Is the realestate bubble bursting?

[2HOTinPHX]

Opendoor posts nearly $1B loss....POP...........?

https://therealdeal.com/2022/11/03/opendoor-posts-1b-loss-as-market-slowed-faster-than-expected/

Opendoor has become a poster child for a housing market slowdown.

The San Francisco-based iBuyer reported a net loss of $928 million in the third quarter — more than 17 times what it lost in the second quarter, the company said Thursday in an earnings release.


Most of that loss was attributed to a $573 million writedown in home values, the firm said in a letter to shareholders, describing the adjustment as a “conservative forward view.”

 

[MarieIG]

I'm seeing some modest price reductions in our neighborhood, although nothing near pre-pandemic levels. A few of the homes are sitting. The house on the corner of our block (which was purchased towards the latter part of 2019) is in foreclosure. It has not been updated, is empty, and appears to be a bit overpriced. I have to wonder if the owner stopped making payments during the foreclosure moratorium, and the bank is trying to recover lost interest. We'll see how it does.

The house in foreclosure has been listed for in excess of 90 days, and the price was reduced 50k. I have to wonder if it is going to drop a bit more. It is the worst location on the block (abuts a busy main street), the finishes don't look to have been updated, and there are better choices available in the same price range. Otherwise, it appears that most price reductions in our neighborhood are modest, and there has not been much activity. Solicitations for our house have dropped off (there was a final flurry of activity in July).

We were watching a very cute house in Tennessee. It was listed in the spring for 600k (overpriced in my opinion) and it with the last price drop to 425k it listed as pending. Had we bought it, we would have needed to expand, which was a bit of a drawback in my opinion.

 

[copyright1997reloaded]

Since this thread has been so quiet, I thought I would post this about KB Homes....a 68% cancellation rate this past quarter:
https://seekingalpha.com/article/4569528-kb-home-disappoints-as-market-weakness-hits

 

[2HOTinPHX]

There was a home in our neighborhood that went up for sale a few months ago and we thought the people had moved but then we noticed their vehicles back in the driveway. Apparently they put a large deposit on another home but didn't get any offers fast enough on their current house so they forfeited their deposit. I don't have any other details as we heard this from another neighbor.

 

[JoeWras]

Something has popped. At least in my neighborhood.

9 months ago, homes in the neighborhood essentially sold before listing via "coming soon."

4 months ago, homes were selling within a week

Homes listed in the last month have not sold. Viewing traffic is slowly steady, just not overwhelming. (This is per talking to my neighbors selling.) Listings are seeing slight price reductions. Sales prices are steady overall... for now.

This is actually more typical in the long term. Average time on market 30 or 45 days through the years.

Just like bank interest rates, I think we forgot what normal is.

I was reading a "news report" about the MLS in our area and the "reporter" was putting a positive spin on things, emphasizing the year over year numbers and trying to ignore the month over month. I put that stuff in quotes because I'm not 100% sure the reporter is completely unaffiliated from sales.

 

[ShokWaveRider]

We are not seeing price reductions but do notice longer sales times. Good well-built homes in top areas are holding their value. Average homes in average areas are a different story. But is that not usually the case. There are not so many institutional buyers, but they are waiting and will soon have a field day.

I have noticed that sellers in our area are turning down offers that are not cash, (We know a few realtors). But then our neighborhood is far from transient, and owners typically do not have to move.

 

[Car-Guy]

I live in a "very" rural area but when established homes/properties come up for sale around here, they seem to sell quickly and at elevated prices. (compared to just a few years ago)

However, I've seen some "developers" buy up some larger tracks of land and subdivide them for sale as " 5 to 10 acre country ranchettes". (A bit pricey too, IMO) These oversized lots are just unimproved pasture/timber land, except they have rock road access and the community has gated security. They are "not" selling like hotcakes. I guess it takes time to find folks who want to live in the country but in an unimproved subdivision. (Albeit a spacious subdivision)

 

[Closet_Gamer]

We're continuing our hunt for a beach house. Prices have drifted down a bit but mostly the whole market has just stopped. Very few new houses being listed, even fewer going under contract.

I think a few things are in play....

1 - most of these houses are investor owned who are perfectly happy to collect rentals on their 3% mortgages, so no need to sell anyway

2 - others are in denial that prices have shifted down. Several houses have been on the market for 6+ months at very high prices. We're now seeing the efforts to bump the houses back to the top of searches by pulling/relisting or dropping price 2%. No takers.

3 - I think buyers have moved to the sidelines both because they can't take out 7% loans or like us they are watching what happens to the market.

There is a house that meets our criteria but is a bit wonky. We're going to put in an all-cash bid on it that is 25% below asking ... that is the reduced asking after they dropped it a couple weeks ago.

We really like our realtor -- very good guy without any "you should buy this one!" sales effort. He thinks that 25% off, all-cash bid is a strong bid given what he's seeing in the market.

We will see how it goes!

 

[Fermion]

There is one house in our area that was listed at $419k during the height of the bubble, didn't sell, and now has been relisted at $299k. That is quite a drop.

I do expect the market to eventually come down in most of the areas where reality has not set in yet.

But...

It is very expensive to build a new home, as we have/are finding out. Like my other thread about nanny state, following the codes and paying the high prices for copper wire and other things that have inflated (even though lumber finally dropped back down) means there has to be a floor, especially if someone desires such a new home.

 

[Aerides]

Def not a burst, but a slow release, as I expected. Homes here are about 10-15% off their highs, and selling in weeks rather than days. Still way over 2020 prices, and probably costing net of more than early 2022 prices given the mortgage rates.

 

[Chuckanut]

There is one house in our area that was listed at $419k during the height of the bubble, didn't sell, and now has been relisted at $299k. That is quite a drop.

I do expect the market to eventually come down in most of the areas where reality has not set in yet.

But...

It is very expensive to build a new home, as we have/are finding out. Like my other thread about nanny state, following the codes and paying the high prices for copper wire and other things that have inflated (even though lumber finally dropped back down) means there has to be a floor, especially if someone desires such a new home.

+1 on building costs

There is a good reason that lower-income housing is often older but still very sound housing. New housing is just plain expensive.

 

[MarieIG]

The house in foreclosure has been listed for in excess of 90 days, and the price was reduced 50k. I have to wonder if it is going to drop a bit more. It is the worst location on the block (abuts a busy main street), the finishes don't look to have been updated, and there are better choices available in the same price range. Otherwise, it appears that most price reductions in our neighborhood are modest, and there has not been much activity. Solicitations for our house have dropped off (there was a final flurry of activity in July).

We were watching a very cute house in Tennessee. It was listed in the spring for 600k (overpriced in my opinion) and it with the last price drop to 425k it listed as pending. Had we bought it, we would have needed to expand, which was a bit of a drawback in my opinion.

The house on our block which was in foreclosure sold. Interestingly, the sale price, while less than the original list price, was more than the reduced listed price. (I don't understand that one.) The house which we had been looking at in Tennessee sold for 410k.

 

[SVHoper]

The house on our block which was in foreclosure sold. Interestingly, the sale price, while less than the original list price, was more than the reduced listed price. (I don't understand that one.) The house which we had been looking at in Tennessee sold for 410k.

A little bidding war may have been the reason that it went over the reduced list

 

[MarieIG]

A little bidding war may have been the reason that it went over the reduced list

Ohhhhh, thanks.

 

[W2R]

We hadn't had many houses coming on the market in my neighborhood lately. But this week, two did. Both are listed at well over twice what I paid for my "Dream Home" back in 2015, and while one is large, the other is the same size as my present house, looks tacky inside, and doesn't even have a garage like mine does.

Even considering that it's been 8 years since I bought my home, still these asking prices are crazy; the sellers must have a screw loose. Houses simply are not getting snapped up immediately like they once did and I'd imagine they're going to need to drop those prices considerably.

I'm so glad we don't want to move! Not the best time for it, here.

 

[ShokWaveRider]

I was watching Bloomberg today and there was a small segment on how the housing market was perking up now folks are used to the higher mortgage costs. They indicated it was going to increase throughout 2023.

 

[tryan]

gonna be a long (4-5 year) slide down. And those buying today (especially at adjustable rates) will be the first in foreclosure. Because they can't sell and they can't re-fi.

 

[JoeWras]

I was watching Bloomberg today and there was a small segment on how the housing market was perking up now folks are used to the higher mortgage costs. They indicated it was going to increase throughout 2023.

Talk to my neighbors about this.

Our neighborhood time on market went from 6 minutes to sixty days in 6 weeks.

Effortless sales a year ago now take hard work. People are not dropping prices yet. That's next since they ain't selling.

 

[2HOTinPHX]

OP here...just thought I would see what an updated offer from Open Door would look like. From original post Open Door offer was 500,300 reduced to 459,500 a few weeks later. Today's offer is down to 378,400. Glad no plans to move anytime soon.

POP??

 

[brucethebroker]

OP here...just thought I would see what an updated offer from Open Door would look like. From original post Open Door offer was 500,300 reduced to 459,500 a few weeks later. Today's offer is down to 378,400. Glad no plans to move anytime soon.

POP??

Great info! Pass along to all that "don't really see a drop in prices anytime soon". In our area, the Midwest, many corporate buyers, like OD are already trying to flip properties that were bought in October/November. Some are listed for 10-15% less than they paid for them. Must be nice to have OPM to burn through.

 

[ShokWaveRider]

I noticed today that there are only 2 homes for sale in our development of over 600 homes. All over $1m, we are a gated golf community in Northeast Florida. Our HOA is $325pm and includes 2 Manned Gates, Neighborhood maintenance and landscaping for our home.

The golf club is NOT mandatory for residents dance, and we do not partake. It is private, not funded by residents, and is open to non-residents. While this does make for some extra traffic in the development for the entrance near the clubhouse. Those lucky enough to be in the newer section like us and furthest away from the club enjoy a nice quiet environment while still benefitting from a well-kept landscaping and our own entrance that is rarely used by club outside members.

 

[pacergal]

about a year ago, a single family home was bought in our neighborhood, torn down and two homes just finished being built on the lot. Asking price 1.8 million each, crazy! I am waiting to see what they actually sell at and how long it takes.

 

[ElizabethT]

OP here...just thought I would see what an updated offer from Open Door would look like. From original post Open Door offer was 500,300 reduced to 459,500 a few weeks later. Today's offer is down to 378,400. Glad no plans to move anytime soon.

POP??

When prices are going down, it's a great time to move upward. (And vice versa.) Particularly if you have cash and thus have no concern over interest rates.

So we're actively looking!

 

[Aerides]

OP here...just thought I would see what an updated offer from Open Door would look like. From original post Open Door offer was 500,300 reduced to 459,500 a few weeks later. Today's offer is down to 378,400. Glad no plans to move anytime soon.

POP??

Open Door is not a remotely accurate way of judging the housing market.

 

[MarieIG]

OP here...just thought I would see what an updated offer from Open Door would look like. From original post Open Door offer was 500,300 reduced to 459,500 a few weeks later. Today's offer is down to 378,400. Glad no plans to move anytime soon.

POP??

Thanks for the update. You can take a peek at the listings and recent sales in the neighborhood to get a flavor of the local market. Wasn't Phoenix one of those area which had a huge run up? Perhaps this is just a return to the pre-run up prices? I would "guess" that there would be somewhat of a recovery when interest rates and the economy calm down a bit and the dust settles.