This article is part of our 2022 – 2023Housing Market Forecast series. After the series wraps, join us on February 6 for the HW+ Virtual 2023 Forecast Event. Bringing together some of the top economists and researchers in housing, the event will provide an in-depth look at the predictions for this year, along with a roundtable discussion on how these insights apply to your business. The event is exclusively for HW+ members, and you can go here to register.
Buyer behavior on the Auction.com platform provides one of the best barometers of the retail housing market because the success and livelihood of these buyers depend heavily on them accurately anticipating what the retail market will look like in the next six to 12 months.
These buyers are primarily local community developers who purchase distressed properties and then resell or rent those properties on the retail market following rehab — a process that typically takes six to 12 months.
Here’s what that buyer behavior in the second half of 2022 is telling us about two key retail market trends in 2023:
1. Home price correction likely nationwide and in majority of markets
Foreclosure auction buyers on the Auction.com platform purchased at an average discount of 29% below estimated “as-is” market value in the fourth quarter of 2022, up from 23% in the third quarter and up from a pandemic low of 9% in the first quarter of 2021. The 29% average purchase discount was also well above the pre-pandemic average of 22% between 2015 and 2019.
The rapidly rising average purchase discount indicates that local community developers are anticipating a rapid slowdown in home price appreciation in the next six to 12 months. The bigger discount provides them with a bigger cushion to hedge against this slowdown.
The fact that the average discount in Q4 2022 was seven percentage points higher than the pre-pandemic average suggests that buyers expect home price appreciation to go negative given that average home price appreciation between 2015 and 2019 was just 5.4 percent, according to ATTOM Data Solutions.
Nationwide, Auction.com buyer behavior is signaling a negative home price appreciation of less than 5% in 2023, but the risk of a more severe price correction in 2023 is higher in some local markets where the average foreclosure auction purchase discount in Q4 2022 was much higher than the pre-pandemic average.
Among 80 metro areas with sufficient data in the fourth quarter of 2022, those with the biggest increase in purchase discounts relative to their own pre-pandemic averages were Jacksonville, Fla.; Los Angeles; San Diego; Minneapolis-St. Paul; and Riverside, Calif. The average foreclosure auction purchase discount in these five markets was at least 19 percentage points above the pre-pandemic average.
Foreclosure auction buyer behavior is signaling a possible home price correction in 2023 in 50 of the 80 markets, but some notable exceptions include Chicago, Philadelphia, Virginia Beach, Va., Cincinnati and Miami.
2. Home sales bottoming out as sellers eventually capitulate on price
Auction.com buyers are demanding a deeper discount on distressed property purchases, and they’re willing to walk away from a deal when they can’t realize that deeper discount. This is evident in foreclosure auction sales rate data from the Auction.com platform. The sales rate — simply the percentage of properties available at foreclosure auction that end up selling — dropped quickly in the second half of 2022 after spiking earlier in the COVID-19 pandemic.
While still above pre-pandemic averages, this rapidly falling sales rate signals a paradigm shift from seller’s market to a buyer’s market. This paradigm shift is being mirrored in the retail market in the form of plummeting home sales, which had declined for 10 consecutive months through November 2022 — the longest string of consecutive declines on record, according to the National Association of Realtors (NAR) data going back to 1999.
The shift to a buyer’s market is driven primarily by rising mortgage rates. Assuming mortgage rates do not drop substantially in 2023, sellers will eventually need to capitulate on price to adjust to this new reality.
Retail sellers are typically slower to adjust pricing due to their emotional connection to the property, but distressed property sellers don’t have that emotional connection and are typically more responsive to market conditions. Sellers on the Auction.com platform are already showing some early signs of pro-active price adjustments, a trend that will likely be reflected in the retail market in 2023.
Foreclosure auction sellers set their credit bid — the minimum amount they will accept to sell the property — at 70% of estimated “as-is” market value on average in the fourth quarter of 2022, down from 73% in the previous quarter and down from a pandemic peak of 83% in the fourth quarter of 2020. The 70% average credit bid in Q4 2022 was the lowest level as far back as the Auction.com data is available, Q1 2012.
As retail sellers eventually follow the lead of distressed sellers and adjust their listing price lower in 2023, home sales will bottom out and begin rising again, most likely in the second half of the year.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
The United States cryptocurrency sector received a jolt on Monday, as VanEck today marks the inaugural debut of its Ethereum-based exchange-traded fund (ETF). The innovative investment instrument is designed to offer investors indirect exposure to the second-largest cryptocurrency by market capitalization. This exposure is achieved by investing in contracts of Ethereum (ETH) futures.
The product, listed on VanEck’s website, commenced trading on October 2nd on the Chicago Board Options Exchange (CBOE). This milestone establishes VanEck as one of the pioneering U.S. investment managers to introduce an ETF grounded in Ether futures—cash-settled ETH futures contracts traded on the Chicago Mercantile Exchange, a registered exchange supervised by the Commodity Futures Trading Commission (CFTC).
VanEck had disclosed its plans to launch an ETF based on Ether futures last week, indicating that it had received the eagerly awaited approval from the Securities and Exchange Commission (SEC).
The competition for Ethereum futures-based ETFs gained momentum earlier this year when several managers, including Bitwise, ProShares, VanEck, and Grayscale, submitted proposals for such products. As of the latest count, approximately 15 entities have submitted their proposals to the SEC this year.
While U.S. regulators greenlit the launch of the first ETFs based on Bitcoin futures in 2021, they had not previously endorsed funds tied to futures of other cryptocurrencies. VanEck, at that time, emerged as the second manager in the nation to introduce a BTC futures ETF.
In addition to VanEck’s Ethereum futures performance-focused product, several others also made their debut on this Monday. ProShares, the same company that introduced the first U.S. Bitcoin futures ETF in 2021, introduced the ProShares Ether Strategy ETF, along with two others offering a blend of BTC and ETH exposure. Bitwise, another manager, announced the launch of two ETH futures ETFs: the Bitwise Ethereum Strategy ETF and the Bitwise Bitcoin and Ether Equal Weight Strategy ETF.
The crypto community is still awaiting the introduction of the first spot ETFs for both Bitcoin and ETH. In August, the SEC delayed it decision to issue spot crypto ETFs, although no official reason was cited in the decision.
Study uncovers function of mysterious disordered regions of proteins implicated in cancer
Credit: Courtesy of Dana-Farber Cancer Institute
Study uncovers function of mysterious disordered regions of proteins implicated in cancer
Study Title: A disordered region controls cBAF activity via condensation and partner recruitment
Publication: Cell, Monday, October 2, 2023 (https://www.dana-farber.org/newsroom/news-releases/2023/study-uncovers-function-of-mysterious-disordered-regions-of-proteins-implicated-in-cancer/)
Dana-Farber Cancer Institute author: Cigall Kadoch, PhD
New research from Dana-Farber Cancer Institute researcher Cigall Kadoch, PhD, along with colleagues at Princeton University and the Washington University in St. Louis, reveals a key role for intrinsically disordered proteins known as IDRs that are implicated in a wide range of human diseases, from cancer to neurodegeneration. Kadoch’s team studies large protein complexes called mSWI/SNF or BAF complexes that control which genes turn on and off in cells. BAF complexes are the most frequently mutated cellular entities, second only to TP53, a tumor suppressor. Intrigued by the fact that over half of the complex mass contains IDRs, including the ARID1A/B subunits in which a high frequency of disease-causing lesions, or mutations, accumulate, the group set out to define their contributions. They found that these IDR regions lead to two important functions: first, condensation, the tight clustering of proteins in close distance to one another in the nucleus, and second, protein-protein interactions that are required for the proper positioning and activity of BAF complexes along DNA. Kadoch and colleagues show that the right interactions depend on highly specific “sequence grammars” within the protein’s IDR amino acid code, a concept broadly useful to the burgeoning area of work in this area to understand and ultimately therapeutically target biomolecular condensates and their constituents.
IDRs comprise a large percentage of the human proteome and are particularly important for nuclear proteins that govern our genomic architecture and gene expression. Their disruption is frequent in cancer. This study sheds light on the sequence-specific contributions of IDRs to the highly disease-relevant mSWI/SNF (BAF) chromatin remodeling complexes, which have become top therapeutic targets in oncology.
Howard Hughes Medical Institute, The Mark Foundation, National Institutes of Health, United States Air Force Office of Scientific Research, St. Jude Research Collaboratives, Fujifilm, and The Wellcome Trust.
The former FTX CEO was reportedly invited by Vogue editor-in-chief Anna Wintour to be her special guest at the Met Gala, only to cancel at the last minute.
Michael Lewis, author of The Big Short, has painted an interesting picture of Sam Bankman-Fried (SBF) in his soon-to-be released book on the former FTX CEO.
In an excerpt of Going Infinite: The Rise and Fall of a New Tycoon published in the Washington Post on Oct. 1, Lewis described several interactions Bankman-Fried had with the media and influential figures prior to the downfall of FTX and his criminal charges in the United States. According to the author, he would frequently play video games in the background of online interviews — his League of Legends exploits are well reported — often giving little attention to people including Vogue editor-in-chief Anna Wintour.
“Sam didn’t want to seem rude,” said Lewis on SBF’s talk with Wintour. “It was just that he needed to be playing this other game at the same time as whatever game he had going in real life. His new social role as the world’s most interesting new child billionaire required him to do all kinds of dumb stuff. He needed something, other than what he was expected to be thinking about, to occupy his mind.”
At one point, Sam Bankman-Fried was worth $22.5 billion. No one but Mark Zuckerberg had become richer faster.
Lewis added that Natalie Tien, who moved into the role of FTX’s head of public relations and SBF’s “personal scheduler”, said the former CEO cancelled many highly publicized appearances — often at the last minute — for seemingly no reason at all. The Wintour interview reportedly led to FTX's sponsorship and Bankman-Fried as a special guest at the Met Gala, which he ended up snubbing.
“Sam treated everything on his schedule as optional,” said the book. “The schedule was less a plan than a theory. When people asked Sam for his time, they assumed they’d posed a yes or no question [...] All he had done, when he said yes, was to assign some non-zero probability to the proposed use of his time. The dial would swing wildly as he calculated and recalculated the expected value of each commitment, right up until the moment he honored it or didn’t.”
Other in-person showings by Bankman-Fried included testifying before the U.S. House Financial Services Committee in December 2021 and meeting with Senator Mitch McConnell. The appearances marked some of the rare times SBF appeared in public wearing a suit as opposed to his usual T-shirt and shorts — though social media users pointed to footage of the then CEO's shoes slipped on without being tied at the hearing.
It’s unclear what other information will become available once the book is released on Oct. 3, the same day jury selection begins for SBF’s criminal trial in New York. Amid the expected court proceedings, a slew of podcasts, news features, books, and other media have been released detailing aspects of Bankman-Fried’s life before and after the downfall of FTX. A 60 Minutes interview with Lewis revealed SBF had plans to pay off former U.S. President Donald Trump not to run for the office again based on the threat to elections and democracy as a whole.
On Oct. 4, Bankman-Fried will appear in a New York courtroom for the first day of his trial, scheduled to run through November. He will face 7 charges related to fraud at FTX and Alameda Research, for which he has pleaded not guilty.