Homeowners Are The Ones Who Get Taken To The Cleaners

A report from Agence France-Presse. “As he looks at the ruins of his home razed when deadly fires tore through the Los Angeles area, Sebastian Harrison knows it will never be the same again, because he was not insured. ‘I knew it was risky, but I had no choice,’ he told AFP. Harrison is one of tens of thousands of Californians forced in recent years to live without a safety net, either because their insurance company dropped them, or because the premiums just got too high. For Harrison, a former actor, the emotional strain of losing the home he had lived in for 14 years is magnified by the knowledge that without a handout from the state or the national government, he has lost everything — he even still has mortgage payments to make. ‘I’m very worried, because this property is everything I had,’ he said.”

“Even in a best case scenario, home insurance looks set to be a lot more expensive in California, as state reforms filter through allowing increased prices in places more susceptible to wildfire. ‘Real estate and taxes are already very high in California,’ said Robert Spoeri, a Pacific Palisades homeowner who was dropped by his insurer last year. ‘If the insurance gets even higher, who is going to want to live in this state?'”

The Center Square on California. “According to the U.S. Department of Housing and Urban Development, San Francisco permitted zero homes in November 2024, with just 744 homes permitted in the consolidated city-county through the first 11 months of the year. ‘What I’m hearing from developers is that projects aren’t penciling in the San Francisco market,’ Los Angeles Housing Production Institute Director Joseph Cohen told The Center Square. According to the U.S. Census Bureau, San Francisco has a population of approximately 810,000, while Austin, has a population of approximately 960,000. In 2010, San Francisco’s population was estimated to be approximately 805,000, or roughly 15,000 residents larger than Austin.”

“In November 2024, Austin permitted 738 homes, or nearly as many as San Francisco had in the first eleven months of the year. Through November, Austin permitted 8,917 homes, or nearly twelve times as many as San Francisco. According to Apartments.com, the average apartment in San Francisco is 584 square feet and rents for $2,916 per month — or nearly $5 per square foot per month — and rents have increased by 0.9% in the past year. Meanwhile in Austin, the average apartment is 713 square feet and rents for $1,434 per month — or just over $2 per square foot per month — and rents have declined 4.6% in the past year.”

The Palm Beach Post in Florida. “The town of Palm Beach bustled with an active real estate market last year for single-family homes, especially when it came to higher-end and trophy properties. But the real estate story was far different for much of the island’s condominium and co-operative market. The number of sales in multi-family buildings townwide dropped to 267 last year from 311 in 2023, according to the year-end report prepared by agent Gary Pohrer of Douglas Elliman Real Estate. Inventory ‘reached new highs’ in 2024, Pohrer wrote in his report, ‘with anywhere from 80 to 100 active listings across single-family home properties.’ The increased choices, Pohrer added, led to an increase in so-called ‘price discovery, with buyers testing the waters by making offers well below the last asking price, and acceptance rates often coming in 20% to 25% below the original asking price.'”

The Denver Post. “Homebuyers continued to wait for mortgage rates to drop last year and sellers, especially condo owners, waited for buyers to show up in a meaningful way during what was another sluggish year for the state’s housing market, according to the Colorado Association of Realtors. If the single-family market was manageably cold, the townhome and condo market turned frigid as rising association and insurance costs scared would-be buyers away. ‘Buyers and sellers were forced to take a slower, more methodical approach to the market in 2024, as buyer demand was curbed by a lack of motivation,’ said Denver Realtor Cooper Thayer.”

“‘During the brief 2024 moments when interest rates fell into the low sixes, buyers rose to the occasion and made purchases,’ Fort Collins Realtor Chris Hardy said in the report. ‘These mortgage rate drops were never long-lived, and inventory continued to accumulate to levels not seen in at least five years.'”

Bisnow on Texas. “Dislocation in Houston’s commercial real estate market is creating massive opportunities for buyers and developers, but not all properties are created equally, and timing will be everything. That was the word from Transwestern Southwest President Kevin Roberts and others. ‘We see a lot of people who are chasing office buildings by the pound,’ Roberts said, adding that ‘there are $20[-per-SF] office buildings that you don’t want to touch. There’s $150[-per-SF] office buildings that you need to buy right now. There is a maturity wave coming. I think at the current time, we’re somewhere between trying not to catch a falling knife and fear of missing out.'”

The Ottawa Citizen in Canada. “Homebuyers caught in the Eastboro development fiasco say it has set their finances back by years and hundreds of thousands of dollars. Homebuyers lost out on the appreciation of their homes and their stranded deposit monies — and many now face a housing market with even steeper prices. Most of the 108 Eastboro buyers put down deposits five or six years ago. They’ve now been told their purchase agreements are being terminated and the unfinished Orléans development sold in receivership. Gurprit Dhaliwal, 39, an Ottawa police officer, said it was difficult to be strung along year after year by Eastboro’s builder, Ashcroft Homes . After putting down a $75,000 deposit in June 2019, Dhaliwal was told by Ashcroft that his new home would be completed in September 2021.”

“Dhaliwal, a married father of two young children, rented for years while waiting for his Eastboro home and recently bought a new house. ‘It has been a financial setback, for sure,’ he said. ‘We’ve been running around the last five years, and have incurred more debt.’ First-time homebuyer Alex Roussel, 29, put down a five-per-cent deposit on a $400,000 townhouse in Eastboro in 2018. His Eastboro townhouse is now about 90 per cent complete. ‘The homeowners, we’re the ones who get taken to the cleaners,’ says Roussel, who now lives in another townhouse he bought in 2022.”

The Evening Standard in the UK. “January is a great time for bargains. There are discounts on clothes, shoes, electrical products, kitchens — and now on properties. ‘London currently offers the biggest ‘January sale’ the real estate market has seen in a long time,’ says Becky Fatemi, partner at Sotheby’s International Realty. ‘At the end of last year, it was becoming evident that with the recent budget, price reductions were required and strategies needed re-evaluating. We were also taking over a lot of other listings that other agents had overvalued. To list and launch with us, we had to have firm but fair conversations about realistic expectations and correct pricing.'”

“Camilla Dell, founder of buying agency Black Brick, agrees: ‘We’re definitely seeing price reductions. They’re not all being played out publicly online, on portals, particularly at the super prime £15 million plus part of the market, for obvious reasons. Sellers are quite reluctant to display how bad the market is, for want of a better word.’ At the top end, Dell says she has seen discounts as big as 50 per cent. ‘That’s in the most extreme cases…where something had an extremely ambitious or unrealistic asking price two or three years ago and is now selling for half of that.'”

News.com.au in Australia. “Choice for Sydney buyers has lifted, with the most listings in a December seen in six years. REA Group director of economic research Cameron Kusher said the higher listing environment was reducing competition and contributing to slower price growth. ‘They aren’t putting in offers just to secure a property and that is weakening price growth,’ he added. ‘Higher interest rates have really bitten for some people so they may have overextended themselves when interest rates were very low and now that they have remained higher for longer, they simply can’t afford those properties anymore so they’re looking to exit. For people who are really struggling, one rate cut might not be enough to solve the issue so I wouldn’t be surprised if we continue to see a heightened level of people that are under a bit of financial strain trying to sell their properties.'”

From Newstalk. “New Zealand’s housing downturn has been ‘deep and prolonged,’ and has left buyers with much more power in the market, one property research firm says. Real Estate Institute chief executive Jen Baird said buyers lacked urgency for much of 2024, and that showed through in the December numbers. ‘They shrugged their shoulders and went on holiday thinking there’ll be all the property still available in January and they were right.’ She said the 30,000 available houses for sale gave buyers a lot of choice and that was keeping prices down. ‘Agents are telling us that sellers are seeing interest rates come down and in their heads that means prices are on their way up immediately, with lots of demand for property. But with so many on the market, that’s not the case. The buyer demand equation is not what it was a few years ago.'”

“Corelogic data shows prices have fallen by nearly 18% from their post-Covid peak. The biggest drops have been seen in Wellington and Auckland, down by around 25% and 22% respectively. At the other end of the spectrum, Christchurch is down by ‘only’ 7%. ‘Main centres like Auckland, and Wellington in particular, have seen a strong rise in listings in December compared to the same time last year, which has softened price pressures in those regions for several months now,’ property economist Kelvin Davidson said. ‘It’s not great news for homeowners especially those that purchased around peak levels, but ultimately the downturn conditions are most favourable for recent buyers.'”

South China Morning News. “More homebuyers in Hong Kong surrendered their deposits on new flat purchases last year, and property agents expect such defaults to continue at a high level. A report from property agency Centaline showed that 449 buyers of first-hand property forfeited their deposits last year, a 75 per cent increase from a year earlier and the highest since 2019. The final quarter saw 104 such cases, just short of triple the 40 cases in the third quarter. The agency did not report the value of the forfeited deposits, but the typical initial deposit is HK$100,000 (US$12,844), according to market sources. ‘As the market will be busy after Lunar New Year, and developers will be offering discounts, we expect the number of defaults on new property units to remain high,’ said Yeung Ming-yee, a senior associate director at Centaline. ‘There will be around 100 such cases in the first quarter of 2025.'”

“Forfeits indicate either that buyers are not able to move forward with their purchases, or that they expect to find significantly better deals. Flats that originally sold while prices were peaking between December 2019 and December 2021 resold at discounts of 25 per cent or more from their initial purchase prices, Centaline’s report said. One such case was an 865 sq ft flat in Kai Tak that sold at HK$29,558 per square foot in December 2019, but resold for 30 per cent less at HK$20,809 per square foot after the initial buyer cancelled the transaction in December.”