Another Sign Of A Noteworthy Slowdown
A report from MarketWatch. “Existing-home sales ran at a 5.34 million seasonally-adjusted annual rate in July, down 0.7% versus June, the National Association of Realtors said Wednesday. That was the lowest pace since February 2016. July’s selling pace was 1.5% lower than a year ago, and at the current sales rate, it would take 4.3 months to exhaust available supply, the same as in June, and well below long-time historical averages.”
“For years, the Realtors have been warning that many would-be buyers, particularly at the lower end of the market, are being priced out. Now they’re also acknowledging that many others are just deciding to sit it out until market conditions change. First-timers made up 32% of all buyers in July, a tick higher than in June but still well below long-time averages, and making no real progress.”
“‘There are no tears left to cry with yet another disappointing housing report,’ said BMO Capital Market’s Jennifer Lee, invoking teen idol Ariana Grande.”
The Orange County Register in California. “Another sign of a noteworthy slowdown in the Southern California housing market: Existing homes are taking three more weeks to sell vs. a year ago, by one industry metric. ReportsOnHousing market time stats say it’s taking 21 more days to get a home from listing to escrow than a year ago — 84 days vs. 63 a year ago. It’s the longest selling time in early August, by this math, since 2014.”
“The slowdown is somewhat surprising considering house hunters have 4,165 more listings to consider vs. a year ago — an increase of 13 percent. The supply boost comes as homeowners have put 8,604 more homes put on the market so far this year vs. 2017 — a 258 percent jump. But the added choices aren’t enticing buying, as the four-county region covered by the Southern California News Group has seen a 15 percent decrease in sales contracts signed vs. a year ago.”
From The Tribune in California. “Boosted by soaring home prices, California homeowners are now sitting on the richest vein of home equity in the nation, hundreds of thousands of dollars per home in most cases, according to data from an analysis by Attom Data Solutions. The message is twofold: California real estate has pulled well beyond the carnage of the 2007 to 2011 housing collapse. And it has done it in a big way compared to the rest of the United States, to the point of being slightly worrisome, some real estate watchers say.”
“‘That’s is great news for homeowners who are becoming equity rich, but it is a sign of that excess we tend to see in the California market,’ said Daren Blomquist, a vice president with Attom Data Solutions.”
“Dean Wehrli, a Sacramento real estate analyst with John Burns Real Estate Consulting, said he expects more Californians to tap that equity in the coming years, and he sees some of that happening already in Northern California.”
“Koji Fujimoto, a Sacramento software company manager, and his wife bought their first home in 2011 in the Vineyard subdivision just when prices had hit bottom. The couple paid $186,000 for a newly constructed home that is now worth $350,000, an 88 percent value increase in seven years. They took advantage of a down payment assistance program and builder credits, and put down a minimal amount.”
“But California appears to have hit a ‘where to now?’ moment that has homeowners like Fujimoto concerned. After seven years of huge value increases, the state’s real estate market has slowed in recent months. Median sale prices plateaued statewide in June. In Sacramento, those medians dropped slightly in July.”
“Fujimoto is among those taking advantage of his home’s equity to move up to a more expensive home in Elk Grove near his and his wife’s families. But it’s giving him the jitters. He no longer will have the comfort of feeling equity rich. He wonders if his new home will increase in value like his first one did, or whether its value might drop. ‘Is this the right time to sell, and right time to buy?’ he asks. ‘They are like opposing forces. I felt trepidation, pulled in two directions. This isn’t our first rodeo, but it feels like it is.’”
The Brooklyn Bridge News in New York. “The developers of the vexed Pacific Park Brooklyn development (formerly Atlantic Yards) have quietly acknowledged–in a non-publicized document–that the full 22-acre project, with 11 more towers planned beyond the four already open, likely won’t be finished until 2035.”
“That’s ten years later than the previous estimate of 2025, which remains the deadline for the 2,250 required units of affordable housing, of which 1,468 remain to be built. (The plan also calls for 3,720 market-rate units to be built; only 460 have been constructed so far.) Over the past three years, though, Pacific Park has faced headwinds: a change in state tax policy, a glut in market-rate units nearby, and rising construction costs.”
“Greenland USA’s long-term involvement is not set in stone; while it has bought nearly all of Forest City’s remaining share–the cost remains undisclosed–the company has pulled back from two proposed projects in California, and is seeking to sell part of its other major project, Metropolis, in Los Angeles.”
The Ruidoso News in New Mexico. “While the housing market in Lincoln County slowed in July, sales in New Mexico as a whole continue to post record numbers this summer. A breakdown from the association showed 29 sales occurred in Ruidoso, a 13 percent decrease; nine in the Alto Lakes-Outlaw-Kokopelli area, a 44 percent decrease; five in Alto to Bonito River for a 20 percent decrease; and nine in the rest of the county for an 11 percent decrease.”
“Average prices in Ruidoso hit $227,879, a 20 percent decrease; $316,556 in Alto Lakes-Outlaw-Kokopelli for a 125 percent decrease; and $165,056 in the rest of the county for a 17 percent decrease However, the median price for Ruidoso was $176,500, a 15 percent increase, with the other areas seeing decreases.”
‘Dean Wehrli, a Sacramento real estate analyst with John Burns Real Estate Consulting, said he expects more Californians to tap that equity in the coming years, and he sees some of that happening already in Northern California’
I see a boo-boo coming.
‘He wonders if his new home will increase in value like his first one did, or whether its value might drop. ‘Is this the right time to sell, and right time to buy?’ he asks. ‘They are like opposing forces. I felt trepidation, pulled in two directions. This isn’t our first rodeo, but it feels like it is.’
Koji, go for it. You only live in Elk Grove once. Think of all that sweet equity! Go big, the biggest the bank will let you buy. Cuz that means even more profits!
Happy trolls?
Good lord Elk Grove. Wasn’t that one of the many ground zeros during the last mortgage collapse?
All I know is Elk Grove is the best place to get real Chinese food unless you drive to the bay.
May 9, 2018
From the Elk Grove News in California. “After recent articles on Elk Grove News (EGN) regarding the Elk Grove Sphere of Influence (SOI) application before LAFCo, and the rise in the Elk Grove real estate market, the question now becomes: Will the Elk Grove City Council guide real estate property values back into another decline? As reported on EGN, Elk Grove is currently a seller’s market which is great considering that was not the case years ago. Good news for homeowners right now. However, what happens when the next housing boom in the Southeast Policy Area (SEPA) and the SOI hits? Or worse, when the next housing crash hits which economic theorists say is inevitable?”
“Recall thousands of Elk Grove homeowners were devastated by the housing market crash with foreclosures everywhere and we saw a significant rise of rental properties aka pot houses. Shouldn’t we learn from the past in planning future massive housing projects? By the looks of it, the Elk Grove City Council clearly has not. And want to bet the Elk Grove City Council, led by Pat Hume, will fast-track the SOI into an annexation vote so that more housing projects can be built in record time.”
“So many times, we have seen housing developers get in and get out, leaving a trail of Mello Roos taxes behind them. The writing is on the wall, it will happen again as Elk Grove is ripe for the picking and there is no one on the Elk Grove City Council who will get in their way.”
“If one council member had the courage to speak up, having learned from their past mistakes, keeping their constituents’ property values in mind, works to negotiate a fine balance between supply and demand to ensure home values continue to rise and phase in new housing slowly, that council member would immediately be labeled ‘anti-growth’ and soon, circa 2006, those same developers would form independent expenditure committees and oust that incumbent.”
“Housing developers are very good at playing the waiting game. Problem is developers appear to have bounced back from the housing crash with bigger plans for Elk Grove, more than ever before, acquiring vast areas of land in the SOI. With that, the developers, with the council members in tow, will suck voters in with their fancy wording on annexation of ‘long-term stewardship’ and ‘adding value’ to existing homes in Elk Grove. However, it is a fact that oversupply often creates lower prices for existing housing.”
http://thehousingbubbleblog.com/?p=10427
Is “real” Chinese food better than the garbage they sell at most Chinese restaurants? Because that stuff is nasty…
It’s all personal taste of course. But in my opinion yes and I’m not a big fan of most Chinese food in general. The stuff in most American Chinese restaurants is loosely based on Hong Kong/Cantonese food with a bunch of extra sugar and deep fried breading. I assume there is some historical reason for why that particular part of China became what Americans think of when they think of Chinese food. But there are many styles.
If you get the chance have some xiao long bau(?) at Din Tai Fung in the USA or Asia, or try some “Hakka”(?) style food at Lost Heaven in Shanghai or Beijing. Those styles are both pretty friends to western tastes and are much better. They make you wonder why we’ve eaten that crap all these years.
If you get the chance have some xiao long bau(?) at Din Tai Fung in the USA
I work basically next to a Din Tai Fung these days..will have to give it a try!
Definitely do. Shanghai people will tell you that it’s even better in Shanghai, but I think everyone agrees it’s good enough to be considered “real” Chinese food.
We passed through Folsom and Placerville recently on the way to Tahoe. Geez they’re going gang busters building.
how about stockton- everyone will be getting free money soon
Stockton is an armpit. Same with Modesto, Turlock, Merced and every other central valley town.
‘Pacific Park has faced headwinds: …a glut in market-rate units nearby…’
‘Greenland USA’s long-term involvement is not set in stone; while it has bought nearly all of Forest City’s remaining share–the cost remains undisclosed–the company has pulled back from two proposed projects in California, and is seeking to sell part of its other major project, Metropolis, in Los Angeles.’
This is one of those Chinese conglomerates that is ditching US real estate as we type.
‘The slowdown is somewhat surprising considering house hunters have 4,165 more listings to consider vs. a year ago — an increase of 13 percent. The supply boost comes as homeowners have put 8,604 more homes put on the market so far this year vs. 2017 — a 258 percent jump.’
Shortage?
‘But the added choices aren’t enticing buying, as the four-county region covered by the Southern California News Group has seen a 15 percent decrease in sales contracts’
Something doesn’t add up here. More shacks, shortage, should equal Mazel Tov! But I’m not seeing the love. Maybe it’s all those foreclosures.
It’s amazing what a tiny increase in Mortgage Rates will do. Imagine what will happen if they increase a tiny bit more.
10-12% lending rates is going to be long painful slog for anyone counting on a house to do anything besides costing a fortune.
Just how do you get to 10 to 12 percent interest rates without a surge in inflation? Where is the cause of that inflation?
Rates are ah risin’ and prices are ah fallin’.
This increase is bigger than we are seeing in the other bubble markets…The Chinese were huge buyers in Irvine and the surrounding areas, speculators running for the exits
‘More home sellers are resorting to price cuts as interest from buyers wanes nationwide. A recent report from Zillow found that starting in June, 14 percent of current home listings reduced their asking prices.’
‘While that rate has remained roughly stable since 2013, it is up 1.2 percent since January, and is considerably higher in certain markets where prices were already much higher than average. San Diego, for example, saw 20 percent of its home listings take a price cut in June, compared to 12 percent last year. Seattle, Portland, Sacramento and Riverside all saw the highest rate of price reductions in their respective markets in at least the last year, Zillow said.’
‘Moreover, home listings representing the top pricing tier in 23 of the 35 largest metros saw a disproportionately large number of price cuts, according to Zillow. In Dallas, for example, 22 percent of listings in the first of three pricing tiers saw cuts, compared to only 8.7 percent of homes in the bottom-third. Other cities like Orlando, Houston, Las Vegas and San Antonio saw similar trends.’
‘A growing number of price reductions may point to decreasing interest among potential buyers. Another recent economic indicator from the University of Michigan’s latest consumer sentiment survey found that only 63 percent of respondents believed it was “a good time to buy a home” as of August. That’s the lowest response rate the question has seen in 10 years. Researchers estimate that home prices have likely reached a breaking point for too many would-be buyers, resulting in lower demand and thereby influencing price cuts’
“Researchers estimate that home prices have likely reached a breaking point for too many would-be buyers …”
AKA a market top …
“… resulting in lower demand and thereby influencing price cuts.”
And these price cuts will act to break the spell, the illusion, of forever increasing price hikes currently enjoyed by the throughly dumbed-down which will result in two things:
Thing Number One: Real estate will no longer be see as the true path to endless wealth by prospective buyers and thus they will pull back from the market place.
Thing Number Two: Prospective sellers who have been holding off from putting their houses on the market because they did not want to leave money on the table by selling too soon will begin to see through their dimmed vision that the legs of the table are being kicked out by the actions of Mr. Market and thus they had better SELL NOW or be priced in forever and thus they, in their vast multitudes, will act as one and dump, yes, dump, their RE holdings onto the market and will hope and pray and will burn candles, bury statues upside down in their yards, and cast endless spells all in the hope that their house, their ATM Money Machine, that endlessly produced an endless supply of equity wealth has in some seemingly unforseen fashion BROKE DOWN and has now being transformed into seemingle endless consumer, yes, CONSUMER of equity wealth and thus MUST BE GOTTEN RID OF!
And thus RE prices are destined to decline because the previous relationship between supply and demand has been altered.
Never fear me banker, debt-holders are easily startled. But they’ll soon be back, and in greater numbers.
“The slowdown is somewhat surprising considering house hunters have 4,165 more listings to consider vs. a year ago — an increase of 13 percent. The supply boost comes as homeowners have put 8,604 more homes put on the market so far this year vs. 2017 — a 258 percent jump.’
HOLY SMOKES! 258%!!!
“‘There are no tears left to cry with yet another disappointing housing report,’ said BMO Capital Market’s Jennifer Lee, invoking teen idol Ariana Grande.”
Does anyone else find this to be a turnoff? Yesterday’s NYT article about bitcoin featured a photo of another “financial analyst” bitcoin trader sitting at his home computer in his dimly-lit messy den, wearing fleece short shorts and an undershirt.
How about a little professionalism here, folks? I can appreciate that NYT published the photo to emphasize the shadow and secrecy — oh my — of digital currencies, but why would the financial analyst himself allow such a picture to be taken? He risks turning off some of his older (and wealthier) clients. And the lady from BMO Capital couldn’t quote Shakespeare, or opera, or something more respected and applicable to a moneyed audience, instead of Ariana Grande? *sigh* Millenials…
“… why would the financial analyst himself allow such a picture to be taken?”
For the same reason he became a bitcoin trader: He is incredibly stupid.
“…bitcoin trader sitting at his home computer in his dimly-lit messy den…”
Did they depict him surrounded by miserly stacks of physical coins?
the biggest loser often gets a boost
As my critical theory professor was known to say, “De gustibus non est disputandum.” Can one not appreciate opera, Shakespeare, AND Ariana Grande?
If Ariana Grande’s songs are remembered even 25+ years from now (much less 150-400 years), sure. But to me, Shakespeare or opera — or heck, Milton Friedman, is a sign of education, and I like a bit of education in my financial advisers. Ariana Grande is a sign that someone clicked Trending on YouTube. Not exactly the direction I would would be willing to toss a few hundred large. Ditto for the bitcoin boy in his pajamas.
Highbrow, middlebrow, and lowbrow culture are all markers that divide and distinguish by class. Some leisure activities are completely foreign to others (e.g. skiing, golfing, sailing, lacrosse, equestrian, polo, etc.).
What do you think about Kendrick Lamar winning a Pulitzer?
https://www.nytimes.com/2018/04/17/arts/music/kendrick-lamar-music-pulitzer-prize-damn.html
“Another sign of a noteworthy slowdown in the Southern California housing market: Existing homes are taking three more weeks to sell vs. a year ago, by one industry metric. ReportsOnHousing market time stats say it’s taking 21 more days to get a home from listing to escrow than a year ago — 84 days vs. 63 a year ago. It’s the longest selling time in early August, by this math, since 2014.”
Today’s longer time to escrow is tomorrow’s dinner of crow.
Sandy, UT Housing Prices Crater 12% YOY As Salt Lake City Sellers Rush Excess Housing Inventory To Market
https://www.zillow.com/sandy-ut-84093/home-values/
*Select price from dropdown menu on first chart
California is tanking for sure. I probably spend to much time watching local RE in my town and have been seeing major price reductions and “little” home sales. No longer a sellers market. I’m being told by realtors that foreign investors have backed off a “little” which is causing a slow down. Funny to hear this now as three months ago these same realtors told me foreign investors had no part in the RE market in this bum ridden town.
https://www.zillow.com/homedetails/100-Isbel-Dr-Santa-Cruz-CA-95060/16109205_zpid/
https://www.zillow.com/homedetails/123-Alamo-Ave-Santa-Cruz-CA-95060/16100954_zpid/
Just a couple crap shacks with some nice declines. The first one butts up along a creek that shelters 100’s of homeless people. Wake up to a beautiful view of the homeless bathing in your backyard creek as they shoot up and deficate in a serene setting.
I’m hating living here. Gonna stick it out renting for another year +/- and move out to a less liberal area and avoid high crime / homeless areas.
Try N VA
I haven’t seen that many homeless in the area. There *are* a lot of median-walkers asking for money, but they’re not living by the river. ISTM that they are the relatives of immigrants. The come to visit, overstay the visa, live on a sofa and beg for money to bring in a little cash.
Do you actually live here? I can assure you Santa Cruz is over ran with homeless, I experience them everyday and yes it may be worse elsewhere like parts of Los angeles but it’s very bad here and over the last few years has been snowballing out of control. We have friends that bought a brand new condo a block away from that house and there backyard is the creek. They have come mustang issues with the homeless around the creek and recently got the police, sheriffs, and park rangers to come clear out over 100 homeless dwellers. I dont usually like to sound like an arrogant prick but I’m just fed up living here my whole life, watching it go to hell, and raising kids here in a town with a huge problem and housing values up so high most can’t afford to live here. I’ll look into N VA, but eyes on parts of Nevada.
http://www.cityofsantacruz.com/community/homelessness
The City has one of the highest per-capita population of homeless who are completely un-housed (meaning they live their lives outside, with no shelter).
https://www.google.com/amp/amp.ksbw.com/article/santa-cruz-to-build-bathroom-downtown-for-homeless/1291766
Santa Cruz is building a 24-hour portable bathroom near the San Lorenzo River levee in an effort to stop homeless men and women from publicly defecating downtown
Santa Cruz has so much potential, but run by the looney left and inhabited by those who elect them. Such a naturally beautiful area, but so trashy. The downtown is nasty, overrun with bums. They are everywhere. The boardwalk and the flats are also super sketchy. What a waste.
Exactly
Santa Cruz was sketchy back in the mid-80s, and I don’t know about before then because I wasn’t old enough. The point being, it was never good in my lifetime.
I dont usually like to sound like an arrogant prick but I’m just fed up living here my whole life, watching it go to hell, and raising kids here in a town with a huge problem and housing values up so high most can’t afford to live here.
Sounds like a great time to sell.
Oops sorry, I meant in MY area, which is the Maryland burbs of DC. Not California. Last time I visited CA was a conference in San Diego in 2003 and I have no desire to go back.
That’s good for your sake
I have never and will never understand Santa Cruz. Super expensive, populated by dirtbags - just trashy people everywhere. Meth heads, gangs, homeless. Must be something in the water - that, or the curse of the Lost Boys.
It truly is astounding, a real head-scratcher. If the visual appeal reflected property values, it would be a cheap sh%thole.
As a kid I used to go to Derby skatepark off Stockton (still have the scars back when it was *rough*). I remember on a visit as an adult in the late 90s parking on an adjacent street, mere blocks from the ocean. Across the street was a house that had a pile of empty beer cans topping 4′ in the front yard. Just about everyone there wore sweat pants, no shirt and shoes were optional. I guarantee none of them were sober (or not stoned), and this was probably 10am.
I lived in San Diego at the time and a place like that near the beach would run probably 700K+ at the time.
Still have that crowd but mixed with yuppies / techies that commute to Silicon Valley and of course the zombies (lost boy wanna be’s ;). I like San Diego but looking for a slower less populated environment. Derby just got a retrofit but it’s still very similar with the snake run and bottom bowl.
uly’s selling pace was 1.5% lower than a year ago, and at the current sales rate, it would take 4.3 months to exhaust available supply, the same as in June,
6 months is par
Chino Hills CA Housing Prices Crater 6% YOY Leaving Nothing Left But The Crying For Homeowners
https://www.movoto.com/chino-hills-ca/market-trends/
That unfolding Australian house price crash
Financial Times-Aug 20, 2018
Will the housing bubble go the way of all others? … To take an example, the purchasing capacity of the median potential FHB in Sydney in 2016 is estimated to .
So now Bloomberg and the Financial Times are calling it a bubble.
El Dorado, CA Housing Prices Crater 23% YOY As Sacramento Area Homeowners Take A Financial Beating
https://www.movoto.com/el-dorado-ca/market-trends/
they have to keep prices going up or people wont buy.
“‘There are no tears left to cry with yet another disappointing housing report,’ said BMO Capital Market’s Jennifer Lee, invoking teen idol Ariana Grande.”
Au contraire, Jennifer. You REIC types are going to be weeping copiously as each new “disappointing” housing report comes out for many months to come. You won’t be cried out ’till the last FB gets foreclosed on and housing returns to historic pre-bubble norms, i.e. 3X median income.
“The slowdown is somewhat surprising considering house hunters have 4,165 more listings to consider vs. a year ago — an increase of 13 percent.
The slowdown isn’t surprising at all to anyone who’s been paying attention to how unsustainable Housing Bubble 2.0 has become. And most house hunters who see inventory starting to soar as prices start to tank will wisely decide to wait out the carnage and buy when the dust has settled.
‘They are like opposing forces. I felt trepidation, pulled in two directions. This isn’t our first rodeo, but it feels like it is.’”
Koji was clearly the rodeo clown. Now he’s going to get the horn.
“Average prices in Ruidoso hit $227,879, a 20 percent decrease; $316,556 in Alto Lakes-Outlaw-Kokopelli for a 125 percent decrease; and $165,056 in the rest of the county for a 17 percent decrease However, the median price for Ruidoso was $176,500, a 15 percent increase, with the other areas seeing decreases.”
And to think this party is just getting started. Oh my….
Loan demand tumbling…oh dear. You may have to find honest work, Mr. Banker.
https://www.zerohedge.com/news/2018-08-22/loan-demand-suddenly-tumbles-companies-revolt-rising-rates
Your post contains two words that I find to be totally repulsive and incomparable with myself and they should never - NEVER - again be included in the same sentence with my name!
Work is a four-letter word!
US existing home sales fall for four straight months. Of course the NAR blames the mythical “housing shortage.” WRONG. It’s the “I’m not overpaying for your overpriced shack” buyer sentiment coming to the fore.
https://www.reuters.com/article/us-usa-economy-housing/u-s-existing-home-sales-fall-for-fourth-straight-month-idUSKCN1L71I7
This past weekend I stopped by a 2 bed 1,700 sq ft town house in South Orange County, California. Asking price $780K. Three months ago the place would of been swarming. Not this past weekend. The only other activity on site was the agents partner operating a hot dog stand in the backyard. I declined the hot dog and asked about the homeowners dues. She replied there’s two that total $500 per month. Ouch! Pair that with the new tax laws next year and there’s going to be a lot of stunned California homeowners who are going to get the shock of their lives at tax time. Needless to say I did not stick around.
Agent serving up the hotdogs is preparing for their future when this thing implodes.
For those of us not living in CA, what are the new tax laws coming, and how to do they impact property owners?
State income tax and property tax are capped at $10,000 on Schedule A (Itemized Deductions) of your 2018 federal return — versus unlimited for 2017 and prior tax years. That combined with a DOUBLING of the standard deduction in 2018. So it hits California and the NYC Tri State area particularly hard.
It doesn’t just impact high end real estate. It is hitting the low end and first time buyer ($250 - $500k) particularly hard since they often are making a comparison with renting, and much of the monthly tax benefit of home ownership was just taken away.
It is almost as if the Republicans and Trump wanted to take aim at the blue states when they overhauled federal taxes.
I’m in the Bay Area (East Bay) and would also like to know how I’m going to be impacted. Is it the limits on deductions that will not make it viable to itemize?