A report from the Colorado Sun. “The collapse of Zillow Offers can be traced, in one small part, to its over eagerness to invest in Colorado’s red-hot real estate market. The company bought hundreds of homes in the Front Range this summer, mostly in August and September, often paying more than what sellers were asking. Now the company, as it folds its ill-fated Zillow Offers business of flipping homes with a promise to investors to unload roughly 18,000 homes across the country, is selling more than 500 homes in 10 Front Range counties, and more homes it purchased in October are hitting the market every day.”
“Zillow is slashing prices for those homes. Nearly all the properties are priced well below what the company paid only a few months — or even weeks — ago. If interest rates climb, Zillow might look pretty smart having shed thousands of for-sale homes from its portfolio. ‘Sure maybe Zillow lost money and maybe they made bad decisions, but did the company get out when the getting out was good?’ said Patrick Muldoon, whose brokerage works in both Colorado Springs and Pueblo. ‘We could be six months from now looking back and saying ‘Wow, did they see this coming?’”
From Housing Wire. “When Zillow waved the white flag on its iBuying operation earlier this month, CEO Rich Barton couched the company’s price forecasting model as something of a Frankenstein’s monster. But to Lee Kennedy, who for the last 16 years has run AVMetrics in Simi Valley, California, an evaluator of AVMs for client companies, what happened at Zillow is not surprising. What’s different about Zillow? ‘Most of my clients are large lending institutions and shy away from publicly admitting a mistake,’ Kennedy said.”
From Patch New York. “A year after an Upper West Side ZIP code had the largest increase in home prices of any in the United States, the same local ZIP code had the greatest decrease in home values in 2021. The median home sale price in the 10069 ZIP code dropped 39 percent in 2021. The median price in the area now sits at $1,663,000, which compares to the $2,725,000 it jumped to in 2020, according to Property Shark. ‘Notably, this ZIP code was actually the leader of price growth in 2020, when its median shot up 42 percent year-over-year,’ authors wrote.”
The Orlando Sentinel in Florida. “More sellers, real estate agent Hunter Albritton said, are willing to make deals they weren’t making during the run earlier this year. ‘People getting $50,000 and $100,000 beyond asking, we’re starting to see less of that,’ he said. ‘If homes are reasonably priced, they’re moving.’”
From News West 9 in Texas. “Heather Prichard, broker and owner of Ziglar Realty, said despite all the shortages happening nationwide, homes are not experiencing that same problem. ‘We have plenty of listings to choose from,’ said Prichard. ‘There are over 500 homes on the market on average right now. In the Odessa area, there are many homes to choose from.’”
The Enterprise Record in California. “Watch your step as you hopscotch around the excrement. Some of the thousands who sleep on San Francisco’s streets, the nation’s filthiest, are off their meds or on meth, or both, and are not always gentle. Also, Michael Shellenberger reports that between 2015 and 2018 the city replaced more than 300 lampposts ‘corroded by urine after one had collapsed and crushed a car.’”
From ABC News. “Australia, having shackled itself to China during the past 20 years, is already feeling the fallout. Since May, iron ore prices have slumped 60 per cent from then-record levels, as construction and infrastructure have tanked with prices for our most valuable export last week crashing below $US90 ($123) a tonne. It’s not just iron ore. Coal prices, which last month spiked to record levels, are in free-fall. Things are likely to get much worse before they get any better.”
“Both coal and iron ore prices now are in rapid descent as Beijing desperately fights economic battles on multiple fronts. Both commodities are paramount to Australia’s financial wellbeing. While the federal government has maintained uber-conservative price estimates for both exports — pencilling in iron ore at just $US55 ($75) a tonne — the opportunity to pass off windfall gains as ‘sound economic management’ will be dulled as it heads into an election year.”
“More importantly, from a strategic standpoint, the events of the past two years have highlighted the dangers of being a one-trick export pony exclusively hitched to just one wagon.”
Smart Property Investment. “Peter White AM, the managing director of Finance Brokers Association of Australia (FBAA), shared some insight into how the industry expects APRA’s mortgage crackdown to play out in Australia’s housing market, warning, ‘there is going to be a collateral impact somewhere.’ One of those effects, he said, amounted to borrowers essentially becoming ‘mortgage prisoners’ in their home loans.”
“This occurs when rates move around, and property owners seek to refinance in order to get a better deal, only to discover, ‘you can’t move your loan because you don’t meet the new servicing floor rates,’ Mr White explained. ‘And financially, you’re probably paying more than what you were before.’”
“It’s a catch-22 that leaves people paying more for a financial product than they might need to, but with no exit. ‘We’ve got to watch this mortgage prisoner game. We’ve got to watch what happens with the first home buyer market and also the refinance market,’ Mr White said, urging industry leaders and regulators alike to monitor the situation closely. ‘It’s one of those things that it’s a delicate step, and one that can have unintended consequences and landmines pop up that wasn’t the intent of what was trying to be done.’”
From Reuters. “Chinese investors are abandoning an age-old attachment to property investment products and seeking returns in equities and other corners of the capital markets, as the authorities crack down on the debt-fuelled property sector. ‘Previous investment logic has collapsed,’ said Shanghai businessman Desmond Pan.”
The South China Morning Post. “Raymond Cheng, head of China and Hong Kong research at CGS-CIMB Securities, said developers have had to cut prices by 10 to 15 per cent as the market reels from a liquidity crunch sparked by China Evergrande’s debt crisis. ‘The worst for the property market is yet to come,’ he added.”
“Monday’s data gives a misleading picture of the actual scale of the slump in house buying, according to Andy Lee Yiu-chi, chief executive for southern China at Centaline Property Agency. ‘The government data is lagging behind the market. New home prices in major cities have fallen by up to 15 per cent from the peak early this year,’ he said.”
“In Shenzhen, the number of transactions in the primary residential market was down 75 per cent from early in the year to 2,000 in October. In Guangzhou the number of deals fell 50 per cent to 7,000, said Lee. ‘Home prices have not bottomed out. Buyers are staying on the sidelines, wary that builders may fail to deliver their homes on schedule,’ he said.”