A weekend topic starting with the Review Journal in Nevada. “After a prolonged hot streak in the housing market, at least one flipper is maxed out. Zillow announced it will not sign any new contracts to buy homes ‘through the end of the year.’ Offerpad purchased a two-story, 3,151-square-foot house in Summerlin in late July for $772,000, records indicate. It then put the home up for sale in late September for $899,900 — a 16.6 percent price jump.”
“A listing for the house says it has new paint, flooring, carpeting and baseboards. It is still for sale.”
The Coeur d’Alene Press in Idaho. “The median sales price of homes in Kootenai County is up to $475,000, an increase of 37% compared to $346,000 in September 2020, according to the Coeur d’Alene Multiple Listing Service. A total of 544 homes were on the market last month – a jump of 24% compared to 438 homes available in September 2020. That increase indicates inventory shortages are easing, which creates a more balanced real estate market, say real estate agents.”
“One real estate agent told The Press the market is seeing price reductions and fewer cash offers. ‘We have been seeing a slow correction on sales prices, the Coeur d’Alene housing market is still strong and competitive,’ wrote Sarah Kestler, Coeur d’Alene Association of Realtors director of communication. Nick Shriner, real estate agent with Windermere Real Estate, said inventory has tripled from spring.”
The Cape Cod Times in Massachusetts. “The robust seller’s market continues across the Cape and Islands, with the median sale price of a single-family home climbing to $625,500 in September, up from $619,000 a month earlier and $550,000 in September 2020, according to the Cape Cod & Islands Association of Realtors. The median price for a condo slipped by a hair’s breadth, from $402,000 in August to $400,000 in September, but still shows a substantial gain from $353,750 in September last year.”
“The statistics recorded across the Cape and Islands mirror the trends seen statewide, with sales volume reductions compared to 2020 but increases versus 2019, according to data released by The Warren Group. ‘The number of single-family home sales has now declined for three consecutive months,’ said Tim Warren, CEO of The Warren Group. ‘There just aren’t enough homes for sale in Massachusetts,’ he said, adding that single-family homes ‘have just gotten too expensive for a lot of buyers. The people who can afford homes already have them, while those with more modest budgets have been left with next to no options.’”
The Augusta Free Press in Virginia. “For the first time in more than a year, sales activity in Virginia slowed in September compared to the prior year. The cooling of the market can also be detected in the moderating price growth. ‘It would be impossible for the housing market to keep up the frantic pace we’ve been seeing over the past 12 months,’ says Virginia REALTORS® 2021 President Beth Dalton. ‘What we’re seeing is a slow return to a more ‘normal’ housing market, and not a big change in home buyer demand.’”
The Los Angeles Times. “Pam Lumpkin is among a small but growing group of Black Angelenos who, though torn, prefer to see what’s happening in South L.A. as an opportunity. One that if seized by enough Black people could lead to an unprecedented transfer of generational wealth and, by extension, slow the pace of gentrification. Or, if squandered, could put the neighborhoods that have long been at the center of Black life in Southern California at further risk of cultural erasure.”
“She’s a real estate agent who has developed a niche market in South L.A., selling homes to an exclusive clientele of Black professionals, and renovating and renting homes for others. This time of crisis has presented plenty of opportunities for her, if not always for everyone else. She tells those who will listen: ‘Don’t sell your house if you’re Black and you’re from this neighborhood. Don’t sell your damn house!’”
“Lumpkin is optimistic about what’s ahead for South L.A. ‘I think people are going to hold on to their houses and I think Black people are going to continue to buy, and I think the enclave that was here when I was growing up is going to come back again.’ And it’s almost certain that home prices will continue to rise.”
The Los Angeles Times on Florida. “Basketball legend Shaquille O’Neal had more relists (five) for his Florida home than NBA championships (four), but the big man finally sold the mega-mansion for $11 million. That’s a discount of roughly 60% compared with his original price of $28 million. The mammoth deal ends a three-year saga that saw him tap five different agents to try to sell the place.”
From Reuters. “U.S. home prices are rising rapidly because of low interest rates and as people seek out living space during the COVID-19 pandemic, but the trend doesn’t yet pose big risks for financial stability, New York Federal Reserve Bank President John Williams said. Housing prices could come down later if preferences change, Williams said, but there is less credit risk in the housing markets and banks are better prepared to handle that kind of shift than they were before the Great Recession.”
“‘I think there is clearly a risk … that house prices could come down and I think that’s a risk to the macro economy through the traditional channels,’ Williams said.”
From Interest New Zealand. “Economists at the country’s largest bank are warning that rising mortgage rates could make the housing market ‘flip more abruptly than expected’ from a support – to a drag – on household spending and construction activity. ANZ economist Finn Robinson, chief economist Sharon Zollner and senior strategist David Croy note that the ‘dramatic increase’ in wholesale swap interest rates earlier in the week ‘was so large there is real pressure for mortgage rates to rise further before long.’”
“‘This increases the chance that housing market momentum could turn more sharply than forecast and flip more abruptly than expected from a support to a drag on household spending and construction activity,’ they say. ‘And globally, a reassessment of the likely average cost of borrowing over the next few years poses a challenge to asset valuations that underpin household wealth. All up, it is far from a given that the wheels will stay on the bus while the RBNZ steadily increases the OCR [Official Cash Rate] for the best part of a year.’”
From CNBC. “China’s real estate sector has to be ‘substantially smaller’ to keep the overall economy healthy and stable, said a top expert on the Chinese housing market.’We have too big of a risk in the sector. We built too much housing, so the stabilization first has to come [from] trimming the sector,’ Li Gan, an economics professor at Texas A&M University, told CNBC. Gan estimated that about 20% of China’s housing stock is vacant as buyers rack up second and third properties as investments. Even then, developers continue to build millions of new units each year, he said.”
“Gan said lower home prices would allow consumers to spend on other things, which would be healthier for the overall economy. Overall, the contribution of real estate and related industries to China’s gross domestic product could fall from roughly 30% currently to around 15%, predicted Gan. He added that the Chinese government would be able to engineer a gradual slowdown in the real estate sector to avoid a hard landing in the economy.”
“‘Using real estate sector to pump up GDP growth is not … a sustainable path for China,’ the professor said. ‘Some of the real estate companies, I would say, will have to get out of the sector in order for the country and the sector to be healthy. So Evergrande’s problem is just the beginning, many companies would have to exit from the sector because the demand is no longer there,’ said Gan.”
The Mises Institute. “While Federal Reserve Chair Jerome Powell considers the ramifications of his $5 million stock sales prior to the market slump of last year, the rest of us should be left wondering: What else are they not telling us? This week, some lesser-known members of the Fed offered some ideas worthy of consideration. On Tuesday, Governor Bowman, at the Women in Banking Symposium asked her audience how America’s central bank can help women.”
“The Federal Reserve can do a lot to help women. However, the help required is at odds with actions taken by the Fed. For example, the best way the Fed could help women is to simply leave them alone, but the Fed doesn’t want to leave people to their own devices. With less regulation, women would spend less money and time paying for unnecessary fees. They could also face fewer barriers upon entry.”
“Even if beneficial, it’s highly unlikely the Fed would consider less regulation as a viable solution to anything. The idea of interfering less in the lives of people so they can better manage their own affairs is something not normally mentioned by central bankers. Of course, it’s not surprising that the Federal Reserve would prefer people don’t know about this. It would be self-defeating for them if they did!”
“There’s no easy way to say this and it’s not hyperbole or exaggeration; the Fed’s goal was to erode your purchasing power, making life more expensive for you. Naturally, they will not tell you their goal is currency devaluation. But that’s exactly what it is. Rather, they will call it inflation targeting or use other words to make it sound less harmful.”