A report from the LA Business Journal in California. “Agents agree that a lot of the reason we are seeing more mansions sell at auction is that properties are simply listed too high and in some cases, sellers want to offload the properties quickly. Another major reason for some of the high-priced auctions we’ve seen, such as The One, is that the developer or company that owns the property has filed for bankruptcy.”
“With auctions, you have to have a really good understanding of the value that you are willing to pay,’ said Hilton & Hyland’s Stuart Vetterick, one of the agents who represented the buyer of The One, adding that for buyers he cautions them to come up with a value they think the property is worth and not bid beyond that. ‘You don’t want to get other people that are opportunistic pushing you through the levels you are willing to pay… buyers’ remorse is a real thing,’ he added.”
The New York Post on California. “Tom Girardi and ‘Real Housewives of Beverly Hills’ star Erika Jayne’s longtime marital home has gone into foreclosure — with another abysmal price cut after nearly a year on the market without any offers, The Post can report. Initially listed for $13 million last May, the Pasadena, Calif., estate now sits on the market for just $7.98 million.’”
From Fortune. “‘Fewer people are starting online home searches and applying for mortgages than this time last year, and year-to-date growth in home tours remains far below 2021 levels. An increasing share of sellers are also reducing their prices after putting their homes on the market,’ wrote Redfin researchers. ‘The market still feels hot, but a slowdown in online searches, home tours and mortgage applications suggests more buyers are getting priced out.’”
The Motley Fool. “Recently, developer Marvy Finger, who has over 5 decades of developing luxury real estate properties sold half of his Sunbelt apartments, as he considers the recent price appreciation to be unsustainable. He warns of an upcoming glut of apartments. Finger’s sale may well be a case of ‘sell when you can, not necessarily when you want to’ and doesn’t really signal anything like an imminent crash.”
From Arizona PBS. “Rent in the Metro Phoenix Area is skyrocketing, climbing 80% between 2016 and 2021. Meanwhile, median household income only rose 22% during those 5 years. As a result, many people are using 50 to even 100 percent of their income to pay their rent. More than $13 billion spent buying metro Phoenix apartments, much spent by new landlords, and that does not count new buildings. An apartment downtown would typically be $250,000. However, some are selling for as much as $600,000 per apartment unit.”
“Some people are spending all of their income on their rent, and Catherine Reagor, Senior Real Estate Reporter at the AZ Republic said ‘it just can’t’ go on, people can’t afford it.”
From CBC News in Canada. “Some economists now think Bank of Canada rate could go twice as high as it was pre-pandemic. The bank’s deputy governor said as much telling attendees at a monetary policy conference that an uptick of household debt was ‘worrisome’ and that the bank was ‘prepared to act forcefully’ to ensure inflation doesn’t run too hot for too long. For Carlos Capistrán, an economist with Bank of America, strong language like that from a central banker is a clear sign that ‘everything is on the table,’ when it comes to bringing down inflation.That type of tough talk is the banks’ way of saying ‘We’re really going to fight this forcefully if we need to,’ according to Capistrán.”
“If Capistrán’s projections are right and the Bank of Canada rate is headed to 3.25, expect variable rates to make a similar leap. The impact could be dramatic. Right now, an uninsured 25-year mortgage of $400,000 at 1.5 per cent would cost $1,599 a month. But if that variable rate goes up to just four per cent, where fixed rate loans already are, the monthly payment jumps by more than $500 a month for the life of the loan.”
From News.com.au. “Australia’s red hot property market, which has seen prices skyrocketing during the pandemic, has finally come crashing down. Momentum in Australia’s property market has really slowed in 2022 with the fear of rising interest rates plaguing it, according to PropTrack economist Paul Ryan. ‘Those boom conditions seem like they have passed. While housing prices are still going up, it’s at a slower rate and whether prices increase or fall significantly is a question around interest rates and when and how quickly the RBA will increase rates,’ he told news.com.au.”
“But he said interest rates are already playing into a drop in housing prices. ‘I think part of that is prices have caught up to the reduction in borrowing and we have already seen interest rates start to drift higher, especially with fixed rates, and we are already anticipating borrowing costs increasing when the RBA potentially increases rates later this year,’ he explained.”
Mortgage Professional Australia. “House prices are forecast to fall over the coming years, as downward pressure on migration, rising supply and higher interest rates constrain demand. Executive chairman of non-bank lender Mortgage Ezy Peter James said there was currently a lot of uncertainty in the housing market. The peak of rising property prices was fast becoming ‘a distant memory,’ James said.”
From Stuff New Zealand. “The IMF delivered its most alarming statement about New Zealand’s biggest domestic problem: housing. It pointed to soaring household debt due to rising house prices, borrowers’ vulnerability to rising interest rates as the Reserve Bank hikes the official cash rate, and banks’ heavy exposure to housing. According to the financial institution, the NZ property market is a financial stability risk. The message was stark. While recent government and Reserve Bank attempts to ‘mitigate investors’ demand’ have helped, and could ‘address imbalances,’ New Zealand remains vulnerable to a property downturn. In other words, if the house of cards ever falls, it would do so in spectacular fashion.”
“A senior economist recently told me they feared young New Zealanders would leave in their droves for countries with ‘better wages, higher productivity, and a more affordable housing market that works properly.’ The person lamented the state of the New Zealand economy ‘based on borrowing foreign money to sell houses to one another at ever-inflated prices.’”