A report from the South Haven Tribune. “People in the South Haven area who want to earn extra income by renting their homes to vacationers may want to reconsider their options. According to a study, the short-term rental market in Southwest Michigan appears to be experiencing a mild bust. The study, conducted by the Ann Arbor-based CEO Host, reviewed revenue data from 2021 and 2022 in 34 communities along the West Michigan lakeshore, from New Buffalo north to Frankfurt and found that overall, revenue remained steady. However, the number of available properties jumped nearly 65 percent.”
“‘With stable demand, revenue flat and supply up over 64 percent, it’s clear that West Michigan has not escaped the short-term rental bubble burst,’ said Kate Stoermer, founder of The CEO Host, an education and consulting company for short-term rental owners and businesses. Even though South Haven is considered the largest STR market along the lakeshore, overall revenue from 2021 to 2022 decreased by 5 percent. This comes at a time when the number of rentals in South Haven nearly doubled from 535 in the first quarter of 2021 to 903 at the end of 2022. ‘Unfortunately, for a lot of investors who leveraged buying with a mortgage in the last two years – their expenses may well be higher than their rental income and some investors are certainly already considering or looking to sell,’ she said.”
From Realtor.com. “The supply of homes for sale has rebounded with a bang. January marked a whopping 65% more real estate listings than this same month a year earlier, according to a recent inventory report from Realtor.com®. And while home prices are still up year over year, they’ve declined from the pandemic peak. January’s median home list price clocked in at $400,000—holding steady since December but much lower than June’s record high of $449,000.”
“Three things—lower mortgage rates, stabilizing home prices, and a glut of listings—spell a long overdue opportunity for homebuyers to jump into the market and snag a deal. ‘Fresh listings are a new opportunity for buyers because they might mean they will better fit the needs and budget of potential buyers,’ says Danielle Hale, chief economist of Realtor.com. However, she urges buyers to give those long-in-the-tooth listings another look, since this is where sellers might be desperate enough to lower their price.”
Business Insider on Arizona. “Booms do often end in busts. And as Phoenix’s housing market performs an about-face from the dramatic rise it witnessed from spring 2020 to summer 2022, experts across the country are debating the possibility of the whole market imploding. According to sale-price data from Realtor.com, the Phoenix market saw a median peak price of $470,000 last May, but subsequently fell by nearly 13% to $410,000 by December. And as of January 2023, area home sales are down 74% year-over-year, according to John Burns Real Estate Consulting.”
“Another factor at play is the sheer number of home-builder cancellations in Phoenix. Data from John Burns Real Estate Consulting shows that as of January 2023, 44.7% of homebuilders’ net sales had been canceled, up a whopping 496% from January of last year. ‘For builders, unsold inventory costs them money every day they’re sitting vacant on the lot,’ Barry Cox, the vice president of consulting at John Burns Real Estate Consulting, told Insider. ‘So we’ve seen price declines on new home sales in a number of markets since mortgage rates ballooned last year.’”
From Fortune. “That sharp buyer pullback comes at a less than ideal time for U.S. homebuilders. See, a combination of pandemic-related supply chain constraints and a surplus of eager buyers during the boom, saw the total number of units under construction reach historic levels last year. And that historic backlog, along with spiked cancellation rates, means buyers finally have some negotiating power over builders. Unlike homeowners—who are less likely to give up the equity they have—builders are just dropping profit. ‘For builders, it’s a business,’ said John Downs, a certified mortgage advisor. ‘Which is very different than regular homeowners where it’s their network savings. So for a builder, it’s just a raw business decision—am I still making money? And if I’m losing, what am I gaining by losing?’”
“As for home improvements or upgrades, builders sometimes use the fact that ‘they can build stuff cheaper and the perceived value is bigger,’ Downs told Fortune. He gave an example: if a buyer is quoted $50,000 to build a patio but the builder could do it for $15,000—as a consumer it checks out, and the builder basically uses ‘inflated values to give the perception of bigger savings.’”
The Napa Valley Register. “California’s median home price remained on a downward trend for the fourth straight month and has been down on a monthly basis in six of the last seven months. December’s price also was lower on a year-over-year basis for the second consecutive month. ‘While depressed inventory will preclude major price declines beyond the 8.8% we forecast for this year, it will also slow sales growth and prevent the housing market from having a rapid recovery,’ said CAR chief economist Jordan Levine.”
“A listing Realtor Zack Sperow has at 2425 Kiess Barn Place near Linda Vista Avenue in Napa was originally priced at $979,000. Sperow said one couple hoped to buy it earlier in 2022 but after mortgage interest rates rose again, they realized their monthly payment (including taxes) would be about $6,800. Their response? ‘No way.’ They’d continue to rent, and for much less money, they told Sperow. The Kiess Barn house was delisted for several months and recently put back on the market, this time for $939,000. As of Wednesday, Sperow had at least one offer.”
“The number of homes sold in Napa County in 2022 declined 27%, dropping from 1,594 sold in 2021 to 1,166 in 2022. That’s the lowest number of local homes sold since 2008.”
Skilled Nursing News. “Operators looking for financing in 2023 will find it much more challenging on the equity side, noted Brendan Healy, senior managing director with VIUM Capital, again with inflation, high labor costs and unfavorable short-term rates creating less than stellar returns. On the debt side, Healy has seen a lot of reluctance in the fourth quarter of 2022 from financing sources, also driven by rising interest rates. Medicaid rebasing serves as a silver lining into this year, he noted, but for many, it hasn’t happened yet.”
“‘That cash flow is not going to be coming into a lot of states until probably the second half of the year,’ said Healy. ‘The math isn’t there for the buyers and it’s not there for the sellers, either, because they know they’re not going to get the values they want.’”
Insauga in Canada. “Zoocasa says that significantly more houses hit the market in Mississauga in January 2023 compared to December 2022. Data from the Toronto Regional Real Estate Board (TRREB) indicates that 634 homes were listed, up 89 per cent from the 335 that hit the market at the end of last year. As for the GTA overall, home sales are down year-over-year, with 3,100 sales reported in January–down 44.6 per cent from January 2022. The average selling price for January 2023 sat at $1,038,668, down 16.4 per cent compared to the average price recorded in January 2022.”
The Globe and Mail in Canada. “7790 264 St., Langley, B.C. Asking price: $5-million (Dec. 9, 2022). Previous asking price: $6.2 million (March 2, 2022). Selling price: $5-million (Jan. 6, 2023). Days on market: 282. The property went on the market on March 2, 2022 at $6.2-million and although the seller received offers, they were too low. The seller pulled it off the market and continued to receive inquiries, so it was relisted Dec. 9 at a firm $5-million. It quickly received three offers. The buyer is a young local family that fell in love with the house and its privacy, listing agent Paul Hague says. ‘All sellers were challenged with releasing their properties because they still thought they were in a sellers’ market,’ he says.”
News.com.au in Australia. “A retired baby boomer has sparked outrage after suggesting to young people that they give up eating out and updating their mobile phones so they can afford to buy a home. Sydney 68-year-old Kerrie Boylett claimed it was ‘practically impossible’ to be approved for a home loan in 1995 as a single mum because interest rates were so high. In an interview with the ABC on Monday, Ms Boylett said one lender eventually agreed to loan her the money so she could buy her first home in the Sydney beachside suburb of Coogee for $150,000 with a 15 per cent deposit.”
“It was Ms Boylett’s advice for Millennials that truly sparked uproar, as she suggested young people give up holidays, nights out and buying new technology so they can get onto the property ladder. ‘They (Millennials) want, you know, the latest mobile phone, the latest iPad, they want a nice car, they want to go on holidays, they still want to go out to restaurants — they pay $20 or $30 for a drink if they go out, have a nice time,’ she said. ‘You’ve got to say: ‘Right, am I prepared to keep my phone for four years? Am I prepared to cut back?’”
“In 1995, the median house price was about 6.7 times higher than the median single income. In 2022, it was 16.5 times more. The median price for a house in Coogee — where Ms Boylett bought her first home for just $150,000 — has soared to a staggering $3.7 million. Units sell for an average of $1.32 million.”
“‘My (heart) is now in pieces for this woman who struggled for a whole five years in the 1990s after buying a house for $150,000 in Coogee with 19% interest rates,’ journalist and author Amy Remeikis tweeted. ‘She’s absolutely right — my phone is the reason I can’t afford to buy and not that homes are about $1m.’ ‘Yeah I’ll take 19% interest on a $100,000 home over 8% on a $1,000,000 mortgage on the same house any day,’ wrote a third.”