A report from Realtor.com. “The housing market has been called plenty of things this summer: red-hot, insane, brutal. But the latest word du jour to describe the state of real estate today is almost shocking in its tepidness: balanced. This term cropped up most recently in an analysis by Realtor.com economist Jiayi Xu. ‘For a fourth week in a row, homes are sitting on the market for a longer time than last year,’ adds Xu.”
From Forbes. “Many sellers have slashed their asking prices in recent months. Some cities—particularly those that were popular early on in the pandemic—are seeing this trend more widely than other areas, according to Redfin. Boise, Idaho, for example, touted as the most overvalued housing market in America where prices spiked as much as 80% last year, is seeing a decline. Recently, two-thirds of sellers (61.5%) in Boise have cut their asking prices.”
“Denver is also seeing a dip, with 55.1% of sellers lowering home asking prices. Some 51.6% of sellers in Salt Lake City and 49.5% of sellers in Tacoma, Wash. recently cut prices. Other metro areas that are following this trend include Grand Rapids, Mich. (49.3%), Sacramento (48.7%), Seattle (46.3%), Portland, Ore. (45.7%), Tampa, Fla. (44.5%) and Indianapolis (44.1%). ‘My advice to prospective sellers is to list their home slightly lower than they think they should and be patient,’ Denver Redfin agent Andy Potarf said in the report.”
“In a separate survey, Redfin looked at cities where residents have high debt compared to income and where home equity remains vulnerable as a result of this. In these areas, homeowners are more likely to foreclose or sell at a loss. Riverside, Calif. topped the list of cities most vulnerable to a recession. Riverside ‘has highly volatile home prices and it was a hot destination during the pandemic, both for people permanently relocating and those buying second homes,’ according to the report. Boise, Idaho came in second, followed by Cape Coral, Fla., North Port Fla. and Las Vegas. Sacramento, Calif., Bakersfield, Calif., Phoenix, Tampa, Fla. and Tucson, Ariz. followed behind as risky markets that could be impacted by a recession.”
From Nerd Wallet. “Selling a home these days isn’t as effortless as a year ago, when a seller could choose among competing buyers. ‘Overall, I’d say the buying/selling experience right now is comparable to the summer of 2019,’ said Dana Bull, a Realtor in the Boston are. Today, there’s still low inventory and it’s a very active market, but not as cutthroat and without underlying tones of desperation.’”
“Not long ago, it was common to list a property on Tuesday and sell it by the weekend, says Terri Robinson, a Realtor in Ashburn, Virginia. ‘Or you had people putting in offer deadlines saying, ‘Please submit all offers by 4 p.m. Sunday.’ Now that language has disappeared.’”
The Larchmont Buzz in California. “Recently, the Los Angeles Times reported that ‘rising mortgage interest rates have put the brakes on a once-hot housing market in Southern California and across the country.’ But what does that mean in our greater Hancock Park, Windsor Square and Larchmont Village market? ‘We are down 6% year over year from July 21 to July 22 in listings in Hancock Park, Los Feliz, Silver Lake, Hollywood Hills East and Studio City,’ said Ali Jack of Compass. ‘The market is down 10% year over year on accepted offers, but the most telling stat is we are down 48% in houses sold year over year (166 sales to 87 sales), while listing inventory has not changed that dramatically. This is why you are seeing headlines of price reductions,’ added Jack.”
“‘Hancock Park is very fashionable,’ said Anne Loveland of Loveland Carr, who grew up in the neighborhood. ‘There is demand, but no seller wants to be a fool, so when listing a property today it’s important to not just look at your neighbor‘s sale from a few months ago,’ said Loveland.”
From Candy’s Dirt. “It used to be a way to feel good about your investment. But now, maybe it’s not a good idea to check your home’s value on Zillow. If we decide to sell, we might not get the price we want. According to Redfin’s report, 45.8 percent of home sellers in the Dallas area and 44.7 percent in the Fort Worth area have had to reduce their prices in July. In Texas, only Austin ranked higher with 46.5 percent. It wasn’t just the North Texas region that experienced price reductions. Nationwide, the share of homes for sales with price drops reached a record high in July.”
The Denver Post in Colorado. “Metro Denver’s housing market has exited the pandemic-induced fever that dominated last year and the first half of this year — a surge in activity and prices unlike any the region has ever seen or will likely see for years to come. ‘Wages and salaries aren’t keeping pace with housing costs. It is realistically unsustainable. Something has to give at some point. Our housing market has changed, the question is how much will it continue to change,’ said Steve Danyliw, a member of the Market Trends Committee at the Denver Metro Association of Realtors and a Littleton-based Realtor.”
“Nancy Henson, the managing broker at Heather Gardens Brokers, has worked in the 80014 ZIP, which ranked second hottest overall, going back to the mid-1980s when she started in the real estate business with her father. She has seen a lot of ups and down over the past 36 years, but said nothing compares to the frenzy of the past two years.”
“‘It was crazy. We had very little inventory and were getting record prices in just a few days,’ she said. ‘Right now, it has come to a grinding slow-down, with price reductions every day on inventory that is not selling. It feels more like the 2006-2009 era, which makes me very nervous.’ In the spring and early summer, her firm had between 5 to10 listings on the market at any given time and now that total is up to 30 and they aren’t moving. Her hope is that interest rates don’t go so high they send the housing market into freefall.”
The Globe and Mail in Canada. “A nearly complete mixed-use retail and residential rental project has been pushed into receivership in London, Ont., as its lender alleges construction delays blew up an initial $18-million construction budget and dozens of contractors claim millions in unpaid work. London’s Applewood Marketplace Inc. may be just one of many developments to face financial trouble amid grinding delays and rising costs affecting the building industry. Data from the real estate research and data company Altus Group shows roughly 60 per cent of residential and commercial projects are facing delays of about a third of their original timetables.”
“Court filings from construction lender MarshallZehr Group Inc. allege that Applewood owes it more than $58-million, with the interest on all that debt surpassing $36,000 per day. Contractors have also filed liens or $8-million in unpaid work. There are two named principals for Applewood Marketplace, located on former farmland on the northern edge of London: Mike Clawson and Perry Sempecos. The court documents contain unproven allegations that have not been tested in court. Mr. Sempecos declined to comment and Mr. Clawson, whose colleagues said went on a month-long vacation to Europe starting in mid-July, could not be reached.”
“‘The interest is just the tip of the iceberg – it is way bigger than that,’ said David Schoonjans, a senior director with Altus Group who focuses on costs and project management. ‘There’s project overhead: crane rentals, management, subcontractors. Take a 30-storey high-rise in the GTA; you can easily burn through half a million or $800,000 every month you’re delayed. That’s a lot of money very quickly. And there’s 50 companies on that project, so when you delay, you open yourself to a massive box of litigation troubles.’”
“What may be happening now is that the tide is going out and beaching builders who were already swimming too close to the rocks. ‘When the markets are going up and everybody sees what looks like massive profits … all they’ve ever seen is people making money off of real estate and for a lot of years a lot of sloppy mistakes were covered up by rising revenues,’ said Mr. Schoonjans.”
News.com.au in Australia. “Homeowners from a building company that collapsed last month owing $23 million have been dealt another devastating blow. In a creditor’s report released last week and obtained by news.com.au, the appointed liquidators have revealed they are pursuing customers for money.That’s despite most homeowners having to fork out hundreds of thousands more to build their homes as costs have skyrocketed and state insurance only covers 20 per cent of the contract price after the company’s demise.”
“Donna Taylor, a postwoman in Phillip Island south of Melbourne, expects to receive one of those letters even though she has been left $180,000 out of pocket from the whole ordeal. ‘They’re probably going to send me the bill for a retaining wall, I’ll tell them to get f**ked,’ she told news.com.au. ‘It’s just too scary, I start crying when I think about money. That’s nearly my whole last mortgage from the last house. I was going to be mortgage free and semi-retire, now I’m probably going to have to do a full time job plus an extra job, I’ll have to take a mortgage of $100,000 (to afford that).’”
“Brody* runs a small business with three other employees and claims he is owed $150,000 from Langford Jones Homes after outlaying his own money to buy materials. The contractor, based in Victoria’s Mornington Peninsula, said that was the sum total of his life savings. ‘I really don’t have any money, I’m having to borrow money from my father,’ the 49-year-old told news.com.au. James* was one of several site supervisors for Langford Jones Homes who quit en masse once they understood the scope of financial problems the company was facing. ‘It was the worst time of my life,’ he said.”
“Another employee, Vincent, said: ‘I could see the writing on the wall. I couldn’t face clients, you know people are paying deposits and not getting their house built.’ David Drummond and his wife, in their late 60s, said they are ‘devastated’ and that the company’s winding up ‘will be a huge financial loss for us.’ ‘We will sell and move on and not proceed with the build with anyone else. This has also destroyed our plans for a retirement by the sea,’ he told news.com.au.”
The Guardian. “China has reached a point of no return in its battle to contain what could be the biggest property crash the world has ever seen, experts believe, creating a perilous moment for the country’s Communist leadership and the global economy. The Chinese housing market has driven growth for the past two decades and now represents the biggest asset class in the world, with a notional value of between $55tn (£47tn) and $60tn, which is bigger than the total capitalisation of the US stock market.”
“Now developers are going bust after being deprived of easy credit, prices are falling, homeowners are refusing to pay mortgages on unfinished homes and the slump in properties being sold and construction is crippling local governments that rely on land sales for income. Gabriel Wildau, a China expert at the global advisory firm Teneo, says Beijing faces a crunch moment over whether to reverse the crackdown on lending or double down in its attempts to ‘tame the beast’ of unproductive construction activity that has resulted in the emergence of ghost towns and airports, as well as roads to nowhere.”
“‘The government faces a hard choice. But it’s like zero-Covid. They have come so far they can’t turn back because then it looks like a misjudgment or policy error,’ Wildau said. ‘This is where the rubber hits the road. They want more hi-tech growth and they don’t want as much real estate, but what replaces that? There’s been a total collapse of confidence in the housing market. No industry can survive that.’”