It’s Friday desk clearing time for this blogger. “The streets aren’t being easy on Zillow, which is reportedly losing money on homes it bought to flip, but are instead proving flops. The winners of the real estate fumble include seller Abidemi Bolatiwa, who sold his Phoenix four-bedroom to the company for $531,300 in late September. Zillow listed the property for $505,900 10 days later, but it didn’t sell, so the company cut the price to $494,900. Richard Flor of the Phoenix suburb Tolleson, Arizona decided to sell to the company this summer. Zillow paid him approximately $412,000. Two weeks later, after making light repairs, Zillow listed the property for $387,000.”
“In September, several metrics were down compared to August: the average price of a resale home was down 2% to $422,000; house showings were down by 6%; pending sales down by 5%; closed listings down by 12%; and resale closed listings down by 14%. Metrics that were up in September include end-of-month housing inventory up by 32%, houses listed up by 5% and the overall average price of a home didn’t rise from its average of $430,500, according to the Triangle Area Residential Report.”
“Inventory is expected to increase this time of the year, especially since homebuilders will finish building new homes in places like southwest and west Wake County, said Stacey Anfindsen, real estate appraiser. ‘You’re going to see some (house) prices leveling,’ said Anfindsen, but he emphasized that does not mean house prices will fall back to what was considered normal.”
“Otto Cedeño, director of the Durham Regional Association of REALTORS, pointed out that housing supply increase is a silver lining of the fact that home foreclosures are up 150% in Durham County and nearly 67% in Wake County from the previous quarter as mortgage assistance programs ended.”
“After months of homes selling for record-breaking prices, new data shows Northeast Ohio’s real estate market starting to level off and even correct itself. Realtor Denise Franklin, said told News 5 she’s seen the slowdown firsthand, now seeing homes up for sale receive three or four offers, compared to similar homes receiving a dozen offers this past summer. ‘It was a terrible market, now it’s just a bad market,’ she laughed. ‘Even though it’s a seller’s market, I don’t want buyers to give up.’”
“The high desert communities of Yucca Valley, Pioneertown and Joshua Tree about 130 miles east of Los Angeles have been inundated with new homebuyers. And sometimes, locals can be unwelcoming. ‘We drive a Prius and we took off the Santa Monica license plate frame. We’ve heard, ‘Go back to L.A.,’ said Sarah Scott Alperin.”
“After a large wave of buyers came to town, home prices have started to cool in recent months, said Merl Abel, the mayor of Yucca Valley and a Realtor in the area. ‘Some of the frustration of people a few months ago was getting outbid every time they put in an offer. Now people have an opportunity. We’re seeing offers of one or two per home, unless it’s underpriced,’ he said. ‘The fever pitch has sort of leveled off a bit.’”
“Canada’s pandemic housing boom has attracted a larger-than-usual share of speculators, many of whom took advantage of falling variable mortgage rates to take out multiple loans, but the central bank’s surprise warning this week about an early interest rate lift-off could douse a rally fueled by cheap debt. Already, the housing market has started to cool as fixed rate mortgages rose 60 basis points on average this year.”
“‘Once (investors) start seeing that rising interest rates and/or falling house prices makes it unprofitable to speculate on housing as an investment, that source of demand can disappear quite rapidly,’ said Philip Cross, senior fellow at the Macdonald-Laurier Institute. Former central bank governor David Dodge dismissed the likelihood of a big correction. ‘There may be some people that made a stupid bet that they could borrow money for nothing forever,’ Dodge told Reuters. ‘I don’t have a lot of sympathy, and I don’t think there are many people like that.’”
“To this day, Lee still rues the HK$1 million (US$128,600) she invested in a new residential property in the United Kingdom in 2014. An overseas property neophyte at the time, Lee, who manages a consultancy and declined to give her full name, said she fell victim to the unprofessional tactics of an agent in Hong Kong while negotiating the purchase of the 300 sq ft home in Leeds. She said the agent claimed the GBP80,000 investment would pay for itself in just three years if it was rented out to students – a carefree proposition, they maintained, given a management agency would handle everything for her.”
“The agent, however, failed to warn her that properties’ management agencies changed often and easily, and their appointment was beyond investors’ control. The firm taking care of Lee’s property was subsequently replaced three times over the years, resulting in higher fees and more expenses when it came to making repairs. ‘Mostly the repair fees are around a few hundred pounds sterling. That’s a lot when they have something to repair every three to four months,’ Lee said.”
“As it turned out, she added, the property’s location was also not as popular among students as the agent had led her to believe, with the home sitting deserted some semesters. Peter Chan, a chartered engineer in the UK, said he witnessed a growing number of Hongkongers investing in the country’s residential real estate market, but in many cases the properties were in poor condition. ‘For example, the rug was not underlaid, making the house colder during winter. The bathroom has the risk of water penetration in the bricks. Not all furniture was included, as the promotion materials had shown. We even found termites in the walls,’ he said.”
“There has been a massive deterioration of rent values in inner-city apartment markets since March 2020. According to CoreLogic, median asking rents dropped by 14.5 per cent in Sydney and fell even further in heavily locked-down Melbourne, which experienced a fall of 18.9 per cent in the first half of this year. Worse still, because of the high developer margins and marketing costs, many investors paid too much to start with and have since found that, on completion, their properties were worth considerably less than their contract price.”
“The Hong Kong real estate firm run by the family of billionaire Joseph Lau liquidated its position in Kaisa Group Holdings Ltd. bonds at a loss, contributing to a selloff that has stoked worries about credit-market contagion in the Chinese property sector. Lau’s Chinese Estates Holdings Ltd. sold the last of its Kaisa bonds this week for about $27 million and will record an aggregate loss of $174 million on its position this year.”
“The latest sales came as several of Kaisa’s bonds tumbled to record lows, pacing a broad slump in Chinese property debt. It’s been a tough year for Lau, a poker buddy of China Evergrande Group founder Hui Ka Yan and one of his biggest financial backers. Lau’s firm has also been exiting its position in Evergrande shares, which have tumbled more than 80% in 2021.”
“A long-held belief in China is that as long as the Communist Party stays in power, housing prices will continue to rise. Ordinary Chinese, however, are now debating whether this convictionis about to be turned upside down. The debate was triggered on Saturday by a decision at the Standing Committee of the National People’s Congress, China’s parliament, to introduce a property tax in select areas on a trial basis.”
“Socialist China currently charges no fixed-asset tax, even on high-net-worth individuals owning multiple mansions. Seminars explaining just what the new tax will look like are seeing an influx of new participants across China: rich folk desperate to understand the magnitude. Every seminar venue has a banner with the words ‘common prosperity,’the new political slogan Chinese President Xi Jinping uses as he attempts to rectify the disparities.”
“In the Chinese social media sphere, meanwhile, an interesting conversation is taking place. ‘The days when people could become rich through housing investment are over,’ one post says. ‘Let’s sell houses where we don’t live early before their prices go down.’”
“A Chinese man in his 50s who sold his Beijing condominium at a high price a few years ago and moved to the south of the country with the proceeds analyzes the real estate market as follows. ‘Since last year, my friends in Beijing and Shanghai have also finally begun to sell their condos,’ he said. These are second and third houses they do not live in. ‘President Xi has continued to say, ‘Housing is for living in, not for speculation,’ hasn’t he? Housing prices that have gone up too much will inevitably go down. Why does everyone not believe it?’”
“Ever-rising home prices emboldened owners to increase their consumer spending, which in turn became a driving force behind China’s high-growth economy. Private property developers, including the now embattled China Evergrande Group, made money by building clusters of massive condominium towers after purchasing land-use rights from local governments.”
“Local governments themselves made out by selling land-use rights at high prices. For property developers, wealthy buyers and municipalities, it was a win-win-win dream. People’s belief that the party would never destroy this convenient system also supported the conviction that home prices would only rise. But now, the common practices of the past look like they will no longer work.”