The Blubber

Per CNBC

With rising interest rates and people wanting to be more frugal about their money, home sales have dropped to their lowest pace since Nov 2010. Sales were down for 11 consecutive months in a row in Dec 2022.

With real estate sales down, US commercial real estate investors are creating a pile of withdrawals. The investors collectively created a withdrawal request worth $20 billion, considered the largest since the great recession.

The National Association of Realtors revealed that the sales of previously owned homes dropped by 1.5% in December. Total sales for the year were down by a whopping 17.8% from its numbers in 2021.

In total, 2022 seasonally adjusted, annualized pace sales were 34% lower than its numbers on Dec 2021 at just 4.02 million units. The drop in sales can be attributed to the rise in mortgage rates and the pandemic-driven demand causing prices to skyrocket.

Realtors chief economist Lawrence Yun gave a statement regarding how they expect sales to start going up soon as mortgage rates decline. So far, mortgage rates have dropped by 1% since October but are still double the rates a year before as Yun says half of the country's markets could also offer discounted prices.

Yun: “December was another difficult month for buyers, who continue to face limited inventory and high mortgage rates... However, expect sales to pick up again soon since mortgage rates have markedly declined after peaking late last year.”

Although low supply is still holding the price of some properties, gains are reportedly shrinking compared to a year ago before the rate hike started. In fact, even commercial real estate has seen massive vacancies in certain markets.

San Francisco, for example, is at a 27.2% commercial real estate vacancy after it consistently increased over 12 quarters. Subleased, however, increased by 8% quarter-over-quarter, meaning businesses are downsizing and not leaving.

See flow at unusualwhales.com/flow.

Other News:

• US Commercial Real Estate Investors Withdrawal Requests Pile Up to $20 Billion, Second Largest Since Great Recession
• San Francisco Commercial Real Estate Vacancies at 27.2% After 12 Quarters of Continuous Increase

Resources:

CNBC