A report from Axios Denver in Colorado. “As the market settles, so will the ‘record-breaking appreciation homeowners have been spoiled with,’ realtor Jeremy Kane at eXp Realty anticipates. ‘This will feel like a pull-back or a loss in value, when really it is just normalizing and will provide opportunities for buyers to make more logical choices when making offers on homes,’ he tells Axios.”
The News Herald in Michigan. “The residential real estate free-for-all is in the rearview mirror and buyers and sellers can expect greater market stability in the year ahead, according to local real estate professionals. The News-Herald asked four local real estate specialists — with a combined experience of more than 85 years — to size up the market for the next year. Kelly Matelic, 25 years, Realtor, Park Ave Realty: ‘Foreclosures will start to come to the market. It’s been absolute insanity and I think the insanity is done.’”
WBIR on Tennessee. “Suzy Trotta, a realtor who writes regularly about Knoxville’s market, said the number of home sales in Knoxville was down around 30% year-over-year in the area, in November 2022. ‘Active listings were way up, which is another reason we saw a softening of the market. So, active listings were up a good bit, giving us more than double the inventory we had this time last year,’ said Trotta. ‘It’s supply and demand. We have more supply, but we’re not sure where demand is right now. I think it’s really important for everyone to remember that — we were in a really good market coming into 2020. It just took off like a rocket in 2020, and we’re coming back down to Earth a little bit.’”
“‘Those prices just shot up, and they’re still up. They’re not plummeting down, but they’re not shooting up at the same rate. They’re kinda coming back down to join those 2021 numbers, which is good. We can’t sustain 20% or 40% growth month-over-month. Traditionally in Knoxville, the market has appreciated at around 4% or 6% per month,’ said Trotta.”
From Arizona Family. “In the Valley, there’s around 17,400 homes on the market. That’s the most inventory we’ve seen over the summer when the market was at its peak of just 3,500. ‘Photography is important. The way the house looks…making sure any major repairs that need to be done are done,’ said Sindy Ready, vice president of Arizona Association of Realtors. ‘Gone are the days of ‘I’m not going to do anything to this house and sell it.’ I mean, you can still do that, but you’re going to take a big hit on pricing if you do that.’”
“The Cromford Report, a real estate market tracker, said that overall, the market in Phoenix has moved back into balance. In December, 50% of the closings closed with some form of buyer’s concession. That means anything from a repair or contribution to an interest rate buy-down. Tina Tamboer, an associate of the report, said, ‘The outskirts of town, such as areas like Maricopa, Casa Grande, Buckeye, you’re still going to see a buyer’s market. Still very good deals are to be had with builders,’ she said.”
The Business Observer in Florida. “If you are a condominium owner, there’s a bright side to all the doom and gloom over the state of the housing market. So say the researchers behind a study that found condominium prices have been falling at a slower rate than the prices for single-family homes. Point2 reports that single-family home prices dropped in four of Florida’s largest cities, with the biggest drop coming in Jacksonville where prices fell 5%. Tampa, Orlando and St. Petersburg all saw a 3% drop. In the condo market, prices fell in three of Florida’s five largest cities, with units in Miami taking the biggest hit with a 13% drop. In Orlando, prices fell 5% and in Jacksonville 1%. ‘What goes up must come down,’ the authors write.”
From Market Watch. “Question: I was a victim of FOMO during the housing market craziness and bought a house for $200,000 over the asking price. Now house prices are coming back to reality, and I feel like I lost my hard-earned money. I don’t know what to do as I am living with constant stress thinking that I made a big financial mistake. My wife and I are in our 30s and are working in the Bay Area and making about $320,000 combined yearly. Answer: First of all, know you’re not alone: This has happened all over the country as tight inventory forced bidding wars. And kudos for knowing that it’s time to face the music and figure out what to do next.”
The Chicago Tribune in Illinois. “‘The winners of the pandemic are all of a sudden becoming the losers,’ said Diane Swonk, chief economist at KPMG U.S. That includes Big Tech, which bulked up on labor during the pandemic as people moved their lives online. In November, tech industry giants all laid off, or announced plans to lay off, sizable chunks of their staff. ‘I think there was a certain belief within the sector that you know, this is really not just a blip. This is a major change in the way people are going to live their lives,’ said Peter Bernstein, an economics instructor at DePaul University’s Driehaus College of Business. ‘And they may have gotten ahead of themselves a little bit.’”
Bisnow Washington DC. “Washington, D.C.’s troubled office market appears to be lagging behind its peer cities as public and private sector tenants shrink their footprints. The District recorded 1.2M SF of negative net absorption last year, bringing the vacancy rate to 20.5%, according to CBRE’s fourth-quarter market report. The vacancy rate rose 20 basis points in Q4, due in large part to a quiet quarter from the federal government, which only signed one 10K SF lease. ‘I’m not predicting robust net absorption, nor robust gross leasing activity, so as a result, owners are going to have fewer at-bats to refill the space’ said CBRE Vice Chairman Randy Harrell. ‘So they’re playing the hand that they’re dealt and taking a little bit of a haircut instead of a bigger loss.’”
“Harrell said market softness is likely to continue into 2023, with landlords having to work harder to convince tenants of their financial stability. ‘We’re preparing our owner clients for greater transparency of their capital stack,’ Harrell said. ‘Historically, owners have held their capital stacks relatively close to their vests. When money was free, it wasn’t a problem. Well, money isn’t free right now.’”
From Fortune. “The markets hit the hardest by the correction fall into one of two groups. The first group are boomtowns, often second-home markets or up-and-coming cities, where remote workers moved during the pandemic and pushed local home prices beyond what local incomes could support. That ‘froth’ might explain why home prices are falling more swiftly in boomtown markets like Coeur d’Alene, Idaho (where home values are down 10.8% from the peak); Austin (down 10.4%); Phoenix (down 8.1%); Las Vegas (down 8%); Salt Lake City (down 7.9%); and Reno (down 7.6%).”
“The second group comprises high-cost markets along the West Coast, including places like San Jose (where home values are down 10.6% from the peak); San Francisco (down 9.5%); Santa Cruz, Calif. (down 8.4%); and Seattle (down 5.8%).”
From Bloomberg. “At the conclusion of the Dec. 13-14 meeting of the Federal Open Market Committee, policymakers published new projections showing they expected inflation would end 2023 higher than they previously thought. That led to surprisingly widespread support in the projections for the notion that interest rates would need to rise above 5% in 2023. ‘It’s going to be trickier’ to achieve a soft landing for the economy in 2023 if the Fed follows through on its tightening plans, said Mark Spindel, the chief investment officer at Chicago-based MBB Capital Partners LLC. Given their blunt policy tool, ‘they are butchers, not surgeons.’”
The Globe and Mail in Canada. “A record number of new condo units will be completed in Toronto in 2023, just as skyrocketing mortgage rates make it harder for investors to close on their properties. Nearly 32,000 condos will hit the city and surrounding suburbs, according to data from condo research firm Urbanation Inc. That surpasses the previous high in 2020, when 22,473 units were completed. Now, many buyers are having problems qualifying for a mortgage, with five-year interest rates topping 5 per cent. As well, lenders are appraising units at lower prices, meaning that the buyer has to come up with extra funds to make up the difference between the smaller mortgage for a unit, based on the lower appraised price, and what the buyer agreed to pay.”
“This has led to an uptick in buyers trying to get out of their newly built condos by selling the right to buy their new unit, also known as an assignment sale. ‘A lot of people are assigning because they can’t qualify for a mortgage nowadays,’ said Brigitte Obregon, a broker with Re/Max Ultimate Realty who has sold preconstruction condos since 2009.”
“The average condo ownership cost in Toronto was $3,506 a month as of the third quarter of 2022, according to Urbanation. In comparison, the average monthly rent in the region was $2,733, which left the condo owner paying an average of $773 out of pocket every month. That is up from an average shortfall of $235 a month in the third quarter of 2021, $196 in 2020 and $17 in 2019, according to Urbanation.”
“Activity had already dropped significantly, and by the third quarter of 2022, preconstruction sales hit their lowest level since the 2008-09 global financial crisis. Dozens of projects had no sales during the quarter, according to Urbanation.”
ABC News in Australia. “Mobaraka Mohammadi says she works 12 hours a day just to make ends meet and pay off her mortgage. Ms Mohammadi, 23, from northern Adelaide, told the ABC she might have to stop university to pick up more hours if her mortgage repayments and living costs increased further. ‘I was actually trying to cut a few of my hours so I can concentrate on my study but … if I cut any hours, I’m not going to be able to pay my mortgage,’ she said. Her home cost her $390,000 and mortgage repayments were originally $750 a month. But amid the latest interest rate increases, Ms Mohammadi’s repayments jumped to $940.”
“Mortgage broker Gracious Chidhakwa told the ABC some households had already started missing their repayments, and she warned the full effect of the rate rises would not be felt for some time yet. ‘We are now seeing some missing their repayments, some are coming back to us saying, ‘look, can we refinance as soon as possible’, or some are having to sell because they may not be able to afford that property anymore,’ Ms Chidhakwa said.”
“Ali Kawser, mortgage broker and owner of AK Home Loans based in the west of Melbourne, told the ABC that some aspiring home owners who secured house and land packages last year did not want to proceed. ‘They don’t know about the future … whatever plans they had … it’s all cancelled,’ he said. ‘Twelve months ago we told them everything is fine, yes you can borrow that much and everything will be fine, we’re happy, but 12 months later we are apologising to them.’”
“David Lin is anxiously watching Australia’s mortgage rate rises and considering whether he will have to take up another job soon. Mr Lin, a Melburnian in his 30s, had his mortgage rate fixed before the pandemic but that will expire next year, meaning if rates stay where they are, he could be forced to pay an extra $300 to $400 every month. ‘Money is gone quickly. Now I am thinking about taking extra casual jobs during the weekend,’ he said. ‘I didn’t think carefully about expenditure before. Now I have to plan it.’”
The Vietnam Express. “Many people borrowed money to invest in property in 2022, hoping to make quick profits but lost instead as tightened credit drove up interest rates and hit liquidity. In late 2021, Nu bought an apartment for VND2.5 billion (US$104,000) in the southern province of Binh Duong, hoping to resell it within a few months for a profit of hundreds of millions of dong. But in late 2022, when bank interest rates went up, she had to sell the apartment for a loss of over VND300 million.”
“She said: ‘The broker told me that apartment prices kept increasing from 2016 to 2021, and so I bought the apartment hoping for a profit of hundreds of millions of dong in six to eight months. But I was shocked that I was forced to sell it at a loss.’”
“In December, Lu put on sale an apartment he had bought for VND3 billion in HCMC’s Thu Duc city. This time he accepted a loss of VND600 million after the discount of VND300 million he had offered in August found no takers. He said: ‘The interest rate has increased from 9% to over 13%, there have been no buyers, and I still had to pay the loan and interest every month. All of these forced me to accept losses of more than half a billion dong. It is a shock to me because in recent years apartment prices in HCMC have only increased.’”
“Many investors in land have suffered similar losses this year. Early in 2022 Phuc borrowed VND1.5 billion to buy a plot of land near an industrial park in a province bordering HCMC after a broker said he could resell it within eight months for a profit of 10-15%. But Phuc has yet to find a buyer while the loan interest rate has surged to nearly 14%. Most of his monthly income goes toward paying the interest. He said: ‘I have already lowered the offer price to the original buying price. I don’t know if I can hold out [for much longer].’”
“In the first quarter of the year Ha paid VND3 billion, 70% of it coming from loans, to buy a plot of agricultural land in Bao Loc city in the central highlands province of Lam Dong. He and his wife now use 80% of their monthly income to pay the interest which is currently at a rate of 15%. He lamented: ‘The pressure to pay interest every month has turned our investment, our hope for a big profit, into a time bomb. If I cannot afford to pay interest, the land has to be liquidated at lower than the market price.’”