A report from the New York Post. “Fed officials seemed to oppose taking more aggressive action as recently as last month. Fed Chair Jerome Powell told reporters that half-percentage-point hikes were ‘on the table’ at meetings in June and July — though he said at the time the guidance was contingent on economic conditions. Powell also said last month that the Fed was not ‘actively considering’ a 0.75% increase. ‘The idea that there is some Goldilocks outcome in the cards or soft landing is a mockery,’ said Danielle DiMartino Booth, CEO at Quill Intelligence. ‘Consumer sentiment is at record lows and jobless claims have surged since bottoming in mid-March, leaving little doubt that the US has entered recession.’”
From KSDK in Missouri. “‘Two weeks ago we had two houses that did not sell the first week, and so we’re like, ‘Oh, the sky is falling,’ said Kathy Helbig-Strick, the owner of Experience Realty Partners. ‘It sold in seven days instead of two, but that’s the reality. That was unusual. I went back and looked at how many active listings we had [in the St. Louis metropolitan area] during a week period versus the price reductions that happened,’ said Helbig-Strick. “We had about 450 existing listings and about 230 price reductions in that same week.’”
“This is a hot tip from Helbig-Strick who often works with hedge funds that try to buy 50 homes a month to hold and rent in the St. Louis community. The companies that work with EXP said they’re holding off as they watch the next round of securitization.”
From ABC 15 in Arizona. “Paul Murphy is breathing a huge sigh of relief. He just closed on his newly built home in Surprise two weeks ago. Murphy thinks the recent rate hike from the feds may eventually lower home prices. In fact he says one of his colleagues, already saw it happen with a builder in a new home development. ‘They actually lowered the price by about $75,000, so I think what you’re gonna see now is that in order to get people to keep buying, the builders gonna have to start possibly bringing their prices down some,’ Murphy said.”
From KDVR TV Denver. “Colorado homes could lose some of their value in the coming year. There is no ‘cliff’ for Colorado’s housing market to fall from. Rather, Bret Weinstein, CEO of guide Real Estate said rising interest rates and other factors will bring the market to a plateau. Even if prices fall, he said, home values have risen so much in the last few years that homeowners will still come out ahead. ‘If we say we’re going to, on average, drop 10%, in the next six months – and I think that’s a realistic statement – we went up 21% in the first four months,’ said Weinstein. ‘So, for us to drop 8% to 10% still brings us up to double-digit appreciation.’”
Salt Lake City Weekly in Utah. “What’s going on? I recently held an open house and only two groups came through! I listed a property and only had three showings! Is the real-estate bubble bursting? Don’t wait for a popping sound, but the market is softening somewhat. Prices in many areas around the country have adjusted downward by an average of 5%, and bidding wars are starting to slow as mortgage interest rates have increased to 5% or more. Don’t panic if you’re selling right now. Your property may be on the market for a slightly longer time, or you may need a price adjustment, but you will sell if you’re patient and have a good sales strategy.”
From KPIX in California. “For anyone used to the Bay Area housing market being white hot, the idea of a buyer’s market is unfathomable. Ian and Lauren Finn are ready to sell their 1,500 square foot, three bedroom, three bath home in Martinez and move somewhere bigger – with more room for their kids Jack and Evelyn to run. There’s a slight problem. So far, no buyers.”
“‘We were told by everyone that there would be tons of bidders, that it’d be very competitive and we would immediately sell,’ Ian Finn told KPIX 5. ‘There has not been a single offer since the listing hit the MLS. ‘We launch on May 9th….and nothing. Chirping. Crickets,” said Lauren Finn.”
“According to Wednesday’s East Bay housing report, there are 1,900 homes for sale in the East Bay, up from less than 500 in December ‘We priced it lower than one of the neighbors who had just sold their house and we didn’t get any bids and then we lowered the price by $20,000 and again no one has put in any offers and we had to lower the price for a second time. So, we’re now $40,000 less than we started,’ said Ian.”
“‘Buyers are just more hesitant. How do you pull money out if you just lost it all? How do you get a loan if the rates go up – you qualify for less,’ said Jennifer He of Keller Williams.”
From KTLA in California. “Home sellers are now cutting their asking prices, one of the telltale signs that the red hot real estate market is cooling off. One month ago, homeowners listing their home in Hollywood were asking for $2 million. On Wednesday, the sellers dropped the asking price by $100,000. ‘If you’re selling your house right now, you are already seeing a reduction in the number of showings, and if you’ve been on the market for anything longer than 14 days, you’re reducing your price,’ said Khaled Yatim, a local real estate broker.”
“The selling frenzy of multiple offers, waiving inspections and ‘no contingencies’ appears to be over. A homeowner named Joel told KTLA he can’t find a buyer for his property, and now his adjustable rate mortgage is going up. ‘We’re worried that now our condo is going to sit on the market and we are going to lose two, three months of vacancy and that’s really going to put us behind,’ Joel said.”
From Candy’s Dirt. “Caught up with a few more in-the-know voices, asking Compass’ senior managing director of real estate Bryan Pacholski how yesterday’s lay-offs will affect offices here in North Texas. ‘We are talking about going back to fundamentals: Becky Frey says she has to dust off the open-house signs in her garage, they haven’t been used in months,’ aid Bryan.”
“Victor LundCEO of WAV Group, a real estate consulting firm, says the trim was a smart move on the part of Compass. ‘If you have to catch a falling knife, catch it fast,’ he said. ‘Frankly, every broker should be looking at agents who are not productive and getting rid of them now. Help them find another career.’”
The Canadian Press. “‘Canadians widely expected home prices to keep rising, which pulled in investors and multiple-property buyers, while also causing many households to stretch in fear of missing out,’ said Robert Kavcic, BMO Capital Markets senior economist Robert Kavcic. ‘But, beginning with the (Bank of Canada)’s first nudge in interest rates, those market expectations began crumbling.’”
“When Sara Rowshanbin, a Chestnut Park Real Estate Ltd. broker in the Greater Toronto Area, tells her clients they can request a home inspection, their eyes light up because most buyers had to drop the condition when the market was heated previously. Now about 50 per cent of the bids she helps place have the condition again. However, how sellers are reacting to offers made with the cooling market in mind is ‘all over the place.’”
“‘Some are receiving them with open arms and saying ‘let’s work together on this’ and others are saying ‘is that a typo?’ so you can tell … the market shifted very quickly,’ she said.”
The Globe and Mail. “Canadian home prices and sales dropped in May in a second straight month. Samantha Brookes, the chief executive of brokerage firm Mortgages of Canada, said borrowers are shocked when they see fixed-rate mortgages above 4 per cent and are asking about their options. ‘They’re like, ‘Well, I have a 1.75 per cent right now.’ I’m like, ‘Well, you’re going to have a 4.19 per cent soon,’ she said.”
“Over the past three months, Cambridge’s home price index has fallen 13.5 per cent, while London and the Toronto suburb of Oakville-Milton are down just over 9 per cent. Ms. Brookes said some homeowners who bought during the peak this January and February are contemplating selling. ‘They can’t afford it. So they’re thinking that they need to sell, but they may take a loss,’ she said.”
From Newmarket Today in Canada. “Housing prices in Newmarket, York Region and across the province have declined since a peak in February. Average house prices in Newmarket were approximately $1.44 million in February, compared to $1.19 million in May, according to the Toronto Regional Real Estate Board. Newmarket-based real estate broker Darcy Toombs said the economy and increased interest rates are playing a factor, with buyers waiting longer to buy.’”
“‘It gives me some hope that there may be some affordability that could come back to the market if things start to balance out,’ he said, adding there has been lots of speculation in the market that assumed real estate would always go up. ‘It’s kind of comforting to know there are other market factors that can come in and show us that things can change.’”
“The real estate trend is playing out similarly across the province. Average home prices across the region have gone from approximately $1.59 million in February to $1.37 million in May. Jay Miller, another Newmarket realtor, said sellers are unsure of where they will buy a new home, which is impacting the market. ‘We’re in the midst of flux, and we’re going to see how it plays out. Buyers, already over the next few months, they will be hoping for a significant downward spiral in price.’”
From CBC News in Canada. “When people are deciding whether to borrow or not, said Stephen Williamson, the Stephen A. Jarislowsky chair in central banking at Ontario’s Western University, the important thing is not the nominal rate, but the real rate — in other words, the nominal rate after subtracting inflation. So, if a borrower has a nominal interest rate of 1½ per cent, while inflation sits at 8½ per cent, the ‘real interest rate’ — what the lender is earning from that loan while taking inflation into account — would actually be negative seven per cent. Or as Williamson puts it: ‘Really low.’”