It’s Friday desk clearing time for this blogger. “Nearly one in five sellers dropped prices during the four week period ended May 22, Redfin Corp. said. ‘The picture of a softening housing market is becoming more clear, especially to home sellers who are increasingly turning to price drops as buyers become more cost-conscious under higher mortgage rates,’ said Daryl Fairweather, Redfin’s chief economist.”
“‘Rising mortgage rates have caused the housing market to shift, and now home sellers are in a hurry to find a buyer before demand weakens further,’ said Redfin Chief Economist Daryl Fairweather. Sellers clearly see the market softening. ‘We used to get 10 to 15 offers on most houses,’ said Lindsay Katz, a real estate broker at Redfin in the Los Angeles area. ‘Now I’m seeing between two and six offers on a house, a good house.’”
“While home sellers were in the driver’s seat barely six months ago, they are now seeing far less competition from buyers. ‘I met with sellers in February who are going to sell in June, and it’s a very different conversation in February than it will be in June because the market has completely changed,’ said Katz.”
“Pending home sales, a leading indicator of the health of the housing market, declined for the sixth straight month in April. The news follows a drop in both new and existing home sales. ‘Pending contracts are telling as they better reflect the timelier impact from higher mortgage rates than do closings,’ said Lawrence Yun, NAR’s chief economist. ‘The latest contract signings … are at the slowest pace in nearly a decade.’”
“Andrew Sachs, a Keller Williams broker in Newtown, Connecticut, says he has begun to notice signs of a cooler market. ‘There are fewer bidding wars. Maybe the seller gets asking price, but they don’t get eight bids that push it over asking price,’ he says. ‘A seller can’t ask for the world and get it, so everything is going to be more negotiable.’”
“Monica Fowlds, a Real Estate Agent with Century 21 Selling Paradise, actually let us track two of her Fort Myers listings in the Reflection Isles community. Fowlds expected both houses to sell in no time. In total, it took seven days to get both homes sold and under contract. Fowlds said it could be a sign that the market is slightly slowing down. ‘They’re still coming in at full price or over ask, the offers. We’re just not seeing 47 offers to have to juggle and figure out. We’re seeing 1,2,3…7…something like that.’”
“The other house actually had no showings so the sellers decided to drop the price after 24 hours. ‘It was at $535,000…we got it under the threshold of $500,000. We went at $499,900 and then showings started coming in,’ Fowlds said.”
“The national and local housing market surge is finally cooling. Over the past two years, Lehi has been averaging only 30 available homes for sale at any given time. That number has risen to 108 available homes listed for sale on Monday, May 23. The state has also seen a rise in inventory. Utah had an average of 2,767 active listings in May 2021, compared to 5,009 active listings as of today. Builders are starting to eliminate their weekly bidding programs and are moving back to a first come first serve system. Lehi started the year with a median sales price of $581,000. May is currently sitting at a median sales price of $600,000. This number is Lehi’s highest monthly median sales price in history, despite the seller-to-buyers’ marketshift.”
“Investor sentiment has started to cool for new Toronto condos, the latest sign that the sharp rise in borrowing costs is slowing the country’s frenetic real estate market.’Buyers won’t be as willing to absorb higher prices because of diminished profit outlook and rents not covering expenses,’ said Urbanation president Shaun Hildebrand. ‘As preconstruction buyers see that the resale market is starting to slow and inventories are rising, they become more cautious as expectations about future growth are tempered.’”
“Simeon Papailias, senior partner with real estate brokerage REC Canada, which specializes in condo sales, said retail investors are nervous about interest rates and the federal government’s plans to crack down on real estate speculators with a tax on preconstruction condo sales. As well, so-called end-users, or those who intend to use the condo as their primary residence, are in wait-and-see mode. ‘You have both camps waiting for the shoe to drop. It’s just fear right now,’ he said.”
“Look around the world and a quite different picture emerges, for several of the hottest markets in property have suddenly become very much cooler. In Canada, house prices fell by six per cent in April, the second monthly decline in a row. In Australia house buyer sentiment has collapsed to its lowest level since 2008, with the Westpac, the Australian bank, saying: ‘The housing downturn foreshadowed in our previous reports is now underway, having been pulled forward and accelerated by an earlier and more aggressive interest rate tightening cycle.’”
“New Zealand Reserve Bank governor Adrian Orr has plotted a course to much higher interest rates, despite acknowledging the risk of a recession. The Reserve Bank is forecasting the economy will keep growing every quarter but Orr said a recession ‘sat within a range of possible outcomes, of course it does.’”
“ASB chief economist Nick Tuffley said it had thought the Reserve Bank ‘would come out swinging’ but its statement was still more hawkish than expected. ‘The Reserve Bank’s new OCR forecast profile implies both a higher OCR peak than we had expected and a more rapid pace of tightening to get there,’ Tuffley said.”
“National Party finance spokesperson Nicola Willis said rising interest rates would be difficult for people battling ‘the cost of living crisis.’ We have known since last year – well before the Russian invasion of Ukraine – that New Zealand had an inflation problem but the Government’s only response has been to put more fuel on the fire with more spending,’ she said. ‘Now the Reserve Bank has no choice but to increase the OCR, pushing up interest rates across the whole economy and creating more pain for mortgage holders.’”
“A Chinese property company long considered among the nation’s most resilient shocked investors with a proposed dollar-bond payment delay, raising fresh doubts about the financial strength of the industry’s higher-rated borrowers. Greenland Holdings Corp., whose shareholders include the Shanghai government, is asking holders of a $488 million dollar note due June 25 to delay repayment by a year, a rare sign of stress at a state-linked firm. Its bond price tumbled from highs of 92 cents on the dollar to a record low of 41 cents in recent days as fears of an extension were confirmed.”
“Signs of stress at a firm like Greenland, China’s 11th-largest builder, is a worrying sign that even borrowers which enjoy some level of state backing may no longer rely on support when they run into trouble. The builder’s extension proposal ‘signals quasi state-owned developers aren’t immune to a liquidity crisis caused by prolonged Covid-zero lockdowns and heightened refinancing pressure due to market shutdown for weak developers,’ wrote Bloomberg Intelligence analysts Dan Wang and Daniel Fan in a report.”
“SOEs, companies that are backed by local or provincial governments, have so far been spared from the credit crisis sweeping the real estate sector as authorities moved to clamp down on these debt-saddled borrowers. A payment failure at Greenland may prompt a drastic repricing of risk among state firms and ‘an onslaught of rating downgrades could happen and lead to systemic risk for the financial system,’ Wang and Fan wrote.”