There’s A Simple Explanation For The Stall: House Prices Were At Near-Historic Highs When Interest Rates Started To Rise

A report from Wilmington Biz. “‘The mania we saw from remote work, from significant relocations, has slowed down,’ said Mouhcine Guettabi, a regional economist with the University of North Carolina Wilmington’s Swain Center. ‘So we’re no longer seeing people waiving inspections; we’re no longer seeing people paying 20%, 30% over asking price … there is this slow shift toward buyers. We’re in this kind of place of almost like the new price discovery. It seems that sellers still want 2023, 2022 prices, and buyers want 2018 prices, and so something is going to have to give.’ Amanda Parmer, president of BlueCoast Realty Corp., is seeing price cuts play out locally. ‘I can say that anecdotally, there are more price improvements every day than there are new listings, which is telling me while we’re getting new inventory, a lot of the current standing inventory has to adjust to meet the market,’ she said.”

“‘We all know ‘housing is a supply-and-demand product,’ and now more than any time in the past 10 years, pricing is so important,’ said Tim Milam, CEO of Coldwell Banker Sea Coast Advantage, one of the largest residential real estate firms in Southeastern North Carolina. Milam said the best way to avoid price cuts is to price the home correctly from the start. ‘We highly encourage sellers to price their property competitively at the time of listing and you will be the winner and, in many cases, create multiple offers by doing so,’ he said. ‘Sellers who ‘chase the market down’ with price reductions do not typically do as well.'”

Bisnow South Florida. “Monarch Alternative Capital has been the senior lender for an unfinished 50-story hotel and condo tower at the Miami Worldcenter megaproject for a month, but it is already pursuing a court-ordered foreclosure to take over the project from its developer. The developer, Royal Palm Cos., filed a countersuit Monday morning claiming Monarch is engaging in predatory tactics and that the project’s original lender, an affiliate of World Trade Center developer Silverstein Properties, stopped funding the construction loan last year. Monarch, through its affiliate, Legacy Lender Holdings LLC, sued to foreclose on the Legacy Hotel & Residences last week, alleging that RPC, led by Dan Kodsi, defaulted on a construction loan issued by Silverstein Capital Partners. ‘Despite the loan being fully closed, Silverstein abruptly informed RPC that it would no longer fund the remaining balance, creating significant disruptions and major delays for the Legacy projects,’ Kodsi said in a statement. This is not a routine lender-borrower dispute — it is a calculated and retaliatory attack by Monarch, following a failed attempt to strip Royal Palm of its rightful equity in a separate project.'”

From KOAA. “The Pikes Peak Association of Realtors released numbers for the housing market in the Colorado Springs area for June recently, and there were a few anomalies for this time of year, according to their board president Windy Bailey. ‘The other big number that jumped out was that our days on the market continue to decrease,’ Bailey added. ‘We’re down to 40 days on the market. And I think when we did our very first interview, we were at 67 days on the market. So it’s very confusing. The numbers are inconsistent. They don’t really make sense. We still don’t have a whole lot of buyer confidence, but sellers seem to want to be getting out from underneath their houses, which is odd, because most of these sellers have low interest rates.’ Bailey offers advice to buyers in the current market. ‘They can ask for more, but not ask for too much,’ Bailey said of buyers. ‘I think that this is an opportunity for buyers to ask for what they want, instead of offering stuff to the sellers to choose their offer, because we’re not seeing a ton of multiple offer situations… they do exist, but it’s not the norm the way that it was a couple years ago.’ Bailey also pointed out that she believes Realtors are educating sellers well in this market. ‘I think the biggest thing is, is being flexible, pricing the home correctly, not being overly confident that they’re going to get top dollar for their home,’ Bailey said.”

In Maricopa in Arizona. “The spring housing market in Maricopa is usually characterized by a surge in activity, quicker sales, and growing optimism. This year, however, things have been more subdued. From Jan. 1 through early June, Maricopa’s active listings rose from 552 homes to 673, roughly a 22% increase. By comparison, in the same period Casa Grande climbed from 332 to 404 (22%), Buckeye moved from 691 to 867 (25%), Phoenix leapt from 2,053 to 2,888 (40%), and Chandler grew from 344 to 583 (69%). Phoenix housing cooled more noticeably — January’s $694,000 average fell to $611,000 by June (nearly 12%).”

“In addition to the high supply of homes, short sales and pre-foreclosures are starting to put some downward pressure on pricing. The highest average sales price on record for Maricopa was recorded in June of 2022 at $435,000. Today, the average price is around $374,000, a decrease of about 14% over the last 3 years. This means that anyone who bought a home in 2022 is most likely underwater on their mortgage. New construction represents about one-third of the active inventory, with some builders offering mortgage interest rates as low as 3 to 4%, making it tough for individual sellers to compete.”

Spectrum News on California. “Six months after thousands of Los Angeles residents lost their homes in a pair of devastating wildfires, 70% of survivors now say their insurance companies delayed, denied or underpaid their claims. Three quarters of those who lost their homes in the Palisades and Eaton Fires in January also say they were underinsured, leaving them on the hook for hundreds of thousands of dollars to rebuild or move on. ‘Six months to the day feels like 10 years,’ community activist Zaire Calvin said at a press conference with hundreds of other survivors of the Eaton Fire. A third-generation Altadena resident who lost his sister to the fire along with two family homes, he said, ‘These insurance companies that have taken advantage of us, it has been disrespectful.’ Zaire had just finished remodeling his home when the fire wiped it out, leaving him with a $1.2 million gap in insurance. Like 75% of Eaton Fire victims, Zaire was underinsured.”

CBC News in Canada. “When Thamara DeVries handed over the keys to her fully furnished home in Wheatley River, P.E.I., in February, she thought she was renting it to a family of four. But shortly after move-in day, DeVries was called to help with the property’s hot tub. ‘I realized that there was a mom and a dad and 10 children, which is definitely not what we agreed on,’ DeVries told CBC News. Eventually — after providing the tenants with written notice that she was going to enter the property, in accordance with IRAC policy — DeVries called the police for assistance. She said she didn’t feel safe going in without officers nearby after noticing aggressive dogs on the site. Soon she saw something she found even more menacing. ‘There were knives all over the door frames on every door of the main floor — all covered in knives — to prevent us from walking into the property,’ she said. ‘We had to remove the knives and push the door in and to see the absolute disaster that it was.’ Once inside, the first thing she noticed was the smell — ‘the worst smell you could imagine,’ DeVries said. ‘I’m going to be left with maybe $80,000 of damages, lawyer fees to the roof and the mental stress that is … beyond anything anyone can imagine,’ she said.”

The Associated Press. “A fierce protest in Mexico City railing against gentrification and mass tourism was fueled by government failures and active promotion to attract digital nomads, according to experts, who said tension had been mounting for years. The criticism comes after Mexican President Claudia Sheinbaum alleged that Friday’s protest was marked by xenophobia, reviving a debate over an influx of Americans in the city. In one case, a protester slammed a butter knife against the window of a restaurant where people were hiding, and another person painted ‘kill a gringo’ on a nearby wall. ‘The xenophobic displays seen at that protest have to be condemned. No one should be able to say ‘any nationality get out of our country’ even over a legitimate problem like gentrification,’ Sheinbaum said Monday. ‘We’ve always been open, fraternal.'”

From The I Paper. “‘We are locked out of the next step,’ says Peter Blackall. “The housing market is telling us: ‘You’re not allowed to move up to your next house – a four-bedroom family home – you can’t move up to it.’ Over the past year, the 39-year-old, who works in risk management for a financial institution, has been struggling to sell the three-bedroom family home he and his partner bought in Farnham, Surrey, back in 2013. ‘We had the house on the market last year, but there was no shift. Very few viewings,’ says Blackall. There was such little interest in Blackall’s home – listed at £425,000 in a desirable area in the south east of England – that he and his partner took it off the market. There’s a simple explanation for the stall: nationally, house prices were at near-historic highs when interest rates started to rise. And yet, house prices have not fallen drastically because sellers (particularly those who bought near the top of the market), understandably, do not want to stomach losses. ‘We have ultimately ended up accepting a significant drop in the original price we listed as sellers,’ he reflects. ‘Of course, this leaves us with nowhere near as much equity [as we had hoped] considering all of the fees, paying off our renovation loan, etc.'”

“The Blackalls are not the only people affected. Martin Lowensmith has been trying to sell his Elizabethan farmhouse on the Devon/Somerset border for two years. ‘We’re in the £1-2m bracket,’ he explains. ‘So our story won’t arouse much sympathy, but it seems there are an increasing number of people like us.’ The fact that interest rates have doubled has made the property less sustainable because it has several cottages with mortgages on them. They’d like to downsize and move to Hampshire to be closer to friends. But it seems that the housing market has other plans. ‘We’ve had to reduce it from £2.25m to just over £1m.'”

The Press in New Zealand. “Debts owed by a luxury building company accused of leaving a ‘trail of destruction’ have climbed to more than $2.3 million. Christchurch-based John Ross Architectural Builders Ltd (JRB), which was renamed Box 128 Ltd in October, was placed into liquidation in December. The sole director and shareholder is John Ross Kelleher, known as Jack. Liquidator Brenton Hunt’s just released six-month report says no money has so far been paid out to any creditors. Meanwhile, property owners affected by Box 128 Ltd’s collapse are still mopping up the ‘trail of destruction’ – as one homeowner previously put it – left across several multimillion-dollar homes. The man had already paid Box 128 Ltd $1.7m before it went under. ‘Two and half years after starting my build I estimate we have now incurred over $650,000 of cost over and above our Master Build Guarantee claim and endured moving house six times over this period with two children under 5, and all the stress on our family associated with this,’ he said.”

“Another said she had successfully put in a claim to the Master Builders Association but was in the process of submitting a new claim after more issues were uncovered with her $2.1m architecturally-designed house that JRB had built. She said she had been unable to live in the property since April while repairs were being carried out. ‘The roof has to come off now because the insulation wasn’t put in how it should have been. The issues he has caused are just horrific,’ she claimed.”

Yahoo on Australia. “In Craigieburn, 25 kilometres north of Melbourne’s CBD, rubbish has been piling up for months at a vacant lot next to a property recently purchased by new homeowner Alexandra. To make matters worse, the mess frequently attracts cats, crows and maggots with locals saying it has become a health hazard due to the presence of chemicals, pet waste and rotting food. The Melbourne woman said she was proud to have purchased in the area but now feels as though she can’t have guests around due to the unsightly mountain of waste in the area. ‘And now it’s like, ‘Oh yeah, come, come round, but let’s just display this huge disgusting rubbish dump that I’ve got next door,’ she told A Current Affair. ‘It’s like a tornado of rubbish just getting blown around every day. Every single day, I see a new pile of rubbish. It’s gotten to the point of squalor.'”

“While locals are frustrated in Craigieburn, it’s certainly not the only region in Melbourne trying to combat the problem. On the outskirts of the city, where suburbia meets farmland, shocking images supplied to Yahoo in March show building waste, such as polystyrene and plastic sheeting, dumped in the environment alongside mattresses and household rubbish. In fact, illegal dumping has become an ‘all too familiar story’ nationwide.”