A weekend topic starting with KRDO in Colorado. “The Pikes Peak Regional Building Department is showing hope, with a 33% increase in building permits issued since the beginning of the year. However, supply and demand are just part of the complex housing issue. ‘Based on our social media pages and whatnot… nobody can afford the homes being built,’ Greg Dinaldo with the Pikes Peak Regional Building Department said.”
The Arizona Republic. “It’s nearly impossible these days to build a single-family home in metro Phoenix for under $400,000. And that’s a problem, considering that the average resident doesn’t make enough to afford a $400,000 home. If this is the new normal — and every homebuilder and housing affordability researcher I spoke with says it could be — that has major implications. As recently as 2020, two-thirds of metro Phoenix homes sold were considered affordable for the average resident (meaning, the mortgage was less than 30% of their income). Now, less than a third fit that definition, placing us among the least affordable major cities in the nation for housing.”
12 News in Arizona. “On a recent weekend, a Phoenix family of three stayed in Unit 203. They were visiting Flagstaff during a high-travel weekend and told 12News they paid $340 a night for the rental. The complex is called Venture at Route 66 and is owned by real estate development company Neighborhood Ventures. Flagstaff City Councilman Jim McCarthy said the short-term rental craze worsens the city’s affordable housing shortage because it reduces inventory. The city has no authority to limit the number of short-term rentals and has lobbied state legislators to give them more authority to regulate the industry. ‘About one in four residential properties are owned by people who don’t live here and that’s a problem,’ McCarthy said.”
The Los Angeles Times. “A stay in Brian Maggi’s house, per the Airbnb listing, is what coastal California dreams are made of. The little house in Dillon Beach, a remote town in western Marin County, is a second home for Maggi, a software designer who lives full time in Livermore, a hundred miles southeast. That’s a pretty common practice in Dillon Beach where, according to county estimates, a whopping 84% of the town’s 408 housing units are second homes and 31% are used as licensed short-term rentals. In nearby Bolinas, artist Marlie de Swart and husband Bruce Bowser welcomed the new rules, telling the Coastal Commission in a letter that their town ‘is being changed from a characteristic village to a vacation rental suburb.’ ‘We used to know this as very much a vibrant neighborhood,’ Bowser said. ‘A lot if it’s thinned out. A lot of people are older and have passed or moved on. We used to look out on this valley, and there were a lot of lights at night. Now, it’s mostly dark.’”
KSNV in Nevada. “Clark County continues to focus on short-term rental enforcement this year after writing nearly the same number of citations issued in all of 2023. ‘It’s very frustrating. I mean, the homeowners are outraged,’ said Jacqueline Flores, founder of the Greater Las Vegas Short-Term Rental Association. ‘These people that are still, you know, doing it, because they don’t have a choice, they still have to, they still have to keep the lights on, they still have to pay a mortgage.’”
The Denton Record Chronicle in Texas. “Though the stereotype is people looking to party and bring crime to neighborhoods, short-term rental landlords in Denton claim that the clients are actually respectable people. They also contribute to the local economy. While short-term rentals like those listed on Airbnb and Vrbo are popular, they aren’t welcomed in every city. It’s an all-too-familiar claim for the short-term rental landlords who attended Denton’s town hall meeting Thursday night. ‘When we think about it as a realtor in the community, if you own a property next to that and your situation changes and you immediately have to move or relocate, and you’re in a situation where you bought in the last two years, you don’t have the equity to be able to do a long-term rental,’ explained one real estate agent, who didn’t give her name to city staff.”
The News Press. “If you are selling a house in Florida and think you are going to get the asking price, you might want to think again. At least based on a recent study conducted by real estate experts at Agent Advice. They used Zillow house price data for each state to see the regions with the most properties sold undervalue. The data looked at the most recent 950 properties sold to find the states with the highest percentage of those sold below the listed price. The research found Florida was the state with the most properties sold undervalue at 69.4% of recent sales being bought below the listed price. Montana sold 68.1% of homes undervalue according to the most recent data.”
The Globe and Mail. “As governments at all levels grapple with the housing crisis in Canada evidence is building that new home buyers and builders won’t be bailing out the country with a pile of new supply. The slide in new home sales appears even steeper in the Greater Toronto Area. April figures from market researcher Urbanation Inc. showed just 1,461 condominium sales in the first quarter of 2024: ‘Sales were down 71 per cent when compared to the latest 10-year average for Q1 periods [4,978 sales], dropping 85 per cent from the Q1 high in 2022 [9,723 sales].’”
“An oft-mentioned factor in the Toronto-area market’s sales slowdown is perhaps the most obvious: price. Outside of Toronto, the per square foot price for new homes in the first quarter hit $1,161, while inside Toronto’s boundaries the prices fell four per cent to $1,522 per square foot. Ten years ago, the first quarter of 2014 saw new condos sell for an average of $549 per square foot. The question buyers have to ask is if the condos they are looking at now are 177 per cent better than they were a decade ago.”
Blog TO in Canada. “A Toronto apartment sold at a massive loss last month demonstrates just how much prices in the city’s real estate market tend to vary year-over-year. The two-bedroom, two-bathroom apartment, located at 190 Borough Dr. in Scarborough, comes with over 1,000 square feet of living space, an open-concept modern kitchen with granite countertops, and stainless steel appliances. After roughly one week on the market in February 2022, the apartment sold for $868,000, at a time when the city’s real estate market saw an uptick in demand and skyrocketing prices thanks to cheaper borrowing rates. Just over two years later, the apartment was put back on the market for $684,900. Following two weeks on the market, the apartment eventually sold for $653,000 — representing a substantial loss of $215,000 in just two years.”
Bisnow London. “It almost seems that the modern real estate industry doesn’t know how to transact unless interest rates are falling or historically low. ‘Everybody’s waiting for [Federal Reserve Chairman Jerome] Powell to relent,’ Starwood Property Trust CEO Barry Sternlicht said earlier this month. Interest rates dropped steadily from the early 1980s on, MSCI’s Jim Costello said in a recent note. But from 2009, in the wake of the financial crisis and again after the pandemic, central bankers in the U.S. and UK began the process of cutting interest rates to essentially zero, as well as buying bonds through the process of quantitative easing. That flooded the financial system with more capital, giving banks and investors access to essentially free money.”
“For Sabina Reeves, CBRE Investment Management chief economist, real estate is experiencing a return to normalcy. Given the abnormality of the past few years, that means it will have to reinvent itself. ‘If you look at things in the long term, for decades, for centuries even, real estate has been a good investment,’ she said. ‘But then, every 10 or 15 years or so, it’s bad.’”
From Domain News. “Australia’s cascading housing affordability crises have all but killed belief in the Great Australian Dream, experts say, as the average house becomes further out of reach of the average earner. ‘We effectively capitalised zero interest rates into house prices during the boom over 2021,’ Jarden chief economist Carlos Cacho said. ‘Since then we know that borrowing power has gone back by roughly 30 per cent, a little bit more or less depending on the household. The person who could afford to buy when rates were zero can no longer afford to buy.’”
From News.com.au. “Simon Pressley, founder and managing director Propertyology, has weighed into the debate over the rapidly worsening housing crisis with a pointed rebuke to a common complaint, which he has dubbed bulls**t.’ ‘I get the s**ts every time there’s a story, once a year, ‘We’ve done the numbers and now it takes 10 years for someone to save for a deposit,’ Mr Pressley said. ‘A standard house in one of Australia’s 40 largest cities today costs circa $650,000. In 20 years’ time, that same standard house will have tripled in value to be worth $2 million.’”
“Stories of eye-watering sale prices for modest homes in once working-class capital city suburbs are now an almost daily occurrence. Last weekend, a 100-year-old four-bedroom bungalow in Glebe sold for $4.7 million, after a neighbour already living on the same street beat out four other bidders, Domain reported. The desirable inner-west suburb has a median household income of just over $91,000, according to 2021 Census data. In other words, it would take a median-income household in Glebe, saving 20 per cent per year, nearly 52 years to save up a 20 per cent deposit of $940,000.”
“Clearly, that is not what’s happening — mortgages of that size are vanishingly rare. Wealthy, cashed-up buyers are driving the market in these suburbs. ‘Salaries can no longer pay for houses in Sydney,’ Freelancer chief executive Matt Barrie wrote on X. ‘Average house price rapidly going to $5 million. $4.7 million for a 100-year-old bungalow in … Glebe. Blind Freddie can see the writing on the wall. Not a serious country.’”
South China Morning Post. “Scott Xiong of Wuhan, the capital city of China’s central Hubei province, is racked with disappointment after a potential buyer pulled the plug on a deal to buy his home last week. Now the 30-year-old PhD student is considering cutting another 50,000 yuan (US$6,900) from his asking price, which is already close to his original floor price. Meanwhile, 840km away in Shanghai, Li Huiting is feeling buyer’s remorse after she bought a second-hand home with her husband in the city’s Pudong New Area in April. Prices then had already dropped by around 1 million yuan compared with a year earlier, but now the 26-year-old teacher thinks ‘prices might go lower if I waited for a while.’”
“Both stories suggest that a stimulus plan unveiled a week ago – including more than US$41 billion for local governments to buy unsold homes – may not be sufficient to refloat China’s massive property market, which ran aground more than three years ago. Certainly little has changed for potential buyers, who at this point have been conditioned to expect falling prices and to eye developers’ promises about delivery dates with a jaundiced eye.”
“‘This is a buyer-led market, where I must offer more benefits to lure buyers,’ Xiong lamented. In fact, he worries that the new policies reinforce the idea that the market is in a downturn, leading buyers to delay their decisions in case prices plummet further or even more supportive measures rain down. Simply on a practical basis, some unfinished projects will need a lot of attention, according to Liu Huanhuan, a general manager with Huapai Auction in Shanghai, which specialises in distressed assets. One 17-storey residential building she knows of in eastern Jiangsu province, for example, now sits in the middle of a pond that formed as water collected on the deserted construction site. ‘It will be a long process to revitalise such distressed properties,’ she said.”
“Prices of existing homes in March were down 23.9 per cent from a high in July 2021, according to data compiled by the Beike Research Institute based on a sample of 50 large cities. ‘The myth that home prices will only rise has been broken over the past three years,’ said said Zhu Ning, a professor of finance at the Shanghai Advanced Institute of Finance at Shanghai Jiao Tong University, who as early as 2016 called the property market a ‘bubble.’ ‘Unless there is speculative demand driven by strong expectations that prices will rise, buyers, except those buying for their own use, will not buy at this level of prices, which are still high if compared with their income. It will be a long time before we see home prices rise to levels as high as in 2017 and 2018, unless there is dramatic inflation or quantitative easing.’”
“Linda Chen, a former teacher, now marketer, sold her 753 sq ft home in the eastern metropolis of Hangzhou at a discount of about 300,000 yuan in December, moving into a rented unit of similar size with her husband. For years she had paid about 9,000 yuan a month for her mortgage, and was still paying 7,000 despite several rounds of mortgage rate cuts by the authorities last year. ‘The house had become a huge burden for us, and we knew we must sell no matter what the price was,’ Chen said.”
“‘Personal experience has a great impact on one’s risk appetite and investment decisions,’ Zhu said, adding that the past few years have taught young Chinese two lessons. First, young couples saw the risks of home delivery as they got nothing even after emptying ‘six wallets’ – their own plus those of their parents. Second, they learned that even those lucky enough to get their homes could find themselves out of work and unable to afford loans. ‘They once regretted not buying a home earlier when they saw their friends earning [from appreciation],’ he said. ‘But now they are like, ‘Thank God I didn’t buy.’”