It’s Friday desk clearing time for this blogger. “The average sale price of a single-family house in Mesa has increased 55% in two years and while home prices likely will continue to rise, mortgage rates and an apparent cooling in demand may spell trouble ahead for sellers, a leading Valley housing analyst said. Valley-wide, the Cromford Report reported that over the past six weeks, ‘active listing counts are rising very strongly’ – up more than 32% in a month – and called it ‘one of the most dramatic shifts in direction we have ever seen. If this trend continues for several months the market dynamics will change significantly.’”
“Cromford said rising mortgage interest rates and rising prices are discouraging potential new buyers from entering the market, citing a 6% decline in listings under contract in April. ‘Closed sales are also down more than 9% from April 2021,’ it said. ‘Demand is weak and getting weaker. The overall effect is a major cooling event, turning a hot housing market into one that still favors sellers (for now) but is looking increasingly dangerous with each passing day. The market does not turn on a dime, but it can certainly change dramatically over a handful of months, as it did between August and November 2005,’ it added, suggesting ‘we are now entering a very different phase of the market cycle.’”
“In Boulder County, sellers’ expectations did not quite match reality, as Easter weekend saw a turn in the market where home showings went from 20 to 30 showings over the course of a weekend to an average of five or six showings. The report notes that listings were still on the market on Monday morning and the county started to see price reductions on homes.”
“‘They say you only know when the downturn comes right after it happened. It seems to have happened a few weeks ago and with more rate hikes on the horizon, we expect a very different second half of the year compared to 2021,’ Kelly Move, a Boulder and Broomfield realtor, said in the report.”
“‘Are we seeing changes with the increase in interest rates? The answer is a definitive, yes,” Aurora-area realtor Sunny Banka said in the report. ‘We are seeing more price reductions on some homes and in some areas. Sellers are perhaps thinking they have hit the top of the current market on pricing. We are seeing some increase in listings, which could be due to the time of year, and we are seeing some median prices go down over the previous month.’”
“A combination of post-pandemic cabin fever and a 75% reduction in new mortgage applications drove thousands of Southern California mortgage loan originators with nothing but time on their hands to the recent California Mortgage Expo in Irvine. It was so surreal, it felt like I was part of an ant farm. I was struck by how creative and aggressive lenders have become in solving the income puzzle for homebuyers. Certainly, the most aggressive loan program I came across was a way for self-employed borrowers to income qualify using the most recent three months of business or personal bank account statements to qualify.”
“In another example, one lender allows income qualifications based on liquid assets. And who says you need your own money to buy rental properties? One program I came across allows 100% gift funds (let’s say Mom gives you a wad of cash) with a FICO score as low as 620. Can you say straw buyer? Pivoting to vacation investment properties, one lender has made it easier to qualify for a purchase or refinance by using the average vacation rents instead of average neighborhood rents.”
“Just how busy was the expo? ‘There were just under 2,000 attendees,’ said originator connect expo organizer Vincent Valvo, CEO of American Business Media. ‘Non-QM (exotic mortgages) were the hot topic.’ For better or worse, walking away after the show got me thinking that virtually anyone can get financed if they have decent credit and 20% down.”
“It was crazy how quickly the market turned, says realtor Dajan Kumarasamy. ‘It was like a flip of a switch,’ he says. He had three or four homes listed in March. One week those houses were drawing 15 to 20 offers. The next week, it was two or three. ‘I was so shocked. I was like, ‘What is going on?’ And then I was telling all the people in my pipeline, ‘Hey, if you need to sell, sell now, because (the market’s) going down.’”
“For the last two years, Kumarasamy had been juggling bidding wars and bully offers. His Durham Region territory was seeing house prices escalate 30 to 40 per cent annually, month after month, as buyers flocked to the suburbs during the pandemic in search of more space. Now, he says, some unique properties — those with big lots or extraordinary renovations — are still seeing 20 or 30 offers, but houses in average condition ‘are just kind of stagnant.’”
“Kevin Crigger, president of the Toronto Regional Real Estate Board has heard other agents expressing concern and the management at his Re/Max Realtron brokerage has been trying to offer reassurance that the market will lift. ‘It’s been crazy the last couple of years. I don’t think everyone has been saving their money the way they should have been,’ he said.”
“First-home buyers are being urged to snap up a property during the coming year as interest rate rises cause house prices to fall. Lloyd Edge, managing director of buyer’s agent Aus Property Professionals, said getting into property when others were scared of mortgage stress was the right time to ‘get a bargain’. ‘That’s when people will be walking away from the market,’ he told Daily Mail Australia. ‘The increase in interest rates will lead to a decline in property prices, and we’re already starting to see the market cool-off.’”
“‘The prices are actually coming off because before there was so much FOMO, prices continued to increase,’ he said.”
“Queenstown median house prices have dipped below $1 million for the first time in 18 months. Figures for April show a 22.1% decrease from the same month last year, from $1.22m to $950,000 for the tourist town.
There was an even larger drop in Wānaka, where the median price dropped 43.3% to $635,000, largely due to sales of townhouses at the Riverside Residence development. ‘There is a rationalisation of the market happening, but it’s too early to panic,’ said Real Estate Institute Otago/Southland spokesperson Liz Nidd.”
“For many of Sweden’s highly indebted consumers, the Riksbank’s sudden interest-rate increase at the end of April marks the start of a new squeeze that officials have long fretted about. The financial legacy of borrowings that swelled during the country’s housing boom of the past decade, stoked by years of subzero monetary policy, is now catching up with citizens who were led to believe such a swift change in the central bank’s stance wouldn’t come to pass.”
“Swedes’ debts at 200% of household income clearly exceed any from the Group of Seven economies. The pile of consumer borrowing prompted Riksbank Governor Stefan Ingves to publicly worry last year that he felt like he was ‘sitting on top of a volcano.’ ‘We are facing a large trend shift after 25 years with declining housing-finance costs, and it’s pretty clear that is about to change,’ said Helena Bornevall, senior economist at Svenska Handelsbanken. ‘We haven’t been in a situation where rates increase at the same time as households are pressured by price increases, combined with the level of indebtedness we have today.’”
“‘The party is over on the housing market and domestic demand will stagnate,’ Nordea economist Torbjorn Isaksson said in a new economic forecast. Christina Casserlov, a real-estate broker at Fjelkners, a small agency in the well-off Stockholm suburb of Bromma, is detecting a sense of hesitation among prospective home-buyers. ‘We have seen prices double in 10 years,’ she said. ‘Now the uncertainty is increasing again.”