A report from the Orlando Sentinel in Florida. “‘The normal day now, I wake up, look at the [multiple listings service for agents], see a hundred new listings and 400 price decreases,’ said Jeremy Wood, an agent with Keller Williams Heritage Realty in Altamonte Springs. Higher end luxury home sales have nearly dried up, Wood said, while competition has eased even among homes selling for less than $300,000. ‘Sellers were still … riding that high of thinking, ‘Oh my gosh, I could ask for anything,’ he said. ‘Begrudgingly, a number of them have had to bring their prices back down to what the home is worth.’”
Fox 13 on Tennessee. “Within days of listing her East Memphis home, Lisa Caufield said she received her first offer. However, that first offer was $30,000 less than her listing price. ‘I can’t say (the market) is hot,’ Caufield said. ‘Our prices have gone down as far as what we thought we could be selling our house for.’”
“‘We won’t have this bidding war that we had before,’ explained Cassandra Bell-Warren, the Division Vice President for Tennessee Realtors. ‘So for buyers, it’s going to be great’. Bell-Warren said buyers can take their time to make a decision after touring a home because inventory has grown significantly. ‘Six months ago, people were going to look at a house and they were having to make a decision right there because there were 18 other people outside waiting to see the same house,’ Bell-Warren explained.”
NBC DFW in Texas. “As housing demand continues to decline following the uptick in mortgage rates, realtors and lenders are seeing signs of hope for people who have struggled in the competitive homebuying market. Crystal Parkinson, Area Manager for Cardinal Financial, explained several emerging trends that are more favorable for families searching for a home. ‘It is nice to be able to make a call to somebody and tell them the market is softening, hold on you’re going to have a chance. One thing we are seeing now is more contingent offers are accepted. So, if a buyer has to sell their home before they can close those, are finally getting accepted,’ said Parkinson.”
The Aspen Daily News in Colorado. “The elephant in the room is trumpeting a shift. At the recent Inman Connect gathering of luxury U.S. brokers from all over the country, the changing market got enormous attention. On my last REALM.Global weekly Zoom call, eight top-tier luxury brokers from major U.S. markets reported on the undeniable shift in market conditions. Globally, the story is the same. Throughout the U.S., sellers are living in the recent past of unrealistic pricing. ‘But Aspen is different’ — that is the anecdotal chatter on the hiking circuit. Is it?”
“From Aug. 1 to Aug. 12, price reductions are popping up daily. ‘Price changes’ is now the more delicate euphemism for reductions. The high end is no exception, with one listing reduced from $29 million to just under $25 million. Throughout the entire MLS, there have been a total of 61 price reductions this month for properties listed at $1 million and up. Now that the elephant has spoken, you can proceed with confidence that the market is going back to the future. If you are a real seller, reasonable pricing will deliver a positive outcome for your next sale.”
The Review Journal in Nevada. “With home sales recently falling in Las Vegas and around the country, U.S. builder confidence has dropped for the eighth consecutive month as developers face a ‘housing recession,’ a new report shows. Coldwell Banker Premier Realty agent Tricia Kiefer said recently that Las Vegas Valley builders have ‘totally switched.’ She said they are offering to apply money toward closing costs and are offering commissions again to buyers’ agents. Some builders have also started to slash their base asking prices lately ‘for the first time in a very long time,’ Andrew Smith, president of Las Vegas-based Home Builders Research, reported.”
“Century Communities, a national homebuilder with projects in Southern Nevada, recently announced that it was ‘bringing back its popular Purple Tag sale’ through August. The sale offers ‘major savings’ through special pricing, closing-cost assistance, competitive financing and rate-lock programs, and move-in packages, the builder said.”
“On the resale side, Southern Nevada is seeing fewer purchases, fast-rising inventory, plenty of price cuts and more negotiating power for buyers. Amid the pullback, sales prices fell month to month in July for the second consecutive time after not dropping for more than two years. The median sales price of previously owned single-family homes — the bulk of the market — was $465,000 last month, down 3.1 percent, or $15,000, from June,Las Vegas Realtors reported. ‘We’re definitely seeing a shift in the housing market,’ LVR President Brandon Roberts said. ‘We haven’t seen prices slow down like this in several years.”
The Las Vegas Sun. “The number of conventional mortgage applications in July in Nevada was down more than 34% from the same month in 2021, according to the Mortgage Bankers Association. And the number of refinanced mortgage applications last month was down more than double — about 84% — from July 2021. ‘We went from all-time record-high applications to a 22-year low, which is a brutal swing,’ said Jonathan Gedde, CEO of SimpliFi Mortgage and chairman of the Nevada Mortgage Lenders Association.”
“‘All of these (mortgage-lending) companies had been doing all this hiring to take advantage of all the business that was out there,’ Gedde said. ‘We’re talking significantly higher-than-normal capacity, then, all of a sudden, we have significantly lower application numbers. It’s caused a radical shift.’ Last week, mortgage lender LoanDepot, a national firm that does business in Las Vegas, announced a second-quarter loss of $224 million. The dwindling business is forcing some difficult decisions.”
“‘LoanDepot is the fifth-largest wholesaler in the entire country, and they just closed that whole department,’ Gedde said. ‘We’re seeing lots of layoffs. The last time we had a radical market shift was 2008, which is really the only time we can compare this to. Even 2008 and 2009 (the Great Recession), that wasn’t as drastic of a shift.’”
“Corey Gehlken, a senior loan officer for Keller Mortgage in Las Vegas, said the refinance business has almost completely gone away. ‘It’s a rough time out there in the mortgage industry,’ Gehlken said. ‘Those rates around 2%, those just weren’t realistic. They were real at the time, but that wasn’t a normal type of situation.’”
The Nevada Current. “Builders in Southern Nevada sold 434 homes in July, down from 713 the previous month, according to analyst Home Builders Research, sparking concerns about rippling economic effects. Sales of new homes in the valley peaked this year at 1,256 in March. ‘I’ve heard of one builder making some layoffs but I don’t know any details so I’d imagine with permit activity also falling there will be some residual effects across the industry,’ Andrew Smith president of Home Builders Research, said in an interview.”
“‘We are busy for the next two weeks, still catching up from supply chain and labor issues,’ says Patricia Farley, president of Southwest Specialties. ‘After that you will see massive layoffs.’ Farley says one competitor has already laid off 150 workers. ‘I know people who qualified last year for a new home, which is a one-year build out, but can’t qualify this year with the higher interest rates,’ says Sarah Scattini, president of the Reno/Sparks Association of Realtors. Builders must either shave the price or cancel the sale and start over, she says.”
“‘It’s pretty easy to connect the dots between higher interest rates and reduced demand, which is going to suppress prices,” says fiscal analyst Guy Hobbs of Hobbs, Ong, and Associates. ‘Suppressed prices are probably a strong signal to the homebuilders. If they’re thinking about undertaking another project, the way their margins are anyway, doing it in a market where the prices are dropping is probably not to their advantage.’”
“At a July auction, builders made no offer on eight of 20 tracts of land belonging to the Clark County Department of Aviation. ‘The per acre price for what these are zoned for was too high for builders to secure financing,’ the SNHBA said of the parcels. Farley doesn’t expect commercial projects to offset the anticipated lull in the residential market. ‘Commercial construction is on a drip now and companies are struggling with having the financials necessary for bonding on big projects,’ she says.”
“Farley is equally pessimistic about a quick recovery, citing inflation concerns. ‘I don’t think the market will turn quickly,’ she says. ‘I think it’s ugly through year-end.’”
From Business Insider. “Homebuilder stocks slipped Monday as sentiment among construction companies fell to a level indicative of contraction. About 1-in-5 home builders, or 19%, reported reducing prices in the past month to boost sales or limit cancellations, with the median price reduction at 5%.”
From Bloomberg. “Compass Inc., the real estate brokerage led by Robert Reffkin, is taking new cost-cutting measures as it seeks to generate positive cash flow in a slowing US housing market. The New York-based company said it would implement a cost-cutting strategy that should save the brokerage about $320 million in expenses next year, according to an earnings release Monday. The move, which should be completed by the end of the year, follows earlier measures, announced in June, that included a 10% reduction of Compass’s salaried workforce.”
“The main cuts will come from Compass’s technology operation and from the incentives used to acquire agents, Chief Operating Officer Greg Hart said Monday on a conference call discussing second-quarter results. Compass reported a net loss of $101 million in the second quarter, missing an estimate for an expected loss of $63 million based on analyst forecasts compiled by Bloomberg.”
From The Street. “Mark Cuban should have expected it. Since crypto lender Voyager Digital filed for Chapter 11 bankruptcy, criticism of the billionaire and owner of the NBA Dallas Mavericks team has been raining down on social media. These critics accuse him of promoting the platform and therefore hold him responsible for the losses they say they suffered as we wrote on July 8. These reproaches now result in a class action lawsuit against the successful entrepreneur.”
“These angry individual investors claim that Cuban and the Dallas Mavericks tricked them into investing in Voyager Digital, which went bankrupt and cost them some $5 billion in total, according to the complaint. The complaint is based on another complaint filed already in December against Voyager Digital. The ‘deceptive’ Voyager Platform ‘was an unregulated and unsustainable fraud, similar to other Ponzi schemes,’ claim the plaintiffs. ‘It was specifically alleged in detail in that complaint how defendants Mark Cuban and Stephen Ehrlich were key players who personally reached out to investors, individually and through the Dallas Mavericks, to induce them to invest in the deceptive Voyager platform.’ Ehrlich is Voyager Digital’s Chief Executive Officer.”
“Cuban and Ehrlich, as will be explained, went to great lengths to use their experience as investors to dupe millions of Americans into investing — in many cases, their life savings — into the deceptive Voyager platform and purchasing Voyager earn program accounts (‘EPAs’), which are unregistered securities,” the plaintiffs add. ‘As a result, over 3.5 million Americans have now all but lost over $5 billion in cryptocurrency assets.’”
“‘In stocks and crypto, you will see companies that were sustained by cheap, easy money — but didn’t have valid business prospects —will disappear,’ Cuban said in an interview in June with Fortune. ‘Like [Warren] Buffett says, ‘When the tide goes out, you get to see who is swimming naked.’ The plaintiffs included this last statement in their complaint.”