A report from the Boston Globe in Massachusetts. “Greater Boston’s housing market over the last few years has been anything but normal. Prices soared to staggering heights in 2021 and 2022. And now things have cooled dramatically. Home prices have declined year-over-year three months in a row for the first time in years, hitting new lows in February. In February, the median-priced single-family home in Greater Boston cost around $700,000, $200,000 less than the June peak.”
From KLTV. “According to a National Association of Realtors report, the median price of a U.S. home was lower in February of this year than in February of 2022. That hasn’t happened in a decade. But is the national study the same for East Texas? According to Dwell Realty owner David Kurtz the real estate market in the Tyler area has seen a drop in pricing, but not a large one. ‘We are seeing price reductions, but also keep in mind since 2021 we’ve seen about a twenty to thirty percent, year every year appreciation, just in that short of a time period. What we’re really experiencing right now is maybe a two to three percent correction. You know, hit the peak, little bit of a dip,’ Kurtz said.”
“Kurtz said he doesn’t expect the prices to go into a free fall in the East Texas market. ‘Tyler is an insulated economy. A lot of people are moving here from out of state. And so what we’re experiencing is yeah, seller can’t exactly ask 50 thousand dollars more than a home is worth and expect for a buyer to come in and pay that,’ Kurtz said.”
From DS News. “Austin soared in popularity in 2021 and early 2022 as an influx of out-of-town remote workers moved in from expensive coastal areas, taking advantage of historically low mortgage rates. But now, measures of homebuying competition and demand in Austin are dropping off fast. Its total supply of for-sale homes rose 140% year over year in February, the second-biggest increase in the U.S. (only North Port, FL, had a bigger increase). Pending sales dropped 40%, and just 16% of homes went under contract within two weeks of hitting the market in February, down from 38% a year earlier.”
“The increasing portion of home sellers dropping their asking price illustrates just how much some of these markets have cooled. In Phoenix, 70% of for-sale homes had a price drop in February, compared with 21% a year earlier—the second-biggest uptick in the U.S. It’s followed closely by Denver, where 37% of homes had a price drop in February, compared with 13% a year earlier. Las Vegas and Phoenix are also among the places that have seen the biggest upticks in sellers offering concessions to woo buyers over the last year.”
KYHV Little Rock in Arkansas. “‘On a national standpoint, we are seeing that houses are not selling for as much as they did for the last two years,’ said Kaye Chambers, a real estate agent with Keller Williams Realty. ‘We saw houses selling for $20K- $30K over because so many buyers were taking advantage of historically low interest rates. We’re having to have that conversation with our sellers that the price of the house is not going to be nearly as high as it used to be.’”
The Los Angeles Times in California. “Max Gardner and his wife, Artyn, decided to sell their home in Irvine and move to Balboa Island eight years ago because they wanted something more than a comfortable place to live. Now, residents have set their sights on a burgeoning real estate trend known as fractional home ownership, in which multiple people, often strangers, own a small share of a luxury single-family home that they use as a vacation property. The Gardners now sit just across the street from a Pacaso home. The four-bedroom, four-and-a-half bath contemporary Cape Cod-style home is listed on Pacaso’s website at $940,000 for a one-eighth share.”
“As the Gardners tell it, one co-owner crashed a golf cart and another threw a raucous party that kept the neighborhood awake into the early morning hours. When a frustrated neighbor called police, the co-owner was incensed. After the cops left, he stood shirtless on his rooftop deck and screamed a message to his new neighbors: ‘I’m gonna find out who called the cops, and I’m gonna f— them,’ Gardner recalled.”
Yahoo Finance. “After a rather wild earnings call three months ago — during which he blamed a “collapsing” luxury housing market for poor quarterly results — RH CEO Gary Friedman is back at it. ‘Inflation that was thought to be transitory is now deemed persistent by the Federal Reserve, resulting in a record rise in interest rates, triggering a dramatic decline of the housing market, with luxury homes sales down 45% in the most recent quarter versus a year ago,’ Friedman said. ‘Add to that an underperforming stock market, and a banking crisis no one saw coming and the data points to business in our sector likely getting worse before it gets better.’”
“In January, the median home price sold in luxury markets was at a 23% discount to listing, wider than November and December. Luxury homes priced above $2.5 million are at a new multi-year peak in terms of days on the market at 61 versus 37 in January 2022.”
Business Insider. “The US housing market is suffering a major downturn as historic inflation, surging interest rates,and banking-sector turmoil rattle the wider economy, RH CEO Gary Friedman has warned. ‘It’s not rocket science to know this is a really bad time,’ he said. Friedman warned the economic outlook is more uncertain today than in 2008 and 2009, after the housing bubble burst and the Great Recession took hold. He noted there wasn’t an inflation problem or as much political unrest back then.”
“The business leader also urged the Federal Reserve not to strangle the economy. ‘Just land the plane on the other side, whether it’s hard, whether it’s bumpy,’ Friedman said. ‘Just don’t completely crash. A complete crash would look like the ’70s and the ’80s. That will take over a decade to recover from.’”
From Axios. “Higher interest rates and a loss of confidence in the banking sector have hit commercial real estate especially hard, with both the housing and office sectors poised to feel the chill. ‘The capital markets have been essentially frozen for months now and lending is already disappearing,’ Patrick Carroll, CEO and founder of $8 billion real estate company Carroll, tells Axios. He likened the Fed’s recent rate hike to ‘rubbing salt in the wound’ of the industry. ‘I haven’t seen anything like this since 2008/2009 and in my opinion this may be worse, and nobody seems to know what is happening next. When there’s no clear direction for valuations, it creates instability for everyone participating in the market.’”
“The seeds of the current era were sown during the era of ultra-low interest rates. Now, the chickens are coming home to roost, as banks and commercial lending suffer the consequences. ‘This episode highlights the Hotel California nature of quantitative easing – ‘you can check out any time you like, but you can never leave,’ Jason DeSena Trennert, CEO of research firm Strategas, in a note. ‘Unfortunately, this has led the central bank to fill alternative roles as pyromaniac and firefighter.’”
The Globe and Mail in Canada. “The traditional spring upswing in the Toronto-area real estate market is behind schedule so far in 2023 as homeowners remain reluctant to list properties for sale. ‘It is sluggish,’ says John Pasalis, president of Realosophy Realty. ‘The market’s not behaving the way it normally does.’ Mr. Pasalis has been talking to real estate photographers and other service providers who have much less work than usual. Mr. Pasalis crunched the numbers to see the change in the average sale price for low-rise houses in Toronto and surrounding areas in February from the peak one year earlier. Mr. Pasalis included rowhouses, semi-detached and detached houses, but not condo townhouses or high-rises.”
“Toronto saw a decline of 15 per cent to $1,606,591 in February from a high-water mark of $1,889,178 in the same month last year. Richmond Hill, north of the city, edged out that performance with a 14-per-cent dip in the same period to $1,644,146 from $1,914,379. In Vaughan, the average low-rise price dropped 17 per cent to $1,643,499 from $1,970,730 in the same period.”
“Some of the areas with more severe slides include Brock Township, Caledon, Pickering and Scugog. The Township of Brock, set on the east shore of Lake Simcoe, is about 100 kilometres north-east of downtown Toronto. Communities there, including Beaverton, Cannington and Sunderland, became popular with buyers seeking more space during the pandemic. The average price in the area tumbled 37 per cent to $713,042 in February for a low-rise home from a milestone of $1,124,119 in February, 2022.”
“In Caledon the average price fell 36 per cent to $1,200,252 from $1,864,257 in the same period. Mr. Pasalis says many of the areas that saw steep declines are relatively rural and a fair distance from Toronto’s core. ‘It’s probably very close to the opposite of how they accelerated.’ In the city of Oshawa, the average low-rise price was $816,742 last month to mark a 31-per-cent drop from the peak at $1,180,860 in February of last year.”
“Some downsizers who are considering a sale hope that prices will rebound to the highs of last year. ‘There is an aversion to losses,’ he says. ‘The loss is based on what they could have sold for at the absolute peak of the market. Definitely some people just have their eye on that.’”
From Bloomberg. “Bank of Japan Governor Haruhiko Kuroda changed the course of global markets when he unleashed a $3.4 trillion firehose of Japanese cash on the investment world. Now Kazuo Ueda is likely to dismantle his legacy, setting the stage for a flow reversal that risks sending shockwaves through the global economy. Just over a week before a momentous leadership change at the BOJ, investors are gearing up for the seemingly inevitable end to a decade of ultra-low interest rates that punished domestic savers and sent a wall of money overseas.”
“Ueda may have little choice but to end the world’s boldest easy-money experiment just as rising interest rates elsewhere are already jolting the international banking sector and threatening financial stability. The stakes are enormous: Japanese investors are the biggest foreign holders of US government bonds and own everything from Brazilian debt to European power stations to bundles of risky loans stateside.”
“‘A change in policy in Japan is “an additional force that is not being appreciated’ and ‘all G-3 economies in one way or the other will be reducing their balance sheets and tightening policy’ when it happens, said Jean Boivin, head of the BlackRock Investment Institute and former Deputy Governor of the Bank of Canada. ‘When you control a price and loosen the grip, it can be challenging and messy. We think it’s a big deal what happens next.’”
“For others like 36-year markets veteran Rajeev De Mello, it’s likely only a matter of time before Ueda has to act and the consequences may have global repercussions. ‘I fully agree with the consensus that the BOJ will tighten — they’ll want to end this policy as soon as possible,’ said De Mello, a money manager at GAMA Asset Management in Geneva. ‘It comes down to central bank credibility, it comes down to inflation conditions being increasingly fulfilled now — normalization will come to Japan.’”