Supply Is Increasing At The Wrong Time And It Cannot Be Absorbed

A report from the Coeur d’Alene Press in Idaho. “Jennifer Smock said she and her team at Windermere/Coeur d’Alene Realty are often asked the same questions these days: What’s going to happen with the housing market? While she said she can’t answer those questions with absolute certainty, she did offer this: ‘We’re not going to see values plummet,’ she said. ‘But we are seeing a leveling off of values, for sure. The market has pivoted.'”

“The days of multiple offers and buying homes without inspections are over. Inventory is increasing and home price reductions are becoming common. ‘Things are starting to shift big time,’ Smock said. ‘Pivot is what I like to call it.'”

From Barron’s. “New Orleans homeowner Lisa Tourtelot says homes were flying off the market in her neighborhood as recently as a month ago. Now, as she prepares to list her own house for sale, the homeowner is on edge. ‘My realtor told me that, as of last week, about 50% of interested buyers dropped out,’ she says. On real estate sites like Zillow Tourtelot notes, homes in her area are spending more time on the market and sellers are dropping their asking prices.”

The New York Post. “The scorching pandemic-era US housing market is on the verge of a ‘coast to coast’ price correction as the Federal Reserve hikes interest rates, a prominent economist warned this week. Mark Zandi, chief economist at Moody’s Analytics, said his firm expects home prices to sink in key competitive markets that are the most ‘juiced’ or overvalued. Rising interest rates ‘have already caused the housing market to slow down,’ Lending Tree senior economist Jacob Channel told The Post. ‘Fewer people are getting mortgages, homes are sitting on the market for longer and some sellers are cutting prices,’ Channel said.”

The Stamford Advocate in Connecticut. “One that stands out for Coldwell Banker agent Melodye Colucci was a recent instance in which a buyer took their time — to the extent of spending extra for multiple inspections to determine if anything was amiss with a house that had been on the market for a few weeks. ‘My client was saying, ‘What’s wrong with this house?’ Colucci said. ‘That was their mentality, having gone through the craziness of the past year.'”

“In Bridgeport and other parts of Fairfield County, just 15 percent of homes listed for sale had a cut in price as calculated by Redfin. That compared to more than 22 percent of listed properties taking price cuts last month across the metropolitan New York City and Boston markets tracked by Redfin, and above 30 percent in multiple Florida markets.”

“Colucci said the sellers were shopping Connecticut in a relocation from California and were willing to expedite things by waiving an inspection. But with interest rates rising and continued uncertainty for the economic outlook, Colucci said such purchases are becoming rarer. ‘I think that was the last hurrah,’ said Colucci who works out of the Stamford office of Coldwell Banker. ‘When something good comes on it will go into a bidding war, but we’re not seeing the frenzy that we had.'”

The Palm Beach Daily News in Florida. “Dents in the housing bacchanalia could be showing as inventory and mortgage interest rates rise. The price hikes came with a 19% plunge in closed deals and amid increases in new listings. May’s 1.7 months supply of inventory of listed homes was a nearly 31% increase from May 2021. ‘Three months ago, I would have said there were no signs of a housing correction but that’s changing,’ said Bev Knight, broker owner of Ocean Estate Properties.”

“‘Some sellers are calling us to list their house out of panic thinking the market is going to crash,’ said Talbot Sutter, president of Sutter and Nugent real estate. ‘But our area is in a bubble where people are coming for so many different reasons that it would have to be a really devastating crash to significantly affect us.'”

The Tampa Bay Times in Florida. “‘May was still the peak time,’ said Lei Wedge, a professor of finance at University of South Florida’s Muma College of Business. ‘But that data does not represent the future.’ The number of active listings in Tampa Bay increased 34.7% from last May, but there was still only a one-month supply of inventory. Wedge said the supply of homes is not likely to increase anytime soon and could possibly even decrease. ‘There are lots of homeowners who wanted to sell their homes that may turn around now because they see prices dropping,’ she said.”

From Mansion Global. “After two years of a breakneck market for vacation homes across the U.S., demand for second homes has now fallen below pre-pandemic levels, according to Redfin. The federal government also increased loan fees for second homes in April, adding approximately $13,500 to the cost of purchasing a $400,000 vacation home, Redfin noted. Across the U.S., sellers in areas that saw spikes of pandemic-related demand have begun to drop their asking prices.”

“‘Skyrocketing monthly payments, along with higher loan fees, have priced many second-home buyers out of the market,’ Redfin deputy chief economist Taylor Marr wrote in the report. ‘Many would-be second-home buyers are also deterred by turmoil in the stock markets, high inflation and recession fears, and they can be quicker to pull back from the market because vacation homes aren’t a necessity the way primary homes are.'”

The Missoulian in Montana. “Brint Wahlberg, a local Realtor who serves as the first vice president of the Missoula Organization of Realtors, said data shows that the amount of time homes sit on the market has been rising after hitting an all-time low earlier this year. ‘It’s interesting,; he said. ;It shows that, basically, it’s taking longer for sellers to get under contract. People are changing their expectations and changing their price points. With increased mortgage payments, buyers are forced to become a little more picky.'”

“‘The past couple years people would see a house and say ‘I have to have it, I don’t care, I’m buying it’ and now they’re taking a little more time with it,’ Wahlberg explained. For the first time in a long time, there are more sellers who are having to reduce their asking price from the original list price. ‘The other thing we’re seeing more regularly are we’re seeing more price reductions,’ Wahlberg explained. ‘Last year, to have an active listing reduced, that just didn’t happen. Now you’re seeing that activity pretty regularly.'”

“Another effect that Wahlberg has seen anecdotally is short-term rental properties, such as a house being used as an Airbnb, are starting to get listed for sale. ‘I’ve noticed a handful of vacation rentals start to come back on the market for sale,’ Wahlberg said. ‘Those are Airbnbs that have taken away properties that long-term Missoulians can live in. And maybe the market got a little over-saturated with vacation rentals, so people are starting to dump them because people aren’t getting the returns they thought they would.'”

The East Valley Tribune. “Whether you’re selling your home or looking to buy, better wear seatbelts. And that may especially be true right now for sellers, who are flooding the Phoenix Metro housing market with a record number of listings, according to the Cromford Report. The Cromford Report, the Valley’s leading analyst of the market in Pinal and Maricopa counties said a whopping 1,845 homes were added to the Arizona Regional Multiple Listing.”

“‘If we were just suffering deflating demand,’ it said, ‘the market would be cooling off pretty gently. But if 34% more new listings are arriving every four weeks, supply is increasing just at the wrong time and it just cannot be absorbed. This is why we are seeing the fastest cooling trend that the Greater Phoenix housing market has ever experienced.'”

“The Cromford Report two weeks ago said ‘uncertainty is compounded by the unusual speed of change’ and that the Phoenix Metro housing scene ‘is shifting faster than we have seen at any time in the last 22 years.’ ‘Further increases in mortgage rates are kicking a big hole in demand while supply continues to grow extremely fast,’ Cromford reported. ‘It would appear that some owners who do not need their property as a home for themselves are timing the market and prefer to be in cash right now.'”

“It said Buckeye, Queen Creek and Maricopa already are close to a balanced market, where demand and supply are basically equal. Cromford said data from May sales drawn from County recorder records show closed sales dropped 11% from where they were in May 2021 regardless of whether the deals involved new or used houses.”

The Orange County Register in California. “In Los Angeles and Orange counties, 10% of homes listed for sale in May had reductions in the asking price — but that ranked only the 33rd highest share of the 50 metros. In the Inland Empire, 13% of listing had price cuts — 12th highest. Nationwide, price cuts were found on 12% of all listings vs. 8% in February. May’s highest? New Orleans and Salt Lake City at 16%, and Sacramento at 15%.”

“Owners are adjusting prices more frequently as fewer sales contracts are signed. So-called ‘pending sales’ fell an average 21% the past year in metros where the most price cuts fell vs. down 19% where price cuts were least seen. L.A.-O.C. pending sales were down 24% in the last 12 months, and that was 13th biggest drop. The Inland Empire was off 17%, the 15th smallest dip. Nationwide? Off 20%. Biggest falls is dealmaking were in Salt Lake City, down 38%, Miami, down 33%, and Hartford, down 31%.”

“Metros with the most price cuts had average hikes in projected payments of 52% vs. 44% where discounted listings were harder to find. L.A.-O.C.’s payment jump was 52% — and it was only the 19th largest hike! The Inland Empire was No. 14 at 56%. Nationwide? 47%. Raleigh topped this ranking at 70%. Then came Tampa at 66%, and Las Vegas at 65%. Even the nation’s ‘smallest’ payment leaps were scary. Milwaukee was 34% pricier over 12 months, Pittsburgh was up 35%, and Hartford and Minneapolis rose by 37%.”

The Hollywood Reporter in California. “As the Los Angeles housing market has gone up and up, some high-rolling real estate players are selling their mega-mansions — surprisingly — at a loss. Trevor Noah recently sold his Bel Air mansion for $26.4 million, more than $1 million less than he paid for it in 2020. Michelle Pfeiffer and David E. Kelley sold a Pacific Palisades home for $6.5 million, $1.2 million less than they paid for it in 2018. Earlier this year, Sandra Bullock sold a condo in West Hollywood’s Sierra Towers in an off-market deal . According to Dirt.com, she paid $5.1 million for it in 2017 and unloaded it for $3.6 million, making for a $1.5 million loss.”

“Director Simon Kinberg was one of the biggest losers, selling his Hollywood Hills estate, which he bought for $31.5 million, for $28.5 million. But they aren’t the only ones. LeBron James, Simon Cowell, Justin Bieber and Channing Tatum also have sold property at a loss in the past couple of years. How is this possible in a booming market?”

From Global News in Canada. “Halifax’s housing market has been described as ‘red hot’ with houses receiving numerous bids — most over asking. This comes as inflation and interest rates continues to rise. ‘So it’s pretty much a one-sided loss that anyone who’s borrowing money for any reason is probably suffering right now,’ said Moshe Lander, an economics professor with Concordia and Dalhousie Universities. ‘So if you have a line of credit you’ve already noticed it’s gone up. If you have a variable rate mortgage it’s already gone up, if you have credit card debt it’s gone up.If you were hoping your mortgage payment was going to be $1,000 dollars a month, it’s now going to be $1,200.'”

“It’ll take the air out of it,’ said Lander. ‘Is it going to completely destroy the market? No…but [the Bank of Canada] was very clear in their announcements over the last couple weeks that they are very that concerned Canadians are over-indebted and the housing market in Halifax, Nova Scotia, and all of Canada is over-heated. So they’ve said very clearly they’re increasing interest rates specifically to target that market because it’s the one that’s causing the most amount of distortion in the economy.'”

The Daily Telegraph in Australia. “Its walls are crumbling and its ceilings are stripped bare, but a notorious Redfern terrace once at the centre of a squatter dispute is set to change hands again after a forced sale five years ago. What is left of the two bedroom terrace at 544 Elizabeth St is expected to fetch a seven figure sum when it goes under the hammer, despite being in an unliveable condition. Listed with a price guide of $1m, the terrace is stripped to its timber frame at the rear where the bathroom and laundry once stood. The owners paid $100,000 more than its current guide when they purchased it five years ago.”

From Nine News. “Some Chinese property developers are going to extreme lengths to attract buyers. From accepting grain or garlic as part payment, to offering live pigs as an incentive to buyers, the unusual sales tactics underline the dire state of China’s vast real estate industry. A collapse in sales has accelerated since developer Evergrande defaulted on its debt last year as the economy has slowed. ‘On the occasion of the new garlic season, the company has made a resolute decision to benefit garlic farmers in Qi County,’ the firm said in a post on WeChat late last month. ‘We are helping farmers with love, and making it easier for them to buy homes,’ it added.”

“Central China Real Estate did not respond to a request for comment, and deleted its wheat ad from WeChat on Wednesday. The campaign has been widely reported in Chinese media, and was trending on social media.’This is a hard evidence how weak housing demand is,’ said a Weibo user. A recent survey by China Real Estate Information, a private research firm, indicated that sales by the country’s top 100 developers collapsed 59 per cent in May from a year ago.”

“Meanwhile, more developers are coming up with imaginative ways to spur sales. Poly Real Estate, one of the country’s top developers, said it would gift buyers a 100-kilogram hog if they purchase a home at its residential project in Lianyungang city in eastern Jiangsu province. The company even offered to have the pig slaughtered for customers. ‘Buy a house and get a 200-catty ‘Peppa’ pig. Get a good life in one stop,’ read the ad, posted on the firm’s WeChat account last week, using the popular British cartoon character to refer to the hog.”

Supply Is Increasing At The Wrong Time And It Cannot Be Absorbed