A report from Market Watch. “Lumber prices have dropped by more than 60% so far this year, but don’t count on a recovery soon. ‘Home builders have faced an enormous uptick in cancellations over the past several months due to the sharp rise in mortgage rates and the related softening demand for home buying,’ said Alexander Snyder, portfolio manager, real estate securities, at CenterSquare Investment Management. The trickle down of higher rates is cascading into lower demand for new houses, which leads to lower demand for lumber, which leads to lower prices for lumber.’”
“‘Lumber has witnessed complete demand destruction from a housing standpoint,’ said Greg Kuta, CEO of lumber broker Westline Capital Strategies. It has been a ‘one-two gut punch’ in the form of demand destruction with every kind of ratchet higher in interest rates. When you factor in higher inflation, price appreciation over the past year, and higher interest rates, ‘the single family component of housing is getting annihilated,’ he said.”
Business Insider. “Homebuilders like Lennar and KB Home are already walking away from residential land deals due to the soured outlook in the housing market. In their most recent quarter, Lennar said it canceled contracts to purchase 10,000 lots, while KB Homes dropped 8,800 lots. ‘The lumber market continues to be in a state of overall malaise as buyers anticipate lower overall demand going forward. Many yards are trying to pare their inventories to minimum levels and have really no fear of price upside,’ said Sherwood Lumber’s director of risk management Steve Loebner.”
The Daily News Journal. “Tennessee’s housing market shows signs of cooling. ‘A sign of uneasiness emerged in the corners of the housing market as reflected in significant drops in housing permit activities in Tennessee,’ said report author Murat Arik, director of the BERC at MTSU. Over the past two years, when the Federal Reserve lowered interest rates, Tennessee home buying skyrocketed. Builders couldn’t keep up with demand and the inventory of existing homes was extremely low. Houses sold quickly and offers were often significantly over the listing price. ‘I call it the 2020 covid interest discount,’ said Jason Galaz with Find a Home in Tennessee. ‘But that’s over.’”
“‘If it’s up above $400,000, it could sit on the market a month, maybe two,’ said Galaz, whose brand covers the entire state of Tennessee market. ‘A lot of home sellers are still expecting high demand and they can make up a number. When their home doesn’t sell that quickly, they have a reality check.’”
Carolina Public Press. “Charlotte’s real estate market may be cooling off, with less pressure on homebuyers to bid tens of thousands of dollars over asking price. Morgan Wise, a senior loan officer at Bridgewater Capital, said that recent bidding wars have scared many buyers in the Charlotte area, where it wasn’t uncommon for sellers to receive dozens of offers and to go on to sell for more than $50,000 over asking prices. She recently helped that same client sign a contract to purchase a home for $40,000 below list price, a significant shift from just a few weeks ago.”
“Realtor and broker Heather Hopkinson said that Charlotte’s housing market is catching up with national trends. She said that larger markets like New York’s started slowing first, and now Charlotte’s is following suit. Hopkinson also said she’s seeing a repeat of what happened after the 2008 market crash, a time when she saw low appraisals and quickly fluctuating home prices.”
From WLRN. “Home prices in South Florida are finally falling. Michael Butler, a real estate reporter for the Miami Herald said that a three-bedroom, two-bathroom house in Miami Gardens that had been previously appraised at $350,000 had most likely ballooned to about $550,000 as prices ran wild over the last year. ‘You’re looking at maybe a $20,000 dollar drop between July and August,’ Butler said. ‘Technically, that indicates there was a drop … But in terms of like a more significant drop, $20,000 might not mean a whole lot when you’re still overpriced by $200,000.’”
The Seattle Times in Washington. “‘The cooling has come hard and fast,” Stephen Stanley, chief economist at Amherst Pierpoint, said in a note. Seattle-area home prices in July were still up compared to last year but have fallen since this spring. Single-family home prices were up 14.5% from last July and down 3% from June, according to the index. In Seattle, that was the largest month-to-month drop since January 2009. But in 2008 and 2009, prices were also falling by double-digit percentages compared to the previous year. San Francisco (-3.6%) and San Diego (-2%) also saw large month-over-month declines in July.”
Oregon Pubic Broadcasting. “‘I like to describe the market as having gone from white hot to red hot, but it’s definitely in the cooling phase,’ said Drew Coleman, past president of the Oregon Realtors Association. Deschutes County saw the most drastic dip in median listing prices, going from $777,000 in May to $707,000 in August. This region has some of the highest median listing prices in Oregon, thanks to housing demands in Bend. Multnomah County also saw a slight dip, from $545,000 in May to $525,000 in August.”
“Coleman says Oregon’s most recent homebuyers shouldn’t worry about losing equity — that is, having their home’s value dip below what they bought it for — if they bought at the top of the market, when many homebuyers were making offers well above asking price. ‘People who vastly overpaid for a home definitely could have a slight loss in equity if they did overpay above-and-beyond what the market would bear now,’ Coleman said.”
The LA Daily News in California. “Los Angeles County homebuying chilled this summer. The homebuying pace cooled by 28% in August to a record low as house hunters were scared off by 41% higher house payments. Los Angeles County home prices are now 5.2% off their springtime peak.”
The Express News. “A Dallas developer who discussed plans for several San Antonio projects in recent years is facing federal charges for allegedly bilking Chinese investors of more than $26 million. Timothy Barton, president of JMJ Development and CEO of Carnegie Development, is facing charges of wire fraud, conspiracy to commit wire fraud and securities fraud, U.S. Attorney for the Northern District of Texas Chad Meacham announced. He allegedly went to Hangzhou, China, to pitch real estate projects, telling investors the properties were in desirable neighborhoods in the Dallas-Fort Worth area.”
“They also ‘allegedly misappropriated nearly all investor funds,’ using the money to make Ponzi payments to other investors, buy property under the names of other Barton companies, pay sales commissions to Fu and purchase a private jet for Barton, the SEC said. ‘The properties were never developed and investors have not been repaid,’ the SEC said.”
The London Free Press in Canada. “First-time homebuyers struggling to pull together a down payment to get into the London market might get some relief – if they’re willing to sit tight for a few months. After hitting an all-time high of $825,000 in February, the average resale price of a home in the region dropped to $648,000 in August.”
“According to RBC, London homes, along with those in Kitchener-Waterloo, have seen the second biggest decline in the MLS Home Price Index in Ontario at 16 per cent. Only Cambridge saw a greater decline at 19 per cent. Randy Pawlowski, president of the London and St. Thomas Association of Realtors (LSTAR), said the interest rate hikes have had a big impact on the local market, keeping many buyers on the sidelines uncertain about when to jump into the market and sellers struggling to adjust to the new price reality.”
“‘We haven’t seen a situation like this before, with the pricing, the inventory levels or the interest rate increases to such extremes,’ he said. ‘So, it’s pretty messy out there. Many sellers are struggling to get in line with where today’s buyer thinking is.’”
The Daily Mail. “Britain is heading for a property price crash within the next two years as more than two million households face soaring mortgage costs that will see many forced to sell, analysts have warned. Jittery lenders pulled almost 1,000 deals from the market overnight in the biggest daily fall on record. Homeowner Gary Sanders, 53, said the successive increases in mortgage rates so far this year alone have forced him to put his home back on the market.”
“He told MailOnline: ‘People are suffering now because of the seven increases since the end of last year. My mortgage has already risen from just over £500 a month to £1200 a month. I know they are going to go higher. I have put my property on the market as I have no choice but to sell. I am a 53 year old man who has worked hard his whole life and I find myself being forced to move back with my parents.’”
From Reuters. “Investors dumped shares and bonds of Chinese property developers on Wednesday, after a media report that CIFI Holdings (Group) Co had defaulted added to worries over the crisis-stricken real estate sector. Hong Kong-listed shares of CIFI Holdings plunged 32.3% to a record low as of the market close on Wednesday, after credit intelligence provider Reorg reported that the Chinese developer had missed payment on certain non-standard debt.”
“In a letter to employees dated Sept. 27, CIFI Chairman Lin Zhong said the company’s priority now is to survive. ‘Hardship and ordeal will persist for quite a long period of time,’ Lin said in the letter, which was widely distributed via social media and confirmed by the company. Lin said mortgage boycotts have prompted many local authorities to tighten cash withdrawals from escrow accounts, further squeezing liquidity for property developers.”
“‘Although we have more than 30 billion yuan ($4.14 billion)of cash sitting on the books, the overwhelming majority of it could not meet reasonable demand by companies,’ CIFI’s letter said. ‘In the coming months, CIFI’s cash flows will meet unprecedented challenges.’ A source with direct contact with Lin told Reuters that Lin is under immense pressure, as there’s no fresh, big policy support in sight, so ‘it’s unclear when the industry can see a gleam of hope.’”