July 23, 2017

Sellers Are No Longer Anchored To Irrelevant Pricing

A report from Realtor.com on California. “Stephen Curry isn’t used to losing—at least, on a basketball court. But in the realm of real estate, this Golden State Warriors point guard proved that not all he touches turns to gold when he recently sold his home in Walnut Creek, CA, at a loss. In November 2015, Curry and his wife bought the mansion for $3.2 million. Then the couple poured an additional half-million into renovations. A year later, they put it back on the market for $3.7 million. But apparently they’d set their sights too high, because it sat warming the bench with no takers. Finally in July of this year, the home sold for the lowball sum of $3,195,000—more than a half-million less than what Curry was hoping for and less than what he paid for it almost two years earlier.”

“The luxe market had begun to level off right when Curry made his purchase—and then move downward by the time he was ready to sell a year later. ‘Curry paid top-of-market prices in 2015, as that’s when the market really peaked,’ says Cara Ameer, a Realtor in Florida who often handles property for professional athletes. ‘It has taken a bit of a downward trend since then, and the luxury market has been more challenging to sell since some of the foreign money has dried up.’”

The Real Deal on Florida. “Sellers are finally getting realistic about pricing, and the result is a far more robust residential market. In Miami Beach, for example, sales were up for the second consecutive quarter after three years of declines. ‘Sellers of high-end real estate are more in sync with reality than they have been in the past,’ said Jonathan Miller, who authors the Elliman reports, either reducing their prices or letting some listings expire.”

“In Miami Beach, the median sale price fell by 5.9 percent to nearly $409,500 for all residential properties, compared to $435,000 a year ago. The median condo sale price fell by 4.9 percent to nearly $365,000, and the median sale price of a single-family home price dropped year-over-year by 12.5 percent to $1.4 million. The median price of a house dropped 7.1 percent to $405,000 in Delray. Across the board, the median price of a single-family home in Palm Beach was $4.2 million for the second quarter of this year, down 6.7 percent from the previous year.”

From Greenwich Time in Connecticut. “Greenwich home sellers are getting more realistic about their pricing, according to Jonathan Miller of Miller Samuel Real Estate Appraisers and Consultants, and that’s a big positive for the market, he said. These statistics stem partially from sellers who are no longer ‘anchored to the value of their homes from what they paid for it before the financial crisis,’ he said, adding home values from before 2008 should be considered ‘irrelevant’ to pricing now.”

“Sellers are changing their tune with pricing mostly because of time, Miller said. Many of last quarter’s luxury sales, which began at above $4 million, ‘have been on the market for a number of years,’ he said.”

From Realtor.com on New York. “A prime location overlooking Manhattan’s Central Park.A 7,000-square-foot apartment with 15 rooms, 11-foot-high ceilings, and a private elevator. A place with such features practically sells itself, right? Well, there is another not-so-small detail: the price. When it landed on the market in April 2016, the luxury apartment in the prewar building at 1060 Fifth Avenue on the Upper East Side was priced at $65 million.”

“With no buyer committing to the 10th-floor, six-bedroom, six-bathroom condo at that high price, co-listing agents Jenny Lenz and Dolly Lenz have drastically cut the price to $38 million, reigniting interest in the luxe home. Lenz explains the reasoning for the price drop with the recent sale of actress Demi Moore’s New York City penthouse after a few years on the market. ‘She started out at $75 million and ended up at $45 million,’ Lenz explains. ‘One number is a nice idea and maybe could work—and the other is the number that actually does.’”

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Comment by Ben Jones
2017-07-23 10:22:29

More on the first report:

“Since homes valued at more than $2 million make up only a small percentage of properties in Contra Costa County, it’s a very niche market,” says Steve Mohseni, a real-estate agent with RE/MAX in Pleasanton. “So there’s limited demand for this type of home.”

‘Mohseni checked sales in the past year of homes listed in the city of Walnut Creek for $2 million or more, the definition of high end. He found that out of the 494 homes sold, only eight were in that category. Of those eight, four sold under the asking price.’

“It’s the mainstream that’s hot, not necessarily the high end,” says Mohseni. “And in many areas even the high end is not as hot compared to four years ago when we saw a lot of Chinese buyers paying all cash and over the asking price. That, as a rule, has slowed down.”

Comment by Professor Bear
2017-07-23 21:19:44

“Since homes valued at more than $2 million make up only a small percentage of properties in Contra Costa County, it’s a very niche market,”

We bought a condo in Contra Costa County back in the 1990s at the now-mythical price level of $89/square foot. Needless to say, the price tag was not in the $2 million plus range.

Comment by Jingle Male
2017-07-24 06:31:02

What is the market value today in $/SF?

Comment by Mafia Blocks
2017-07-24 07:21:47

A number less than $89. Remember…. Houses are depreciating assets that never put a dime in your wallet. They only cost you money.

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Comment by Jingle Male
2017-07-24 07:53:54

The median list price in Contra Costa County today is $359/SF.

Comment by Mafia Blocks
2017-07-24 08:29:19

And not a buyer in sight.

Comment by Professor 🐻
2017-08-05 08:40:23

$297, according to Zilldo

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Comment by MillValleyHoops
2017-07-23 10:27:18

Market is bound up with little to no real interest. They’re all fb’s now.

Comment by Jingle Male
2017-07-24 04:12:37

I think it depends on several factors Mill…..

I just went under contract to sell a house in the Sacramento foothills. The deal is at 98.2% of asking and took two weeks to sell after it was listed. It’s a 30 day escrow with a move up buyer. $450,000 = $150/SF.

The market isn’t stupid like 2005, yet it is very active.

Comment by alphonso bedoya
2017-07-23 12:07:32

“Ms. Moore and her former husband, the actor Bruce Willis, acquired the San Remo triplex in 1990; the purchase price was $7.73 million”

7.73 Purchase————>75 Asking————>45 Sold

Less than 7.5% compounded.

Comment by Jingle Male
2017-07-24 04:19:07

I would gladly take 7% over 27 years. However, it is likely they also invested multi-millions over those decades, probably each time there was a break up!

Comment by Rental Watch
2017-07-24 09:24:02

“Less than 7.5% compounded.”

Of course they probably spent money on the interior, and paid association fees and taxes, which would lower that return (potentially considerably)…but it wasn’t just an investment with no utility, right (like art on a wall)? They did get to live there, correct?

IMHO, if you get to live somewhere for the cost of the association, taxes, AND upkeep, and you end up financially better off at the end of your time there (even after taking inflation into consideration), that seems like a win to me.

Comment by Judge Dredd
2017-07-23 12:10:34

Meh. No slow down in SoCal in the <2 mil range. Check out this gem:


Last Sold April 15th, 1975 - $50,500
Listed Now- $1,375,000

They’ll probably get it too, a 2/1 just 2 streets overs recently sold for 1.55 mil

Call me when we actually institute serious taxes on foreign buyers and raise interest rates. Until then I’m not even looking at buying again seriously.

Comment by alphonso bedoya
2017-07-23 12:44:18

Its asking price is just shy of 15x its assessed value. It comes with a “formal dining area” and formal rugs and ….

Comment by Geiger
2017-07-23 13:10:46

Signs everywhere in SD and I don’t see much interest or selling. Even the uninformed know better it seems.

Comment by Professor Bear
2017-07-23 21:23:12

Now that you mention it, I did see quite a few yard signs during my drive through Rancho Santa Fe this afternoon en route to a picnic. It seems ironic to see yard signs in front of $1+ million dollar homes in upscale Rancho Santa Fe when none are to be seen around middle class Rancho Bernardo. It’s almost as though our local used home sellers decided to stop displaying yard signs for fear that people might sense an incipient crash.

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Comment by Jingle Male
2017-07-24 04:23:19

Marina condo for sale inventory up from 225 to 235…..that is only 4%, but condos are often the first markets to drop. We will see…..

Comment by GreenEggsAndSpam
2017-07-23 16:26:34

Youve got good schools, but traffic getting in and out of there at just about any time of the day is brutal. If you worked from home it might be ok, but if that was your situation why not live somewhere else that is 100x nicer for less money?

These people buying this nonsense have fail written all over them. Probably drive a tesla too, or even better - a fisker karma.

Comment by Professor 🐻
2017-07-23 20:26:14

“In Miami Beach, the median sale price fell by 5.9 percent to nearly $409,500 for all residential properties, compared to $435,000 a year ago. The median condo sale price fell by 4.9 percent to nearly $365,000, and the median sale price of a single-family home price dropped year-over-year by 12.5 percent to $1.4 million. The median price of a house dropped 7.1 percent to $405,000 in Delray. Across the board, the median price of a single-family home in Palm Beach was $4.2 million for the second quarter of this year, down 6.7 percent from the previous year.”

Seems like SoCal, which was one of the loss leaders in the first wave down, may prove to be among the last to crash this episode.

But it’s only a matter of time…

Comment by aqius
2017-07-23 20:29:57

traffic here in Sacramento area has gotten very congested the past few years. worse than LA. and that’s saying a lot.

a lot of recent out-of-country arrivals either drive like maniacs or overcautious clueless mr magoo’s.

i actually miss the old sleepy, backwater, bumpkinville lifestyle.
(wonder if this is what happened to austin when it got “discovered”?!)

i remember ybor city went from edgy affordable artist dump to pub crawl bourbon street wannabee nightmare in a blink of an eye.

tragic, really. just tragic

Comment by Professor Bear
2017-07-23 21:24:31

“worse than LA.”


Comment by Jingle Male
2017-07-24 04:30:54

That’s because it is not true! Aqius must not have been in LA recently…..

Sacramento is getting more congested, but it is nothing like LA!

Comment by aqius
2017-07-24 06:50:17

Aqius HAS been to LA recently, and often over the years. there is a major difference in traffic patterns where Sacramento has fewer lanes for CHP to close down when they grandstand for hours at the slightest excuse.

so traffics grinds to a complete halt. no rhyme, no reason . . then hours later you crawl past 7 chubby LEOs / First Responders /etc all clumped-up standing around jaw-jacking while the tow truck drivers sweep up.

L.A. has more lanes to squeeze by. a snails pace but you do move.

btw, I’ve had many unsolicited conversations w/local businessmen in the area as I get out & about and they notice the same change. it’s not just me.

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Comment by Young Deezy
2017-07-24 07:41:43

Sac traffic has gotten worse, and it is terrible, but it’s not as bad as the bay area or LA (yet). Also, I too wish all the recent arrivals would go back to wherever they came from.

Comment by Jingle Male
2017-07-24 07:56:29

….and when did you arrive Young Deezy?

Comment by aqius
2017-07-24 08:01:55

with me, its not so much “close the door behind me” as more of a “why is this area so popular lately . . . ?”

you really get a sense of what Vancouver has gone thru.

ex: Zillow shows my crapshack going up 18 THOUSAND dollars in 30 days! what the HELL!?

I don’t WANT it to go up 18K. that will just get the govt tax leeches & school bond leeches & every other tax n’ spenders drooling over future increases.

damnit, Jim. I’m just a homeowner, not a ____________!

Comment by oxide
2017-07-24 07:50:21

Bourbon Street is a nightmare too.

If you want sleepy and backwater, you’ll have to move to Trump flyover country.

Comment by aqius
2017-07-24 08:14:59

from what I understand the interior backwaters have been the dumping grounds for controversial under the radar immigrants.

I guess if I had to pick my poison, I’d choose the death bed with a coastal view/access.

but I do see your point.

Comment by Mafia Blocks
2017-07-24 09:05:38

The entire state is a disaster. Crime, poverty, unemployment and lawlessness.

Poorest state in the country.

Comment by Jingle Male
2017-07-24 09:31:18

Bwah, ha, ha…….. HA! Here is a list of the 10 poorest states for you. News flash: California is not even on it!


Comment by 2banana
2017-07-23 21:38:48

“All borrowed up…”

The calls for a federal bailout of democrat run socialists states gets stronger.

Thank Gid Trump ruined the plans…


The state cannot meet its budget because the tax base has shrunk. The economy has shrunk and so has the money supply, triggered by the 2008 banking crisis. Jobs were lost, homes were foreclosed on, and businesses and people quit borrowing, either because they were “all borrowed up” and could not go further into debt or, in the case of businesses, because they did not have sufficient customer demand to warrant business expansion.

Quantitative Easing for Munis

There is a deep pocket that can fill the hole in the money supply – the Federal Reserve. The Fed had no problem finding the money to bail out the profligate Wall Street banks following the banking crisis, with short-term loans totaling $26 trillion. It also freed up the banks’ balance sheets by buying $1.7 trillion in mortgage-backed securities with its “quantitative easing” tool. The Fed could do something similar for the local governments that were victims of the crisis. One of its dual mandates is to maintain full employment, and we are nowhere near that now, despite some biased figures that omit those who have dropped out of the workforce or have had to take low-paying or part-time jobs.

Comment by 2banana
2017-07-23 21:45:02

That wall is coming….fast


Record Apartment Building-Boom Meets Reality
Wolf Street | 21 July 2017 | Wolf Richter

No, the crane counters were not wrong. In 2017, the ongoing apartment building-boom in the US will set a new record: 346,000 new rental apartments in buildings with 50+ units are expected to hit the market.

How superlative is this? Deliveries in 2017 will be 21% above the prior record set in 2016, based on data going back to 1997, by Yardi Matrix, via Rent Café. And even 2015 had set a record. Between 1997 and 2006, so pre-Financial-Crisis, annual completions averaged 212,740 units; 2017 will be 63% higher!

These numbers do not include condos, though many condos are purchased by investors and show up on the rental market. And they do not include apartments in buildings with fewer than 50 units.

The New York City metro includes Northern New Jersey, Central New Jersey, and White Plains and is by far the largest metro in the US. So the nearly 27,000 apartments it is adding this year cannot be compared to the 5,400 apartments for San Francisco (near the bottom of the list). The city of San Francisco is small (about 1/10th the size of New York City itself), and is relatively small even when part of the Bay Area is included.

Other metros on this list are vast, such as the Dallas-Fort Worth metro which includes the surrounding cities such as Plano. Driving through the area on I-35 East gives you a feel for just how vast the metro is. However, I walk across San Francisco in less than two hours:

And it has an impact on the prices of these buildings. Apartments are a big part of commercial real estate. They’re highly leveraged. Government Sponsored Enterprises such as Fanny Mae guarantee commercial mortgages on apartment buildings and package them in Commercial Mortgage-Backed Securities. So taxpayers are on the hook. Banks are on the hook too.

Comment by 2banana
2017-07-23 22:01:36

There are a few lessons in here…


Detroit Is Demolishing Homes With Federal Money Meant “To Save Them”
Zerohedge - Jul 23, 2017

Contrary to popular perception, not all of the money approved as part of the federal government’s emergency effort to save the American financial system in the fall of 2008 went to the big banks. Some of it – nearly $10 billion, all told – went to support the government’s “hardest hit” program, meant to help forestall foreclosures in 18 states.

And unsurprisingly, nearly a decade after the program was signed into law, government investigators are finding that much of this money was squandered by state governments. Money initially earmarked to help troubled homeowners struggling with underwater mortgages was instead spent on demolitions meant to boost prices of surrounding homes and help ward off crime in city neighborhoods. Except the money was often squandered by state governments, disproportionately robbing poor citizens in cities like Detroit of a program meant to save them from homelessness.

As the Detroit Metro Times reports, Detroit’s decade-long wave of tax and mortgage foreclosures has wiped out large swaths of the city’s neighborhoods as Wayne County continues to seize thousands of occupied homes a year. The city’s neediest homeowners were supposed to receive federal assistance to save their homes as part of the Treasury Department’s seven-year-old Hardest Hit Fund.

In 2010, Michigan originally received nearly $500 million to provide loans to eligible homeowners who were facing tax or mortgage foreclosure. But the program, called Step Forward Michigan, rejected funding for about 5,000 Detroiters, while assisting more than 2,000 homeowners who earned at least $70,000 a year. That number eventually swelled to $761 million, and of that amount, half was committed to demolitions.

Comment by aqius
2017-07-24 06:58:52

so the Detroit connected hogs fed at the govt handout trough while the taxpayers got the corn cobs.

the reach-a-round was your condemned neighbors house(s) finally getting demolished.

bonus: clear sight lines to zero-in your scope if needed.

Comment by aNYCdj
2017-07-24 08:12:18

The biggest luxury overdevelopment in all of america and it still keeps going

Queens plaza was a low rent district 15 years ago lots of 1 story mom and pop stores taxi stands strip clubs 99 cent stores donuts shops bars not a horrible area but best navigated in daylight unless you were into the r&r dive bars, but remarkably quite safe


Comment by aqius
2017-07-24 08:38:19

must use more buzzwords in my posts, such as “product’. makes me seem all policy wonk ivy league think tank. housing is now product.


grow a beard too. yeah. square it off with a jutting forward angle like that MMA connor Mcwhatzzitname.
a menacing appearance while I pour your coffee. don’t even THINK about cutting me off on my bike in traffic, brah. I got your 50 shades right here in my messenger bag.

product this

product that

now to unclog the product precariously polluting my porcelain perch.

Comment by aNYCdj
2017-07-24 09:28:42
Comment by rms
2017-07-24 13:05:43

In Brentwood, CA too. The Juice could make a comfortable comeback there if he could just find a white woman who can take an occasional
beating when “the rage” daylights. :)

Comment by aNYCdj
2017-07-24 19:28:06

Hopefully i will see him tomorrow night


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