A report from the Review Journal in Nevada. “With builders slashing prices and buyers pulling back, Las Vegas’ home construction market kept hitting the brakes in November. ‘Over the past few months though, the conversation has changed from how high prices have gone to how far and how quickly they are falling,’ Las Vegas-based Home Builders Research president Andrew Smith wrote. Last month, builders’ average base asking price in Southern Nevada was $581,531, down 4 percent, or almost $27,000, from May, Smith reported. Leading the pack was Taylor Morrison Home Corp., whose average base price of $527,382 last month was down 21 percent, or more than $136,000, from May, according to Smith.”
From WTOP. “Home sellers and their agents often set a price based on comparable sales of similar homes nearby. But their house may not be worth what their neighbor’s house sold for just a few months ago. ‘There are situations where past sales are higher than what one might reasonably expect right now,’ said Corey Burr, The Burr Group, in Chevy Chase, Maryland. ‘If listing agents rely too much on recent sales going back six to nine months, they might be a risk of mispricing properties on the high side.’”
“Burr said the D.C.-area housing market has slowed down precipitously — and he’s seen it himself. At this point last year, he had 11 home settlements scheduled for January. This year, he has three scheduled. The local housing market has seen a drop in sales, but homes are still selling, with many buyers making offers that are 10% less than the listing price. More than 50% of houses are selling below asking price, though averaging only about 1% to 5% below.”
Axios Austin in Texas. “Average home prices started to creep down, especially in Austin’s northern suburbs, between July and October, according to Zillow data. In the greater Austin area, home prices have dropped by about 14% from their peak in May, going from a median of $560,000 to $480,000 in October. Meanwhile, average rent increases have slowed as the market cools. ‘This is a great reminder that 2023 will be a great time to buy a home without having to go wildly over the asking price, as buyers have in the past few years,’ says Ashley Jackson, 2023 president of the Austin Board of Realtors.”
The Colorado Springs Business Journal. “The Colorado Springs residential real estate market is returning to a more ‘normal’ state, local agents say. ‘On the one hand, it’s a ‘correction,’ says Harry Salzman, broker/associate at ERA Shields/Salzman Real Estate Services. ‘But what we’ve had in the past couple of years was not realistic.’ What it boils down to, he says, is that the market has cooled and the unprecedented seller’s market has ended. But like most real estate experts across the country, Salzman doesn’t foresee a crash or drastic downturn in 2023, but rather, ‘a return to what was prior to 2020 — a normal, healthy market.’”
WTSP in Florida. “Investigators in Sarasota County said they have a warrant out for the arrest of a contractor who allegedly scammed elderly couples out of their money. They said the victims wound up paying thousands of dollars to Sarkis Konsulian to build homes, but he kept asking for more and never finished. According to police in North Port, Konsulian used his European background to target and gain the trust of his victims who were elderly immigrant couples, with some language barrier. Zofia Kaczor said she and her husband gave Konsulian $100,000 and signed a contract with him to finish the house by late spring of last year before he absconded. ‘In February, I heard rumors that he stole money, and he went to Moscow,’ she said.”
“The North Port Police Department said Konsulian shut down his business and left the Kaczors and other families with just an empty lot, no home and short on funds. Detectives say there are up to 40 cases in total between Charlotte and Sarasota counties with seven of them in North Port alone.”
The Orange County Business Journal in California. “A turbulent 2022 is blending into an uncertain 2023 for Orange County’s luxury market. Many buyers and sellers are sitting on the sidelines to gain some clarity after a slow pace of sales last year. Last year kicked off with some residual demand from the pandemic frenzy that sent buyers paying top dollar for new homes, but that fervor was cut by looming economic headwinds; by May, mortgage interest rates were up 69% year-to-date, according to Steve High of Villa Real Estate. ‘Fewer buyers translated to fewer offers and fewer listings going under contract,’ High said. ‘By July, the number of homes for sale had doubled and nearly one-third of the listing inventory had experienced at least one price reduction.’”
From Market Watch. “The housing market downturn didn’t spare the Big Apple. High mortgage rates and low demand from buyers depressed sales in New York City in 2022, according to a new report by real-estate agency Coldwell Banker Warburg. ‘Buyer caution reasserted itself through all price ranges as increasingly anxious sellers went through the five stages of real-estate grief,’ the report stated. The final stage of grief among sellers in New York City was to accept price reductions. Despite reluctance from sellers, ‘most properties during 2022 have required price reductions of at least 10%,’ the report stated, ‘and some far more.’”
From House Digest. “Data from the Mortgage Bakers Association’s Weekly Mortgage Application Survey paints a clear picture of this. It found that the number of applications for mortgages in the last two weeks of December 2022 fell by 13.2%, and that is with seasonal adjustments. Joel Kan, the Vice President with MBA, shared, ‘The end of the year is typically a slower time for the housing market, and with mortgage rates still well above 6% and the threats of a recession looming, mortgage applications continued to decline over the past two weeks to the lowest levels since 1996.’”
From Bloomberg. “Federal Reserve officials last month affirmed their resolve to bring down inflation, cautioning that an ‘unwarranted’ loosening of financial conditions would hurt their efforts to achieve price stability. ‘A big concern of their messaging here is that the market is pricing in cuts by the second half of this year,’ said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. With inflation too high, officials ‘realize that the risk of overtightening is just something that they have to swallow and stomach,’ he said.”
Multi-Housing News. “The multifamily industry is bracing for more interest rate hikes in the first half of 2023. Three Pillars Capital Group in Houston was closing a $30 million acquisition in December but finding value-add deals in the second half of 2022 was generally difficult, noted Gautam Goyal, CEO. ‘There’s still a big mismatch between buyers and sellers but anybody that needs to sell now or for the next 12 months is definitely having to face reality that their assets are not worth what they were six months ago and they’re going to have to take a huge haircut in order to get rid of it,’ Goyal said.”
“‘If somebody had a fixed-rate mortgage that’s coming to term now or sometime in the near future, their deals don’t pencil anymore because they were predicated on a 3 percent or 3.5 percent mortgage, and that mortgage is now over 6 percent,’ said Jonathan Bennett, president of AmTrust Realty in Manhattan, which owns and operates 12 million square feet of multifamily and office space in New York, Chicago and Tampa, Fla. ‘And the values are not matching up either. So, the bank is saying, if you want to stick with us, you’re going to have to pay down this mortgage by 30 percent. Many owners and operators don’t have that and have to come up with a solution.’”
“Noah Hochman, co-chief Investment Officer at TruAmerica Multifamily, said one problem is many syndicators and sponsors have not been cycle-tested and are probably over-levered without a hedging strategy. ‘They’re probably not going to be able to meet the lenders’ extension test, and they’re going to have to be prepared to write a big check to either buy a new insurance cap that expired or rebalance a loan or do a cash-in refinancing,’ Hochman said.”
“Reuben Robin, CEO of Concord Cos., a Beverly Hills, Calif.,-based real estate firm that owns multifamily in California, Texas, Illinois and New Jersey, sold about 70 percent of its Texas assets in 2021. With the bid-ask spread making value-add deals difficult, Concord has pivoted and is focusing on non-performing loans. Robin said Concord was buying a portfolio of eight NPLs at the end of 2022 and anticipated more in 2023. ‘We’re looking at acquiring $50 million of NPL now and looking at another batch of $220 million behind that,’ Robin said.”
CTV News in Canada. “The housing market just isn’t what it used to be. Residential home sales in the Vancouver area plummeted almost 52 per cent in December 2022 compared to the same month the previous year. Year-over-year sales sank about 34 per cent, according to the Real Estate Board of Greater Vancouver. ‘Prices are down about 10 per cent of the peak over the past six months and that’s…over the whole market,’ said Andrew Lis, REBGV’s director, economics and data analytics.”
“Final numbers aren’t out yet for the Fraser Valley, but realtors say they’ve seen significant drops there too. ‘I mean it’s just down. We’re dramatically down,’ said Del Touet, owner or Royal LePage Preferred Realty in Mission. Touet said sales at his office took a big hit last year, dropping 28-30 per cent. Housing prices fell too. ‘Pricing in the Mission market is down 19 to 21 per cent overall,’ he said.”
The Globe and Mail. “The assessed value of homes rose in almost every community in British Columbia last year, but new official estimates show much smaller increases across B.C. than 2021′s massive spikes because rising interest rates had already begun cooling many of these real estate markets. Assessor Bryan Murao said these assessments are a snapshot of the local markets on July 1, 2022, when prices had already begun falling in many places after peaking before the Bank of Canada started raising interest rates.”
“”Jesse Kleine, a realtor in Vancouver and its eastern suburbs, said these latest assessments will further confuse some sellers as to the true value of their homes. For example, Mr. Kleine said, a three-bedroom rancher he was showing this week in Langley was first listed last July for $1.14-million. The owners have since dropped the price three times and are now asking $998,888. But, he said, their new assessment just pegged the value at $1.25-million.”
“In a normal market, an assessment might be off by up to $100,000 owing to not taking into account a house’s location on a busy street or the state of its interior, said Mr. Kleine, who has been selling real estate for six years. But, now with the downturn taking shape in Metro Vancouver, he said these assessments ‘can easily be off by a quarter million.’ That is leading to some difficult conversations when an agent meets with a seller to discuss what price to list their unit at, said Mr. Kleine, who said he just sold a house in Abbotsford for $899,000 that was assessed for $1.05-million.”
The Korea Times. “Home prices in Korea are cooling at a jaw-dropping clip amid soaring borrowing costs and an economic slowdown, portending that indebted home owners may face the toughest-ever challenge this year. ‘As demand (for homes) sharply decreased, potential buyers remain hesitant in buying homes. More and more people expect home prices to fall further down the road,’ said the Korea Real Estate Board.”
“There is other data pointing to a further drop in home prices. The number of unsold newly built homes surged to some 47,000 as of October last year, from a meager 17,000 units at the end of 2021. This year, the figure may surely reach between 60,000 and 70,000. For indebted home owners, a rising market rate means a bigger interest repayment as most property loans here are tied to benchmark rates. In the end, those who jumped on the bandwagon to buy homes with heavy debt out of fear of missing out will be forced to sell their home at cheaper prices than they have bought.”
The Guardian on Australia. “Sydney, Melbourne and Hobart posted record annual falls in property prices in 2022 as higher interest rates sapped demand and amounted to the largest national decline since the global financial crisis, industry analysts say. Sydney prices for dwellings – houses and apartments – shrank 12.1% last year, or more than double the 5.3% average national drop, according to CoreLogic. But prices remained more than 8% higher than pre-Covid levels, with the median price holding just above the $1m mark.”
“Melbourne’s 8.1% slide in average prices was the largest fall in a single calendar year in the data used by CoreLogic, which goes back to the 1980s. Prices remain above 2020 levels but those gains are ‘looking precarious,’ CoreLogic said, with median prices about 1.5% above pre-Covid levels at over $750,000. The 6.9% decline in prices recorded in Hobart in 2022 was also a record, but made only a dent in the Covid-era rise which saw home prices increase by more than a third since March 2020. Prices in Brisbane kept rising until June but have since dropped 9.4%. It left prices in the Queensland capital up about 1.1% overall. Adelaide’s housing peak came in July and the 1.3% reduction since then barely eroded the 44.7% gain through the upswing, CoreLogic said.”