It’s Friday desk clearing time for this blogger. “‘When you have a rise and increase in interest rates like we’ve had, that is a big problem for housing. Interest rates are like the mother’s milk of housing,’ Pulte Capital CEO Bill Pulte told FOX Business. ‘And if you cut it off, you’re in big trouble. The [KB Home] cancelation rate… was through the roof, something like 68%, which is just enormous. Usually, that number is around 10, at most 20%. So I think we’ve got a tough road ahead this year.’”
“Property investor Thor Equities CEO Joe Sitt said claimed it’s ‘going to take some time’ for metropolitan areas to see a rebound in their commercial and personal housing markets. ‘I think the cities are going to wake up and try to react,’ Sitt said. ‘I would say San Francisco rents are probably down somewhere in the neighborhood of about 35%. No exaggeration. It’s dramatic what’s going on in that marketplace. It’s more, I hate to say it, markets like ours here in New York, Chicago, San Francisco is a ghost town. San Francisco’s been destroyed.’”
“Home prices in the DC area fell year-over-year in December, according to a Bright MLS report out Thursday, the first time since September 2016 that prices fell annually. ‘The median sales price was $550,000, which was down 1.3% compared to last December,’ the report said. ‘Home prices peaked in May 2022 and the median price is now 15% below peak level.’”
“Brenna Rizzuto is about to put her north Phoenix home up for sale. She should get a reasonable price, but it won’t be as much as she would have made listing her house last year. ‘I do understand that I am not going to have people beating down my door, not going to get as much as I might have six months or a year ago,’ said Rizzuto. ‘But I am okay with that.’ ‘We’re seeing buyers now that are able to make some demands,’ said Real estate expert Shelley Sakala with The Sakala Group. ‘They’re getting some concessions, asking for closing costs, asking seller for rate buy down, which is very helpful as far as interest rates go.’”
“‘We are seeing things sit on the market a little bit longer, and we are seeing things swing in the buyer’s favor,’ noted Noreen Payne with Lang Realty in Delray Beach. ‘Sellers are willing to have conversations.’ According to numbers from the Miami Realtors Association, Palm Beach County’s median time to contract was almost double what it was a year ago. ‘There are a lot of good deals for cash-buying snowbirds. They are really starting negotiations from a power position,’ said Whitney Dutton with the Dutton Group in Fort Lauderdale.”
“The end of 2022 marked the largest decline in quarterly North Texas home starts since the Great Recession as buyers pulled back. Builders began construction of almost 8,000 new homes in Dallas-Fort Worth in the fourth quarter, down 38% from a year ago when they started just over 12,900 homes, according to a new report. Many D-FW builders took a ‘spec-and-release’ approach, starting homes in anticipation of demand and releasing them for sale late in the construction process. Builders who took this approach are now having to provide incentives like mortgage-rate buydowns and discounts to get the homes to sell. ‘Buyers that were waiting for more affordable opportunities compared to earlier in 2022 will find that many communities offer compelling house prices today,’ said Ted Wilson, principal with Residential Strategies.”
“In the last half of 2022 the market for homes priced at $10 million and more fell precipitously in New York and South Florida, according to a new report from the brokerage Serhant. ‘Pricing has certainly come down, which differentiates New York City from other markets,’ says Garrett Derderian, Serhant’s director of market intelligence. ‘When buyers at this level smell blood, especially during uncertain times, they tend to strike. So super-prime is usually one of the last tiers to collapse but the first to recover.’”
“Nevada homeowners gained an average of $40,000 in equity for the third quarter year-to-year while U.S. homeowners gained an average of $34,300 during the same period. That’s down from $60,000 year-to-year for the second quarter, according to CoreLogic. The median price of a home in Reno is $519,950, down from a peak of $570,000 in May. In Southern Nevada, the median price of a home has plummeted to $425,000 in December, from a peak of $482,000 in May.”
“Looking specifically at the fourth quarter, median home sales prices in San Francisco declined by 13.5% to $1.57 million and condo sale prices dropped by 12.5% to $1.18 million. Quarterly sales volume dropped by 42% over the same period. San Francisco’s median home prices dropped by 1% to $1.78 million between 2021 and 2022 in the first annual decline the city has seen in a decade, according to Compass. Sales in the luxury home segment fell 52% in the fourth quarter. That’s stark reversal from earlier on in the pandemic, said Patrick Carlisle, a Compass market analyst who authored the report.”
“‘Back then, it was these affluent buyers that led the market. They had the money, they were stuck in shelter-in-place and they very quickly started to buy big new homes and estates,’ Carlisle said. ‘Now we have a complete flip, and the decline in luxury home sales is outpacing the decline in the more affordable market segments.’”
“There are early signs of rough times ahead in the GTA real estate market, with some Toronto mortgage brokers reporting a rise in the forced sale of homes by private and alternative lenders. ‘It’s happening at breakneck speed,’ said Toronto broker Ron Butler. ‘It’s just a strange set of events that have come together to create this vast increase in power of sales. This is just the very beginning of the problem; we’re not going to see the real impact of the problem until May, June, July.’”
“Peppered with colourful all-caps copy like ‘HELP!!! MISSISSAUGA POWER OF SALE **MUST SELL IN 30 DAYS!!!’ and ‘POWER OF SALE* BACK ON MARKET — DEAL FELL THROUGH!!!’ power of sale ads are hard to miss on sites like Kijiji and HouseSigma. One three-bedroom, four-bathroom Brampton townhouse was sold as a power of sale for $919,000 in December 2022, after it was bought in 2021 for $1,260,000.”
“The other group facing forced sales is people who have mortgages with alternative or ‘B lenders’ that cater to individuals who might not qualify with the big banks. In these cases, ‘the increase in payment was so substantial as to become almost unmanageable,’ Butler said. Butler estimates that only around 2 to 3 per cent of homeowners with mortgages in Toronto and Vancouver have either private or alternative lenders. ‘But it’s still meaningful,’ he added. ‘There’s nothing quite as impactful on a marketplace as too many people who have to sell.’”
“From a new build offering £5,000 towards buying fees to a Grade II-listed house with a £2 million price cut, here are nine London properties with reductions or offering financial incentives for buyers. Cheyne Walk, £1 million. Four-bedroom, 1,834-sq ft detached house with an entire ground floor for entertaining and a granny annex in the garden. Originally priced at £1.395 million. Maida Vale, £5.25 million. A seven-bedroom, Grade II-listed house arranged over four storeys with front and rear gardens, wooden floors and feature fireplaces. It has been reduced by £2 million since March 2022.”
“House prices have fallen at their fast rate in more than a decade in Denmark, one of the most expensive property markets in Europe – and analysts fear the UK could be next. In the third quarter of 2022 in Denmark house prices fell by 3.8%. Prices in neighbouring Sweden have been plummeting, with almost 20% of their value being lost in five months. Denmark was the first country in the world to experiment with negative interest rates in 2012. This experiment ended in September when the central bank brought them back into positive figures. This has pushed up the price of borrowing which many Danes have grown used to being almost free for a decade. A similar situation is happening in Sweden where they too used negative interest rates to stimulate their economy.”
“Hundreds of thousands of the most vulnerable mortgage borrowers risk being locked into uncompetitive interest rates as falling property values reduce or remove their ability to refinance. Mortgage broker Ali Kawser, who operates around Melton in Melbourne’s outer western suburbs, is starting to see some of these borrowers coming through his doors.”
“‘We have gone through a fixed-price frenzy from early 2020 to mid-October 2021,’ he told ABC News. ‘Eight out of 10 customers fixed the loans for two years with a rate of 2 per cent or lower, and they have adjusted their monthly expenses and everything around that … and some customers bought a car because their repayment was lower. So 10 per cent of the customers are coming back now, but in the coming months, by Easter, it will be a big chunk of customers who will come to us. I would say all of them will come just to get by for the next 24 months. And we have to make a plan for them.’”
“Mr Kawser said one customer had come to him this month after being informed by her lender that her repayments would jump from $2,173 this month under her fixed loan to $3,550 in February once that loan ended. ‘Their first comment is, ‘We can’t pay that much, we need to do something now,’ he said.”
“A borrower with less than 20 per cent equity would most likely be required to pay lenders mortgage insurance (LMI) if they moved bank. ‘This is not your insurance, it’s insurance to cover the lender that you have to pay for,’ explained RateCity’s research director Sally Tindall. ‘And so, when you move lenders, it does not come with you. If you don’t have that all-important 20 per cent equity in your home, then you’re going to be asked to pay it again.’”
“‘Suddenly they find themselves in what we would call mortgage prison,’ Ms Tindall explained. ‘Because once you do the maths, the cost of the lenders mortgage insurance typically outweighs the benefits of refinancing — although don’t rule it out completely, do the maths first.’”
“Mr Kawser said he was already seeing customers in this situation. ‘A customer of mine last year bought a property of $570,000 … [the] current valuation is maximum $540,000,’ he said. ‘They have paid over maybe $10,000 or $15,000 in the last 12 months, and it’s been wiped off already. So we are trying hard to do a refinance, including LMI. So they’re going to lose another $7,000 to $8,000 again.’”