A report from Mansion Global. “Austin, Texas has cooled faster than any other major U.S. metro over the past year, according to the report. The city’s median price plummeted 13% year over year in February. Austin leads a trend where migration boomtowns during the pandemic—often smaller, more affordable tertiary cities—are seeing their fortunes reverse. After Austin, home-buyer demand has dropped off most steeply in Seattle. Pending home sales there fell 40% in February compared to a year ago. Seattle was followed by Phoenix and Tacoma, Washington, as the third- and fourth-fastest cooling housing markets, respectively. Denver rounded out the top-5 list.”
“Phoenix and Las Vegas, where prices soared amid in-migration, are now seeing the proportion of sellers offering price cuts grow the fastest, according to Redfin. Indeed, negotiability seems to be one way to pull house hunters off the sidelines, agents said in the report. ‘Overpriced listings are the ones sitting on the market,’ said San Jose Redfin agent Laxmi Penupothula.”
The Houston Chronicle in Texas. “Wade Bowlin, who has more than 30 years of commercial real estate experience, says a market slowdown is the perfect time to ponder the firm’s future. Q: Houston has excess office space, particularly in older properties as tenants seek new buildings. Is there consensus on what should be done with this excess space?”
“A: There’s likely going to be some 35 million to 40 million square feet of office space over the next decade that will be obsolete and that will never be leased again. I think everyone is trying to figure out what will be done with that. Is it going to be used for document storage? If they ever legalize marijuana would it be used to grow it — or with what they’re doing with UV lights, will it be used to grow tomatoes and potatoes? There’s going to be a lot of adaptive reuse and conversions into apartments.”
The Union Tribune in California. “Downtown San Diego is about to get a lot more residents. There are roughly 1,500 new apartments set to open this year throughout East Village, Little Italy and other parts of downtown. After two slow years, San Diego’s downtown didn’t see a ton of new residential units, but major projects that have been in the works are finally opening — all within months of each other. It isn’t just downtown seeing a lot of activity. There are around 4,700 new units across San Diego County — about the same as last year — spread throughout the region to the Midway District, Oceanside, Chula Vista, North Park, Point Loma, National City and others.”
“The biggest project to open downtown this year will be Simone, with 395 apartments and one of the tallest buildings in the area at 455 feet. Its website calls it Little Italy’s most anticipated new address — technically, it is a block outside of the neighborhood on Union Street — and seems to be aiming for affluent renters based on its promotional materials, featuring a scantly clad woman coming out of a pool with a designer watch and sunglasses and fancy cocktails.”
From CNBC. “The rental market has seemingly flipped: After prices surged throughout 2021 and most of 2022, they’ve declined almost as quickly for five of the last six months, a new rent report reveals. Oklahoma City had the most dramatic decline, with year-over-year rent prices dropping by 15.71% in February. Prices there fell 8% between January and February of this year. The biggest factor in recent rent price declines is a glut of new rental units in 2023, ‘the largest in 50 years,’ says Thomas LaSalvia, director of economic research at Moody’s Analytics. ‘This is very much a supply and demand story where demand is easing a little bit and supply growth is picking up.’”
The New York Post. “After nearly two years on the market and a $1.5 million price cut, David Duchovny is finally parting ways with his beloved Central Park West apartment. ‘The X-Files’ star purchased his longtime co-op in the Ardsley building in 2012 for $6.25 million. But he sold it this past week for $5.65 million — a $600,000 loss, records show.”
The Aspen Times in Colorado. “An open house I hosted in the midvalley last week was far from a barn-burner. Ideally, you hope for a revolving door of buyers and agents over a two-hour period rather than the trickle of visits I got that day. The low turnout wasn’t unexpected. But this open house was different. This time … the seller was me. Me and my wife, to be exact. Something was off as I put the sign in my yard and unlocked the door — an unexpected lack of confidence, an uncertainly had crept in. What if no one shows up? Will they don’t like it? Am I priced right? What happens if it doesn’t sell? Like others these days, I recalled we were at the mercy of a new, uncertain market in an environment very different than 12 months ago.”
“I’ve helped others navigate these questions and doubts, but now had to ask myself: Am I listening to my own advice? Or have I just been BSing past it all for the sake of a sale? I’ve represented many clients over my career, but ironically never one buying and selling at the same time, which is suddenly what we’re doing. It was just a short year ago that pen houses were almost an afterthought, when just the whisper of a new listing could elicit multiple offers before the sign got hammered in the ground. List it, and they will come with the outcome nearly automatic. But no longer.”
“The interesting dichotomy is sellers are still realizing strong returns, and buyers are beginning to see the reductions they have been waiting for and more room to negotiate. It’s clear the era of easy money is over, and the economy is correcting. But we all knew it was coming. How many times have we all heard the word ‘unsustainable?’”
The Globe and Mail in Canada. “10 Old Mill Terrace, Toronto. Asking price: $2,690,000 (January, 2023). Selling price: $2.5-million (February, 2023). Previous selling price: $2,640,000 (March, 2021). The owner of this five-bedroom house bought it for $2.64-million in 2021, but their plans changed in the following year, so they put it back on the market at a slight markup of $2.69-million in January. One buyer came through with an offer, but at a steep discount – $140,000 less than what the seller had paid.”
“‘[The sellers] realized when they bought it, it was the peak of the market, and the market is off somewhat now, so they were prepared to take a loss,’ said agent Nigel Denham.”
From Bloomberg. “At the heart of Sweden’s woes is a dysfunctional housing market, which has not only cemented social divides, but exacerbated them. The country’s property boom — which saw prices increase by almost 250% in the past 20 years — was fueled by razor-thin borrowing costs and a shortage of rental properties. This lack of housing squeezed poorer families into overcrowded accommodation. And pushed others into buying — the total value of mortgages increased 459% in the two decades up to 2022. Before the latest crisis, household debt, including mortgages and consumer debt, had soared to more than 200% of disposable income, according to the OECD’s latest data from 2021. That is double the level in Germany.”
“Until now these problems had been papered over by cheap money and an ever-growing economy. With both coming to an end the vulnerabilities in the system are being exposed. An over indebted middle class now faces the prospect of not being able to afford to pay their mortgages, much less everyday luxuries. At the same time the number of corporate bankruptcies soared to the highest level in at least a decade in January as construction companies came under pressure.”
“K2A Knaust & Andersson Fastigheter AB, a builder and manager of rental apartments, has lost 70% of its market value since the Riksbank started hiking rates last year. It has postponed almost all of its construction starts due to the market uncertainty. ‘If you’re looking at the situation from a societal perspective, it’s a huge problem,’ Chief Executive Officer Johan Knaust said. ‘There will be a big vacuum in construction.’”
Stuff New Zealand. “Christchurch’s construction industry could be facing a tough year as the recent building boom becomes a thing of the past. With the combination of higher construction prices, rising mortgage interest rates and a cooling housing market dampening demand for new homes, the industry is having to downsize.”
“Christchurch builder Peter de Gouw said he laid off half of his 10 staff four weeks ago. ‘There’s not nothing happening, but there’s very little happening. It seems to be very widespread. We’re pretty quiet.’ De Gouw described the shift as part of the normal construction ‘boom-bust cycle’. He said he expects things to pick up next year, but it was still hard for those who lost work. ‘Construction companies, builders and sub trades are going to find it very, very tough over the coming 12 months, there will be a massive increase in liquidations.’”
From ABC News in Australia. “The Atherton Tablelands was once an agricultural mosaic of corn and sorghum crops intertwined with dairy production and tropical fruits. But now the landscape is awash with green-leafed trees. In fact, hectares upon hectares of avocados. While this impressive expansion provided growers with a premium fruit income, it has in recent years led to an avocado glut hitting the market. Dozens of avocado farms are listed for sale in Mareeba alone with recent low fruit prices the key contributing factor. But the fruit’s price is also the reason many are struggling to sell.”
“‘The lower prices have put people off from buying, avocado farms are not the flavour at the moment,’ says local real estate agent John Falvo. ‘Until the markets change and become more consistent, I think we have challenges trying to sell these properties.’”