A report from KCRA in California. “Buyers and sellers across the Sacramento region are bracing themselves as interest rates peak after years of relief. ‘The housing market has been completely bananas for the beginning of the year, unreal price growth and really over the past month or so we’ve seen the market begin to change temperature,’ said Sacramento appraiser and housing analyst, Ryan Lundquist. ‘Instead of seeing multiple offers, five, six, or above, we’re getting a couple offers,’ said local realtor, Ahrash Zamanian.”
From NBC San Diego in California. “Dan and Brady work together as the president and vice-president of Brookeshire Real Estate. They say some relief could be in sight: As interest rates have gone up, they predict the number of people looking to buy should go down. ‘There’s a bit more opportunities for buyers now,’ Dan said. ‘It’s still a seller’s market … but the pendulum is starting to swing just a little bit.’”
The Real Deal on New York. “Multifamily investors and developers piled into a stately Midtown building Thursday to try to make sense of their turbulent industry. Everyone at the conference had ideas for those roadblocks, but none had an elixir for their biggest problem of all: The multifamily development tax break Affordable New York, better known as 421a, expires June 15. ‘It’s been a very healthy market over the last 12 to 18 months,’ said Martin Nussbaum, co-founder and principal of Slate Property Group. ‘That has now come to a stop.’”
From Bisnow. “Investors in an Austin, Texas, luxury student housing building will likely get a payout from developer Nelson Partners Student Housing after a lawsuit threatened to topple the company’s student housing venture altogether. The developer has now agreed to a settlement in Texas state court that includes a liquidation plan with a $50M payout to investors, which Nelson Partners could fund by selling off other properties. If the plan is approved, Nelson Partners will have 18 months to raise money to pay back its investors.”
“Complexes run by Nelson Partners all over the country, including Skyloft, have been plagued by complaints of poor living conditions including faulty air conditioning, elevators not working, malfunctioning fire alarms and disconnected utilities. Complaints led some investors to compare Nelson to a ‘Ponzi-like’ scheme, according to court filings. A group of more than 200 individual investors, including engineers, doctors, teachers and lawyers, sued the developer’s owner, Patrick Nelson, for $75M last year in an attempt to get their money back.”
From NBC Connecticut. “With multiple bids, buyers are waving inspections and many houses are going for way over asking price, but there can be a hidden price of rushing to buy. Some Connecticut homeowners say they paid a price for not knowing more about their future homes. Just ask the Favreaus, of Bristol, who longed to retire in Connecticut. But they say their new forever home has quickly turned into a nightmare. ‘We had family coming over for the Fourth of July and then the septic comes spewing into the basement,’ Pat Favreau said.”
“Favreau and her husband Mike trusted what they said they were told – that the house had a three-year-old septic system and a disclosure that said no septic problems. ‘So we said, ‘Well, all right, it’s three years old,’ so we didn’t do the septic inspection and that’s where it all kind of went down the tubes,’ Mike said. ‘I guess we just took it on faith that they were telling us the truth.’”
From Slate. “Dear Pay Dirt, I have made a terrible mistake and I don’t know what to do about it. I just bought a house that’s now falling down around me. I got a conventional loan with 20% down. The seller did not report any major structural issues during closing, but I have discovered that the house is splitting in two. It started out as a single-wide mobile home but it has so many additions that it looks like a brick-and-mortar home. There’s an inch-wide crack in the floor, and the roof is buckling in the same spot. The subflooring needs to be replaced. The doors don’t latch, and the floors aren’t level. The heat pump just died, too.”
“My real estate agent did not recommend a home inspection. He was a stranger to me, but told me that he was my friend, and when I wanted to back out of the sale, he strongly urged me ‘as a friend’ to go through with it. This house needs at least $30,000 in repairs just to keep it from falling down. I paid $180,000 for it. It seems to me like the seller should have reported the obvious defects and the realtor should have pushed for a home inspection at the very least. However, I am an adult and I should have been more observant and less excited when I toured the house.”
“I realize that you can’t give me legal advice, but I just don’t know where to go from here. I have contacted five attorneys but nobody wants the case, so maybe I don’t have one. Do I try to sell it and cut my losses, or fix it up? Unlike the previous seller, if I did sell, I would be required to report the structural defects, so I suppose I’m going to have to fix it and live with it. Do I have any other options? —A Big, Huge Whoops.”
From Fortune. “As data trickles in for April, it’s becoming clear that the historically hot housing market has flipped trajectories. It’s now in cooling mode. ‘The red-hot housing market’s days are numbered. While I don’t anticipate a collapse á la the Great Recession, rising mortgage rates and inventory are sure to cool what has been an unprecedented time for the U.S. housing market,’ says Ralph McLaughlin, chief economist at Kukun, a real estate data and analytics company.This softening is by design. The Federal Reserve is done watching inflation run away.”
From Global News. “The apparent cooling in Canada’s housing market is leaving many buyers and sellers alike confused about how to price and bid on homes in the normally fervent spring market, real estate brokers say. Those who spoke to Global News said the new market is resulting in negotiation power swinging back into the hands of buyers in many cases. Nasma Ali, broker of One Group Real Estate in Toronto, said the difference between the mid-winter market — before the Bank of Canada started hiking interest rates — and today is ‘day and night.’”
“This pricing change didn’t happen overnight, though. Ali said she saw a gradual drop in the number of people coming by showings, and a slow dawning on sellers that their home might not be able to generate the buzz it used to when the market was hotter. They started accepting offers that were based on, say, what a nearby home on the street last went for instead of waiting to see what they could get on offer night. The result was that prices stayed elevated for longer until buyers started waking up to the actual market conditions.”
“Pritesh Parekh, a Toronto realtor with Century 21, told Global News that the cooling housing market has fundamentally changed how buyers should be understanding list prices. When it comes to 90 per cent of homes on the market, ‘you’d be surprised what you can negotiate down’ right now, she said. ‘In this market, this is when you 100 per cent can negotiate,’ Ali said. In Toronto, she’s seen conditions added to sales for inspections, financing and even escape clauses — conditions that could allow a buyer or seller to back out of the deal.”
This Is Money in the UK. “House sales are stalling across the country as a surge of down-valuations pours cold water on the red-hot property market. Brokers say they are now seeing lenders apply the brakes and increasingly down-value homes by tens of thousands of pounds. This means banks and building societies do not believe a property is worth the price agreed so reduce the amount they are willing to lend. Experts warn that this could be the first indication the post-pandemic property boom is coming to an end.”
“Emma Jones,owner of Alder Rose Mortgage Services, claims around a fifth of her clients are now being told their property is worth less than the asking price. ‘We have seen around twice as many down-valuations in the past few months as we were previously,’ she says. ‘It suggests lenders are being more cautious. And it is something we are seeing across the board and with holiday lets as well.’”
From Stuff New Zealand. “The number of properties for sale in the Wellington region increased by a ‘staggering’ 90% in April when compared to the same time last year, according to the latest Trade Me Property Price Index. Trade Me Property sales director, Gavin Lloyd, said along with the capital, every other region apart from the West Coast had an annual jump in supply. ‘Some of the largest increases were seen in the Manawatū/Whanganui (up 86%) and Hawke’s Bay (up 85%) regions,’ he said.”
“Nationwide, Lloyd said the number of properties for sale on the site jumped by 39% in April, the largest annual percentage increase on record. ‘This follows the previous all-time high 32% year-on-year increase we saw in March,’ Lloyd said. Prior to the pandemic, Lloyd said the market supply would usually begin to cool off for winter, but it was not the case any more. ‘As a result, in some regions we’re starting to see the property market enter a stalemate situation where buyers simply aren’t willing to pay the price sellers are asking, and they’re at a standstill.’”
The South China Morning Post. “The Hong Kong villa of a Kaisa Group Holding executive has been offered for sale at a discount by receivers, joining a growing group of mainland Chinese developers who are selling their assets at distressed prices amid the debt crunch and stagnation in China’s property market. The two-storey villa, spread over 3,953 square feet (367 square metres) is valued at between HK$260 million and HK$280 million, or a discount of up to 26 per cent compared with its HK$350 million (US$44.6 million) purchase price in 2017.”
“An office building at 28 Austin Avenue near Hung Hom was put on the market by receivers for an indicative price of HK$200 million, said Lau of Midland. The original owner, a mainland Chinese investor with the surname Jin, bought it via a company for HK$212 million in 2012. The property has been mortgaged repeatedly over the past few years. ‘This is often the case – if some property appreciates, owners borrow money from financial institutions to buy other things,’ said Lau.”
From Swarajya Mag. “An Indian trader recently sent an import enquiry to his contacts in China. The Chinese were known for their aggressive follow-ups. However, this time it was different. Not only the response was lukewarm but there seemed to be a loss of appetite. ‘This is a new China,’ the Indian remarked.”
The Korea Times. “The crash that some had been warning about happened. TerraUSD (UST), a stablecoin, imploded over a period of a few days. TerraUSD was pegged 1:1 to the U.S. dollar through an algorithmic smarts that linked its value to a sister cryptocurrency called Luna, which crashed to $0.40 on May 12th; on May 5th, Luna was worth $87. Do Kwon, the founder of TerraUSD has gone from a hero to a dud at lightning speed. Coindesk excerpted an article from The Node on May 11 titled, ‘Do Kwon Is the Elizabeth Holmes of Crypto.’ Ouch. Basically, it argues that Kwon is either an intentional scam artist or a self-delusional crypto prophet who believed in his own hype.”
“The sense of betrayal is keener in Korea since Kwon was a hometown boy done good. A Stanford grad with stints as a software engineer in Microsoft and Apple, Kwon had a resume that was ideally suited to the Korean narrative of success worship. To be fair, Kwon wasn’t a crypto darling limited to just Korea. He was lauded as one of the youngest and most influential voices in decentralized finance (DeFi) by reputable members of the press throughout the world.”
“After the crash, however, Kwon went from Korea’s Musk to Korea’s Holmes. Conspiracy theories abound, with some even accusing Kwon of making an early escape because he knew what was going to happen and leaving the investors holding the bag. Of course, the question becomes, what now? What happens to the believers when their gods and faith come crashing down?”