A weekend topic starting with WATN in Tennessee. “There’s promising signs the Memphis area housing crunch is easing up lately, compared to this spring and early summer. ‘Forget what happened two years ago and what happened last year, that’s over and it’s a different game,’ Integrity Mortgage Group Branch Manager Kevin Stafford said.”
Atlanta Magazine in Georgia. “‘Slowdown’ is relative,’ says Anna Kilinski, CEO of Anna K Intown/Keller Williams Intown.’I would describe it as ‘coming back down to earth.’ We’re coming off a market that didn’t make sense on paper, and we’re moving more toward a normal market. Nobody should be fearful of that.’”
CBS Minnesota. “‘We’re starting to see decreases as the market starts to stabilize and that’s because interest rates are up a little so sellers now recognize that they’re going to have to lower their price so people can afford homes again,’ said Chris Galler, CEO of Minnesota Realtors.”
From SNN News. “The Suncoast went from having homes selling like hotcakes, to not being able to sell many at all. In fact, three Florida areas rank among the hardest places to sell your home in America, according to a new study by luxury home brokerage RubyHome. Despite being one of the most popular places in which to move to, the Suncoast is the third most difficult place to sell your home. This area sees properties selling for $180,000 less than their listing price and ranks 15th for percentage of homes that have experienced a price cut during their listing.”
Community Impact on Texas. “Cedar Park is seeing the lowest median home price this year for July as prices in the city continue to drop, according to Austin Board of Realtors data. Cedar Park saw the lowest home price in July at $512,500. Housing inventory was on the rise in July, according to ABoR’s report. Leander and Cedar Park combined had a total of 868 active listings in July, compared to 320 in last July. In June, the two cities together had 710 active listings.”
KPHO in Arizona. “Eric Atencio with Valley King Properties said the slowdown in the Phoenix area housing market is directly impacting rentals. More homes are now listed for sale, meaning renters have more options, leading to more apartment vacancies, said Atencio. ‘Last week, I got contacted by another owner of another 400-unit property,’ said Atencio. ‘They had 40 apartments ready to be rented, so we’re definitely being contacted by landlords that need their vacancies filled. We are seeing that more than we have in the last three years.’”
The Review Journal in Nevada. “The average home price is down $17,000 from the all-time high set in May. The Las Vegas market has about 9,800 active listings, which is more than double the amount of inventory this time last year. With inventory set to continue climbing and prices and rates reducing, buyer activity may start to spark. As options increase, buyers can finally say goodbye to the wait lists and bidding wars, and hello to more freedom.”
The Marina Times in California. “We recently asked Ron Sebahar, a top-producing agent with Compass, to comment on San Francisco’s real estate market. ‘July definitely felt the effects of the increase in interest rates and a volatile stock market that caused a lot of chatter about a recession,’ Sebahar said. ‘This led to a fairly dramatic drop in sales volume, increased inventory, less overbidding, more price reductions, and lower appreciation rates. Meanwhile, San Francisco’s median home price was down year-over-year in July, from $1,850,000 to $1,680,000.’”
The Motley Fool. “House prices are crashing in Canada’s biggest cities. In Toronto, Vancouver, and elsewhere, prices are coming down, following decades of consistent gains. In July, house prices fell 5.3% nation-wide, with the biggest declines being recorded in large urban centres. Since the crash began in March, prices have fallen 22% from the $816,000 peak. Since February, Toronto has seen a staggering $395,000 decline in house prices. Vancouver, like Toronto, is seeing a significant housing correction this year. According to The Daily Hive, the average Vancouver home price is down 25% from the February peak. That’s well ahead of the 22% correction seen nationwide.”
The Globe and Mail in Canada. “John Pasalis is the owner of a Toronto residential real estate brokerage called Realosophy Realty. Q: How much of the house price surge of the past couple of years was based on economic fundamentals and how much on speculative frenzy? A: House prices were rising in the Greater Toronto Area before COVID, so part of this surge was driven by fundamentals. But the fact is that in many parts of the GTA, house prices nearly doubled in two years and this rapid rate of appreciation is not normal, it’s largely the result of a speculative frenzy.”
“A classic sign of a housing bubble is when more people start buying homes strictly as an investment versus as a place to live, and that’s exactly what happened. Recent research from the Bank of Canada found that the share of home sales to real estate investors grew faster than sales to end users over the past two years.”
The Reporter Ethiopia. “A year ago, Abraham Terecha called the credit department of the business where he now works as a branch manager to find out if he qualified for a mortgage loan provided to employees. He was overjoyed at hearing the news. A credit officer informed him that he qualified for a mortgage loan of up to two million birr. ‘The real estate market in this area is likewise ridiculous. A house that was originally going for 1.1 million birr saw its price increase by more than half that amount in just one month,’ remarked Abraham. ‘In the past, at least a banker with a mid-level position could purchase an apartment and now that you can’t get to it.’”
“Addis Ababa continues to have the busiest market for homes. The most expensive housing units are found in Lideta, Bladers, Gotera, and Gerji, areas that command greater prices than any other places in the nation, particularly when it comes to condominium homes. A one bedroom condominium house now costs as high as four million birr in these locations. It is two times higher than the price registered two yearsago. The figure is staggeringly high for two-bedroom condominium houses, reaching as high as six million birr, money that was enough to buy a luxury real estate apartment or a villa sprawling on 100 sq.m of land.”
“In an economy with a negative interest rate on deposits, it is typical to see people discouraged from saving money. ‘People would rather gamble their hard-earned money for a land without a title deed (commonly known as Yechereka Bet, literally translated as moon house), which is usually purchased from farmers even though this is considered as an illegal offense based on the constitution that prohibits transfer of land,’ added Tiruneh Assefa, an economist by profession, who believes buying properties proved to be the best venture to invest in, higher than what any industry pays, be it the banking industry or retail trade.”
Korea JoongAng Daily. “Leveraged investment was so heated in South Korea over the last three to four years that it produced new phrases like ‘soul-selling borrowing.’ It underscores the recklessness from the cheap liquidity binge after the 2008 global financial crisis. Squeezing out one’s soul to borrow money to invest in assets is bound to end in disaster. The dizzy rate increases by U.S. Federal Reserve would be just the prelude to the grim and messy consequences from a debt party. The bubbles in assets from stocks to coins to real estate are fizzling out.”
“Bubbles build up from asset frenzy. When debt piles up, so do interest costs. When money is too loose, prices go up. But the world often neglects such common sense. Animal instincts often prevail over reason and rationality. When borrowing beyond one’s means, one could be bombarded with interest costs. But blinded by greed and foolishness, many still take out loans beyond their ability. Excessive debt can always backlash. Real estate prices crash under soaring rates.”
“Since the outbreak of Covid-19 in March 2020, the U.S. government expanded fiscal spending in a colossal scale while the Fed kept benchmark rates at zero. South Korea also joined the trend. As lush liquidity fanned inflation, it sent central banks around the globe to hike their rates to fight inflation. As former U.S. Treasury Secretary Larry Summers has pointed out, authorities have missed timing for tightening.”
“Low interest rates heated the real estate market and fueled the pipe dream of making fast money through cryptocurrency. The bubbles are bursting as soon as rates are rising. Financing cost for mortgages are rapidly rising while the economy slows. Households must tighten their belts to pay for increased interest. Due to a terrible plunge in housing prices, long-tern lease prices are sometimes higher than the property prices. We must remind ourselves never to fall for the temptation of low interest rates.”
From ABC Business. “When Chanel and Mose Atigi made the decision to put their family home on the market, their property was appraised at $NZ120,000 ($133,000) more than the price it sold for just four weeks later. The couple live in Auckland — a city known as the ‘workhorse’ of New Zealand’s real estate market — where just a year ago buyers were easy to come by and reserves were easily met. This market leads the nation up and down house price cycles — as goes Auckland, so goes the rest of the country.”
“Right now, prices in the city are down 15 per cent from their 2021 peak. With three boys and a five-month-old baby girl, Chanel and Mose decided it was time to leave the city and move closer to family, but that meant putting their up for sale in a falling market. ‘With Auckland the way that it is at the moment — cost of living is rather high — we found ourselves pretty much working to survive and not really enjoying time with our kids and our family,’ Chanel said. ‘We were very nervous. When we first entered the market pricing was still pretty high and we just watched it dramatically drop over the period of our campaign. Every single week, we just saw it drop and drop and drop and it really did make us nervous, to the point where we didn’t know if we could sell at the end of the day.’”
“To Chanel’s immense relief, the property sold at auction and after a ‘premium appraisal’ above $NZ900,000, it closed at $NZ780,000. A price lower than their initial expectations, but also one they’re very happy with.”
“Steve and Nila Koerber are real estate agents and have seen firsthand how interest has dried up and how sentiment among buyers has changed. In previous years, their agency would have sold about 500 properties, but this year they are on track to land somewhere between 350 and 380 sales. When last year they each had six open homes every weekend, last weekend they had just two.”
“Steve admits he is a little worried as the couple must also now sell their own home. ‘I’m pretty nervous about doing that, but we do guide our clients that if you buy and sell in the same market, everything should be OK. So we’re just keeping that faith,’ he said. Steve said as agents, there was more work to be done to ensure every possible buyer was really ready to buy, because if finance fell through there was no longer a list of people willing to make an offer.”
“‘This time last year, a lot of buyers would have that confidence to go and bid at an auction and think to themselves, ‘well I’m going to find the deposit, I’m going to sell my own home,’ he said. ‘Today, it’s a little bit different. So we’re having to get closer to them, ask them about their deposit, where it’s coming from, have they got enough? So it’s a whole set of different questions and different circumstances.’”
“Chief economist at ANZ Sharon Zollner said there was not ‘a widespread expectation that they’re bottoming out yet’. With examples like the Atagi family home in South Auckland, one could be tempted to talk about a house price crash, but Ms Zollner said the price falls in New Zealand have been ‘incredibly orderly.’ ‘Someone made a little hole in the neck of the balloon and it’s just very, very calm,’ she said. ‘And it’s ideal really because New Zealand house prices are way out of whack with any fundamentals. They certainly have the potential to fall much more dramatically, but that very strong labour market means very few people are in a must-sell situation. The air is just coming very quietly out of the balloon.’”