This week was a busy one for housing slump discussions, starting with Reuters breaking the story that U.S. home sales in January fell to the lowest level in 3 years, with housing prices rising only modestly. All of this points to a further loss of momentum in the national housing market says Reuters.
Metrics worth noting for real estate investors include a 1.2% drop in home sales (lowest level since November 2015), existing home sales down 8.5% from 2017, and the median existing house price increased 2.8%, the smallest increase since 2012.
Jessica Guerin from The Housing Wire reports on further evidence of a slowdown, noting that “The housing market has revealed yet another sign of a potential economic instability: a persistent decline in single-family housing authorizations.” Specifically, single-family authorizations declined for the third consecutive month in January, falling 3.48%.
Conor Dougherty of The New York Times notes in his recent article titled Housing Is Already in a Slump. So It (Probably) Can’t Cause a Recession, that the housing market has been the lead cause of many recessions in the U.S., however this time it won’t be the cause given the low impact it currently has on the national GDP:
Joe Ward from The Real Deal takes a more positive tone for buyers and real estate investors, noting that “With healthy demand, increasing supply and cooling prices, homebuyers could be in a good position when the market heats up in the spring.”
Similarly, Chris Morris of Fortune adds that the number of homes on the market is beginning to rise above averages, meaning buyers will have selection. This coupled with moderating home prices will boost affordability and shift many local markets to favor buyers.
All that being said, Katia Dmitrieva and Carlyann Edwards of Bloomberg report that “Sentiment among U.S. homebuilders rose in February for a second month, exceeding all forecasts, as lower mortgage rates and a strong labor market help stabilize demand.”
#PropTech Update: Zillow and Softbank
Zillow was in the news this week with a major executive shift and product announcement, seeing now former CEO Spencer Rascoff step aside for former Zillow co-founder Rich Barton to take the reigns.
According to Tyler Clifford of CNBC, Barton and Zillow are also making a huge bet on house flipping: “Zillow would give home sellers access to its online platform to compare offers from potential buyers, including Zillow. If it [Zillow] wins the property, the company plans to complete renovations in 90 days and relist it with one of its premier real estate agents.” The company has reportedly successfully tested this model in Phoenix and Las Vegas, and will now be expanding.
Softbank also made the news this week, with Forbes writer Samantha Sharf reporting that “Storage company Clutter announced Wednesday that it has closed a $200 million funding round led by SoftBank’s Vision Fund.” This brings Clutter’s total funding to $297 million, with a total valuation of $600 million.
#LocalNews: Oregon, NY, and Washington
There were lots of news-worthy local stories this week worth mentioning, starting with Oregon, which is on track to become the first state to impose mandatory rent controls on landlords. Jennifer Dowling of KOIN 6 News reports that “a House committee on Wednesday backed the measure, sending it to the full chamber for a vote as soon as next week. The Senate passed it last week, and Gov. Kate Brown has said she will endorse it.” The bill will reportedly cap rent on units that are 15 years or older at 7%, plus inflation, and will limit no-cause evictions.
An interesting report surfaced this week from Best Neighborhood, and reported on by Natalie Guevara of SeattlePI. The analysis of the relationship between home prices and income points to a stark affordability reality: “As of 2019, 27 percent of homeowners would not be able to safely afford their same house today.” In Seattle, that number jumps to 52.8 percent. Further, “When looking at cities, all of the worst 25 cities are located in California — though two states are worse overall than the Golden State.”
Finally, Denis Slattery of the New York Daily News reports that the NYC municipality has subpoenaed Airbnb for information on about 20,000 units listed on the site. In January, “a federal judge issued an injunction against a city law that would require Airbnb and similar companies to hand over detailed information about listings to the city.” In that statement, the judge noted that the city could still seek information through a subpoena.
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