A report from Market Watch. “‘Our prices have come off of their irrational highs of the last 18 months. It’s kind of a rebalancing,’ Dave Walsh, manager of Compass Realty San Jose, told MarketWatch. At open houses in the Bay Area, multiple buyers are turning up — but the lines are nowhere near as long as they were during the pandemic years. ‘That was just off the tracks,’ Walsh, a four-decade housing-industry veteran, said. ‘We’ve never had a year like 2020 in many of my years in being in the business.’”
The Orange County Register in California. “Orange County home prices are 5.1% off their peak after the worst July sales on record. Basically, Orange County homebuying has cooled 38% in a year as house hunters were scared off by 48% higher house payments. The median: $1 million for all homes was down 2.4% in a month while increasing 11% over 12 months. Record O.C. high? $1,054,000 set in May. So, prices are 5.1% off their peak.”
The New York Post. “Homeowners in markets that boomed when the real estate sector was red-hot during the COVID-19 pandemic are now forced to slash prices due to dwindling demand, according to Redfin. The trend was at its worst in ‘pandemic home-buying boomtowns’ such as Boise, Idaho, where a whopping 69.7% of homes for sale slashed listing prices in July. Other overheated markets included Denver, with a 58% of price drops, and Salt Lake City, with a 54.8% share of cuts.”
“‘Individual home sellers and builders were both quick to drop their prices early this summer, mostly because they had unrealistic expectations of both price and timelines,’ Boise-based Redfin agent Shauna Pendleton said. ‘They priced too high because their neighbor’s home sold for an exorbitant price a few months ago, and expected to receive multiple offers the first weekend because they heard stories about that happening.’”
From Mansion Global. “Home sales plunged 19.3% year over year in July, the biggest annual drop in more than a year, according to Redfin. Month over month, sales dipped 4.1%, marking the sixth consecutive month of declines. In fact, last month’s sales were at their lowest level since the very beginning of the pandemic. San Jose, California, in Silicon Valley, registered a 44.2% year-over-year decline in sales, the largest drop since last year, the figures show. Home sales in Boise, Idaho, and San Diego declined by 42% and 41.2%, respectively. The report looked at 90 metro areas.”
“In North Port, Florida, the number of homes for sale was up 58% year over year, the biggest increase in active listings of any of the metro areas covered in the report. Austin, Texas, and Nashville, Tennessee, followed, with inventory jumps of 37% and 33%, respectively. ‘The buyers who are still in the game are finally getting a break from bidding wars, which means they can be picky,’ Pam Lewis, a Raleigh, North Carolina-based Redfin agent, said in the report. ‘They have some choices. They don’t want a home if it doesn’t have the fenced-in yard or guest room on their wish list, and they want a $20,000 price reduction if a home has been on the market for more than a week.’”
KTAR in Arizona. “Zillow released a report showing the typical home value in metro Phoenix falling 2.8% from June to July, putting the average price at $470,800. Nicole Bachaud, a senior economist for Zillow, told KTAR News 92.3 FM the change represented a decline of about $14,000. Zillow’s report shows that Valley inventory increased by 11.3% from June to July and prices were reduced on 28.8% of homes listed. ‘There’s more options. There’s more availability of homes. It’s easier to negotiate prices. You have less competition from other buyers,’ Bachaud said.”
From Florida Realtors. “The housing market has slowly started to rebalance as less buyer frenzy and higher interest rates help soften it, forcing sellers to adjust to a more normal market. It’s still a seller’s market, South Florida real estate agents stress, though it’s not the torrid one of six months or a year go where bidding wars were common, homes flew off the market in a matter of days and buyers waived inspection just to get into a home.”
“‘Sellers kind of have a fear of missing out and they know the market has changed,’ said Alex Platt with Compass in Boca Raton. ‘We are lucky that prices are still what they are today, but they just aren’t going to get into the same bidding war as they could a few months ago.’ It was common for buyers to waive inspection periods, but that has started to change as the market cools. According to Dave Gunther, real estate agent with Lang Realty in Delray Beach, in the past, every third contract would have an inspection period waiver on a fast-moving property, but now he’s only seen one contract like that in the past six months.”
From KHOU 11. “It’s not a ‘buyer’s market’ yet, but it’s definitely not the ‘seller’s market’ we were seeing just several months ago. In Austin, the monthly change in the median home price went down for the first time in 2022, dropping from $550,000 in May to $537,475 in June. It helps to put a damper on prices when more homes for sale are on the market. We’re seeing that happen in a big way in big Texas cities. In June, there were more months of housing inventory in each of the largest metros.”
Houston Agent Magazine in Texas. “The share of ‘stale’ Houston listings, or homes that were listed for 30 days or longer without going under contract, increased by 10.2% year over year in July. Overall, 60% of Houston listings remain on the market for over a month. ‘The market did a 180-degree turn from early spring to late spring, with buyers backing out because of high mortgage rates. A lot of sellers are telling me they feel that they’ve missed out on the hot market,’ said Christopher Johns, a Redfin agent in Houston. ‘I’m reminding prospective sellers that we’re not in a housing-market crash; it’s a correction. If sellers list their home for slightly less than they would have five months ago, they’re still likely to get a solid offer.’”
The Real Deal on New York. “Manhattan’s luxury market hit a summer slump last week, with just eight contracts signed at $4 million and above. That’s the worst performance in the luxury market since the week of Aug. 3, 2020, when just six contracts were signed, according to Olshan Realty. The report also marks the second time in recent weeks the market hit a slump reminiscent of 2020. The priciest home to enter into contract was 17/18A at 100 Eleventh Avenue, asking nearly $15 million. The seller bought the unit from the sponsor in December 2009 for $19.4 million and it was listed in November.”
“Out of the eight contracts signed last week, five were for condos and three were for townhouses. The median asking price was $6.7 million, and the units spent an average of 457 days on the market, with an average discount of 6 percent.”
From Newsweek. “Some independent mortgage lenders feeling the brunt of increased lending rates are declaring bankruptcy and have already laid off hundreds of employees in certain instances. Some lenders have already downsized or closed permanently, Bloomberg reported. Susan Wachter, professor of real estate and finance at the Wharton School of the University of Pennsylvania, told Newsweek that there are ‘some similarities and stark differences’ between what happened 15 years ago and what is taking place today—alluding to mortgage origination dropping by 50 percent.”
“Wachter, who co-authored a book called The Great American Housing Bubble about the 2008 recession, said if mortgage rates continue to rise significantly, there may be ‘a hard landing’ economically. It’s compounded by the fact that the Fed will likely keep raising rates until inflation comes down. ‘It will hit mortgage markets even worse because housing will become even less affordable,’ she said. ‘We will see housing prices not just decelerate; we will see housing markets fall….I see no silver lining for the mortgage industry in this coming period. The wave, the problems that took the industry down are likely to worsen. Expect independent mortgage companies to be even more challenged.’”
A press release. “‘Buyer sentiment changed virtually overnight as growing geopolitical concerns and spiralling inflation destabilized global markets, leaving the Bank of Canada little option but to raise interest rates,’ says Christopher Alexander, President, RE/MAX Canada. ‘Those fast and furious incremental increases placed downward pressure on housing sales and prices, improving affordability on one hand, but eroding it on the other.’”
“RE/MAX found that second quarter values in the GTA were 10 to 15 per cent below Q1 levels in Durham (-14.6 per cent), York (-12.9 per cent), Halton (-12.7 per cent), Dufferin (-12 per cent) and Peel (-11.2 per cent). Seventy-five per cent of markets in Greater Vancouver, however, experienced a downturn in Q2 median values, coming off peak levels reported in the first quarter of the year. Most of the declines reported were below 10 per cent, with one outlier – Whistler/Pemberton, which fell by just over 16 per cent ($3,020,000 vs. $3,622,500).”
ABC Business. “After witnessing four decades of boom-to-bust cycles in Australia’s residential property industry, experienced Gold Coast developer Soheil Abedian puts the construction industry’s current woes down to one simple reason: greed. In fact, it’s ‘massive greed,’ he says, that is a product of ‘the capitalist system that we have in Australia and the Western world — that everybody would like to have more and more profit.’”
“‘Who is to blame? All of us,’ the Persian-Australian property developer told ABC News in an exclusive interview. ‘Every single person that is taking part in the industry. We increase the prices without understanding that, ultimately, it will backfire on every single part of the industry. And we see that now. Let me say that the collapse of construction companies has just started.’”
“One of the many builders to recently collapse is Langford Jones Homes. But when it went under on June 30, it left many consumers, including San Remo resident Donna Taylor, in limbo. ‘It’s heartbreaking,’ Ms Taylor told ABC News, breaking down in tears over the home that never got built. ‘It’s just wrecked my life. And there’s so many more people that are like me that it’s just ruined.’”
“Langford Jones Homes founder Bruce Langford-Jones told ABC News in a written statement that the company’s customers were covered by warranty insurance. ‘Our family have lost everything — my son has lost his house. My wife and I have lost our family home and holiday house,’ Mr Langford-Jones said. The problem, he argues, was that ‘the government’s fuelling the market with grants [and this] is creating a demand/supply issue.’”
“Regulators also know that moving too hard on rates could tip borrowers like Queensland couple Stacey and Anthony Ashton into financial stress. The couple’s journey to build their dream home has been an ordeal, starting in late 2019 when they bought their first home in Cedar Creek. They contracted builder PlanBuild in 2020, but the company went into insolvency in April 2021. It happened the day before their wedding.”
“‘It was quite stressful and quite upsetting – there were a few tears,’ Ms Ashton said. ‘And then our honeymoon was essentially ruined, because we were just trying to find a new builder as soon as we could to get our home started.’ Mr Ashton urges Australians to be careful when signing contracts. ‘I would just say there’s no gentlemen’s agreements anymore,’ he said. ‘There’s no pride in people’s work. All you can rely on is contracts these days. And that’s the sad thing about the market at the moment. Every promise is broken.’”
The Guardian. “China is in a rocky economic period marked by rolling Covid clampdowns. The timing is awkward, given China is in the run-up to the 20th National Congress of the Communist party in November, which is expected to extend president Xi Jinping’s grip on power. But the issues go beyond the pandemic and notably include a deflating property bubble.In July, almost all the data, from retail sales and manufacturing to investments, missed expectations, says Raymond Yeung, ANZ’s chief economist for greater China. ‘My biggest worry is employment,’ he says, pointing to the 20% youth unemployment in cities, the highest on record.”
“Michael Pettis, a professor of finance at Peking University’s Guanghua School of Management, has long warned about the dangers created by 30 years of rising property prices. Pettis recently noted that developers are yet to deliver about 40% of the homes they sold in advance between 2013 and 2020 – in relatively good times.”
“‘Property developers had historically depended on rising home prices and surging sales to justify massive leverage and overbuilding,’ he wrote. ‘But once the bubble began to deflate last year, these over-leveraged property developers ran into serious liquidity and credit constraints that made it impossible for them to complete their construction projects.’”