The Housing Bubble

A report from King 5 News in Washington. “Real estate experts are seeing a slight slowdown in the housing market around Seattle – and the trend has led to high dollar price drops on some homes. Ahmad Rabi is selling a home at 11259 Roseberg Ave S in Burien. ‘It’s a very nice place. It’s been remodeled down to the studs,’ he said. ‘Got new floors, doors, trim, triple pane windows.’ But the property, originally listed at nearly $600,000, has languished on the market for nearly four months. ‘It is a long time,’ said Rabi. ‘We had predicted the market was going to continue to go up. We overshot it, but we’re still getting a lot of traction.’”

“It led him to drop the list price by more than $100,000. It’s now listed on Redfin for $484,950. It’s not the only home with a large price drop. Brandon Carlson of Rock River Realty said he’d been forced to reduce the price of a home on Sylvester Way by more than $100,000. Carlson said it surprised him, judging by how hot the home market was just a few months ago. ‘I couldn’t get property out to buyers fast enough,’ he said.”

“Zillow senior economist Aaron Terrazas said these large pricing drops are more of a market correction than a bursting bubble. Carlson agreed that the price drops weren’t disastrous. Rabi echoed that of the home on Roseberg Avenue. ‘Yes, it was a big drop in price, but we were overshooting,’ he said. ‘They way we saw it, if it hits $600 or $550, that’s still way over what we projected to sell it for when we bought it a year ago.’”

The Post and Courier in South Carolina. “Charleston-area home sales slipped slightly in July for a second consecutive month. Home sales have been see-sawing for much of this year, and the back-to-back declines come after record-breaking sales in 2017. The president of the Charleston Trident Association of Realtors said the market is likely becoming more balanced rather than trending down. Kimberly Lease also noted that some experts believe the national summer slowdown is an initial indicator of a housing bubble because prices continue to escalate. She doesn’t think that’s the case locally.”

“‘I don’t believe an evening of the market will have negative consequences for us in Charleston,’ Lease said.”

From Nevada Business. “Local home prices are leveling off this summer as the housing supply has stopped shrinking but still remains tight. That’s according to a report released by the Greater Las Vegas Association of REALTORS. ‘Local home prices had been on the rise for most of 2018, but have been slowing down this summer,’ said GLVAR President Chris Bishop. ‘Sales have been leveling off, too. We’re glad to see the housing supply increasing slightly in recent months, but our inventory is still very tight. That tight supply has been dragging down home sales. At this rate, we’re on pace to sell fewer existing homes this year than we did last year. And it may be some time before local home prices get back to their all-time peak from 2006.’”

From Houston Agent Magazine in Texas. “Primary Luxury Auctions is putting another mansion in the Woodlands up for auction. The $6.75 million mansion will be sold without a reserve on Saturday, August 18. The mansion, located on 1.5 acres of land in the Carlton Woods area of The Woodlands, was built in 2016 with five bedrooms (with a room that could be a sixth), eight full bathrooms, two half bathrooms, a two-car garage, outdoor infinity pool and various other amenities. Seeing a luxury mansion sold in auction became a common situation in the Houston area since the decline in the oil industry, according to the Houston Business Journal.”

From Mansion Global on New York. “Earlier this month, two deep-pocketed Manhattan buyers bagged themselves a good deal. First, a penthouse unit at Manhattan’s prestigious and ever-so-rectangular 432 Park Avenue sold for $30.79 million, a 24% discount from its original $40.75 million price tag. Then, further downtown, a penthouse at 160 Leroy changed hands for $43.5 million, a 14% discount from the $51 million for which it was first listed.”

‘The two big bargains are not anomalies, Manhattan’s luxury real estate market has been on sale for nearly three years. Between Jan. 1 and May 31 of this year, 58.6% of luxury homes sold in Manhattan—defined as those priced at $4 million and over— were discounted between hitting the market and closing, according to data compiled for Mansion Global by StreetEasy. The median discount they received was $980,000.”

“It’s a steep rise from the 36.3% of luxury homes that received a discount between being listed and closing in 2016, and slightly up from the 54% of big-ticket homes that sold for a discount last year. In fact, it’s the highest proportion of reductions seen on luxury property since 2010, when 69% of Manhattan’s luxury sales received some form of discount, according to the data.”

“Discounts are happening more now due to rising price pragmatism from sellers, experts suggest, their hands somewhat forced by an oversupply in luxury inventory and dealing with buyers unwilling to budge on their budgets when the market is leaning their way. ‘A lot of [developers] have been building on strong demand for luxury homes in New York, but the building has outpaced the demand, and finding the right price is tricky at this point,’ Grant Long, senior economist at StreetEasy told Mansion Global.”

“Now, he said, sellers are trying to find their footing amidst the glut of supply. And they’re willing to adjust their prices. In Tribeca, an over-saturation of new development is what’s causing its prices to be adjusted downward. ‘Tribeca has a glut of new product on the market,’ said Manhattan real estate broker Richard Steinberg. ‘Developers are negotiating more because they have to get rid of their supply.’”