The Housing Bubble

It’s Friday desk clearing time for this blogger. “While prices continue to rise, Mike Figura, Mosaic Community Lifestyle Realty’s owner, said some indicators do suggest a gradual cooling of the local market. For instance, both Asheville and Buncombe had fewer home sales overall in the first half of this year compared to last. Also, the average days on the market increased, which means homes aren’t selling as fast. And at the higher end of market, houses are lingering too, creating more inventory. Nobody is ringing the alarm bells, but Figura contends ‘if builders aren’t smart about what they’re building, they could flood the upper prices ranges. There were some significant increases in inventory levels in the higher price ranges between the second quarters of 2017 and 2018 in the both the city and county.’”

“The real estate market is cooling in parts of North Texas according to realtors and experts. Two nice houses side-by-side in Frisco are an example according to, Ebby Halliday Realtor Brian Johnson. One he sold in May 2017 for over the asking price. ‘We listed for $309,000. In 3 days I had 17 offers. We sold it for 335,’ he said. The one next door has been on the market 49 days. It has hardwood floors, an updated kitchen and master bath. ‘This home has over 600 square feet more and its way more updated and I’ve got no offers,’ Johnson said. ‘Now we just dropped the price 10 thousand and I do have someone interested.’”

“The U.S. housing market — particularly in cutthroat areas like Seattle, Silicon Valley and Austin, Texas — appears to be headed for the broadest slowdown in years. Some of the most expensive markets, where sales are falling under the weight of prices, are now seeing substantial increases in supply, according to Redfin Corp. In San Jose, California, inventory was up 12 percent in June from a year earlier. It rose 24 percent in Seattle and 32 percent in Portland, Oregon.”

“‘Affordability is becoming a major headache for homebuyers,’ said Lawrence Yun, the National Association of Realtors chief economist. ‘You are seeing home sales rising in Alabama, where things are affordable. But in places like California, people aren’t buying.’”

“In pricey Southern California, sales of both new and existing homes fell sharply in June compared with a year ago, according to CoreLogic. Demand is still quite strong, and while prices continue to gain, more listings are showing price reductions. ‘The market is strong, but I’m seeing a noticeable difference in the number of buyers that are looking at my listings each week,’ said David Fogg, a real estate agent based in Burbank, California. ‘Many properties are now not selling and/or coming down in price.’”

“Orange County mortgage broker Jeff Lazerson said people are increasingly refusing to waive appraisal contingencies and willing to step away from a deal rather than engage in bidding wars. ‘I haven’t seen hesitation like this in years,’ said Lazerson. Lazerson explained the feeling of many would-be buyers like this: ‘This economic expansion, this run-up in home prices, has been going on a very, very long time.… At what point does all this stop?’”

“If there is a true slowdown around the corner, one of the first signs would be a subtle shift of power from sellers to buyers. Inland Empire real estate agent Kira Madrigal said sellers in the markets she covers still have the ‘upper hand,’ but buyers are increasingly willing to submit ‘low-ball’ offers.”

“The number of closed sales from April through June dropped 6.2 percent year over year, to 91 homes in L.A.’s luxury market. In the non-luxury market, the median sales price in L.A. County, primarily Westside and Downtown, slipped for the first time in over five years to $1.3 million. That’s a 7.1 percent decline compared to last year, and the first drop in 23 consecutive quarters. Sales in this segment dropped 5.8 percent to 1,701 homes. There were 453 luxury homes listed for sale, up from 346 last year over the same period, and 365 in the first quarter of 2018. It is also taking brokers longer to sell the homes in this segment. The amount of days the homes spent on the market jumped 41 percent year over year to 120 days.”

“Discounts on asking prices also rose to 11 percent, up from 6.8 percent last year. The slowdown in sales is also happening beyond L.A. County. In a new report from CoreLogic, just 22,706 homes sold across six counties in Southern California last month, representing a nearly 12 percent drop year over year. The figure was also 15 percent lower than the average sales since 1988.”

“June sales of both newly built and existing homes in the San Francisco Bay Area dropped just more than 9 percent compared with a year ago, according to CoreLogic. Sales of newly built Bay Area homes were nearly 32 percent below the historical average, going back to 1988. ‘Price growth is only part of the problem that home shoppers have faced,’ said Andrew LePage, a CoreLogic analyst. ‘The median price paid for a Bay Area home this June was up almost 13 percent year over year, but the principal-and-interest mortgage payment on that median-priced home was up about 22 percent because of the rise in mortgage rates – more than half a percentage point – over the past year.’”

“Much has been made of the dazzlingly wealthy foreign buyers who snap up luxury condos in New York City and Miami; breathtaking beach houses in Honolulu; and sophisticated modern estates in San Francisco and Seattle. But foreign-resident buyers and recent immigrants closed on far fewer properties in the 12-month period ending in March 2018—by about 21%, according to a recent report from the National Association of Realtors®. ‘I’m seeing a slowdown with Chinese buyers,’ says New York City–based real estate agent Kerry Lynn of Douglas Elliman, who works primarily with Chinese and South American buyers who are looking for newly constructed, high-rise condos with luxury amenities in Manhattan for $1.5 million to $2 million.”

“‘Inventory shortages continue to drive up prices and sustained job creation and historically low interest rates mean that foreign buyers are now competing with domestic residents for the same, limited supply of homes,’ said Lawrence Yun, chief economist for the Realtors. For international investors who are looking for condominiums in large cities as an investment, the supply theory doesn’t really hold.”

“‘I don’t think it’s the supply issue because these buyers are buying in the higher end and there is more supply there, particularly in the gateway cities like Miami and New York,’ said Sam Khater, chief economist at Freddie Mac. ‘It could be just that their appetite for U.S. real estate is waning.’”

“Long Island has become a tale of two housing markets, with home buyers competing for starter houses while high-priced properties linger on the market, a new report shows. The top fifth of sales fetched a median price of $820,000, down 0.6 percent annually. For the Island’s luxury market – that is, the top 10 percent of sales – the median price fell by 6.7 percent annually, to $1.05 million. Throughout Long Island – except for the Hamptons and the North Fork — homes sold in 5.1 months on average, at a 3 percent discount from their listing price, the report shows. Luxury homes, though, spent an average of 17 months on the market, and sold for a 6 percent discount. The Hamptons was the only region to see a price decline, with a median price of $975,000, down 5.3 percent year-over-year.”

“Recent news that home sales in Westchester County declined by 18% the second quarter in 2018 in comparison to the same period in 2017, should have not only local elected municipal officials very concerned, but also those at the New York state level. This is the fourth consecutive quarterly decline in the county’s home sales. Westchester residents are putting up their homes for sale since federal tax reform now significantly limits to $10,000 the deduction of local and state taxes. This is about half the $17,179 average tax paid by Westchester residents in property taxes in 2017. As more and more people put up their homes up for sale, this will start to lower home values.”

“Why the face? Maybe because this buyer’s flipped two units at 432 Park Avenue at a loss. An LLC by the name of ‘WHY THE FACE’ just sold a unit on the tower’s 65th floor for $24.2 million, records filed with the city’s Department of Finance show. That’s down from the $25.6 million the buyer paid in March 2016, and $8.3 million less than what the apartment was initially listed for in April 2017. This mysterious buyer sold another unit at a slight loss — roughly $73,500 — on the 28th floor. The unit was purchased, according to city records, on the same day as the other apartment. The buyer paid $1.8 million and then sold the unit in June.”

“The perils of flipping luxury apartments in today’s market are well-documented. As prices fall and a steady of flow product continues to hit the market, turning a profit is increasingly difficult.”

“Declining demand has driven down housing prices across most of the North Shore, but sales of homes in Evanston have remained robust. The average sales price fell by 4.3 percent in 2018, according to local real estate data, dropping from over $750,000 to under $718,000 in the north suburban market. For the north suburban housing market as a whole, the median sales price fell 8.1 percent, from $631,000 to $580,000 compared to last year.

“June home sales in Greater Hartford lost the upward momentum of earlier this year, as purchases and prices paid slipped for the second month in a row, a new report shows. The median sale price of a single-family house — in which half the sales are above, half below — dropped 6.3 percent, to $225,000 from $240,000 for the same month a year ago, according to the Greater Hartford Association of Realtors. Holly Callanan, chief executive of the association, said, ‘It is possible potential buyers are stalling because of the low inventory that makes for limited choices.’”

“If you’re looking into buying a home in Williston, you’re in luck, depending on what you want to spend. ‘It is busy, could we use some more inventory, yes. Everybody tends to be around that 250 to 350 price range,’ said Chelsey Melby, Basin Brokers Real Estate agent. For those looking to sell, don’t over price. With so many homes available, Melby says buyers can afford to be a little picky. ‘If they are priced right for the square footage in the area a lot of times they will go as fast as 24 hours. If you see a housed that’s overpriced it will sit probably 90 to 180 days,’ said Melby.”