Are RE Agents Truly Stressed (Already)? and What about Vendors?

ALesha77 on 11/07/2022 - 23:35
Last edited 13/07/2022 - 14:24

Update: Looks like this story is on fire now - https://www.news.com.au/finance/real-estate/selling/stressed…

Other agencies started reporting on the same with their analysis similar to what I gave you a month ago - https://www.ozbargain.com.au/node/706538
The message from the "prominent auctioneer" is SELL and sell NOW.

It is funny, however, that now everyone expects RBA to suddenly "care" about house price and make it RBA's job to adjust interest rates because of a softer housing market.

About a year ago (when the prices were going up due to insane and irresponsible drunk-line support) it was unanimously accepted that is is no-one agency job to care about house prices (RBA, APRA and Fed Government said they don't care about housing market going berserk and it is no their job to look after housing prices).

If that is not the most glaring example of double standards from the most incapable people, then I don't know what is.

This - https://www.macrobusiness.com.au/2022/07/stressed-agents-pan…

Personally I don't believe much of MB rubbish and think that David and Leith should be shot out of their misery - based on their short and desperate articles in MB, both appear to be long aussie real-estate (or bonds) on 100:1 leverage. Every tick up in bond yields or interest rates triggers some kind of "detailed analysis" about never-seen before deepest recession that we will all suffer from if RBA will not back off.

So I am curious (if there are agents and current vendors in the house), are you already stressed? What are the news from the field?
I thought it would be another 2-3 months until real liquidity squeeze starts.

Can I ask for honest votes please?

Poll Options expired

  • 7
    Vendor and I am in panic as buyers disappeared
  • 1
    Vendor and I am stressed because I am not offered as much as I wanted
  • 10
    Vendor and I don't know what you are talking about (sold +$1Mil)
  • 0
    Agent and I am in panic
  • 2
    Agent and I am stressed
  • 2
    Agent and I am happy and don't know what you are talking about
  • 147
    By-passer and just wanted to click on something
Financial

Comments

  • WreckTangle on 11/07/2022 - 23:43
    +37

    Glad housing market is tanking.

  • MS Paint on 11/07/2022 - 23:43
    +5

    Can I ask for honest votes please?

    Nice try but I think you know the reality.

    • SF3 on 11/07/2022 - 23:44
      +1

      This is like asking people to calm down, it doesn't work. /s /s

    • whatwasherproblem on 12/07/2022 - 13:45

      But we did vote honestly.

    • ALesha77 on 12/07/2022 - 21:23

      I think we had some honest votes - roughly 50/50 with a lot of bystanders.
      We can repeat this at the end of the year and see if we still get honest votes

  • MS Paint on 11/07/2022 - 23:46
    +3

    I've never read macrobusiness before but if all of their articles are like that I don't think I'll be visiting again in the future.

    WTF is it with all the quotation marks and …?

    According, I still expect the Reserve Bank

    Out of the six I sold one out of six…

  • iNeed2Pee on 12/07/2022 - 00:00
    +2

    Oh no, the Real Estate Agents are going to have to hand back their leased BMWs.

    What a shame.

    • MS Paint on 12/07/2022 - 00:02
      +9

      Are Real Estate agents paid too little?

    • iDroid on 12/07/2022 - 08:53
      +1

      Given the amount they've made over the past 2 years I don't think a lease was necessary!

    • ALesha77 on 12/07/2022 - 22:12

      Well, some will have to.

      I think we are on verge of a massive consolidation in REA business. Watch out for those headlines about more bankruptcies.

  • AustriaBargain on 12/07/2022 - 00:01
    -2

    Bubble is bursting. But don't worry, it'll be even bigger 10 years from now and REAs/property investors will be richer than ever.

    • ALesha77 on 12/07/2022 - 21:21

      Agree on the first part, disagree on the second part.

      In order to get an even bigger bubble you will need even more leverage, nominal negative rates and deeply negative real rates and we just have been at the top of this cycle for all of it with high inflation and masses in distress as a result. I do NOT think we will see this level of debt to income and asset prices level (relative to REAL income) for very looooooooooong time.
      I have told all "investors" in the house to get out of this asset class but most just ignored.

      More on my thesis is here https://www.ozbargain.com.au/node/694076 - not repeating that again.

  • Hybroid on 12/07/2022 - 00:02
    +13

    Buyers haven't disappeared. There's tons going to viewings and still signing up for auctions. I'm there every Saturday too.

    The problem is sellers are still expecting TOP DOLLAR for an inflated market that's now long gone. No one wants to pay $1.8m for what was a $1.5m property before the crazy rise. But sellers won't accept $1.6m final bid.

    So there's a ~50% clearance rate now.

    • Tambani on 12/07/2022 - 14:10
      -1

      That's because the market has only dropped 5.5% this year and is only forecast to drop 8-9% by the end of the year. That property that would have sold for $1.8m is now worth $1.7m.

      Maths.

      • Brodenn on 12/07/2022 - 17:20

        Actually the property is worth what someone is willing to pay for it.

        • Tambani on 12/07/2022 - 17:32
          -1

          Well duh.

          • Brodenn on 12/07/2022 - 19:45
            -2

            @Tambani: Not very bright are you? Try reading Hybroids comment again, then yours and then see if you understand the point.

            • Tambani on 13/07/2022 - 11:51

              @Brodenn: I read it, and am very much in the market at the moment. Quality house prices around me are not plummeting - they are selling slowly but settling at around the same value as this time last year. Apartments and fixer-uppers are either getting discounted or staying on the market longer.

              There is not any solid evidence that prices are dropping faster than 5-9% predictions.

    • ALesha77 on 12/07/2022 - 21:26

      Interesting.

      So, it is not lonely at the actions, is it?
      I trust figures from SQM research and they state that clearance rate is below 40%. with more than 50% of the cleared ones sold prior to the auction.
      That would make it very lonely at some of those auctions.

  • iNeed2Pee on 12/07/2022 - 00:04
    +4

    Every Real Estate Agent right now according to OP.

    https://i.gifer.com/92no.gif

    • SF3 on 12/07/2022 - 00:48

      Maybe secretly OP is a REA!?

      • ALesha77 on 12/07/2022 - 21:29

        No, and even if I was, I would be out 2-3 months ago.
        All builders, REITs and mortgage finance have collapsed 4 months ago.

    • ALesha77 on 12/07/2022 - 21:28

      Nah, I don't waste my time building imaginary worlds about others. I am just a trader.

  • slow on 12/07/2022 - 08:09
    +1

    I'll file it with all the other real estate prophecies of doom of the last 20 years

    • ALesha77 on 12/07/2022 - 21:30

      Tough job you've got. Take a break.

  • pegaxs on 12/07/2022 - 09:19
    +6

    Naaaaaw… are the two biggest subsection of scumbags in society (landlords and REA) feeling a little stress? Awwww… let me find my tiny violin…

    I just hope this stress doesn’t roll over onto used car salespeople and bank managers. It could destroy them.

    • WreckTangle on 12/07/2022 - 10:01

      100%

    • ALesha77 on 12/07/2022 - 21:31

      Cmon, have some mercy.
      I have lost money - I can feel their pain.

  • JimmyF on 12/07/2022 - 09:26
    +3

    I thought it would be another 2-3 months until real liquidity squeeze starts.
    Can I ask for honest votes please?

    I've been following the market for a while waiting for the price drops to kick in when rates go up. I'm in no rush, so might as well save some dollars.

    The problem out there that I'm seeing is sellers want top dollar for their property. They think its peak 2021/22 prices and won't take a dollar less for them.

    While buyers like me are fully aware which way prices are going to go, so are holding out.

    Places that would have sold in a week back in 2021 are sitting on the market for months now, prices not moving, talking to agents about them and they say the seller won't budge on price. So it sits.

    • stirlo on 12/07/2022 - 10:30
      +5

      Something like this happened in 2018 in my suburb. But to be clear quality properties never dropped in price. Investors offloaded below average fixer uppers and 2 bedroom homes sold cheaply when families upgraded. But 3 bedroom homes didn't budge 1 inch and then went up 30% in 2020…

      Unless sellers are forced to sell, prices won't drop and given the recent gains in prices most owners have 100s of thousands of dollars in equity to burn through before they are forced to sell. It's not going to pan out how property doomsayers are saying.

      Most likely case is the market stagnates with limited capital gains for the next 5 years meaning if you have investments elsewhere you'll outperform property investors and will be able to buy a home more affordably as you've benefited from price growth elsewhere. But the price in dollar terms is not going to contract the way most home buyers would like.

    • Zeph101 on 12/07/2022 - 12:28
      +1

      Can agree with this. Brother trying to sell his old house but wants more than top dollar so it's sitting. He has decided to rent it out until times improve.

      But with his strategy he will now most likely be up for CGT when he sells.

      Sold our house and waiting to settle next week, we are right smack bang in the middle of independent valuations prior to all the rate rises so we have timed it just right we think.

      • greatlamp on 20/07/2022 - 07:13

        He will pay cgt for the gains made while it was rented out only - which will be about zero in this market.

        Our tax system benefits real estate investors all the way down. People holding onto their deposits hoping for a bargain are going to get wiped out by inflation before prices drop - the government will find some way to manipulate the market up after some pleas from construction and finance industry..but noone will help the next generation who are trapped in renting.

        Same story over and over for the last 30 years

    • ALesha77 on 12/07/2022 - 21:33

      We'll see.
      I am curious whether we get more RBA action given that FED is fully committed.

      • JimmyF on 13/07/2022 - 09:15

        Rates are not even at pre covid levels yet, but inflation is off the charts….. There is no 'We'll see' if we get more RBA action instead more how high rates will go! No not at the top yet, brace for rate rises for most of the year to come.

        • ALesha77 on 13/07/2022 - 16:08

          In a perfect and fair world I would agree with you.
          There have been a lot of wimps complaining that RBA is killing growth…. really? at real NEGATIVE interest rates? are they bloody serious?
          The real issue is over-leverage and reckless debt binge stimulated by all kinds of institutions.

          My bets are on "inflation" narrative wins and spells lots of troubles for RE bubble in many years ahead. But we'll see.

          • JimmyF on 13/07/2022 - 17:42

            @ALesha77:

            The real issue is over-leverage and reckless debt binge stimulated by all kinds of institutions.

            This is an issue, but this is also RBA fault for lowering rates so low and not putting the correct checks and balances onto the banks lending the money.

            The housing market has been in a bubble for a long time. We haven't seen a bubble pop, but in the UK and US the housing market has 'popped' more than once. It might be our turn now.

            • ALesha77 on 16/07/2022 - 14:48

              @JimmyF: I do not remember UK popping their bubble. At least not to the extent of US.

              The reason AU RE bubble kept inflating was NOT RBA's actions (well not a major driver anyway). The real drivers were government's HEAVY incentives like GST concessions, tax incentives and different levels of grants to get new buyers in. In my view, improper and reckless investment incentives for which we have already paid dearly and will pay even more as a nation.

              • JimmyF on 16/07/2022 - 15:15

                @ALesha77:

                I do not remember UK popping their bubble. At least not to the extent of US.

                UK market in 2009 had over a 15% drop. Sure not as bad as the US, but still….

                The reason AU RE bubble kept inflating was NOT RBA's actions (well not a major driver anyway).

                If you overlay house prices vs interest rates, you'll see that it makes a lovely X looking graph on the page as House prices go up one way, while interest rates come down the other way. So who is in charge of interest rates?

                The most recent 'spike' in house prices is because the RBA drop rates to the floor and people could borrow HUGE sums of money for very little interest. Borrow an extra $125k on your loan for as little as $50/wk, so people offered way more for property as it was cheap.

                There was very little foresight by these people or basically anyone under mid 30s at what would happen when rates went up as that hasn't happened in a lot of people's borrowing lifetime!

  • sjj89 on 12/07/2022 - 09:32
    +1

    My LL just sold my rental from under me. PM is looking after me to get me in somewhere close by, but she said investment properties are “starting to drop like flies”

  • DingoBilly on 12/07/2022 - 09:50
    +5

    Why would REA's be stressed?

    Wouldn't they have to be doing some work in the first place to get stressed? Now they have even less to do so seems like their job is easier.

    • JimmyF on 12/07/2022 - 09:57
      +5

      They are stressed they now have to do work to sell a place.

      • Drakesy on 12/07/2022 - 10:41
        +1

        "Won't Somebody Think of The Real Estate Agents!^&#@#%6"

  • pharkurnell on 12/07/2022 - 10:03
    +2

    who the hell is David and Leith and why should I care what they say?

    • Richmond Tigers on 12/07/2022 - 13:02
      +1

      (Profanity) and no.

    • Brodenn on 12/07/2022 - 17:24

      David infamously said recently that Australia should bomb Honiara…
      MB has also hilariously got the take on the property bubble wrong every single time for the past decade.

    • ALesha77 on 12/07/2022 - 21:50

      Just some random blokes, don't stress too much - get back under you cozy rock.

  • tsunamisurfer on 12/07/2022 - 10:23

    REA's and IP owners should understand the market cycles in boom and bust times (sounds obvious doesn't it).

    Some owners have entered the market expecting continued Bull runs of property but it doesn't always happen.

    There is a time for a correction, however the Australian market (particularly over East) always seem to rebound even to levels that screams unsustainable.

    • ALesha77 on 12/07/2022 - 22:09

      I posted that above and I disagree - I think we are in a structural change.

      In order to get an even bigger bubble you will need even more leverage, nominal negative rates and deeply negative real rates and we just have been at the top of this cycle for all of it with high inflation and masses in distress as a result. I do NOT think we will see this level of debt to income and asset prices level (relative to REAL income) for very long time.

      More on my thesis here https://www.ozbargain.com.au/node/694076

  • stirlo on 12/07/2022 - 10:24
    +1

    My property is on the market right now. There hasn't been as much interest as I'd like but also I have only a small desire to sell so I'm not budging on price. Will see what happens once the spring selling season starts.

    None of the poll options really apply to me…

    • Drakesy on 12/07/2022 - 10:42
      +1

      If you want a guide, New Zealand is about 6 months ahead of us, so what they do we do.
      And it's not the rosiest picture

      • Boioioioi on 12/07/2022 - 11:05

        What is happening in New Zealand?

        • Drakesy on 12/07/2022 - 11:07

          This

          • cannedhams on 13/07/2022 - 15:59
            +1

            @Drakesy: The way that supposedly serious "analysts" manage to miss the fundamental contradiction in the following statement just infuriates me:-

            “Housing affordability is not getting any better, as bank serviceability tests rates go up, the amount you can borrow is shrinking faster than house prices are going down.”

            • ALesha77 on 16/07/2022 - 14:49

              @cannedhams: That is not a contradiction, this is a vicious loop that will only magnify the price falls.

    • ALesha77 on 12/07/2022 - 21:52

      Thanks for sharing.
      Yep, it really comes down to the need to transact…. but then you did put it on the market, right?
      If you are not bothered by leverage and can wait for another X years - no problema.

      • stirlo on 12/07/2022 - 22:14

        but then you did put it on the market, right?

        Yeah costs around $2000 dollars to list it so I figured it was worth seeing if someone wants to pay early 2022 market price. If not $2000 is not even 1/2 of a percent of the value of the property so peanuts in the scheme of things. Holding the property only incurs opportunity cost of missing having the money in ETFs or other growth assets so I'll continue to hold if no suitable offers appear. Note my property is well below the current median price and situated close to transport so I think even in a down market it will hold most of its value vs higher end properties where aspirational buyers are aiming.

        There's also probably a lot of investors with far more leverage and less stable situations than mine. My LVR is very low. I think if you haven't been chasing compounding returns by throwing the equity of 1 property into another after another and have a sky high LVR you probably don't have much to worry about.

        Immigration is coming back and there's a rental shortage. At the end of the day those who need housing will need to pay the price that investors are willing to provide it for, if investor costs go up so will rents.

        • techno2000 on 14/07/2022 - 21:14

          My property is on the market as well.
          Its a unit which was my PPOR for a decade before I bought a much bigger house which I have also rented out.
          I am renting myself elsewhere now.
          Hardly any interest from buyers. Some giving laughable offers like 2015 prices LOL.
          I am willing to sell for lesser money but not for peanuts.
          Again LVR is very low. Just the rent on the unit will more than cover the loan repayment even at 5% rates.

          Just didnt want the hassle of dealing with 2 rented properties.And I have realised even before the interest rate rises that real estate is not a great investment when you consider all the costs and the hassles.

          However having said that, I am not gonna sell my unit for peanuts.

          I can HODL till the market sentiment recovers to a sensible level be it years or a decade.

          • stirlo on 14/07/2022 - 21:19

            @techno2000: Yeah. My agent hasn’t bothered bringing any laughable offers to me but I think the sentiment from some people on reddit/ozbargain is whack. Why would any investor sell at a 5 or 6 figure loss?

            Only the bragging investors you read about in domain would put themselves in a situation where 5, 6 or even 7% rates would force them to sell at such a loss. Add in that over leveraged first home buyers will give up everything before they give up their home and you have a recipe for stagnant prices but nothing like the drop doomsayers are predicting

          • ALesha77 on 16/07/2022 - 15:25

            @techno2000: I posted below a response that equally applies here.
            Just a friendly note.

            I traded markets for a long time to know that when you a figure in your head, the market almost never gives it to you. It is only when you are flexible and follow the capital flows, you can win this game. Same applies to RE at a much slower pace.

        • ALesha77 on 16/07/2022 - 15:20

          I think you are missing the most important point (as many of RE investors). Value <> Price

          Liquidity cycle has turned and that has drained money out of ALL asset classes. Residential RE being the slowest to react will be most impacted in the months to come. If inflation will not subside and get stuck at higher levels, it will take years to gt back to same amount of liquidity levels.

          What does this mean for RE prices? The chain of events is long but at the receiving end of it, the aspiring buyers will be left with much smaller amounts they can borrow and for most new migrants mortgages will be unattainable. Markets don't fall when there are many sellers, markets fall when there are no (or not enough) buyers.

          • stirlo on 16/07/2022 - 15:29

            @ALesha77:

            Liquidity cycle has turned and that has drained money out of ALL asset classes

            This makes little sense. When an asset is sold no money is destroyed. The seller now has the money the buyer did previously. They still have to invest it somewhere.

            If inflation will not subside and get stuck at higher levels, it will take years to gt back to same amount of liquidity levels.

            So in a high inflation economy would you prefer to have a pile of cash or a piece of the limited land supply in Australia capital cities?
            Why would you sell your land for dollars that immediately need to be reinvested or inflation will destroy their value…

            Obviously property prices will not grow unless there are buyers able to afford them. But as long as investors are able to afford to cover the loan costs (either from wages or increasing rent) then there’s no reason to sell in a high inflation environment.

            • ALesha77 on 16/07/2022 - 15:37

              @stirlo:

              1. It is obvious that you don't understand the liquidity cycle. It is NOT about the transnational cycle. In short, it is about the rate of change in M2 and in the velocity of money. I covered some of it here - https://www.ozbargain.com.au/node/694076
                Not willing to repeat again.

              2. Yes, cash is a preferred allocation NOW (at this point in time). The answer to a conundrum about "inflation and REAL asset prices" is leverage and the cost of money. The understanding of the answer will come when you fully grasp the idea of p.1 above

              • stirlo on 16/07/2022 - 15:54

                @ALesha77: Ah I should have checked who I was replying to first. You’re the guy who thought it wasn’t worth your time talking down to people on OzBargain but did it anyway… wouldn’t your Saturday be better spent driving your high return investment BMW?

                • ALesha77 on 20/07/2022 - 20:54

                  @stirlo: Ah, now that you are talking like this - sure, I remember. Seemed like a nice person until now.

  • Drakesy on 12/07/2022 - 10:44
    +7

    Honestly i have zero care in the world for an industry that "helps" to facilitate your house sale in return for receiving a guaranteed return on your equity.

    REA's won't be stressed as they don't have skin in the game with regards to house prices, they're just there to get the sale done.
    If you're a Land lord with an investment property though that you've bought in the last year or so then i'd be sh1tting bricks.

    *FWIW Macrobusiness is largely a bear market journalistic exercise. I guess someone has to counter the domain and realestate.com bulls

    • ALesha77 on 12/07/2022 - 21:59

      I look at it a bit differently -as a barometer of activity.
      If you can't sell much, your commissions are zilch and you are going to get stressed out.

      A huge drop in activity proves my thesis with liquidity crunch and the development will get even more exciting.
      I am intrigued how the battle of Inflation vs RE bubble will unfold.
      My bet is on "battle for inflation wins" because it is only 9 meals between peace and anarchy, and squeezed masses are getting very unhappy.

      • Drakesy on 12/07/2022 - 22:15

        First bit

        I look at it a bit differently -as a barometer of activity.
        If you can't sell much, your commissions are zilch and you are going to get stressed out.

        Yes then they'll actually have to work hard for their money and it won't be a get rich quick scheme while driving in a leased Mercedes (There's too many leaches anyway)

        Second bit

        My bet is on "battle for inflation wins" because it is only 9 meals between peace and anarchy, and squeezed masses are getting very unhappy.

        What?

  • Tambani on 12/07/2022 - 14:17
    +2

    Macrobusiness has been predicting the bubble about to burst since it began.

    • ALesha77 on 12/07/2022 - 22:03

      They were not wrong, they were early.
      But I cannot disagree with you.

      The way they are wimping about every rate hike right now is far from what I expected from Goldman material. Looks like they have some serious skin in the game - they should take a loss and move on.

    • Drakesy on 12/07/2022 - 22:13

      *Before it began.
      They're an inherently bear market publisher.

      • ALesha77 on 12/07/2022 - 22:17

        Headlines need to sell.

  • lordezekiel on 12/07/2022 - 15:43
    +4

    As someone whos rent just went up 30% in 1 year (and a total of 55% over the last 3 years) i really, really dont give a shit about greedy bloody real estate agents and home owner landlords.

    • ALesha77 on 12/07/2022 - 22:05

      Sorry to hear that.
      Maybe you should have asked "where was my rent reduction when rates were going down for 10 years in a row?"

  • markathome on 12/07/2022 - 16:36

    The first five auctions were quite sad. Pretty much the only people that were there were the agents and the vendors… I pretty much had no one register throughout the day”…

    I went to one of these in 2018 - it was great. Two of us. The other guy asked when the auction would be, to which the agent responded, "I have to check." After he left, the agents told me that they had a buyer lined up who just couldn't be there today. Unbelievably, I think it did actually sell in the end.

    • ALesha77 on 12/07/2022 - 22:06

      Ah, you do what you have to do.
      I deal with market manipulations every day - kind of silly to complain about that by now.

  • miwahni on 12/07/2022 - 22:24

    Macrobusiness is kinda the clickbait news.com.au of the business world, and like Digital Finance Analysis, their stories are mainly doom and gloom. Having said that, I do feel a bit sorry for those who started out as agents over the last two years, when properties were selling almost as soon as they were listed, and agents haven't had to try. These newbies aren't going to know what hit them. Same with mortgage brokers who are new to the game.

    • ALesha77 on 13/07/2022 - 16:09

      Every news agency needs to sell headlines.
      But the read the essence of the message and there is a clear message.

  • GourmetFoodie on 13/07/2022 - 22:46

    Just here to say I love your threads mate!

    • ALesha77 on 16/07/2022 - 15:26

      Appreciate the feedback mate

  • Boogerman on 16/07/2022 - 15:25

    I love how ignorant people are of interest rates & their strong correlation to home prices.
    Sydney & Melbourne are already crashing at 2% per month extrapolated (per CoreLogic home price data), Sydney already down 4% in a little over 2 months - 24% fall peak to trough never happened in modern times (might have happened in the 1880s or 1930s)
    Brisbane has just started falling
    And no, 2000s aren't comparable as Howard introduced both the 50% capital gains discount rort & the first home buyer subsidy

  • chris666 on 21/07/2022 - 19:23

    House sold in 4 days no stress here

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