A report from Yahoo Finance. “The Federal Reserve chairman this week doused any hope homebuyers had that mortgage rates would soften anytime soon. Instead, rates jumped above 7% after Jerome Powell said inflation was taking longer to come down to the Fed’s intended target, a sign that any rate cuts investors were betting on may not arrive soon this year — if at all. That sent the 10-year Treasury yield, which mortgage rates follow, above 4.5% ‘with some pundits talking about getting to 5% and even debating the possibility of no rate cuts at all,’ Mark Fleming, chief economist at First American Financial Corp., told Yahoo Finance. That puts a wrench in buyers’ plans. Many were ready to swallow elevated rates now, with the expectation that they could refinance to a lower one when those rate cuts came to pass. That playbook is now out the door.”
“What should a buyer do? For those who have the financial wherewithal to withstand higher rates, they may be in luck, said Danielle Hale, chief economist for Realtor.com. ‘They may see a little bit less competition in the market right now, and that might make it easier to have an offer accepted,’ she said. ‘As mortgage rates start to tick up, we are seeing more sellers make price reductions on their homes than we typically do at this time of year,’ said Hale. ‘I think the data suggests that sellers are approaching with more moderate or realistic expectations as the higher mortgage rates go.’”
From Bankrate. “The National Association of Realtors (NAR) agreed to new rules around real estate commissions as part of a lawsuit settlement in March. Agent fees come out of the seller’s proceeds at closing, but it’s reasonable to assume that the seller adjusts their price accordingly — it’s baked into the home’s sale price. And so it’s the buyer who ultimately pays it, just not directly to their agent: That extra 5 percent is rolled into the sale price. If commissions no longer come out of the seller’s proceeds, the thinking goes, buyers won’t have an additional $7,500 or $10,000 to pay an agent. ‘Most of those buyers are scraping the barrel to the bottom to come up with a down payment,’ says Dave Liniger, chairman of RE/MAX.”
The Manistee News Advocate. “‘Now buyers would have to either pay their agents themselves, or they have to negotiate that into the purchase in some way, shape or form,’ said Kellen Keck, owner of City2Shore Port City Associates, which primarily covers the housing market along the west coast of Michigan’s Lower Peninsula. ‘It’s not that nobody’s getting paid — it’s just the way that specifically from the buyer’s agents side, they may have to negotiate that … or if they can’t then they have to figure out if they have the funds available to pay their buyer’s agents out of their own pocket and directly at the time of close.’”
The Idaho Statesman. “Jeff Jones of Boise’s 208 Premier Real Estate has also focused on ways to lower home prices for buyers — most notably by cutting out buyers agents. Jones charges 3% as a seller’s agent, but he doesn’t charge for the buyer’s agent as is traditionally done, he said, and he recently sold a home without a commission for the buyer’s agent. His business also offers up to a $3,000 rebate home buyers for anything from closing costs to escrow. Jones said there’s a lot of confusion around who pays for the buyer’s agent. Many homebuyers — whether they were told by agents or others — mistakenly believe that buyer’s agents are free or that there’s no financial incentive to skip having one, but that’s not quite true, he said.”
“Homebuyers generally pay the buyer’s agent in a roundabout process. Normally, the homebuyer will pay the seller the agreed-upon price for the house. The seller will pay 6% to the listing agent, who will then pay 3% to the buyer’s agent. ‘The buyer is actually paying everyone’s commissions,’ Jones said.”
From Fortune. “Florida used to be the place for wealthy retirees to move to enjoy the state’s healthy dose of sunshine—and a massive break on taxes. But now that the housing supply on the west coast of Florida is surging, sellers are cutting asking prices, and the time a home is on the market is soaring, according to a Redfin report. For example, the number of homes for sale in Cape Coral and North Port, Fla. surged about 50% year-over-year in March. Prices are more negotiable in parts of Florida, especially if they’ve been sitting on the market for at least 180 days, Erin Sykes, chief economist with Nest Seekers International, tells Fortune. But sellers are hesitant to drop publicly listed prices since ‘aggressive buyers are the only ones active in the market right now,’ she says. Still, these buyers are submitting offers that are about 10% below the asking price. ‘It’s a buyer’s market due to low transaction volume, despite list prices holding stable,’ Sykes says. ‘Now is the time to get a deal.’”
The Star Tribune in Minnesota. “Lisa Mabley was laid off a year ago from her job as a software engineer at a Twin Cities software company. Over the course of five months, she sent her résumé to nearly 300 companies. She received just two offers at the end. ‘The one that I did not accept has [since] had layoffs,’ said Mabley, who lives in Minneapolis. ‘If I had taken the other job, I would perhaps be unemployed again.’ Those months were stressful for Mabley, who was the only person in her household working at times. In September, she began working remotely for a tech startup based in Los Angeles. Mabley and other tech workers have come face-to-face with an unexpected reality: The industry — that for so long has been filled will promises of unending opportunity — is now oversaturated with candidates.”
“The environment Mabley found herself in was far different from when she switched careers eight years ago to become an engineer. Then, recruiters solicited her at least once or twice a day. ‘I guess I thought I had it made after that point,’ Mabley said. ‘I was like, ‘The demand is so high in the field. I will never have to work hard to find a job again.’”
“Susan works in software product management. Abby is a user-experience researcher. Susan was laid off from a tech startup in L.A. a year ago. Aside from a three-month contract this winter, she’s been unemployed. Abby has been looking for a job the past 10 months. User-experience researchers, whose jobs are primarily to study the market and determine if there’s a product fit for a software or device, are one of the positions hit the most in this layoff atmosphere, she said. Abby has seen starting salaries decrease by as much as $30 an hour.”
“The industry shift has affected sales at Horizonal Talent, a St. Louis Park IT digital and creative staffing company. In the second half of 2022, the company saw client requests plunge by 38%, said Jeremy Langevin, co-founder and chief executive. There was an additional drop of 52% last year, with requests falling below pre-pandemic, early 2020 figures. Langevin said inflation anxiety and interest rate hikes crept into the minds of decisionmakers, leading to a hiring pullback. Horizonal had two rounds of layoffs itself in 2023. ‘I started getting nervous,’ Langevin said.”
“The pullback follows a hiring spree. In 2021, Horizonal Talent had a 78% increase in requests to fill positions, with thousands of people fast-tracked into the interview and hiring process as many companies grew their tech payroll. Many companies appear to have misjudged the sustainability of their post-pandemic staffing needs, Langevin said. The emergence of remote work has also allowed companies to expand their hiring pool nationwide and offshore jobs to people in India, Latin America and parts of Europe. The emergence of remote work has also allowed companies to expand their hiring pool nationwide and offshore jobs to people in India, Latin America and parts of Europe. Employers can pay $40,000 to someone in India, where the going rate in the U.S. is $140,000, he said.”
Bisnow on California. “More than one-fifth of the Bay Area’s life sciences facilities are vacant, according to new data from CBRE. In the five submarkets that comprise the region’s once-booming life sciences sector, Oakland, the I-680 Corridor, Silicon Valley, the San Francisco Peninsula and the city of San Francisco, vacancy increased to 20.4% in Q1, according to CBRE Research. The regionwide vacancy rate stood at 8.3% in the first quarter of 2023. But at the region’s occupancy peak in 2017, Bay Area life sciences properties were only 5% vacant, according to CBRE.”
“A few factors are causing occupancy issues for owners of life sciences facilities, according to James Bennett, vice chairman at CBRE. Over the past two years, a handful of local biotech companies have laid off employees and are also subleasing space. This happened after a number of new large biotech projects already started construction. ‘Increased demand during the pandemic dramatically raised land, construction and tenant improvement costs, so newer developers who entered the market in that time frame have a much higher cost basis, which makes it harder to lower rents,’ Bennett told Bisnow.”
“Joel Marcus, executive chairman of Alexandria Real Estate Equities, expects the Bay Area life sciences sector to stabilize within the next two years. ‘Stabilization in the weakest submarket of South San Francisco happens over the next 24 months but some foolish developers who have no clue about life science will be negatively impacted for years to come,’ Marcus told Bisnow.”
Bloomberg on Canada. “Politicians are desperate for developers in Vancouver to build more homes to alleviate pressure in one of the continent’s most expensive real estate markets. There’s just one problem — not enough buyers are showing up. With mortgage rates still near their highest levels in more than a decade, some condo developers are struggling to generate enough early interest in projects to get them built. Homebuilders in the province of British Columbia are constantly against the clock: it has a law that gives them just 12 months to market their projects, collect enough deposits and secure the financing to build.”
“They can ask for more time — but at that point, consumers may also be able to ask for their money back. New home sales dipped 20% in metro Vancouver last year, while inventories have climbed in recent months. New concrete condominiums jumped to 6,672 in the fourth quarter — up about a third from the previous quarter, according to the Urban Development Institute, an industry association. Unsold wood-frame condos were up 12% on the quarter, and 45% more than the prior year.”
“AJ Delisle, RBC’s vice president of real estate in BC, told an audience in Vancouver that the REDMA time limit makes pre-sales difficult when compared to other cities like Canada’s biggest, Toronto, where developers can market properties for years before construction finally begins. ‘We are seeing quite a lot of requests coming in to the bank saying: ‘Hey AJ, we can’t meet our pre-sale requirement. What can we do to rejig the loan so that we can qualify, hit our REDMA deadline and get the loan done? And then we’ll keep selling after. That happens almost on every single deal right now.’”
Metro in the UK. “People living in a London block of flats have been told they must pay an extra £5,000 a year for their service charge due to flammable cladding. They say it is bad enough to be living in a building deemed at risk of fire, but are now expected to pay thousands of pounds extra ‘for nothing’. Dad-of-three Hamid Elouahabi, who lives in the building in Earls Court operated by a housing association, thought the increased annual figure of £7,370.22 was a typo when he first read it. He told Metro.co.uk the monthly charge for his wife’s shared ownership flat has trebled from £205 to £614.29. ‘I know £500 a month is not a lot to some people, but to us it’s a huge amount,’ he said. ‘There are some people in the building where it could affect what they can eat on a weekly basis.’”
“Hamid also feels ‘trapped’ as he says it would be impossible to find a buyer not put off by the cladding and willing to stump up for the service charge, but even if he and his wife could, few lenders would be willing to provide a mortgage. He initially considered simply refusing to pay the extra money, but was told anyone who did this would be in breach of contract and risk court action. ‘If I get a job opportunity abroad, we can’t sell up and we can’t rent out,’ he said. ‘We’re literally being held to ransom.’”
The Sydney Morning Herald in Australia. “Households have an average of $10,300 less per year to spend on non-essentials such as eating out, holidays and entertainment after the worst cost of living crunch in decades as those mortgages were left short by more than twice that amount. Those with a mortgage are the hardest hit; that group has had an average of $21,300 a year slashed from non-essential spending compared with 2020, the study by economic consultancy Polis Partners shows. Renters have an average of $13,300 less a year to spend on non-essentials compared with 2020.”
“Polis Partners economist and report author Rob Tyson said a financial ‘sugar hit’ experienced by households due to generous income support and near zero interest rates during pandemic disruptions in 2020 had given way to a sustained deterioration in spending power. ‘This cost of living squeeze has been the steepest and most prolonged period of deteriorating household finances since the start of the time series in the early 2000s,’ he said.”
“Mac Karnecki and Stephanie Quirk borrowed to buy their first home at Mount Warrigal near Wollongong in late 2022 after ‘scrimping it’ for several years to save a deposit. Five interest rate hikes since that purchase, coupled with high inflation, means Karnecki is now ‘always looking out for bargains and cheaper ways to buy stuff.’ The couple and their three children have sacrificed holidays, forgone new clothes, reduced meat consumption and let gym memberships lapse to reduce costs. A plan to buy a second car ‘just hasn’t happened.’ Karnecki, a fire protection system designer, aims for ‘as close to zero waste as possible’ from the family food shop to help with savings. ‘We used to get a coffee every day, but that’s gone, now we might buy a coffee once a week as a treat,’ he said.”
“Tyson said the speed at which disposable income declined during the past two years has affected the way consumers feel about their finances. ‘Many people came off a time during COVID where they had the most cash they’ve ever had,’ he said. ‘I think that may have heightened how people perceive the current crunch – there’s a real sense that just a couple of years ago, they were a lot better off.’”