August 29, 2018

Is This The Beginning Of The End?

A report from the Boston Globe in Masschusetts. “Anyone who’s bought a home in Greater Boston during the last few years might describe the experience as brutal. Unrelenting demand and a tight supply have made buying options scarce and competition ruthless, driving prices into record-high territory. But as the summer housing market starts to give way to fall, there are signs that the pressure might be easing — if ever so slightly.”

“The number of homes newly listed for sale has climbed four months in a row, suggesting that homeowners are more willing to test the market and give would-be buyers something to look at. Meanwhile, some of those prospective buyers are heading for the sidelines — perhaps because they can no longer afford to stay in the hunt — which means less competition for those still looking for a home.”

“Demand has dipped ever so slightly, said Eamon Kearney, a Redfin agent on the South Shore, in part because some buyers are worried about buying at the market’s peak. ‘There’s some fear that we might have hit a ceiling,’ he said. ‘We have customers looking at stories coming out of California and Seattle and [they’re] worried it might come here next. That’s probably part of it.’”

“Other scorching-hot markets like Seattle and Denver — regions similar in size to Boston — have also seen a surge in tech jobs and a relatively tight housing stock. But in those cities, there have been signs lately that a top has been reached. Price growth has slowed, and inventory is starting to pile up as buyers simply can’t, or won’t, pay what sellers are asking.”

“‘Is this the beginning of the end? I don’t think so,’ said Dana Bull, an agent with Sagan Harborside Sotheby’s International Realty in Marblehead. ‘Barring some catastrophe, I don’t see us heading toward a crash. I think it’ll be more like a plateau.’”

Cash Out Before The Bubble Bursts - Los Angeles, California

The Rapid Rise Seems To Have Come To A Screeching Halt

A report from MarketWatch. “Pending-home sales declined 0.7% in July, the National Association of Realtors said Wednesday. It was the seventh-straight month in which the index was lower on an annual basis — by 2.3% in July. Housing has stalled out. In July, total home sales — existing and new — sank below a key psychological benchmark to the lowest in two years. What had been a seller’s market across most of the U.S. hit a tipping point this year, as buyers decided the slim pickings on the market weren’t worth it. The group forecasts a full-year decline for existing-home sales in 2018, and only a 2% increase in 2019.”

“‘It appears sales activity crested in late 2017,’ said Freddie Mac Chief Economist Sam Khater earlier in August. ‘It is clear affordability constraints have cooled the housing market, especially in expensive coastal markets. Many metro areas desperately need more new and existing affordable inventory to break out of this slump.’”

From Mortgage News Daily. “Expectations weren’t particularly high for a solid July report on home purchase contracts, but today’s report from the National Association of Realtors® (NAR) didn’t meet even those. Lawrence Yun, NAR chief economist, says the housing market’s summer slowdown continued in July. ‘Contract signings inched backward once again last month, as declines in the South and West weighed down on overall activity,’ he said. ‘It’s evident in recent months that many of the most overheated real estate markets - especially those out West - are starting to see a slight decline in home sales and slower price growth.’”

“There has been some increase in listings of available homes in some large metro areas, especially those in the West and Yun said this may help cool price growth and make homes more affordable going forward. Listings were up in several areas which have been especially ‘hot’ including Denver, Nashville, Portland Oregon, and the California metro areas of Santa Rosa and San Jose.”

From Northern Public Radio. “In tony Montclair, New Jersey, agent Diane Russell with Stanton Company Realtors has noticed a change. Last year a house in the low $600,000 range might have received 12 offers, she said. This year, she’s seeing more like four or five. ‘Now, they’re still really good offers — well over ask — but it’s not the craziness that we were seeing last year,’ she said.”

“Less ‘crazy’ is far from a downturn, but rising interest rates may be taking some of the air out of the market, said Craig Lazzara, a managing director at S&P Dow Jones Indices. ‘As rates go up, obviously housing becomes less affordable, and that will cause demand to increase at a less robust rate,’ he said.”

“Some sellers are getting the message. Zillow said more owners lowered their asking prices in June. A few months’ data do not a trend make, cautioned Christopher Thornberg with the research and consulting firm Beacon Economics. ‘Realistically, inventories are still very, very tight,’ he said. ‘That, again, suggests that what we’re seeing, these kind of wiggles in the market, are nothing more than that. They’re just wiggles in the market.’”

From PR Newswire. “® today announced the findings of its August housing trend report which revealed a surge in price cuts and the second largest drop in the U.S. median list price in three years. ‘Buyers, exhausted by bidding wars and little choice in inventory, could finally catch a break,’ said Danielle Hale, chief economist for®. ‘An increase in price cuts suggests that sellers are starting to become more flexible, especially in pricey markets. However, affordability is a concern in most areas which continue to be sellers’ markets. Fierce competition and low inventory continue to push up prices. While buyers are gaining leverage in some markets, we are still far from a true ‘buyer’s market.’”

“The median listing price in the U.S. decreased by $4,000 in August, dropping to $295,000 from a record-high of $299,000 in July. This is the second largest monthly list price drop since August 2015. Price cuts are on the rise, especially in pricey markets where inventory is rising. The proportion of listings that feature price cuts rose 1.5 percentage points in the last year to 19.1 percent in August.”

“The share of price cuts among listings is now 1.5 times more prevalent than in August 2012 when 13 percent of listings featured price discounts. This upward movement was more pronounced in major metropolitan areas in the last year including: Seattle with an 8 percent increase in cuts; San Jose with a 7 percent increase; and a 5 percent increase in San Diego, Riverside, Indianapolis and Los Angeles. In fact, 39 of the 45 largest markets saw an increase in the share of price cuts over last year.”

“The last week of August saw the first year-over-year increase in inventory in four years. Approximately 488,000 new listings entered the market during August. San Jose, Seattle and San Diego were the three markets with the biggest inventory jumps over last year, all posting increases of 28 percent or more.”

From Property Showrooms. “There are signs that after years of soaring house prices the US housing market is set for the worst slump in as many years because house buyers can no longer afford to buy. Properties that only a year ago would have been sold in days are now sitting awaiting buyers for many weeks. Asking prices are also coming down sharply. Where a three-bedroomed property might have been listed for US$ 600,000, it is now on the market for just US$550,000 in Seattle’s northern districts.”

“The US housing market was a hotbed in cities like Seattle and Austin, Texas, as well as in Silicon Valley, but now there are signs that the boom is over. Rising mortgage rates and accelerated house prices are pricing buyers out of the market.”

From Community Advocate in Massachusetts. “It was nice while it lasted, but the rapid rise in home values over the past four years seems to have come to a screeching halt. According to a recent article on CNBC, author Diana Olick states ‘Southern California home sales hit the brakes in June, falling to the lowest reading for the month in four years.’ ‘This could be the very beginning of a turning point,’ said Robert Shiller, a Nobel Prize-winning economist who is famed for warning of the dot-com and housing bubbles.”

“Locally, would-be first-time homebuyers are opting to renew lease agreements after losing out on bidding wars and watching mortgage rates creep up. ‘I had been looking for a home since February,’ said Northborough renter John Sullivan. ‘I was bidding high…in many cases overbidding…and still losing out. What I could afford then, even if I was successful in winning a bid, is no longer affordable. I just couldn’t take it anymore so I renewed my lease for another year.’”

“While industry experts are not predicting a housing bubble, they are discouraging homeowners from waiting much longer to cash in on their equity. ‘If you don’t sell now, you may have to wait another 10 years to get that money back,’ warned Shiller.”