A weekend topic starting with Yahoo Finance. “BRIAN CHEUNG: Yeah, let’s start off with Wells…Double digit decline in mortgage income for this company when you consider that it used to be an over $1 billion revenue line. It declined 79%. Again, not a typo.”
From CNBC. “‘Sellers have to be more realistic,’ said Bill Kowalczuk, real estate broker at Coldwell Banker Warburg. As the market cools, sellers should no longer expect one open house to draw multiple competing offers or bidding wars to 20% to 30% over the asking price, Kowalczuk said. ‘Those days are gone.’ When preparing to list a home, hire an experienced real estate agent or broker who knows your neighborhood or region to help you figure out the right asking price, he said. If your pricing is too aggressive, ‘it’s going to be the kiss of death.’”
From The Edge. “In some ways, the trials and tribulations of online used-car platforms mirror the dramatic rise and fall of online real estate firms such as Zillow Group Inc, Redfin Corp and OpenDoor Technologies Inc, whose stocks have declined sharply from their own pandemic peaks. Zillow stock is down 85% from its pandemic peak; OpenDoor shares have plummeted 87%; and Redfin stock is down 92%. And those three are the leaders in what has been the hottest real estate market that the US has seen in decades. The comeuppance for global online used-car giants has been as brutal as online housing firms.”
The Washington Post. “Invitation Homes advertises that it is leading a real estate ‘revolution.’ Yet some of the company’s homes have missed basic quality checks: Renovations at the company’s rapidly assembled collection of 80,000 homes often were made without building permits, according to a review of Invitation Homes properties in several states, a California lawsuit and a Washington Post analysis of building data in three cities. ‘We’re paying $4,000 a month to live in hell,’ said Celeste Jackson, a Los Angeles entrepreneur who lives with her husband in an Invitation Homes property.”
“Outside Dallas, another couple said they discovered water pouring through their walls and soaking the carpet after a bathroom renovation for which no permits are on file with the city. And near Tampa, contractors hired by Invitation Homes reframed rotted floors and walls and rewired a living room without pulling permits, according to county records. The contractors then left the living room gutted for seven months before the company fixed it properly, according to one of the tenants, Kristi McKenzie, and photos she provided. ‘They hire people who will just do anything without doing it to code,’ McKenzie said.”
The Reporter Herald in Colorado. “Boulder remains on top of the price list with the June median resale price of $1.49 million, down from $1.5 million in May and up from $1.32 million in June a year ago. Estes Park’s median home price dipped from $850,000 in May to $735,000 in June; the June 2021 median was $625,000. Inventory of homes for sale was at 105, up from 87 a year ago. Loveland/Berthoud median prices dropped from $560,000 in May to $545,000 in June.”
From KOLO in Nevada. “Real estate agent Mona Lloyd has noticed a growth in inventory. ‘We’re just basically kind of getting back to normal so it has increased a little bit,’ she said. ‘We’re currently sitting at about 1,400 homes for the Reno-Sparks area.’ As a result, some sellers are having to lower prices and offer incentives. ‘We’re definitely seeing offers coming in a little bit under the asking price,’ said Lloyd.”
“‘We’ve seen appraisals that came in below what the sale price was and before this, you know, the buyer had to make up the difference,’ said Rory Butler, loan officer. ‘I think you’re in a much better position to go back to the table and say ‘Hey the appraisal came in $10,000 below of what we agreed to buy the home at, I’d like you to lower the price.’”
The Daily News in Washington. “Recent real estate data shows Cowlitz County housing market is starting to stabilize as more homes go on the market and stay available longer. The major drive is a doubling of the number of homes listed for sale over the span of a few months. Katie Keaton, a realtor for Realty One Group Pacifica based in Longview, said homeowners who were on the fence about possibly selling their home may be doing so now to avoid missing a possible peak in the market. She said it was becoming less common to see homes sell four days after going up for sale, or receive offers $20,000 or more above the asking price.”
“‘The prices are back to where the market is telling us, not trying to get ahead of what it’s telling us,’ Keaton said.”
The Dallas Morning News in Texas. “‘We’ve seen a big shift in sentiment,’ said Laila Assanie, senior business economist at the Dallas Fed. ‘More and more firms are concerned about the second half of the year. We’ve heard comments from a small share of our contacts who’ve actually seen a drop in demand for their goods or services. That is just starting to emerge now.’ The Dallas Fed started to see some slowing in housing in May, and there’s been more erosion since. ‘In the last few weeks, the market changed quite quickly,’ Assanie said.”
“Builders expected home sales to taper off as mortgage rates rose, but they were surprised by the speed of the turn, she said. And few buyers are willing to pay a premium these days. ‘Builders and even sellers don’t have as much pricing power,’ Assanie said.”
From KCRA in California. “‘I think it’s ironic because a few years ago Sacramento was the hottest market ever and now we’re making the opposite side of the list,’ said Ryan Lundquist, housing analyst. Lundquist said there are currently 4,000 homes for sale and of those 4,000, nearly half have had price drops. ‘Last month for the first time in 17 months, the average the buyers paid was one percent below the list price,’ Lundquist said. ‘For all sales, last year on average buyers paid four percent over the list price. The reality check is the honeymoon is over. We’ve had this two-year stint of the most aggressive market ever and now the market has shifted into something else.’”
From Moonshine Ink. “‘Within the last few months, I’m seeing the market changing from a seller’s market,’ said agent Tom Mills who has been selling property in the North Tahoe region for more than 30 years. ‘I can’t demonstrate with stats for sales because if we look back a few months it is not indicative. But multiple offers are no longer the norm. Properties are sitting on the market longer. It used to be ‘no contingencies and quick close;’ Now we are seeing buyers negotiate repairs. We are seeing a correction.’”
From WPBF 25. “Housing experts say the effects of inflation have had an impact on the real estate market in South Florida. Kevin Kent, a broker associate at KW Reserve Luxury Real Estate, told WPBF 25 News they’ve seen some changes in the industry. ‘We were selling our houses so quickly that a lot of people were waiting to get their house on the market until right where they needed to be somewhere. And now that there’s been an adjustment in the marketplace, we’re seeing some price reductions in the inventory that’s out there,’ Kent said.”
“He had just reduced a home by $50,000 and another condo by $100,000. Officials said while a normal housing market has around five months-worth of inventory, just recently they had around two weeks-worth. And with not as many buyers on the market right now, than they’re used to, due to inflation, they have more than two months’ worth. ‘The more interest rates… the Fed keeps raising the interest rate to try to cool off the markets? It’s definitely having the impact. It’s cooling off the market a little bit. How long that’s going to last, I have no idea. I’m hoping it’s a short-term thing especially for our area,’ Kent said.”
From Fox 35 Orlando in Florida. “As interest rates increase, realtors said fewer people are shopping for homes. Realtor Ken Pozek said around 300 customers used to reach out a month. That’s been cut down to around 175. ‘People that are looking to sell that expected 10,15, 20 offers on their house, are like wait a minute, I thought this was a seller’s market.’ Pozek said it still is, ‘Meaning that it might take a month to sell your house and that’s ok. What we were going through before just wasn’t healthy, so it’s re-educating our clients.’”
The Georgia Straight in Canada. “Real-estate boards have reported about downward pressure on Metro Vancouver housing prices. What’s not captured in these reports is what Vancouver realtor Marty Majerski describes in a note to the Straight as ‘some shocking stats.’ ‘There have been MASSIVE price drops from the peak of the market in the early part of this year, and they are simply not getting reported accurately by our real estate boa[r]d,’ the REMAX Crest agent wrote.”
The Canadian Press. “In the London area, which includes Strathroy, St. Thomas and Elgin and Middlesex counties, only 663 homes sold last month – the worst June in 10 years. Other local numbers are stark: The average sale price of a home dropped by $76,000 between May and June – to $686,287, down from $762,397 – and those prices have dropped an average of nearly $140,000 since the market’s frenzied peak this winter.”
The Financial Post. “‘We’ve had everything happen to us in the past couple weeks,’ said Joe Baglieri, broker at Re/Max Realtron Property Shop in Markham, Ont. ‘We’ve had deals fall through, we’ve had renegotiations happen.’ The problem is, borrowing costs have been so low for so long, many households have forgotten what it’s like when interest rates bite. Geoff Morgan, a brand marketer from Toronto, said his bank raised his variable mortgage rate within hours of the Bank of Canada’s shock policy announcement on July 13, while his variable-rate savings account barely budged. ‘I’ve asked my bank for an explanation,’ Morgan said. ‘They tell me they offer competitive rates.’”
“The Bank of Canada observed in its latest quarterly report that a ‘sharp slowdown’ in housing is ‘underway.’ Robert Kavcic, an economist at Bank of Montreal, called the latest data the ‘early days of correction’ in a note to clients. ‘Sales have now fallen back into pre-COVID ranges and below the 10-year average for the first time since the pandemic broke out,’ Kavcic wrote in a note to clients. ‘The period of extreme excess demand is essentially over, and we are on track for a very weak year ahead for resale volumes and prices.’”
From CBC News. “Canada’s housing market continued its slowdown last month, with the average selling price of a home touching $665,850 — a decline of almost 20 per cent since February. ‘What goes up must come down, and the Canadian housing market continued to cool in June under the weight of higher interest rates,’ TD Bank economist Ksenia Bushmeneva said. Ontario led the way down, as selling prices in the province’s suburban markets that rose the most during the pandemic are now coming back to earth.”
“Waleed Hamed has been on the sidelines of Canada’s housing market for years, waiting for a chance to buy, but he said he could never justify making the leap. The market in and around Courtice, Ont., where he’s living with his parents, has definitely turned in recent months, he said. Yet Hamed is still reluctant to buy, because he thinks further price declines are coming. ‘I think we are going to see prices drop for a while,’ he told CBC News. ‘I still feel like we are near the very top.’”
From Global News. “‘What we’re seeing now is our market actually normalizing,’ Remax realtor Morgan Taylor said. Taylor said Edmonton is in a declining market, but it needed an adjustment. ‘People were overextending themselves,’ she explained. The Bank of Canada’s interest rate hike this week has changed the game.”
The Globe and Mail. “The supersized interest rate increase caught the real estate industry off guard. ‘This was a total shock and completely unexpected,’ said Samantha Brookes, the chief executive of brokerage firm Mortgages of Canada. ‘It’s going to have a huge effect on people.’ Ms. Brookes said some of her clients had said before this latest increase they were unable to afford higher mortgage payments.”
“At the same time, federal rules have made it harder for borrowers to qualify for a loan from banks – which typically offer the cheapest mortgages. Federal rules require borrowers to prove they can make their mortgage payments at an interest rate at least two percentage points above their actual mortgage rate. With interest rates on five-year fixed rate mortgages near 5 per cent, that means borrowers have to prove they can make their mortgage payments with an interest rate near 7 per cent.”
“‘More and more of everybody’s daily personal income is going to be taken up by shelter costs by the mortgage cost,’ said Don Scott, the chief executive of Frank Mortgage, a mortgage brokerage. ‘It’s going to put stress on their ability to continue to pay the mortgage, but also put stress on their ability to continue to pay for other things.’”