A Mass Exodus Appears To Be Expanding The Glut
A report from CBC News in Canada. “Before oil prices tanked in 2014, Fort McMurray was a notoriously hot housing market. Realtor Lance Bussieres could barely keep a house on the market for a couple of hours before getting several offers. ‘It was very busy,” Bussieres, co-owner of ReMax Fort McMurray, said. ‘There were times where you would list a house and you would have two or three offers — if not that evening, the next day. People were literally leaving the house and writing offers in the driveway.’”
“Michael Mack has had a ‘for sale’ sign in the window of his three-bedroom trailer in the Fort McMurray subdivision of Waterways for about three weeks. He wasn’t happy when one realtor asked him and his wife to list their home for around $200,000. They bought it for about $370,000 in 2013 and were hoping to at least match that. ‘We’ve had two calls. Nothing serious,’ Mack said. ‘It would be nice to break even.’”
From Business in Vancouver in Canada. “It sounds like an unfathomable statistic within the realm of Lower Mainland real estate. The average single-family detached home in the Fraser Valley is now sitting on the market for more than a month before being sold. Long seen as an affordable alternative to Vancouver’s astronomically high prices for homes, the Fraser Valley housing market now seems out of reach for the average buyer as well. Anne McMullin, CEO of Vancouver-based non-profit Urban Development Institute, said she’s not surprised by the cooling of the market for single-family homes in the Fraser Valley because it’s also happening all over the Lower Mainland.”
“‘People want to blame everything else, but the housing market is still a local market,’ she said. ‘When you start to get over a million dollars [for a property] in the Fraser Valley, there’s very few people that can afford that.’”
“McMullin said the Fraser Valley appears to have hit its ‘threshold’ of how much people are willing to pay for a single-family home in the area. ‘You might say that on the North Shore [of Vancouver], that threshold is about $2 [million] or $2.5 million. And on the west side it’s about $3.5 million, and sure you’ll get a $16 million home sold every once in a while, but they don’t go much more than that.’”
“A mass exodus of gen-Xers and baby boomers appears to be expanding the glut of single-family homes for sale across the Lower Mainland, which could also signal some troubling financial trends on the horizon. According to a report titled The Future of B.C. Housing by Resonance Consultancy, 34% of Metro Vancouverites plan to sell their homes and downsize within the next five years. The report found that 60% of those surveyed also plan on using the sale of their houses to fund their retirements.”
From Domain News in Australia. “Sydney homeowners are losing confidence in the auction market, with the proportion of sellers withdrawing their properties from auction surging in November. Last month one in six sellers got cold feet and called off their auction – almost twice the rate of apprehensive homeowners during the same time last year. It’s the most deflated homeowners have been in at least three years.”
“Clearance rates have also been in decline over the year, with just over half of homes selling at auction in November – the lowest in two years, excluding January, which normally has a low volume of sales. It was 73 per cent during the same period last year, according to Domain Group data. AMP Capital chief economist Shane Oliver said buyers no longer had a ‘fear of missing out,’ which had been a big driver of the auction market.”
“‘I think the sentiment around the property market is a lot weaker than it was two years ago,’ he said. ‘Buyers can afford to take their time, they can be more considered about what they’re buying.’ Mr Oliver said low clearance rates also showed that APRA measures to slow the investor market were ’starting to bite.’”
From News.com.au in Australia. “Next year’s banking royal commission could push the already slowing Sydney real estate market into a deeper spiral. Experts warn the inquiry, announced by Prime Minister Malcolm Turnbull would encourage banks to be even more cautious with their lending policies. Adding to the downward pressure on prices, the restrictive lending environment comes as developers are releasing a load of new properties on to the market.”
“AMP Capital economist Shane Oliver said the combination of rising supply and falling demand would push Sydney property prices down by an average of about 5 per cent over 2018. ‘Banks are already under a lot of pressure from regulators to reign in their lending, especially to investors, and the commission will encourage some banks to be even stricter,’ Mr Oliver said. ‘The risk is that the further tightening associated with the commission would accentuate the slowdown already under way.’”
“BIS Oxford Economics analyst Angie Zigomanis said banks’ lending policies to investors would have the most critical impact as investors accounted for nearly 60 per cent of Sydney homes purchased in 2016. Mr Zigomanis said investors triggered both the recent price boom and the slowdown that followed. ‘The market began to change when investors could no longer get interest-only loans,’ he said.”
“Research from investment bank UBS confirmed buyers were growing increasingly wary of the housing market. ‘The proportion of respondents saying that the ‘wisest place for saving’ is in ‘real estate’ has collapsed to a record low,’ the bank said in a note.”
