A report from CNBC. “Wells Fargo is stepping back from the multitrillion-dollar market for U.S. mortgages. As part of its retrenchment, Wells Fargo is also shuttering its correspondent business that buys loans made by third-party lenders and ‘significantly’ shrinking its mortgage-servicing portfolio through asset sales, said consumer lending chief Kleber Santos.”
From Basis Point. “When you see Wells saying (in the link below) that they’re exiting their correspondent business, it means they’re closing a division that buys loans from non-Wells Fargo mortgage banks. The way it works is a smaller local mortgage company can be your mortgage lender, but they might be selling your loan to Wells when they close it. But there is a critical niche Wells Fargo’s correspondent division filled in higher priced housing markets where the loans are bigger. They have been an outright leader in the lowest-rate jumbo mortgages for consumers since the post-2008 crisis years.”
“Consumers (and realtors referring consumers) in high priced markets who were used to getting competitive pricing from their local mortgage lender might notice pricing is way off starting now. This will be at least partly because of this Wells move. U.S. Bank made a similar move in December, closing a division that served local mortgage brokers in high priced markets with great jumbo rates. These two moves combined are a giant blow to nonbank loan officers who do lots of jumbo loans.”
Reverse Mortgage Daily. “Bankrupt Reverse Mortgage Funding, LLC (RMF), the nation’s fifth-largest reverse mortgage lender as of December, has accelerated the pace of layoffs in recent weeks. This occurred as RMF faced new bankruptcy complications, including the termination of Leadenhall Capital Partners as a debtor-in-possession (DIP) lender. Sources who spoke to RMD about the lender’s collapse attributed the rise in interest rates to heavy losses for both Home Equity Conversion Mortgage (HECM) and proprietary reverse mortgage volume.”
“The decline in volume had an impact on RMF’s HECM servicing business, which caused its loan-securitization outlets to freeze both private-label bonds and Ginnie Mae-guaranteed HECM-backed securities. These events triggered a cascade of defaults on RMF’s warehouse-lending lines, which provided the lifeblood cash flow for the lender.”
Go Banking Rates. “During the early part of the COVID-19 pandemic, there was a rush to buy homes — and many buyers paid premiums. However, some likely will begin to regret that decision, said Odest Riley Jr., CEO of WLM Realty and Co., based in Inglewood, California. ‘The biggest issue in 2023 will be buyers who overpaid in 2021 realizing they have no equity and are stuck with a property they may not have really wanted,’ he said. ‘These buyers will be forced to ride out the down market and get back in the game when the economy recovers.’”
The Guardian. “Here are a few things that I have Googled in the nine months or so since I bought a Victorian terrace home in Philadelphia: As you can probably tell, I am starting to have a few regrets about buying a house. I love my home but, bloody hell, is home ownership overrated. First of all, it’s not as though I even really own the thing, is it? I’m basically just renting it from the bank. And, unlike a landlord, the bank doesn’t come over to check on your possibly frozen pipes. I realise that complaining about home ownership, by the way, might be met with tiny violins from some quarters.”
KOIN in Oregon. “The Portland housing market is experiencing its steepest home sale price drop in years. The average sale price in the market has been declining since July 2022. The average sale price for a Portland-area home in December 2022 was $566,700 and the median sale price was $507,500. Both are the lowest they’ve been since April 2021. They continued to climb until May 2022, when the RMLS Market Action Report said the average sale price in the Portland area was $649,600 and the median sale price was $575,000. After that, prices started to slide. According to the RMLS, home sales are following a similar pattern in Southwest Washington and prices have been declining for months.”
KIRO in Washington. “Seattle and Tacoma are among the fastest-cooling housing markets in the nation. John L. Scott Real Estate agent Nelya Calev says rising interest rates have taken away buying power. According to Calev, interest rates fell as low as 3.5% last year, but today they’ve risen over 6%. Her hope for 2023 is that the federal government stops messing with the rate. ‘People get adjusted to the new rate, and then the market just starts moving slowly; buyers are like, okay, that’s the new interest rate, I can do this, and then bam, we get whacked again,’ said Calev.”
The Coeur d’Alene Press in Idaho. “While it seemed a house in the $500,000 range was considered a good deal not long ago, prices have edged down in light of interest rates. Jennifer Smock,managing broker with Windermere Coeur d’Alene Realty/Post Falls, said the first two quarters of 2022 were a sellers’ market with buyers competing for homes. But mid-year, with a dramatic rise in interest rates, the housing market ‘experienced a quick shift and a serious slowdown.’ ‘When interest rates jumped up close to 7% buyers found themselves unable to purchase at the current home price values,’ Smock wrote. ‘Sellers realized quickly that if they wanted to be successful, they would need to negotiate, give incentives and/or reduce their sales price.’”
Hawaii Business Magazine. “Fran Villarmia-Kahawai’s term as the 2023 president of the Honolulu Board of Realtors comes at a challenging time for the real estate industry. ‘The No. 1 challenge, I believe, is it’s changing. We had an uptick in membership from three years ago. We thought we would go down, but it went the other way. There’s a bunch of agents who don’t know that not every listing will have multiple offers.’”
The Dallas Morning News in Texas. “Dallas-Fort Worth home prices were down 10% in December from June’s peak as affordability challenges kept selling activity slow. Many potential buyers are hesitant because they are unsure of where prices could be going, said Lee Harbaugh, a real estate agent with Davey Goosmann Realty in Mansfield. ‘There’s a lot of feeling of uncertainty,’ he said. Harbaugh said he had a buyer lined up for one of his listings in Farmers Branch in the early fall, but because the home was part of a family estate, it took longer than expected to legally clear the home to sell. Now, as the seller is about ready to put the home back on the market, their buyer from the fall no longer qualifies.”
Bisnow New York. “The last quarter of 2022 brought significant decreases in both sales prices and volume in New York City commercial property sales, ending a year dominated by rising rates with a whimper. Multifamily was the top performer in the fourth quarter, with $1.4B of sales — a 23% decline on the average of the previous four quarters, per Avison Young. Avison Young Tri-State Investment Sales Group Head James Nelson said average cap rates have risen to 4.97% while the average price per SF on properties is $742, down 11%. ‘So that’s that inverse relationship,’ he said. ‘If investors are demanding a higher return, higher cap rate, that is going to push down pricing on a per-SF basis.’”
“Office took a more significant hit. For that asset class, the average price per SF was $495 in the fourth quarter, down 53% on the trailing four-quarter average. Nelson said that number is ‘totally misleading,’ as it doesn’t factor in the quality office buildings that traded.”
From Bloomberg. “Major US office markets were already struggling with empty buildings as flexible work becomes the norm. Now, mounting layoffs and corporate cost cuts threaten to worsen the glut, particularly in New York and San Francisco — two finance and tech hubs with economies that are heavily dependent on office workers. ‘It’s an extremely difficult time to be a landlord,’ said Ruth Colp-Haber, chief executive officer of brokerage firm Wharton Property Advisors. ‘All the costs of running their buildings are going up, the costs of construction and labor are going up. These are all their daily costs, just to open up their buildings for business. Then, on the income side, the rents are going down. This is a real witches brew.’”
Global News in Canada. “‘Our lows are getting back to normal for this area [and] we’re seeing some buyers and sellers starting to understand where the market is,’ said Adam Miller, 2023 president of LSTAR. ‘We’ve had a couple of months where it’s been consistent, smaller decreases, but [we’re heading] back to sort of the more conservative market that the London-St. Thomas is used to seeing.’ Miller said that ‘we’re sort of been caught up in what happened to the market in 2020 and 2021,’ but ‘that will never happen again.’”
“‘That was sort of the Sharknado of real estate,’ he said. ‘No one saw it coming when it happened, no one believed it was happening, but we’re never going to see numbers like that again.’ He advises prospective sellers to look closely at recent market trends, and that ‘the numbers that your neighbour got a year ago, you’re not going to get.’ ‘If you’re ready for it, a lot of things that sold 2018 and 2019 are going to sell in 2023,’ Miller said. ‘So, if you sort of delete those two crazy years, you’re probably going to have a great return.’”
From CNBC. “House prices in Sweden have risen fairly reliably over the last decade. This has been buoyed by ultra-low interest rates in a system where around half of people’s mortgages are financed with variable rates and many of the rest are on short-term fixed rates. But now property prices are tumbling. ‘As of November we are seeing prices nationally in Sweden fall 13% from the peak in February. That’s the largest downturn on the housing market since we had a big economic crisis in the nineties,’ Gustav Helgesson, an analyst at Nordea, told CNBC. Helgesson characterized the change as a correction, rather than a bursting bubble, ‘but it is a painful and very fast correction,’ he added.”
The Taipei Times on Taiwan. “Changes to the Equalization of Land Rights Act might trigger panic selling of presale house purchase agreements and weigh on overall property deals, real-estate analysts said yesterday. Evertrust Rehouse Co said the legislation in essence limits presale housing projects to buyers with real demand and puts an end to people profiting from reselling purchase agreements that cost relatively little.”
“H&B Realty Co said that the slowdown in the local housing market has to do with the amendments being proposed in July last year. Investors have since fled the market, although they were hoping the government might back off, H&B research manager Jessica Hsu said. ‘Panic selling looks inevitable and might cause a splash,’ Hsu said.”
The Associated Press. “The global economy will come ‘perilously close’ to a recession this year, led by weaker growth in all the world’s top economies — the United States, Europe and China — the World Bank warned Tuesday. The report follows a similarly gloomy forecast a week earlier from Kristina Georgieva, the head of the International Monetary Fund, the global lending agency. Georgieva estimated that one-third of the world will fall into recession this year. ‘For most of the world economy, this is going to be a tough year, tougher than the year we leave behind,’ Georgieva said. ‘Why? Because the three big economies — U.S., E.U., China — are all slowing down simultaneously.’”
From Reuters. “Dozens of Telsa owners protested at a delivery centre in Shanghai on Tuesday, vowing to raise pressure on the electric car maker after it declined to offer them rebates on price cuts the U.S. firm made last week and that they missed out on. Similar protests by Tesla owners have sprung up in cities including Henan, Wuxi and Hangzhou in recent days, according to owners and social media posts. Tesla has faced online backlash over previous price cuts in China before but nothing as widespread as the current spontaneous protests.”
“Several of the owners in Shanghai said they felt misled by Tesla sales staff who had urged them to close orders and told them that they would face higher prices in the new year. ‘I haven’t been able to eat or sleep,’ said another owner who only identified herself by her last name, Feng. She said bought her Model 3 in December after Tesla sales staff came to her house to finalize loan documents and had pressured her to close. ‘I cannot accept this.’”
The Associated Press. “The cryptocurrency exchange FTX was supposed to be the crown jewel of the Bahamian government’s push to be the global destination for all things crypto, after years of having an economy overly reliant on tourism and banking. Instead, FTX is bankrupt and Bahamians are trying to figure out what’s next for their country and whether their national crypto experiment has failed. Dressed in a canary blue suit on a warm December night, sweat dripping from his brow, Bishop Lawrence Rolle belts out the lyrics to his latest hit song for the hundreds of children and adults gathered to celebrate Christmas.”
“‘FTX!,’ he sings, bent over and shaking his head for emphasis. ‘The money is gone!’ ‘FTX!,’ his backup singer and audience scream back. ‘The money have done gone!’”