A report from Banker and Tradesman. “The coming weeks and months present a challenge to reporters and editors covering the Massachusetts real estate market. After 18 months of precipitous price jumps, this summer saw hints that the speed of those increases was slowing down. A number of prospective buyers, industry sources told Banker & Tradesman, seemed to take the summer off.”
“The vocabulary journalists choose when covering these trends has to be carefully considered in the context of the Great Recession. The wild home value swings of the 2000s and early 2010s were a formative experience for many people’s understanding of the real estate market. So, when they hear the TV news anchor introduce a segment by saying that the housing market is ‘weakening’ or ‘cooling’ following months of a hyperventilating market, many are naturally going to fear a crash is imminent.”
“In times like this, it’s incumbent on any reporter, editor or producer covering home prices to foreground just how much market power sellers still have and just how well-qualified today’s buyers are. So, we urge our peers to lean into the details, and resist the urge to sensationalize small shifts in the market out of fear they’ll miss the early signs of a trend. The only thing worse than a market panic is one sparked by accidental falsehoods.”
From Community Impact on Texas. “The Austin Board of Realtors shows a continued decline in housing prices across Northwest Austin compared to peaks seen earlier this summer. The median price for all properties in Northwest Austin—including single-family homes, townhouses and condominiums—dropped to $548,750 in August, according to the newest ABoR data. That is a 7.77% decline in the median price from June 2021, when home prices peaked at $595,000. August was also the second month in a row where home prices overall have declined across Northwest Austin, a first for this year.”
From Arlington Now in Virginia. “Hello, Arlington! Buyers stepped up big this week, ratifying a ton of contracts, but sellers put even more new inventory on the market! The market is moving, but it is not moving at the pace we saw in the spring. Perhaps earlier this year we experienced all or most of the appreciation we would for the year, and now we’re just leveled off for the time being. A huge surge in condo inventory over just the past four weeks (about 15%) is adding heavily to our overall inventory, and we have 77 more to choose from than this week last year (and 26 more than last week!)”
The Washington Business Journal. “Home sales in the Washington, D.C. metro area surged beginning in late spring 2020 and have barely skipped a beat since. There is no question that the market is slowing relative to a year ago, with a modest easing in home purchases and equally modest increases in listing inventory. That sets up well for a continuing strong market with significantly less price appreciation.”
From AZ Big Media in Arizona. “Runaway monthly increases in home values and rents tempered in August, according to Zillow, paving the way for a strong but more manageable housing market come fall. Another month of rising inventory and more for-sale listings taking price cuts are giving buyers more options and potentially less stress as they shop for their next home, but Phoenix home values are still rising at unprecedented levels. For-sale listings rose the most month over month in the Midwest. Meanwhile, Austin and Washington, D.C., now have more available inventory than they did one year ago.”
“The share of listings with a price cut rose for the fourth consecutive month, further evidence of a market returning to balance. ‘Another month of rising for-sale inventory gives shoppers more options to choose from and less competition, which should help reduce bidding wars and further moderate rampant price hikes,’ said Nicole Bachaud, economic data analyst at Zillow. ‘A slightly less frenzied market means buyers have a much better chance to land the home they’re bidding on, and may even see a price drop on their saved listings.’”
The York Dispatch in Pennsylvania. “York County Realtors are finally seeing a small increase in inventory floating back into the housing market. The fast-paced sellers market is finally slowing down due to new inventory, according to Tina Llorente, president of the Realtors Association of York and Adams Counties. This slowdown is especially good for buyers, Llorente said. In the peak of the housing market earlier this year, houses quickly came and went from the market in less than a week. While more inventory may be good news for buyers, Llorente said for sellers there will be more competition.”
“At least they have a choice now between property A, B and C, where before it was ‘take A or leave it,’ Llorente said. ‘Now they have a slightly bigger pool to choose from.’”
The New York Post on California. “Only a few weeks after Matt Damon slashed the price of his Los Angeles estate by a colossal $3.1 million, the actor has scored a buyer, The Post can report. Damon initially listed the property — located in the upscale Pacific Palisades neighborhood — back in January for $21 million. But the price apparently was too high for anyone’s liking. On Aug. 4, the sale price decreased to $17.9 million, with a pending offer going into effect Thursday morning.”
From Patch Illinois. “More than five and a half years and 37 price cuts after it was first listed for sale, a lakefront mansion last week sold for $5.5 million — just 56 percent of its original asking price. Built in 2001, the property became the third Winnetka home in less than two months to sell for more than $5 million, according to Redfin. The home’s single owner put it up for sale in February 2016 with a $9.75 million asking price, placing it among the most expensive listings in the suburbs at the time.”
“According to the Cook County Assessor’s Office, the estimated market value of the property is $6.3 million for taxing purposes. The second installment of the home’s annual $160,000 property tax bill is due in two weeks.”
From Remax on Canada. “In recent months, the consensus has been that the Canadian real estate market may have reached its peak. Some markets continue to enjoy record-breaking gains. Still, the broad-based trends spotlight a crucial development: the sector may be returning to some semblance of normalcy during these uncertain times. Will this finally give young Canadians hope that they can attain the dream of home ownership? That is the $679,000 question for households attempting to step foot inside this booming market.”
“The National Post recently ran an op-ed titled, ‘The great real estate cool-down has come,’ adding that ‘sellers turning down offers in hopes of a better one: Be warned. We’ve entered an ‘adjustment phase.’ Indeed, after seeing meteoric gains in recent months, many homeowners might believe they can wait until they receive a better offer. However, that higher bid may not come as many homebuyers have done one of three things: exited the market due to soaring costs, suffered buyer fatigue, or chose to wait until a correction intensifies.”
“Industry experts note that many sellers listen to their friends and family rather than the data, despite the plethora of analyses of a red-hot market being doused by supply, demand and other factors. ‘Many [sellers] are realizing weeks later that they botched a great offer and regret becoming overly confident and unsatisfied with the offers they declined,’ Rob Golfi, the head of RE/MAX Escarpment Golfi Realty Inc., told the newspaper in an interview. ‘Seller expectations are being impacted by how things were in previous months. They’re listening to their friends and family and not listening to the realtor. They’re seeing what their neighbours got for their homes in March and April and they’re saying, ‘I want that. I want more than that. My home is worth what they got if not more.’”
From ABC News in Australia. “Adriane and Gillian Creamer began a $400,000 renovation and extension of their Cygnet home, south of Hobart, in November 2019. Nearly two years on it’s still not finished and they’ve spent an extra $150,000 fixing defects and $50,000 on legal fees. The couple, who are approaching retirement, describe it as the most traumatic experience of their life.”
“‘It’s been really tough, my wife lost 10 kilos, I don’t know how much I lost but she lost 10 kilos of weight, regularly in tears, the stress levels were unbelievable,’ Adriane Creamer said. The second surveyor’s report listed a number of problems. ‘He got about 30 things wrong with the build, 30 defects, 12 of which were so serious we couldn’t live in the house or sell the house until they were satisfactorily repaired,’ Mr Creamer said.”
The Los Angeles Times. “They came from all over the country, dragging cheap suitcases and clutching file folders filled with records, chanting in front of the glassy skyscraper: ‘Evergrande, pay up!’ They were the owners of small lighting and plumbing and construction materials companies, suppliers for Evergrande, one of China’s largest property developers — now staggering under more than $300 billion in debt and facing potential collapse. Dozens of protesters were gathering daily here in recent days at Evergrande headquarters. Most were contractors who’d accepted commercial papers — a sort of IOU — as payment for projects, but now found Evergrande unable to pay when those IOUs came due.”
“‘They say: ‘We have no money. Do whatever you like,’ said Li Gexin, the manager of a janitorial company in Qingdao. It had 200 workers who’d cleaned Evergrande’s sales offices for a year and were owed more than $300,000 in commercial papers. ‘If we don’t get the money, we can’t eat,’ said Li, who’d driven for 24 hours to the Shenzhen headquarters. They needed that money to feed their families, send kids to school, buy medicine for elderly people and pay their own mortgages — to live, he said. Dozens of other suppliers gathered around, relating similar woes.”
“The distress surrounding Evergrande’s crash is a window into the problem of bad debt in China’s housing sector. Property giants like Evergrande have boomed in the last few decades on a model of vast borrowing and fast expansion, relying on cash flows from apartments it would someday build to construct apartments it had already sold. That worked as long as they could keep getting new loans for new projects, even as housing demand declined. But in August 2020, government regulators laid down new rules about how much debt developers could take on.”
“Evergrande admitted in public statements this month that it may not be able to repay its debts. Credit ratings agencies Fitch, Moody’s and S&P downgraded Evergrande to levels indicating ‘in or very near default.’ Its stock value has dropped 80% this year, and it has an estimated 1.4 million more homes that it’s already sold but not yet built.”
“It would hurt not only the developer’s creditors and investors, but also all those who bought unfinished homes, put their savings in Evergrande’s wealth management products or were among its contractors and subcontractors paid in IOUs. Some of these suppliers had put up their own homes as collateral in loans to cover their work for Evergrande, confident that ‘such a big company’ could not possibly fail to pay. Now they are under pressure from both the banks and their workers.”
“The entire construction supply chain had been using Evergrande IOUs instead of cash for years, said Cai, a supplier from Wenzhou who asked to be identified only by her last name. When Evergrande was late paying the July commercial papers, she assumed that if the project she’d worked on was in trouble, the company would be able to transfer money from another Evergrande project.”
“‘We thought, it couldn’t be that all their projects in the whole country are out of money. It’s not realistic, right?’ she said. But suddenly no one wanted Evergrande’s IOUs anymore. They’d become ‘worthless pieces of paper,’ she said. ‘Then we panicked.’”
“‘They sacrifice one group of people in order to save the majority,’ said Ye Hong, 55, a clothing exporter from Ningbo who had invested his retirement savings of nearly $800,000 in Evergrande’s now-frozen wealth management products. Ye had come to Shenzhen for the first time in his life hoping to get his investment back. But after trying to negotiate, seeing the police everywhere and hearing how much the others were owed, he wasn’t hopeful. ‘I just trusted them too much,’ he said.”