have been largely sliding for months amid a broader slowdown in the market. All told, the median sales price of a previously owned single-family house has now dropped by just over $51,000 from a record-high $482,000 in May, according to Las Vegas Realtors data.”
My Northwest in Washington. “According to a report from Redfin, housing sales are down 42.2% from last year, as prices rise by 7.6%. A similar study from RE/MAX shows that Seattle’s active housing inventory in October was up 130% year-over-year. The current median home sale price is $675,000, down from April’s high of $757,750.”
The News Tribune in Washington. “Rising mortgage interest rates have added to the big chill this fall in Pierce County. According to Northwest Multiple Listing Service, Pierce County’s median closed home sale price saw another consecutive drop. In November it was $525,000, down from $535,000 in October, $538,000 in September and $555,000 in August. ‘The data show we’re in a changed market,’ said Dick Beeson, managing broker at RE/MAX Northwest in Tacoma/Gig Harbor. ‘High interest rates, doubled inventory levels, anxious lenders, contracts written with negotiations for repairs, closing costs, and other sundry things – all of these have returned to the market.’”
From Axios Boston. “The median sale price of a single-family home in Massachusetts dropped over 4% to $547,000 in October compared to September. Peabody has seen the area’s biggest dip in home prices with a 2.4% decline. North Reading prices were down 2.2%. ‘The historic pace and magnitude of interest rate increases have created a reset and softened the housing landscape as intended,’ said RE/MAX president Nick Bailey.”
Forbes on Arizona. “While many of these cities’ housing markets have displayed similar general trends to the Phoenix metro area as a whole, many have diverged. Wickenburg median sale price: $642,500 – $525,000 | -18.3%. Carefree median sale price: $1,300,000 – $835,000 | -35.8%. The percentage of active listings with price drops has risen significantly in most cities comprising the Phoenix metro area housing market. For instance, in October 2021, the percentage of active listings with price drops in El Mirage was only 10.3%. A year later, in October 2022, that figure had blown up to 68.3% of active listings with price drops.”
Houston Agent Magazine in Texas. “A report from Redfin shows that 29% of single-family homes for sale in the U.S. were new constructions in the third quarter of 2022. This increased inventory of new constructions for sale represents the highest percentage of third quarter listings of all time. ‘Homebuilders started scores of projects during the pandemic moving frenzy and are now stuck with a bunch of new houses that are hard to sell because mortgage rates have risen to 7%,’ said Houston Redfin agent Faith Floyd. ‘Many builders are offering more incentives than regular sellers. A lot of individual sellers are still pricing their homes too high because they’re having a hard time accepting that the pandemic housing boom is over and they’re not going to get 30 offers like their neighbor did last year.’”
The Press Democrat in California. “The once-booming real estate market from the past two years is slowing down as rising inflation and interest rates have potential homebuyers pressing pause on new offers for houses in Sonoma County. ‘For the last three years, everybody was used to getting whatever they want when they sell their house,’ said Brad Wilkinson, a real estate agent. ‘We’re seeing this weird limbo where the sellers don’t want to drastically lower their price… but at the same time, the buyers are like, ‘Why would we pay you over asking (price) just because people have for the last three years?’”
“‘Things started transitioning (mid-summer) as (the market) started transitioning due to interest rates starting to increase,’ said Carmen Cervantes, another Sonoma County real estate agent. ‘As we’ve gone now into fall, some listings and some sellers are still ambitious about pricing … when it’s not realistic.’”
NBC Bay Area in California. “Home prices are continuing to fall around the Bay Area, and it looks like the trend will continue into the new year. Zillow estimates the San Francisco metropolitan area will see a 3.6% decline in home values in the coming months, and even though prices have been dropping for several months, home buying has stalled. ‘We weren’t expecting it to be quite so dramatic, but it is starting to hit a little bit right now,’ explained Tim Yee, president of Re/Max Gold Bay Area.”
From Business Insider. “Home is where the heart is, but it might not be where the returns are anymore. For the past three years, investing in single-family rentals was the gift that kept on giving. Even as housing prices skyrocketed, companies managing so-called SFRs were happy to outbid everyone else to add to their inventory. The two largest single-family rental REITs — Invitation Homes and American Homes for Rent — have recently seen their ratings downgraded by Wall Street analysts, Insider’s Alex Nicoll reports. For SFRs, it’s a bit of a gut punch, as these investments are supposed to still be good bets during times of turmoil, Alex told me. The fact there is some cause for concern over SFRs show how seemingly no one is safe in this market, as Alex put it to me.”
From Bisnow. “In the weeks following a tough round of cost-cutting and layoffs, there’s plenty to lament in the commercial real estate industry. ‘The big opportunities for 2023 will be in forced asset sales and distressed debt,’ Bullpen CEO Tyler Kastelberg said. ‘We’re hearing more and more murmurs about sponsors being required to put more cash into a deal in order to refinance it out of a bridge loan into long-term debt. When they can’t come up with the cash, they are forced to put the property on the market. Per some of my broker contacts, this is becoming more and more common.’”
Better Dwelling in Canada. “Greater Vancouver real estate prices were slow to respond to higher rates, but it’s making up for lost time. Since peaking earlier this year, the price of a typical home has dropped by more than $130,000, and annual growth has finally turned negative. Peak buyers are experiencing a bloodbath, though it’s not as bad as the national market. Vancouver prices peaked April 2022, and have since fallen 9.2% (-$131,900) as of November. That’s a substantial decline, especially with such steep prices. However, this was much smaller than the -15% national rate reported a few weeks prior.”
The Canadian Press. “The Toronto Regional Real Estate board said Tuesday that November home sales activity was down by about half from last year, following a similar trend seen in recent months. The average price of a detached home was down 11.3 per cent to $1.39 million. the Quebec Professional Association of Real Estate Brokers said that sales numbers for Montreal dropped 38 per cent from a year earlier. ‘We’ve been going through growth, growth, growth year after year, so people almost don’t believe that the real estate market is actually cyclical,’ said Davelle Morrison, broker at Bosley Real Estate Ltd. ‘So this is a part of the regular market cycle. There’s going to be some up and there’s going to be some down. And now we’re just in that down period. And we haven’t hit bottom yet.’”
The Edinburgh News in Scotland. “Lewis Capaldi has expressed his regret over buying a property recommended by Ed Sheeran, calling it a ‘money pit.’ The singer, 36, splashed out on the £1.6million five-bedroom farmhouse on the outskirts of Glasgow in 2020. The singer admitted that he probably should have given the property a closer examination before moving in. Recalling his regret, he continued: ‘I didn’t maybe look around enough. I didn’t smell it. Yeah, I got very excited. And I’m here to tell you, the house is a f***ing s***hole. Yeah, it’s a money pit, and it has been the bane of my existence for the last couple of months.’”
From News.com.au. “A young new property owner is tightening her spending as the Reserve Bank of Australia hiked interest rates to a 10-year high. Sammie Baker, 24, strategically bought a Brisbane apartment in July this year when her borrowing capacity was still large enough to secure her dream place, but demand had dropped, meaning she was able to buy exactly what she wanted. However, she’s now concerned about what will happen if rates continue to go up while her property value goes down, as experts predict will happen in 2023. ‘There’s always that notion in the back of my head, will I be able to keep up with it (mortgage repayments),’ she told news.com.au. ‘There’s always that frightened uncertainty.’”
“Ms Baker signed herself up to a 30-year loan after securing the $440,000 apartment for herself. ‘I had some stocks that I liquidated for the deposit,’ she explained. When she started paying back the bank in July, her monthly mortgage repayments totalled $1986, which was when she was on a variable rate of 2.49 per cent. But just months later she is paying back $2310 a month and her rate is 5.04 per cent. That’s not even factoring in the latest hike after Tuesday’s announcement.”
“In a potential bad sign of things to come, the people next door to Ms Baker sold their property several weeks ago, and it went for $5000 less than the price she bought her own property for. Ms Baker says she has to more seriously think about her finances, including overseas trips, unlike many of her twenty-something peers who are more carefree.”
“Compare the Market’s General Manager of Money, Stephen Zeller, said that many properties were going backwards in terms of their value, putting borrowers in an even more difficult situation. ‘Negative equity creates concerns for borrowers and lenders,’ Mr Zeller said. ‘If you’re employed and making repayments on time, the bank might let you off the hook because you’ve just had some bad luck with the way the market has gone.But a borrower who is having difficulty making repayments and has negative equity might be asked for extra capital or the bank might pressure them to sell so they can get their money back.’”