A report from Money. “If you bought your home in 2008 or 2009, selling in 2023 will still be profitable for you,” says Maureen McDermut, a real estate agent with RE/MAX of Cherry Creek in Denver. “If you bought in 2021 and want to sell in 2023, then you may end up taking a loss. In the latter case, it is best to wait until the market corrects and prices adjust upward.’”
“‘In a lot of markets, homeowners will still have great equity if they purchased two or more years ago, and I think those people who need to move will be able to sell and get a good price,’ Sam Sawyer, CEO of Pinnacle Realty Advisors in Austin, Texas.”
From Berkeleyside in California. “‘If a seller bought 10 or more years ago,’ said Judy Richardson. ‘They are likely going to see a large gain and be able to leverage that into a new property or save it for retirement.’ After a red-hot market fueled by the pandemic, the number of sales fell 29% in July-November, compared to the previous year in the Inner East Bay (defined as the cities between Pinole and San Leandro west of the Caldecott Tunnel). In addition, prices stopped climbing and fell 4% to a median of $1 million.”
From Slate. “The heralded conversion of half-empty downtown office space into much-needed housing has not materialized. Instead, office space is empty and getting emptier. The overall office vacancy rate is above 20 percent in Atlanta, Chicago, Columbus, Dallas, Denver, Houston, Los Angeles, San Francisco, Minneapolis, and in all four New York City business districts (Brooklyn, Downtown, Midtown, Midtown South). Nationally, office space is about as empty as it was after the 2010 recession … but we’re on the verge of a recession, not at the end of one.”
“Converting buildings to residential use is expensive. Couple that with the fact that office rents are higher, per square foot, than residential rents, and you see why developers are not champing at the bit to get new projects underway. Stijn Van Nieuwerburgh, a professor at Columbia Business School, gave me an example from San Francisco, where Juul’s old headquarters—down the block from Twitter’s improvised dormitory—is for sale for $150 million. That’s a lot less than the $397 million the embattled nicotine vape company paid for it in 2019.”
From Forbes. “Nashville builder, Jeff Livingston, had a project with 14 families lined up to move in. But he couldn’t move on building the project. Livingston expressed his exasperation with the process. ‘It’s stress, holding of money, interest carry, loss of opportunity, and what if our market falls? We could all be sitting on massive bankruptcies to a very large number.’ Well, the market has fallen. Interest rates are up, demand is down, and there are many builders across the country sitting on properties held up in permitting purgatory. But it may be too late. Money is too expensive for most buyers, and sellers, especially those that bought in the recent period of cheap money, can’t sell their property without losing money.”
“By the time builder Jeremy Seaton and I talked, he confirmed that what has happened in the market is that money has frozen up; nobody – builders, buyers, sellers – can afford to borrow or take the losses of a reduced sales price. ‘All this is going to put a lot of guys out of business,’ he told me. Seaton says he knows of builders on the hook for as much as $32,000 per month on debt service for properties that haven’t been completed or won’t sell for enough to pay off the debt. ‘Oh, well, boo hoo!’ some people might say. ‘Those people took the risk, they lost, too bad for them.’”
From Morningstar. “Home may be where the heart is, but right now conditions in the housing industry are beginning to break many hearts. Boom times during the past 10 years are now going bust. Already in a slump, industry dynamics are seen worsening in the coming year and are expected to be a drag on already beaten-up housing-related stocks, particularly homebuilders. ‘This is a house with a lot of smoke alarms and they are all going off,’ says David Kelly, chief global strategist at J.P. Morgan Asset Management. ‘The problem with housing from an investment standpoint is that it takes a long time to clear the excesses and a long time to get to the bottom. Next year will be a tough year for housing.’”
“Homebuilders are managing their inventory well by cutting prices, offering incentives, and even revising contracts, a practice they rarely engage in, says Brian Bernard, director of equity research at Morningstar. Their land management strategies are more flexible. And they’ve begun to rent the single-family that aren’t selling.”
From Point 2 Homes. “What goes up must come down: Now, single family home prices that shot into the stratosphere are currently undergoing a dramatic price correction. The trend that is becoming increasingly evident is that house prices are falling almost twice as fast as condo prices. House prices decreased in 88 of the 100 largest U.S. cities, with Irving, TX leading the way with a -22% decline in just a few months. Toledo, OH followed suit, with a similar drop. Likewise, in 10 other cities, house prices contracted between -15% and -20% compared to their spring peaks.”
“After their spring peak, prices started decreasing, revealing the new market conditions. When it comes to condo prices, the decreases were far less generalized than single family home price drops, but slightly more consistent, with the top 10 steepest decreases ranging between -15% and -29%. For instance, in Stockton, CA (the city with the biggest drop) condo prices fell from $252,500 in May to $180,000 in October. Plus, condo prices contracted more than 20% in four other cities: Raleigh, NC; New Orleans, LA; Omaha, NE; and Glendale, AZ — which saw condo price drop -21% to -25%.”
The Vancouver Sun in Canada. “B.C.’s housing market continued to slump in November as sales plummeted 50 per cent compared to the same month last year. The largest declines were posted by real estate boards in the Fraser Valley, down 58.3 per cent, Greater Vancouver, down 53.5 per cent, and Chilliwack down 51.7 per cent. Homes listed for sale jumped 63 per cent in Greater Vancouver and nearly doubled in the Fraser Valley last month compared to November 2021.”
“The rise in the number of active listings is especially startling in Vancouver Island and Chilliwack, where the number of listings almost tripled. Prices across B.C. have taken a hit, with some regions posting double-digit decreases. The Fraser Valley posted a 17 per cent decline, with average prices in November at about $915,500, down from about $1.1 million last year. Similarly, average home prices in Chilliwack dropped nearly 19 per cent to $649,000.Victoria posted a 7.7 per cent drop in the average home price. Greater Vancouver prices dropped an average 3.3 per cent while Vancouver Island was down 2.5 per cent.”
The Telegraph in the UK. “A Tory MP declared bankrupt over £1.7 million in debts has refused to stand down immediately. Adam Afriyie, who represents Windsor, vowed to keep doing his best for his constituents until he retires at the next election. Judge Nicholas Briggs made the bankruptcy order at an online hearing in the Insolvency and Companies Court. The judge was told Mr Afriyie owed about £1 million to HM Revenue & Customs (HMRC) and about £700,000 to Barclays. Mr Afriyie said after the hearing that proceedings had started after business failures. ‘I am ultimately responsible for some of the bank borrowing through personal guarantee. I’ve been trying to sell our home and downsize for some time, but it’s a tough market.’”
“Representatives of HMRC and Barclays had given the judge details of how much was owed and opposed an adjournment. Judge Briggs concluded: ‘There have been six hearings already of this matter so time really has run out.’ Barrister Fiona Whiteside, who represented Barclays, said the bank had ‘lost patience,’ and added: ‘We have seen no credible evidence that the property will be sold any time soon.’”
Stuff New Zealand. House prices continue to tumble around the country, with prices in 14 of 16 regions now down on an annual basis, the Real Estate Institute says. It was the first time since 2009 that so many regions have recorded annual price decreases. The institute has released its latest figures, and they show the national median price fell 12.4% annually to $810,000 in November, from $925,000 last year. It was also down by 1.2% on October’s median. Its house price index, which measures the changing value of residential property nationwide, showed an annual decrease of 13.7% from the market peak last November.”
“That was a bigger fall than last month’s 10.9% drop, which Kiwibank economists said was the biggest recorded since the institute’s records began in the early 1990s. Auckland had the largest median price decrease, down 18.1% to $1.065 million in November from $1.3m at the same time last year. In the index it was down 18.4% from its peak. There were price declines in all of Auckland’s districts, but the biggest were in Papakura, down 24.8% to $850,000, and Auckland City and Waitakere, down 22.7% to $1.19m and $920,000 respectively. In the Wellington region, the median price was down 17.4% annually to $795,000, from $962,500 last November. The index had it down 20.8% from its peakPrices fell in six of its districts, with Lower Hutt, down 26.6% to $675,000, and Porirua down 19.5% to $815,000, being hit hardest.”
The Globe and Mail.”Kevin O’Leary was in Miami having lunch with the business team of Circle Internet Financial LLC. Two hours later, Mr. O’Leary met Mr. Bankman-Fried, founder and CEO of FTX Trading Ltd., for the first time. The next day after their lunch, an FTX executive called Mr. O’Leary and told him they were looking for a brand ambassador. ‘It was a new gold rush,’ Mr. O’Leary recalled, in an interview. ‘Everyone wanted in.’”
“How did nobody see this coming? Did anyone raise any red flags? Erica Pimentel, a professor at the Smith School of Business at Queen’s University, said the ‘seduction of multiplying wealth and a deep, evident sense of FOMO ensured people weren’t asking enough questions’ about FTX last year. ‘Nobody was asking anything, let alone perform proper due diligence. We weren’t even seeing the bare minimum happen because of all the excitement. I mean, people were genuinely mesmerized,’ said Prof. Pimentel, who teaches financial accounting and researches cryptocurrency and blockchain technology in recent years.”
“‘You didn’t want to be that guy or girl in the room asking the cool crypto kids for their financial statements,’ she said. Circle has also seen its US$9-billion deal to go public fall apart. Mr. O’Leary himself has seen his FTX equity rendered worthless by the bankruptcy protection process, losing at least US$10-million out of his deal with the company. Teachers, Sequioa, Temasek and Tiger are writing down their investments in FTX to zero. It is not clear if other investors are doing the same.”