A report from the Mortgage Research Council. “In July, there were 63,000 agreements for homes that were called off, about 16% of homes that were under contract, according to Redfin. That’s an increase from a revised rate of 15% in June. ‘Homes are sitting on the market longer now, so buyers realize they have more options and more room to negotiate,’ said Heather Kruayai, a Redfin real estate agent in Jacksonville, Florida. ‘They’re asking for repairs, concessions and contingencies, and if sellers say no, they’re backing out and moving on.’”
“The number of canceled sales is the highest rate on record if the first two months of the Covid-19 pandemic are excluded, Redfin said. The highest number of deal cancellations have occurred in Jacksonville and Las Vegas out of the 93 U.S. metropolitan areas Redfin analyzed. In July, there were about 800 agreements that were called off, which is equal to 29.3% of homes that went under contract. Las Vegas reported 27.4% cancellations while Lakeland, Florida, had 26.2%. New Orleans saw 25.9%, San Antonio was at 25%, Orlando, Florida, had 24.5% canceled agreements.”
The Review Journal on Nevada. “Last year, when buyers were snapping up houses in Las Vegas at a rapid clip, it was anyone’s guess how long the hot streak would last. Now that it’s come to an end, we’re left with another question: how long will the market keep slowing? Sales totals are tumbling, available inventory has soared, and sellers are increasingly dropping their prices. Las Vegas is far from alone, as markets around the country are also hitting the brakes. And two housing trackers told me Friday they don’t expect sales to rebound quickly.”
“Jeff Tucker, senior economist with listing site Zillow, noted it’s difficult to forecast but said the national sales slowdown ‘could drag on for another year or two,’ adding that there seems to be a ‘standoff’ between buyers and sellers. ‘Until and unless mortgage rates drop substantially, I don’t quite see how that standoff gets resolved,’ Tucker said.”
“On the resale side, just over 2,000 single-family homes traded hands in Southern Nevada last month, down almost 38 percent from August 2021. Also, nearly 8,000 houses were on the market without offers at the end of August, up nearly 146 percent year-over-year, trade association Las Vegas Realtors reported. The median sales price of such homes was $450,000 in August, down 3.2 percent, or $15,000, from July. This marked the third consecutive month that prices fell. Moreover, 42 percent of Las Vegas-area listings had a price drop last month, up from just 9 percent in February, according to Zillow’s Tucker.”
My Northwest on Washington. “According to new data released by Northwest Multiple Listing Service, (NWMLS) home prices in the Puget Sound region are still falling from their peak in the spring, but home prices are still higher than they were this time last year. ‘We are seeing significant signs of slowing now. I tend to not look at sale prices, because they are a lagging indicator, not a leading one, so I look at list prices,’ said Windermere Chief Economist Matthew Gardner. ‘We’ve seen those starting to roll over as well, and just pure math states that the pace of price growth has to slow. We’re really, quite frankly, reverting back to the mean. We had two very strange years for lots of reasons in 2020 and 2021, and now with mortgage rates doubling that naturally has caused a lot of issues in terms of people’s ability to afford to buy a home and more listings.’”
“Part of the cooling market is now nearly 50% of houses in Seattle were sold below their initial asking price in July 2022, nearly double the amount from July 2021, across an overall cooling housing market nationwide, according to Redfin.”
From KTVZ in Oregon. “The median home sales price in Bend and Redmond went in opposite directions last month, the Beacon Appraisal Group reported Friday. While Bend’s median sales price dropped by $45,000 to $717,000 in August, Redmond set yet another record, as its median price rose $37,000 to a median $542,000, the report said. Appraiser Donnie Montagner noted that the Bend and Redmond home inventory rose to about two months, a level not seen in over two years.”
From CNBC. “The slowdown in the otherwise red-hot housing boom has been stunningly swift. Paul Legere is a buyer’s agent with Joel Nelson Group in Washington, D.C. He focuses on the competitive Capitol Hill neighborhood, and he said he saw listings jump by 20 to 171 just after Labor Day. He now calls the market ‘bloated.’ As a comparison, just 65 homes were listed for sale in March. ‘This is a very traditional post Labor Day inventory bump and seeing in a week or so how the market absorbs the new inventory is going to be very telling,’ he said. ‘Very.’”
From Inside NOVA. “The typical seller of a Fairfax County single-family home probably would have done best by finding a buyer in late spring. The median single-family home-sales price in Fairfax County at the end of the year is expected to be about 5.5 percent lower that in the heat of summer. The Northern Virginia Association of Realtors (NVAR) and Center for Regional Analysis at George Mason University are projecting a median sales price for single-family homes in Fairfax of $841,745 in December, down from $891,000 in May, which is expected to be the peak month for home prices in the county for 2022.”
WKRG in Alabama. “Seeing more ‘For Sale’ signs in front of houses around Baldwin County? A telling sign that real estate sales are slowing down. Kevin Corcoran is the broker of Remax of Gulf Shores. He said that this is the slowest it has been in a while. ‘We study the market every month, and what we’ve seen is somewhat of a plateau of sales, as far as the total number of sales taking place, and inventory has been growing every month, since about March, we have almost 4 times as many condominiums for example on the market as we had just six months ago,’ Corcoran said.”
The Colorado Springs Gazette. “Finally, it appears that housing prices are moderating. As the chart shows, the Housing Opportunity Index used to be almost 71.4% in Colorado Springs, meaning that about 71.4% of the homes sold in our region in 2019 were affordable to a household or individual who earned the median income. That’s actually pretty good. Fast forward to today, and that metric has declined dramatically across the nation. In our region, only 22.7% of the homes sold now are affordable to the median income household.”
“Think about that: Less than a quarter of the available homes for sale, new or existing, are in a price range that a typical-earning household can afford.”
Candy’s Dirt on Texas. “We’ve become accustomed to a crazy real estate situation. For two years, it was almost as if you could mumble about selling in your sleep, and there would be a line of people outside the door at sunrise. When you can’t leave your house, much less go on a vacation, real estate is the one thing you can do. You can buy, sell, trade up, or downsize. That’s what seemingly everyone did. Thankfully, the pandemic has waned, and we are back to an almost normal market.”
“Ryan Streiff and the Perry-Miller Streiff Group assured us the real estate sky was not falling. ‘It was a perfect storm. The sheer number of people that moved to Dallas during the pandemic took the market to a place we had not experienced in the past. And then you had Dallasites looking to upgrade their spaces that were working from home. Everyone was a NOW buyer because they wanted to start enjoying now, and there was a fear of losing out based on the demand.’ Should we be worried about this return to normal? RS: ‘No. Anytime value builds this fast, there have to be minor corrections.’”
The Union Tribune in California. “Short-term rental hosts who have long been able to rent their San Diego dwellings out to visitors free of formal regulations will now have to apply for licensing starting next month and hope they’ll secure a coveted license as part of a city-run lottery. Jonah Mechanic, who for years managed short-term rentals for his host clients, said he’s pleased with the city’s revised timeline for implementing the new regulations. Still, there’s likely anxiety, he said, among hosts who want to be assured they will get a license to operate.”
“‘Hosts now know well in advance if they will get a license or not, so the timeline certainly passes the smell test,’ said Mechanic, who has sold his vacation rental company but has remained involved in providing feedback to the city on implementing the new regulations. ‘I guess there’s some nervousness on the part of hosts because this is a part of people’s livelihoods, whether it’s how they pay their mortgage or putting their kids in college.’”
Fox 5 in California. “While rentals on average are going up, a certain specific type of rental is actually on the decline: one-bedroom apartments. In Los Angeles, the rental price of a one-bedroom apartment is down more than 15% from last year. In Southern California, Ventura, Camarillo, Irvine, Huntington Beach and Woodland Hills all saw one-bedroom apartment rent prices drop between 3-17%. The biggest dips came in Fresno (-28.35%), Long Beach (-24.36%) and Santa Clara (-19.97%).”
From Lew Sichelman. “The mortgage market is in for another big shift in a few months. That’s when a sizable increase — roughly 12% or 13% — in the conforming loan limit appears likely to be announced. If so, it will bring the ceiling to well over $1 million in places where houses are super expensive.”
“The loan limit is a key benchmark for both borrowers and lenders. It is the maximum dollar amount on mortgages that can be acquired by government-sponsored enterprises Fannie Mae and Freddie Mac. Anything under the limit that is sold by primary lenders to the GSEs must comply to their rules (thus the term ‘conforming’), while anything above the ceiling is considered a jumbo loan. If we use the latest figures from the FHFA, another double-digit jump in the loan limit appears to be in the offing. Based on second-quarter numbers, the ceiling would rise 12%, to nearly $725,000. In high-cost markets, it would fly past the million-dollar benchmark to roughly $1,087,500.”
“You won’t hear any griping from struggling Main Street lenders who are trying to stay afloat as the mortgage sector has weakened. They would be eager to take another bite out of the jumbo loan market, where lenders who serve well-heeled borrowers are ‘making a ton of money,’ says Paul Muolo, executive editor of trade publication Inside Mortgage Finance.”
From Kelowna Now in Canada. “Higher interest rates and inflation continue to stifle Kelowna’s housing market. For the fourth month in a row, home prices have dropped and sales remain stagnant. In August, the benchmark selling price of a typical single-family home in the Central Okanagan was $1,017,500, down $114,500 from the record-high $1,132,000 set in April, according to figures from the Association of Interior Realtors.”
“With sales slowing significantly, Kelowna is now officially a buyer’s market, meaning buyers have the upper hand in any transaction and can take their time looking around and negotiating lower prices. Gone are the seller’s market heyday of homes selling quickly for more than asking price as multiple bidders push up the price. In August, the benchmark selling price of a typical townhouse in the Central Okanagan was $772,700, a slide of $57,200 from the May record of $829,000. The benchmark price of a condominium last month in the city was $526,700, a $31,000 adjustment from the April peak of $557,700.”
From Bloomberg. “A Swedish landlord’s stock has fallen by three quarters this year and investors are betting the worst isn’t over. SBB, as Samhallsbyggnadsbolaget i Norden AB is more commonly known, has become the second-most shorted stock in Europe, with bearish bets running at 35% of its free float, according to S&P Global Market Intelligence. The scenario is based on concerns that SBB piled on too much debt in the boom years to create a portfolio of about 2,500 properties across the Nordic region.”
“The Stockholm-based company is positioned as the canary in the coal mine for Europe’s teetering real estate market. With Swedish housing prices projected to fall as much as 20% in one of the world’s bubbliest property markets, its business model faces renewed pressure. SBB has about $500 million of debt maturing next year and $1 billion in bonds and loans coming due in 2024, according to Bloomberg. ‘If we don’t have a bond market that’s as open to real estate companies, it’s going to be tough to refinance all of this,’ said Emil Ekholm, an analyst at Pareto Securities. ‘It won’t really be possible to shift all this into bank loans.’”
Global Property Guide. “The average price of high-end condominium units in Phnom Penh plummeted by 11.65% y-o-y (inflation-adjusted) to USD 2,670 per sq. m. in Q2 2022, following annual declines of 20.43% in Q1 2022, 11.38% in Q4 2021, 11.2% in Q3 2021 and 10.32% in Q2 2021. Phnom Penh’s apartment market has been cooling recently mainly due to the oversupply of apartments in the city, according to local real estate experts. It is expected that 2022 will see additional completions of 13,000 condo units, according to CBRE Cambodia.”
The New Zealand Herald. “Unsold property inventories held by Auckland’s largest agency doubled in the last year. Last August, Barfoot & Thompson had 2601 Auckland and Northland residential properties for sale, but last month that hit 4637 unsold properties and in every month this year except January, the agency held more than 4000 unsold properties on its books. New vendors continue to arrive and in August the agency listed 1394 new properties, ‘our highest number of new listings in the month of August for six years,’ Peter Thompson, managing director, said. ‘At month end we had 4637 properties on our books, our highest number of listings at the end of August for 11 years.’”
The Sixth Tone. “In July, Wan Jiani received the letter she’d been dreading: there was an issue with the construction of her new home. Like millions of others in China, Wan and her husband have poured their life savings into a presale apartment, paying for the property years before it’s completed. Now, the developer was saying it needed to push back the delivery date by at least four months. The delay means that Wan’s family will not be able to move into the building until mid-2024 at the earliest. Meanwhile, they will have to continue paying the mortgage — and renting a temporary home in Shanghai.”
“Wan is just praying the project gets completed at all. ‘Given all the bad news spreading around, it’s hard not to imagine the worst-case scenario: What if the building is left unfinished?’ she tells Sixth Tone. It’s easy to understand Wan’s concern. China’s real estate sector has been plunged into its worst debt crisis in decades. Developers across the country are defaulting on payments and bringing construction on new projects to an abrupt halt.”
“Unfinished apartment blocks — known as lanweilou, or ‘rotten-tail buildings,’ in Chinese — ring China’s urban centers. Around 5% of the apartments under construction in 50 major cities — around 71.5 million square meters of property — are now lanweilou, Shanghai Yiju Real Estate Research Institute found in a survey conducted during the first half of 2022.”
“For decades, China’s property boom has been built on a lax presales mechanism, which allows developers to require buyers like Wan to pay for new-build apartments in full long before they are completed. This policy has handed developers enormous power to raise capital, enabling them to finance gigantic amounts of construction. But it has also led to them amassing dangerous levels of debt — and riding roughshod over buyers when projects go sour.”
“For many analysts, the presales mechanism is the root of the current crisis. China’s real estate market cannot be set on a sustainable path, they argue, until the system is overhauled. Yet doing so could also have far-reaching — and painful — consequences for the Chinese economy.”
“‘Developers use the information of their own staff or their close contacts to get mortgages from the bank,’ China’s central bank — the People’s Bank of China wrote in a report. ‘Some developers paid back the bank after they sold the apartments, but some didn’t — they ran away with the money after they failed to sell all the units.’”
“An investment director at a state-backed real estate company, surnamed Cheng, tells Sixth Tone that many developers would be unable to survive without the presale mechanism. Their need for capital is too extreme due to their high debt loads. ‘The development of the property sector is very fast-paced,’ says Cheng, who declined to reveal his full name due to the sensitivity of the topic. ‘If you pull the brake now, many will crash.’ The immediate effect would be to cause developer after developer to fold, leading to a wave of new lanweilou, Cheng says.”
“Wan, the buyer in Shanghai, is more concerned about what will happen to the country’s hundreds of stalled projects — and her half-finished home in particular. She has spent the past few weeks closely monitoring the work at the construction site, and the developer’s other projects in Shanghai. So far, she hasn’t seen anything to suggest the company is about to fold, she says. ‘It feels like there’s a better guarantee here,’ says Wan. ‘The city government won’t allow lanweilou to interrupt its urban development plans, right?’”