A report from the Denver Post in Colorado. “Long lead times to complete new homes have combined with rapidly rising interest rates, now at 15-year highs, to put metro Denver homebuilders and their customers in a predicament unlike any seen since the housing bust. ‘Nobody is happy, but I don’t sense the same panic internally as I did in 2008,’ said Danielle Davis, vice president of sales & marketing at McStain Neighborhoods. ‘We have seen a dramatic shift in the number of people walking through the door. It has been one of those things where people fear buying at the top of the market They don’t want to be perceived by those around them as having made a bad choice at the wrong time. We are seeing a lot of hesitancy.’”
“The window is long for things to go wrong, and they have gone wrong. The market went from one where buyers, frustrated by bidding wars and a low supply of existing homes, clamored to get new homes to one where more are essentially priced out of homes they agreed to buy and fearful of a downturn. ‘Six months ago you had a lot of buyers in the market, tripping over each other and fighting to buy a house. You had this frenzy in this market and people were paying crazy money for housing,’ said Stephen Tindle, president of the Colorado division of Thomas James Homes.”
The Review Journal. “Homebuilders reversed months of slumping sales in Southern Nevada and across the country in August. Sales in August were down 44 percent from the same month last year, and builders’ land buying activity ‘has basically decreased to zero as they wait and see where things end up going into the end of the year,’ Home Builders Research President Andrew Smith wrote.”
“Fueled by low borrowing costs — and by an influx of out-of-state buyers as people worked from home — Las Vegas’ housing market accelerated to its most frenzied pace in years in 2021. Prices hit new all-time highs practically every month, buyers flooded properties with offers and houses sold rapidly. Amid the buying spree, builders put buyers on waiting lists, regularly raised prices and, in some cases, drew names to determine who could purchase a place.”
“Higher borrowing costs have thrown cold water on the once-sizzling industry. On the resale side in Southern Nevada, home purchases have tumbled, available inventory has soared and sellers have increasingly slashed their prices. With buyers pulling back, the median sales price of previously owned single-family homes — the bulk of the market — was $450,000 in August, down 3.2 percent, or $15,000, from July, trade association Las Vegas Realtors reported. This marked the third consecutive month that prices fell .”
The Real Deal. “Builders stuck with a stockpile of extra homes are turning to the boogeyman of residential real estate: investors. Homebuilders are offering discounted bulk sales of homes to investors, the Wall Street Journal reported. The move comes as rising mortgage rates are sidelining traditional buyers from the market, saddling builders with more inventory than they know what to do with.”
“To that end, builders are offering discounts in the range of 10 to 15 percent from estimated retail value, brokers and investors told the outlet. Some are offering as much as 20 percent off for a bulk sale, an attractive option for investors who can save money and energy by keeping holdings close together.”
From KPHO Phoenix. “A new report is showing that home prices may plummet in 2023, so what does that mean for buyers and sellers? Shelly Sakala, a realtor with The Sakala Group, dropped by Good Morning Arizona about what we can expect from the market next year. ‘I’ve been hearing that the interest rates could go down as soon as the midterm elections,’ Sakala said. ‘That could create some stability so people know what to expect…If interest rates continue to rise, we are going to see the market correcting even more than it is.’ She described Phoenix as a volatile market since it tends to ‘go up really fast and go down really fast.’ Sakala believes that the market may plummet, but it may not be as bad as you expect.”
The Star Telegram in Texas. “Almost as quickly as it ratcheted up into a historic frenzy, the housing market in Dallas-Fort Worth is swiftly cooling. Between August 2020 and May 2022, the median home price in Fort Worth jumped 48% from $248,000 to $367,000. In the three months since housing prices peaked in Fort Worth, the median home price dropped almost 5% to $350,000. Over the course of just a few weeks, competition for available homes dried up.”
“The white-hot pandemic housing market — marked by multiple offers well above the asking price — ‘seems to be a thing of the past,’ said Shelby Kimball, former president of the Greater Fort Worth Association of Realtors. ‘The surprising thing to me is how quickly it changed. It seems to have decelerated very abruptly,’ Kimball said. From May to August, the number of active listings nearly doubled, from 1,224 to 2,207. Buyers have backed off. Houses are staying on the market longer and many sellers are reducing prices, Kimball said.”
“The prices aren’t dropping so much as they’re correcting, said Misty Michael, team lead for the Michael Team. A bubble isn’t bursting; the market is simply normalizing. ‘It’s because sellers have been pricing above where comps were, thinking it could sell, and now it’s no longer selling,’ she said.”
The Orange County Register in California. “The summer’s collapse in Orange County homebuying pushed the median selling price below $1 million and cut the number of seven-figure neighborhoods by six from springtime. The countywide median for August fell to $984,000, the first time it’s been under $1 million since March and down 6.6% from May’s peak of $1.054 million. Since the spring’s peak, drops out of million-dollar status were found in Anaheim 92807, Anaheim 92808, Foothill Ranch 92610, Garden Grove 92845, Huntington Beach 92647, Irvine 92614, Ladera Ranch 92694, Mission Viejo 92691, and Orange 92867. Meanwhile, the median jumped above $1 million in three neighborhoods: Laguna Hills 92653, Midway City 92655, Orange 92866.”
“The pandemic starkly changed the home-price landscape so what was only two year sago relatively rare — a million-dollar ZIP — is now Orange County’s norm. Low mortgage rates and limited inventory created a feeding frenzy during the pandemic era’s first two years. But times have changed. The buying binge is over as lofty pricing and sharply rising mortgage rates scare off house hunters and investors.”
From KRON. “After pandemic changes brought two years of skyrocketing growth in home prices, California is now seeing a steep drop, according to home insurance website QuoteWizard. Since June, the study shows that the average price of a home in California has gone down by $12,205 in that time. This is the sharpest drop of any state in the nation. A city in the South Bay is seeing even steeper drops. San Jose’s average home prices has gone down by 5.6% since June 2022. That may not seem like a huge amount, but that percentage equates to $93,037 in value lost since June.”
“San Francisco also saw a drop, though not as large. Home values have gone down 2.9% or $42,144 since June across the City by the Bay. Two other California cities saw drops in home prices, San Diego and Los Angeles. San Diego went down by 2.4% or $22,286. Los Angeles saw a 1.8% decrease so homeowners stand to earn $17,071 less if they sell.”
Bloomberg on New York. “The Manhattan housing market is calming down. Sales of co-ops and condos dropped 3.7% in the third quarter from the previous three months and more than 18% from a year earlier, appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate said in a report Tuesday. The median price on transactions completed slipped 7.6% to $1.15 million from the second quarter. ‘The market is resetting,’ said Jonathan Miller, president of Miller Samuel. ‘It’s a soft landing or a settling.’”
The New York Post. “US home prices are plunging at their most significant clip since the housing market cratered during the Great Recession, mortgage analytics firm Black Knight said Monday. Median home prices fell by 0.98% from July to August, according to Black Knight’s August Mortgage Monitor report. Revised data showed an even sharper 1.05% decline from June to July.”
“‘Together they represent two straight months of significant pullbacks after more than two years of record-breaking growth,’ said Black Knight Data & Analytics President Ben Graboske. ‘The only months with materially higher single-month price declines than we’ve seen in July and August were in the winter of 2008, following the Lehman Brothers bankruptcy and subsequent financial crisis,’ Graboske added.”
From Forbes. “Concerns about the financial health of Swiss banking giant Credit Suisse over the weekend have led to fresh market fears of another meltdown similar to Lehman Brothers’ collapse in 2008. Rumors abound that Credit Suisse’s capital position is at great risk, with shares plunging to new lows on Monday and the cost of insuring the bank against default surged to its highest level in more than two decades. But experts say it’s unlikely Credit Suisse will fail even as the bank’s credit default swaps (CDS), which offer protection against default, surged on Monday.”
“‘The world is in a very different place than 2008, when there was a sudden realization of widespread losses throughout the entire financial system,’ says James Angel, finance professor at Georgetown University. Still, Credit Suisse’s CDS spreads are exploding because the market is in ‘cockroach mentality’ according to Angel, where investors believe if there’s one bank with risky capital levels then there are more.”
“Credit Suisse remains ‘trapped in a circular loop of doom’—where bad news is just sending CDS higher and the stock lower despite management’s efforts to reduce market anxiety, says Vital Knowledge founder Adam Crisafulli. ‘Investors shouldn’t necessarily rush out to buy Credit Suisse shares, but we strongly doubt some type of a ‘Lehman Moment’ is imminent.’”
The Globe and Mail in Canada. “6092 Carradine Court, Mississauga. Asking price: $1,649,000 (Mid-August, 2022) Previous asking price: $1,749,000 (Early August, 2022). $1,849,000 (Late July, 2022); $1,949,000 (Mid-July, 2022) $2.1-million (Early July, 2022) Selling price: $1,595,000 (Mid-August, 2022). Agent Kimmé Myles expected this four-bedroom house might sell for about $1.6-million, but the owners requested a listing price of $2.1-million based on its recent renovations and select location abutting a park. House hunters disagreed with the lofty valuation and the price was cut four times over six weeks.”
“Once their price dipped to $1,649,000, the sellers received a conditional offer, then two more proposals. ‘We gave the first person a chance to remove their conditions and they didn’t, so it sold to one of those two [other bidders] for $1.595-million,’ Ms. Myles said. ‘We sold for under list of $1.649-million, however, we did better than the property down the street, so all-in-all, everyone was happy.’”
From Mozo.com. “It’s official: the market has turned. New data from CoreLogic shows the Australian property market peaked in April 2022 and has been sliding downhill since, primarily due to rate hikes. On the ground, the cooler market makes for chilly receptions at auction, as Ella Palfreyman noticed when her family tried to sell their home at the end of September. ‘After seeing so much growth in the property market these past few years, it’s hard to now adjust our expectations,’ she says. ‘While there were plenty of viewers at the auction, no one was willing to make a competitive bid, so it kind of feels like everything is at a standstill. Now we are asking ourselves do we adjust our expectations and just sell for a lower price, or wait it out and see if we could sell it for more a year or two down the road?’”
“The Palfreymans aren’t alone in this uncertainty. The slump is particularly worrying for investors who rode the September 2020 – April 2022 market upswing, which pushed values into a stratospheric 28.6% growth. Now, according to CoreLogic’s head of residential research Eliza Owens, ‘the nominal gains achieved from that relatively short hold period have already started to erode.’”
From Newshub. “The slump in the housing market is hitting Kiwis hard with prices plummeting around the country, especially in two of New Zealand’s biggest cities. The nationwide average property value fell just over $75,000 (6.8 percent) after hitting a high of $1.09m at the end of February. New Zealand’s biggest city wasn’t exempt with property values in Auckland falling $140,549 (9.8 percent) since peaking at $1.56m at the start of the year.”
“Auckland suburbs have been hit hard by the property market slump as rising interest rates and worsening inflation cause buyers to retreat from the market. Okura was the worst-hit in Auckland with the lifestyle suburb on the cities northern fringe seeing its property value drop by $426,000 since the market peak. New Zealand’s most expensive suburb, Herne Bay, saw the next biggest tumble in Auckland, with the area seeing the property value drop by $355,000 to $3.835m since the peak. The Capital was the hardest hit in New Zealand, with the housing market slump costing homeowners in Wellington almost $200,000, the latest OneRoof-Valocity house value report shows.”
“Sixteen suburbs – mostly in Wellington and Auckland – saw value drops of more than $300,000 since the market peak. James Wilson, head of valuations at Valocity, OneRoof’s data partner, said the continued falls over the quarter suggest the market hasn’t hit the bottom yet. ‘Greater Wellington remains the country’s most troubled housing market. Property values dropped in all eight of the region’s territorial local authorities (TLAs) over the quarter, and homes in the capital are now worth $99,000 less than what they were a year ago,’ Wilson said.”