A report from Mansion Global. “2022 marked the end of a long and prosperous run in San Francisco’s luxury housing market. Patrick Carlisle, chief market analyst in the San Francisco Bay Area at Compass: it’s ‘an excellent time for buyers to aggressively negotiate home purchases at prices well below those of recent years.’ That’s especially true in the luxury and ultra-luxury condo markets located in the city’s downtown/high-tech district, an enclave hit harder than any place in the city, according to Mr. Carlisle. ‘There are deals to be made here for buyers with a longer term view,’ he said. ‘The old maxim says that the best time to buy is when there is blood in the streets.’”
“Halfway through 2022, change came to the Los Angeles property market. It ‘shifted away from the unsustainable pace of the last two-and-a-half years,’ said Mauricio Umansky, CEO of The Agency. ‘Volume dropped while the industry’s cyclical nature and historical seasonality quickly returned. What felt like a jolt was actually what I believe was the beginning of a rebalancing act.’”
From Gothamist. “When will Midtown and Lower Manhattan, long the beating heart of the nation’s largest commercial business district, fully win back office workers? Or is this the new normal? How the government responds could determine if New York City enters what some academics describe as an ‘urban doom loop’ – a cycle of decline tied to tax revenue losses and spending cuts. ‘The worry is that the enormous decline in people coming to the office may soon create a big shortfall in property tax revenue,’ said Jonathan Bowles, the executive director of Center for an Urban Future, ‘and that this will necessitate spending cuts in the very things that make New York so appealing, from the transit system and culture to sanitation and safety. And if that happens, that’s not good news for New York.’”
“City Comptroller Brad Lander noted a surge of residents in the city’s homeless shelters occurred in part because ‘a set of people walked across the continent to escape desperation, war and poverty,’ and that many of them headed to the five boroughs. He refers to an influx of asylum-seekers, mostly people who crossed the southern border and rode buses to New York. ‘Maybe the kids of those Google engineers and the kids of those asylum-seekers from Venezuela will wind up in the same pre-K class, in a Manhattan public school,’ said Lander. ‘And that’s the future of New York.’”
The Real Deal on Florida. “A lender seeking to recoup $6.3 million in mortgage debt has initiated a UCC foreclosure sale for the distressed Banyan Cay Resort & Golf Club. Banyan Cay Resort Fund has set a Feb. 17 auction for the West Palm Beach hotel and adjacent development sites, according to a notice of sale. The winning bidder stands to gain control of the unopened 150-room luxury hotel at 2020 Banyan Way, an adjoining 18-hole golf course designed by Jack Nicklaus and surrounding lots where the developers planned a high-rise condominium, 33 single-family homes and 20 villas. Project partners Domenic Gatto Sr., Domenic Gatto Jr., Kim Pilar and their development entity Banyan Cay Resort & Golf, are also trying to stave off a separate foreclosure lawsuit in Palm Beach County Circuit Court filed by another lender. In 2015, the partners paid $26 million for the property formerly known as The President Country Club.”
Hawaii Real Estate Dreams. “Kona sales are still dropping, houses, condos and land combined only closed 51 sales last month. Was inventory a factor? November 2021 saw only 55 houses/condos for sale, this November we had 150 combined… hmm. Way more choice, so that just leaves us inflation and interest rates which are kissing cousins so to speak, since one typically affects the other, as the reason for the dramatic slowdown. To recap, house sales slowed first, they are now down $150,000 from the top of their range in my opinion. Residential condos restricted from vacation renting slowed a few months after houses. Sales for vacation rental condos kept going, but have recently slowed dramatically and prices are dropping there now. You won’t see this clearly in the solds for another few months.”
“And even though the last two years have been great I think there are turbulent times ahead. With interest rates and inflation high, and sales stalling, I think it is just a matter of time for a big market shift. So like the pilot says on the plane ‘Fasten your seat belt, there could be turbulence ahead!”
The Argus Observer. “Home sales in the Western Treasure Valley are seeing a cool-off of sorts following a peak in June, according to Real Estate Broker Jeff Williams of Coldwell Banker – Classic Properties in Payette. ‘It is my opinion, that our local market [Malheur County in Oregon and Payette & Washington Counties in Idaho] peaked in June-July of 2022,’ wrote Williams. Local homes on the market on the 1st of the month in November were 296, with an average sale price of $314,352 and 59 days on the market. In June, 264 were on the market, averaging $375,798 and just 19 days on the market. The average sale price in December 2021 was $341,424 and 25 days on the market.”
The Chicago Sun Times in Illinois. “Six years ago, Mekazin Alexander bought a 6,000-square-foot lot several houses down from where she owns a home in Englewood. It cost her a dollar. A few years after shutting down the program, the city is preparing to relaunch it next year, with more than 2,000 vacant, city-owned lots on the South and West sides going up for sale. But the biggest difference: Instead of costing $1, lots will be sold for at least 10% of the market rate, a change that has enraged some residents. Margaret Decker, a member of the mayor’s economic development team cited a need to encourage more housing developments. ‘We know that there’s a huge need for housing in Chicago and particularly on the South and West sides. We’re seeing an exodus of people from the city and so we’re trying to facilitate opportunities for more housing development.’”
KETK in Texas. “Johnathan Wolf, a Tyler realtor, said inflation was a major factor in 2022 for stagnant sales. Experts also mentioned the market in 2022 was very competitive. ‘As an understatement it was booming. Sellers (and) buyers going crazy. Buyers going against each other because interest rates were super low,’ Hila Gama, a realtor. Both realtors agree that a transition into a buyer’s market is happening. ‘Sellers, you might not get a bidding war and might have to reduce your price if the buyers don’t see it fit,’ said Wolf.”
“‘Whenever we saw interest rates at a 1-2%, buyers were taking advantage of that. Now that rates aren’t ‘on sale’, it’s better for them to sit back and relax and ask, ‘do I really need this property?’ said Gama.”
From Global News. “Where will price declines in the Canadian housing sector bottom out? And will all markets and property classes be hit evenly? The pain of higher interest rates could hit the pre-construction market especially hard in 2023, some experts warn. Nasma Ali, founder of OneGroup in Toronto says that for buyers who put money down on a home in 2020, when interest rates were low, the bar for qualifying for a mortgage is much higher after the Bank of Canada’s rapid hikes in 2022. Some of these buyers locked in their purchase at high pandemic prices and haven’t benefited from the recent cooling, she notes, and are now forced to pay peak prices at much higher interest rates.”
“With those homes coming up for completion in the year ahead, these buyers will be forced into difficult positions, Ali says. Some could be forced to come up with extra money to cover a home that wasn’t appraised for the mortgage they needed, or they may not be able to afford the monthly mortgage on the property with today’s higher rates, she explains. These buyers may have to assign their sale if they can or sell at a steep loss, Ali says. ‘If the dominoes fall, usually what this means is that we’re going to see finally many listings hit the market,’ she says.”
“John Pasalis, president of Realosophy Realty in Toronto, agrees that the pre-construction market is looking vulnerable heading into 2023. Prospective buyers could even find a deal if an investor is desperate to unload their pre-construction condo, he says. ‘We’re starting to see some distress among pre-construction condo investors,’ he says.”
The Telegraph. “‘Home ownership is a very British thing,’ says Leon Ward, 31. ‘We live in a country where you’re told it’s the right thing to do.’ Ward, a charity worker who recently bought a property by taking out a 35-year mortgage, is less certain. His three-bedroom Victorian house in Cardiff brings other pressures. By his own account, the property was ‘dilapidated,’ and renovation work running over-budget swallowed up any savings remaining from the deposit. ‘Some people would say I was daft to buy a house that needed a 35-year mortgage,’ he admits. ‘Others would say it was the best thing to do because bricks and mortar always go up in price.’”
“‘I’d be daft not to take it because the other option is that I could be renting and paying someone else’s mortgage. If the property price falls then I’m b—–ed, but we’ll just have to see.’”
The South China Morning Post. “A wave of job cuts among China’s giant technology companies has sent the home market reeling in neighbourhoods where waves of tech professionals – flush with high salaries and housing perks – drove prices upwards in recent years. When Linda Wu, a product manager working at Alibaba, moved to Hangzhou several months ago, she was surprised to hear an agent press her to buy a house near her office at a ‘very low price,’ rather than renting. The agent presented it as a ‘golden time’ to buy, because many people who lost their jobs were unable to pay their mortgages and were putting their homes on sale at low prices.”
“For example, proximity to Alibaba’s headquarters made Future Science Town in Hangzhou’s Yuhang district a property hotspot in the city in recent years, despite its location 45 minutes by subway from the city centre. But home prices have plunged in the area since June, linked to massive lay-offs at Alibaba, which let about 10,000 employees go in the second quarter, according to financial reports.”
“Second-hand home prices in Yuhang district dropped by about 15,000 yuan (US$2,150) in the last several months, two local agents told the Post, citing the job cuts as one factor. Home prices in one prime neighbourhood once hit 83,000 yuan per square metre, but the figure fell nearly 28 per cent to 60,000 yuan in 2022, according to a local agent website. Social-media posts also back up the trend, with laid-off technology professionals lamenting their inability to keep paying for their homes.”
“In addition to Yuhang, areas such as Beijing’s Zhongguancun in Haidian district and Shenzhen’s Nanshan district have had relatively high housing prices in recent years, said Jinfeng Shi, an analyst at Credit Suisse. ‘But we can see those once hot areas cooled down [in 2022].’ The Hangzhou agent who talked about a ‘golden’ time to buy failed to convince Wu. ‘I had considered buying a home in Hangzhou,’ she said. ‘But now I would think twice, because you never know if you will lose your job tomorrow.’”