A report from Salt Lake City Weekly. “As Utah’s real estate market sizzled during the COVID pandemic, Matthew Borsodi, a compliance officer at one of Utah’s largest mortgage lenders, filed a federal complaint alleging that his former employer skirted rules aimed at protecting consumers. Borsodi claimed Intercap Lending failed to follow federal appraisal independence requirements established by the Dodd-Frank Act of 2010. Borsodi believed Intercap was not alone, that other mortgage lenders were also sidestepping these rules.”
“Peter Christensen, a Montana-based attorney who focuses on real estate valuation services, said there is an incentive for mortgage lenders to chase higher values during the heat of the market. ‘They can get the loan if they can get the value that they need,’ Christensen said. He added that while federal appraisal independence requirements strictly adhere to the letter of the law, the flip side is no one is really enforcing that law. ‘It’s possible there could be regulatory examination … telling lenders they need to do a better job,’ Christensen said. ‘But as far as chasing down violators, I haven’t seen that happen. I think they’re just not interested.’”
“Mike Carter has more than three decades of experience in the mortgage industry—as a banker, mortgage lender, head of a title company and, since 1996, a certified residential appraiser. In a recent interview, Carter defended Intercap. He then described his work and what he viewed as a somewhat flawed process. As demand for homes outpaced supply, a snowball effect kicked in. In recent years, Carter said he saw a sharp uptick in purchase contracts where a buyer agreed to pay as much as $50,000 above the appraised value.”
“‘I came in low on plenty of deals because the values just weren’t there. People were willing to pay more than the property was worth—and that’s their choice,’ Carter said. But those higher sales prices then become the comparables for subsequent appraisals. ‘The inflated sales price becomes the fact,’ Carter said. ‘That’s … how that whole thing went so rapidly out of control.’”
“With recent indications that the market is slowing down, Carter foresees a bumpy road ahead and is concerned that some recent buyers could find themselves upside down in their loans. By last summer, Carter said in a phone interview, ‘We have more loans nationwide ready to foreclose than we did in 2007 and 2008.’ According to UtahRealEstate.com, in June 2022 the median price of single-family homes sold in the Beehive State hit $594,000, up an astonishing 19.5% over the previous June. But by November 2022, median sales on single-family homes had dropped to $525,000.”
The Washingtonian. “You’re likely familiar with tales from Washington’s nutso Covid-era real-estate market: homes selling for six figures above list price, buyers waiving all contingencies, open-house lines stretching down the block. That changed when interest rates started rising last spring. Suddenly, buyers and sellers paused instead of diving headfirst into the market, leading to a decline in activity that especially slumped toward the end of 2022.”
“This isn’t to say we’re in a bad market now, agents caution—just a more level one. That means sellers shouldn’t expect bidding wars, and buyers no longer need to resort to insane contortions to score a house. ‘We were in a time we probably will never see again in our lifetime,’ says Compass agent Kate Bohlender about the Covid real-estate shakeup. ‘That was just bananas.’”
The Street. “Skyrocketing real estate prices in Hawaii may finally be catching up with the state. The average single-family home in the Hawaii capital of Honolulu costs $1,198,000 — it would take a household with the median income a decade to save enough for just a standard down payment. In the rest of the state, the median home price is just slightly lower at $1.06 million by the summer of 2022 but this is still an increase of nearly 40% since 2019.”
“Years of unfettered growth are bound to come to a head at some point and Hawaii may finally be seeing that shift. By February 2023, the median price of a single-family home dropped to $970,000 while a median condo price fell to $495,000. This is, according to local analysts, more of a correction from overly inflated prices than a return to any sort of affordability since even a double-digit drop will not get prices down to what they were pre-pandemic.”
Bisnow New York. “After three years of pandemic-induced paralysis for office owners, more are finally beginning to lower the asking price on their buildings and accept prices far lower than they paid. ‘It’s a frightening tsunami of problems coming at us, because there’s not a lot of demand for office — especially for Class-B and C buildings,’ said Adelaide Polsinelli, vice chair at Compass. ‘This is absolutely the new normal where properties, especially office, are selling at losses and definitely selling at prices way below what they were at between 2016 and 2018. Valuations have dropped significantly.’”
“Now, lenders are allowing for ‘short sales’ — swallowing a loss — instead of the long-winded process of foreclosing, sending properties to special servicers or navigating the process of handing the keys back, Avison Young Tri-State Investment Sales Group Head James Nelson said. ‘We’re starting to see a lot of those types of deals happen now, and lenders allowing for those sales to happen is expediting the process,’ he told Bisnow. ‘For office properties that are upside down, it makes sense.’”
The Real Deal on California. “Ocean West Capital Partners rushed to sell an office building in Hollywood just five days before the City of L.A.’s new transfer taxes went into effect. The trade off? A 60 percent loss on the building. The Santa Monica-based investment firm sold the 12-story Taft Building at 6280 West Hollywood Boulevard for $28 million, or $222 a square foot, according to the buyer. Ocean West bought the 126,000-square-foot property for $70 million in 2018 from DLJ Real Estate Capital Partners, or about $555 a square foot, records show.”
From Silicon Valley in California. “For Matt Rubenstein, a real estate agent in Contra Costa County — where the median home price was $760,000, down 19% from $935,000 last year — concerns about the economy are the main thing on the minds of many of his buyers. Despite the lower rates now, he’s had two deals on homes over $1 million in Lafayette and Walnut Creek fall through in recent weeks because buyers backed out. ‘Does a little bit of a rate drop offset the nervousness people are feeling about what’s going to happen with the banking situation?’ Rubenstein asked. The median home price in Santa Clara County was $1.5 million in February, an 18% drop from $1.82 million last year.”
The Welland Tribune in Canada. “Here’s how downtown Toronto’s housing market performed in March 2023 compared to February 2023 and March 2022, according to the latest data from Toronto Regional Real Estate Board: Annex and Yonge-St. Clair home prices averaged $1.51 million, down 11.4 per cent monthly and down 10.9 per cent annually. Rosedale and Moore Parkhome prices averaged $1.73 million, down 17.9 per cent monthly and down 25.1 per cent annually.”
“Annex and Yonge-St. Clair: Detached houses (
) averaged $2.52 million, down 37.7 per cent or $1.52 million month-over-month and down 32.1 per cent or $1.19 million year-over-year. Semi-detached houses () averaged $1.57 million, down 19.5 per cent or $380,891 month-over-month and down 32.5 per cent or $754,260 year-over-year. Attached houses () averaged $2.06 million, down 14.8 per cent or $357,500 month-over-month and down 16.7 per cent or $414,000 year-over-year.”
From Newshub. “Annual New Zealand house prices have plummeted further, decreasing by double-digit percentage points from this time last year. Annual house price declines remained strong in the north, with double-digit downturns in Wellington (down 20 percent), Auckland (-13.1 pct) and Tauranga (-10.6 pct). Solid price decreases were also recorded in Hamilton, down 8.4 percent in a year. House prices also continued to decline in the south. Annual prices fell 11.1 percent in Dunedin.”
Australian Associated Press. “Would-be home owners are angry and confused following a disastrous meeting with Porter Davis liquidators that left them with more questions than answers. Melbourne woman Natalie moved into her Bayside house in October last year, with more than 100 defects awaiting action. And while she doesn’t regret accepting the house in less than perfect condition, Natalie fears she and others in a similar position will be forgotten.”
“‘We think it would be over $100,000 to rectify those issues because of all the trades that will have to come out, that includes plasterers, caulkers, window people, plumbers – the lot,’ she told AAP. ‘That wasn’t in the budget, because we thought Porter Davis would fix them like they said they would. I feel so sorry for those in limbo and set to lose money, but I think we are also part of a forgotten group of customers that the collapse affects. It is wide-ranging.’”
The Wyndham Star Weekly in Australia. “Home builder Porter Davis was placed into liquidation on Friday, March 31, leaving more than 1500 unfinished projects across Victoria and homeowners in limbo. Werribee homeowner Julie McDonald purchased her property with Porter Davis in January and said the final inspection was scheduled for April 14. Ms McDonald is a single mother to three teenagers and said she recently gave notice to leave her short-term rental. ‘I’m paying storage fees, pretty soon I’m going to be paying for a house I haven’t got.’”