A report from the Pioneer Press in Minnesota. “‘We don’t seem to be selling stuff like $40,000 or $50,000 over list price, with offers like ‘You can name my first child,’ quipped Justin DuChemin, a real estate agent with Re/Max, recalling the feeding frenzy that made for unusual national headlines as recently as March. ‘Overall, home sales are definitely down,’ said DuChemin, who is helping to sell his neighbor’s home in Maplewood. Buyers ‘are not gangbusters to move into the next phase. There’s a disparity right now between what sellers want to sell their homes for and what buyers are willing to pay.’ Sellers are increasingly surprised, and sometimes disappointed.”
CBS 46 in Georgia. “Demand for homes is cooling down in the metro Atlanta housing market. ‘My housing search started a few months ago when I felt like I was financially and finally in the right place to start looking,’ said Angel Marie. When the 30-year, fixed-rate mortgage surged to as high as 5.81% in late June, according to Freddie Mac, many people decided to wait before putting an offer. And that has forced some sellers to reduce prices. ‘I’ve already seen houses and condos dropping by the thousands,’ said Marie.”
From KSAT in Texas. “‘You’re trying to figure out what’s going on,’ said Lawrence Dean, an analyst with Zonda Home, a provider of research for the homebuilding and housing sectors. ‘And so are we.’ Dean delivered that quip at the Greater San Antonio Builders Association on August 9, before an audience of developers, builders, brokers and other analysts. According to a recent Zonda survey of homebuilders in San Antonio, 87% stated they plan on slowing down housing starts, citing weak sales activity and too much inventory. ‘This pause will let us assess the market,’ one unnamed builder said in the Zonda report. Dean noted that cancellations increased at a peak 50% in June, compared to cancellation increases below 10% in January 2021.”
The Dallas Business Journal in Texas. “The North Texas housing market is downshifting quickly, with Dallas-Fort Worth being the only U.S. market to see a decrease in home sale prices last month, according to a report. ‘Reasonably priced homes that are in good condition and move-in ready are still selling very fast,’ said Todd Luong, a realtor with Re/Max DFW Associates. ‘However, the bidding wars have subsided considerably across the board.’”
From The Street. “‘The spike in searches about a housing crash suggests homeowners, particularly those thinking of selling, are increasingly nervous about their market timing,’ the RubyHome report stated. ‘If interest rates keep going up, purchasing power will continue to erode, putting more downward pressure on home prices until they reach parity with what people can afford.’ ‘Said another way, sellers will eventually have to capitulate,’ the report added.”
“‘The U.S. housing market is primarily stable,’ said Carol Horton, chief marketing officer at Texas-based homebuilder Kindred Homes. However, builders are slowing down on permits/starts to help offset the slowdown in demand. ‘Builders have a record number of homes currently under construction,’ Horton said.”
The Orlando Business Journal in Florida. “Central Florida’s calming residential real estate market finally has translated to a price decrease. Metro Orlando’s median home sales price fell 1.6% from $387,000 in June to $380,900 in July, the first time the metro’s median home price fell since a slight decline from December to January. The price decline in July was accompanied by dropping home sales and surging inventory, according to the latest Orlando Regional Realtor Association data.”
“There’s a definite change happening in the region’s housing market, but it’s a welcome change after two years of all-out bidding wars and nearly nonstop price escalation, Mainframe Real Estate LLC agent Anne-Marie Wurzel told Orlando Business Journal. ‘The last two years, we’ve been living in a fantasy land.’”
ABC 11 Raleigh North Carolina. “‘It’s a great time to buy because you have choices. We haven’t had choices. Compared to last summer, where there was none now you can go out and go look at five or six houses and actually make an offer and not feel like you have to make that offer yesterday,’ explained real estate broker Maya Galletta.”
The Daily American. “A typical Somerset County home listed for $180,000 in July, down 14.3% from the previous month’s $210,000, an analysis of data from Realtor.com shows. Across all of Pennsylvania, median home prices were $295,000, falling 1.3% from a month earlier. The median Pennsylvania home for sale had 1,748 square feet at list price of $173 per square foot.”
From Go Local Prov. “The Rhode Island Association of Realtors is reporting that the monthly median price of single-family homes has fallen from $430,000 in June to $410,000 for July. This is one of the only significant month-over-month decreases in years. Closed transactions of single-family homes also fell 13.4% last month, and pending sales dropped 18.2% year-over-year.”
The Center Square. “A survey of Kentucky Realtors shows confidence in the state’s housing market is close to where it stood at the beginning of the COVID-19 pandemic. The survey of real estate professionals conducted last month by HousingIQ found 73% expect sellers to reduce their asking prices. Worse, 89% anticipate houses will stay on the market longer. Vidur Dhanda, who authored the report, said higher interest rates combined with inflation and general economic unease are causing some buyers to think twice. In the survey, a quarter of the Realtors acknowledged they’ve had buyers cancel contracts. In addition, 47% said some of their clients cut their asking price by at least 5%.”
“The Kentucky Realtor survey isn’t the only survey that shows a vulnerable market. Last week, Fannie Mae’s Home Purchase Sentiment Index dropped two points to 62.8 in July. With only 17% of consumers saying it’s a good time to buy a house, national consumer confidence is at its lowest since 2011.”
Bisnow New York. “In 2020, the pandemic precipitated a mass migration event of well-heeled New Yorkers to the swanky beach towns of the Hamptons on Long Island. But the reality of in-person schooling and return-to-office mandates means the city expats of 2020 and 2021 are heading back to their normal lives this year, leaving behind a slew of problems — like a punishing labor shortage and exacerbated housing crisis — in their wake. ‘The town is bursting at the seams,’ one person in the Hamptons complained to Vanity Fair September 2020. ‘Nobody is f*cking leaving.’”
“They are now, Kristin Sheeler said. She owns a clothing store with locations in Montauk, Bridgehampton and Westhampton Beach. ‘I don’t think you’d ever understand what an East Coast beach winter is like,’ she said. ‘The sun goes down at 4 p.m. … It’s cold, it’s wet, and there’s no one here.’”
From KTNV Las Vegas in Nevada. “Dawn Houlf, Managing Broker with Exit Realty Number 1, says just in three months things have changed drastically. She says it’s now a buyer’s market and sellers are getting the short end of the stick. ‘There is going to be that negotiation between buyer and seller whereas 3, 4, 5, months ago it was all sellers and there were no negotiations, I have never seen it where people are waving appraisal contingencies, waiving appraisals, inspections, just to get into a house,’ Houlf said.”
“Rebecca & Luis Rodriguez have been trying to sell their home since May. While they are in no rush to sell. They think it’s going to be a lot harder than it would have been at the beginning of the year. ‘The seller that needs to sell a home is having a tough time and they have to decide can we afford to drop our price, is its necessity to drop our price because of an employment situation or economic situation,’ said Rodriguez.”
The Denver Post. “Colorado homeowners who are tapping their home equity this year aren’t holding back, borrowing about 50% more on average than consumers in other states. ‘People are chomping at the bit to get home equity loans,’ said Jacob Channel, a senior economist with LendingTree. Nowhere are they chomping more than in Colorado. During the housing boom in the ’00s, people used home equity to purchase additional homes and fund more lavish spending, so much so that homes became referred to as automated teller machines. And when those ATMs stopped spitting out dollars, consumers found themselves overextended and the economy lost a source driving higher spending.”
“The credit bureau TransUnion measured a 41% jump in the number of HELOCs issued nationally in the second quarter — 291,736 vs. 207,422 a year earlier.”
The Bakersfield Californian. “Once notorious, adjustable-rate mortgages have made a comeback lately as homebuyers wrestling with rising interest rates take on greater financial risk in exchange for lower payments, recalling for some the lending excesses that contributed to the housing bust of 2006-07. Bakersfield appraiser and home market observer Gary Crabtree called ARMs a ‘death knell’ to the market. He blamed them for the recession more than 40 years ago when, during the Carter administration, a mortgage product that over time increased borrowers’ monthly payments allowed people to qualify for loans they couldn’t afford two or three years later.”
“He expressed a general skepticism of ARMs. ‘ARMs never made sense in a down-trending market,’ Crabtree said. His latest home-market report from late July showed Bakersfield was on pace for a third-consecutive monthly decline in median home sale prices, a key gauge. Chuck Smith, chief lending officer at Valley Strong Credit Union, said ARMs have remained a relatively steady share of mortgage loans at the Bakersfield-based institution. As he sees it, the loan product has gotten a ‘bad rap.’ ‘That was not what caused it,’ Smith said, referring to the bust. ‘What caused it was people were getting put into homes they couldn’t afford.’ ARMs exacerbated the bust, he added.”
From KRON 4 in California. “Bay Area home values are falling, not plummeting. However, a Zillow report finds they are dipping dramatically. As sellers lower prices with less demand, the drop is outpacing the rest of the country. ‘In San Jose, prices dropped 4.5% in a single month from June to July, and in the San Francisco metro area, they dropped 2.8% from June to July,’ said Zillow economist Jeff Tucker. ‘They’re still up $1.4 million and more like $1.5 million in San Jose. So, this is still the most expensive part of the country, essentially, but that trend reversal is pretty striking.’ Tucker says this is the first time in a decade Bay Area home prices have fallen month-to-month.”
KSWB in California. “Mirroring a cooldown seen across the country, San Diego home values dipped slightly last month, according to market reports. The mortgage payment on a typical home in the San Diego metro area is $4,791 a month, including taxes and insurance, which is up about 82% from this time in 2019. Home inventory rose just under 10% from June to July, and the share of listings with a price cut last month was 23.6%, compared to 17% in June, Zillow said.”
The Vancouver Sun. “From all corners come the forecasts of lower housing prices in Canada. Everyone is nervous. The predictions portend gloom for many who bought homes in recent years, particularly over-leveraged investors. But drastically reduced prices also signal a possible opening for middle-income earners so far barricaded out of ownership. ‘Both buyers and sellers are now running for cover,’ says veteran Vancouver realtor David Hutchinson. ‘Buyers don’t know whether to purchase yet. And sellers don’t know if they should sell for less than they would have received earlier in the year. Or to wait until a more favourable market.’”
“‘On the ground things are pretty weak here in Metro Vancouver,’ says analyst Steve Saretsky. ‘Greater Vancouver homes are selling anywhere from 10 to 20 per cent lower than peak valuations in February.’ Vancouver’s suburbs have been hit the hardest.”
From CBC News. “Canada’s housing market continued to cool in July, with the average home price clocking in at $629,971 —a figure that drops by another $104,000 when excluding the Greater Toronto Area and Vancouver markets — as compared to June’s average price of $665,850. The average home price in Canada down more than 18% since February. Robert Hogue, an assistant chief economist at RBC, told CBC News that the report shows the market is ‘pretty much in full correction mode.’ ‘But what we’re seeing in July is that some of that weakness is also starting to spread across the country, which is what we expected, given that higher interest rates are affecting pretty much every buyer from coast to coast,’ he said.”
The Toronto Star in Canada. “The Bank of Mom and Dad is about to take a beating as rising interest rates and falling housing prices deliver a whole new market reality. And the sting is just beginning. There’s a whole other level of parental involvement emerging: co-signing for a mortgage. Although it is estimated only five to 10 per cent of new mortgages for first-time buyers are co-signed by parents, it’s a worrying segment that will almost certainly grow since the stress test that banks apply to your income before they grant a mortgage requires that your income can handle a two-per cent interest rate hike.”
“In 2017, the five-year fixed rate was 3.39 per cent, notes Ron Butler, a mortgage broker with almost three decades of experience. Renewals will be facing anywhere from 4.99 per cent to 5.29 per cent rate offers today. ‘That’s a big pop,’ Butler says, ‘amounting to $200 more a month on a $100,000 mortgage and $800 more a month on a $400,000 mortgage.’ Ouch.”
“People who qualified for mortgages on their own will now be more cash strapped, and may consider turning to their parents to add to the amount of qualifying income, as well as the amount of collateral equity that can back up the deal. Watch out, Mom and Dad. ‘The day of reckoning is coming,’ says Bob Adourian, a Toronto real estate lawyer, adding it will be as likely to trouble parent-child relationships as the markets.”
“That’s because a co-signed deal confers joint and several liability. You may think you are signing up for only one per cent of the asset value, but the lender can pursue any name on the mortgage for up to 100 per cent of what’s due until they fully recover the amount owing. What may seem like an innocent and low-cost favour could turn into a nightmare for everyone. Adourian says new cases are just trickling in but are destined to increase in coming months.”
“Butler agrees. He says it’s too soon to see big numbers yet. ‘It’s a glacial process. You have to be in arrears for 90 days before you start getting into the power of sale. If people are getting into trouble come September, they won’t see a lawyer’s letter until January. But right after the New Year, we’ll start seeing it.’ If the house isn’t sold to repay the mortgage, or if the value of the equity falls below the amount owing, the parents are liable for what is owed to the lender. Period. That might mean wiping out their retirement savings; or selling their own house; or declaring bankruptcy.”
“You don’t want to be in the room when all the parties come to grips with what just happened, says Scott Terrio, manager of consumer insolvency at Hoyes Michalos. A surprising number of new homeowners won’t sell their house even when that is the smartest thing to do financially, says Terrio. ‘FOGO (Fear Of Getting Out) has become as big a thing as FOMO (Fear Of Missing Out) when it comes to real estate.’”
“‘The people calling us now wouldn’t have been in the housing market if not for their parents’down payments or co-signs.’ Terrio says. ‘If your monthly payments went up $400, and you throw in inflation, it’s not unrealistic to think people are between $500, $600 and $800 a month behind. Nobody has that kind of spare cash lying around. The point is all these people got into the housing market because of their parents, and now the parents are on the hook for 100 per cent,’ he says, adding no one wants to have that conversation with their parents when they find out they are liable for your million dollar mortgage.”
“‘It’s too late for those who are already in it, but for those who are on the sidelines, this is something you want the public to know,’ Terrio says.”