Prices Are Falling Even In Longtime Hot Spots
A report from the Downey Patriot in California. “Financial Partners Credit Union hosted its second annual Gateway Cities Economic Forum last Thursday at the Rio Hondo Event Center, featuring economist Christopher Thornberg as its keynote speaker. Thornberg noted the slowdown in the rate of job growth within the region, and the related factors contributing it. ‘The slowing we’re seeing boils down to a lack of bodies…if you don’t have a person, you can’t hire them, and we hit that wall,’ said Thornberg. ‘Labor force is basically growing at a fairly slow basis.’”
“Some of this issue boils down to homes, or as Thornberg alluded to, a lack thereof. ‘Everybody talks about housing, and you should. But how we talk about it is fairly important,’ said Thornberg. ‘It’s not a bubble; bubbles are over-building or over-borrowing; nothing like that is occurring. We need more housing, and we’re just not building it.’”
The Orange County Register. “Orange County homebuilders are trying to sell their largest supply of completed new homes in 12 years. According to Metrostudy, local builders had 1,022 newly constructed residential units ready for immediate sale in the second quarter, up 340, or 50 percent, in a year. That’s the highest level since the end of 2006. For those who get antsy about overbuilding, builder inventories averaged 458 in the previous boom years of 2004-2007.”
“Metrostudy found 2,780 residential units under construction, off from the recent peak of 3,087 in last year’s third quarter — the fastest development pace since 2006. Note: Construction averaged 3,012 units in 2004-2007. And builders have amped up their inventories of ready-to-build lots. The 6,208 available in the second quarter was down 841 (12 percent) in a year but lots counts averaged 2,385 in 2004-2007.”
“Builders aren’t the only home sellers facing rising inventories. ReportsOnHousing says there were 7,001 existing homes and condos listed for sale as of Aug. 23, the largest supply of resale housing on the market since September 2016.”
From NBC Bay Area. “The government says pending home sales in the United States are down for the seventh straight month. In the Bay Area, that translates to more time on the market and fewer bidding wars. For Robert Hernandez, a longtime renter in the Bay Area who works in tech, the drop in bidding wars gives him hope he now has a chance to purchase a home.”
“‘That is amazing news for us,’ Hernandez said. ‘But it’s great to hear that there’s not so many bids going in per house anymore.’”
“Realtor Mike Gaines said prices on large properties are falling too, even in longtime hot spots. He called the housing shift a correction in the market.”
‘local builders had 1,022 newly constructed residential units ready for immediate sale in the second quarter, up 340, or 50 percent, in a year. That’s the highest level since the end of 2006. For those who get antsy about overbuilding, builder inventories averaged 458 in the previous boom years of 2004-2007′
Oh dear…
…. and with housing demand at 21 year lows and falling, there isn’t a buyer in sight.
Ebola. Toxic, homeowner bankrupting Ebola.
Remember the realtors said this is not a bubble, this is not a bubble, this is not a bubble
Q. Can a convicted felon become a realtor?
A. “A felony conviction is a very serious offense, but it is possible to have a new start. The first step is integrity. You must display the necessary characteristics of honesty and full disclosure that are required to be a real estate agent in order to be considered to take the real estate licensing exam. If a person exhibits these qualities, has paid their debt to society, and is completely honest about any felony convictions on their record, they could get the opportunity to start over with a prosperous new career in real estate.”
Q. So the answer boils down to a simple “yes”?
A. Yes.
Being a charming, amoral sociopath will take one far in the REIC biz.
“Always Be Closing” - even if it means financial ruin for the buyers who trusted you and your “expertise.”
https://www.youtube.com/watch?v=GrhSLf0I-HM
https://www.postandcourier.com/news/accused-s-c-serial-killer-built-successful-real-estate-firm/article_984f9ca0-a8ef-11e6-bf57-b7c6cdf2ecef.html
“But he was also an award-winning agent described as a hard worker and good boss.”
(snip)
“He gunned down four people at a motorcycle shop in 2003 and within the last year killed three more, authorities said.”
Oh. Hmmmm … well what about his hobbies?
“… investigators last week rescued a woman chained up in a 30-foot long storage container on his property.”
So, do you think he might be willing to, maybe, trim back his sales commissions just a wee bit?
Q. How old must be go become a realtor?
A. “To be eligible to become a licensed real estate salesperson or agent, you must: Be at least 18 or 19 years old (depends on the state) Have legal US residency.”
Bahahahahahaha … how many of you pukes would want an eighteen year-old kid to handle your real estate transactions?
\
They are the assistants - and the eye candy.
‘It’s not a bubble; bubbles are over-building or over-borrowing; nothing like that is occurring. We need more housing, and we’re just not building it.’
It’s like a mantra. I post reports every day over oversupply, gluts, all around the world. Yet the shortage people keep at it.
Well now Orange County is fooked again. Hey I know, everybody cash out refinance before the bubble pops!
Cash Out Before The Bubble Bursts - Los Angeles, California
https://youtu.be/gL624-LIWdk
Bubbles are overbidding and overbuying while prices are rising, and underbidding and overselling when prices are falling. And afterwards, nobody can comprehend the collective madness that drove the frenzy which few noticed while it ensued.
If you listen to the ad I recorded, they mentioned everything under the sun: interest only, self-employed (no income documentation). How is cash-out refinancing before a bubble bursts not over borrowing?
Maybe azdude could explain…
…. the ubiquitous no-doc, no-appraisal cash out refi.
There’s no other way to meet your mortgage obligation when you’re paying 3x construction cost for a rapidly depreciating asset like a house.
“I post reports every day over oversupply, gluts, all around the world. Yet the shortage people keep at it.”
You use what works.
‘We need more housing’
Demand, demand, demand.
I’m still convinced I didn’t get a 2nd interview in 2004 when I decided to inject housing talk into the 1st one with a manager based in San Diego, who kept telling me that demand for SD housing = no bubble.
Back here in Portland? Cranes, everywhere. And this:
Portland Is In the Midst of a Hotel-Building Spree. Can Visitors Keep Up?
“It’s great for tourists,” says economist Joe Cortright. “They’ll be discounting like mad.”
High HOA’s plus shiny new Mello Roos for 20 years. Then take into consideration falling RE prices, rising rates and less tax deductions in 2019. You’d be crazy to consider any new development in Orange County, CA.
Good luck builders!
I would never, ever, ever buy a condo. The term “special assessment” gives me the willies. I know somebody who recently received one for $35,000 for building repairs. Further, I won’t say never, but I would be very, very cautious before ever purchasing somewhere with HOAs.
Diddo, well I already did but I wouldn’t never do it again
Falls Church, VA Housing Prices Crater 12% YOY As Accelerating Federal Layoffs Decimate NoVA/DC Housing Market
https://www.movoto.com/falls-church-va/market-trends/
‘It’s not a bubble; bubbles are over-building or over-borrowing; nothing like that is occurring. We need more housing, and we’re just not building it.’”
This asshat is supposed to be a housing expert? Bubbles aren’t about over-building; they’re about over-paying with borrowed money. And Housing Bubble 2.0 is the biggest housing bubble in human history, surpassing even Housing Bubble 1.0, thanks to $15 trillion in Fed funny money lavished on the Fed’s bankster accomplices. The latter have used this fake money to speculate with wild abandon and engage in the same reckless, greed-driven manias that caused the tech and housing bubbles previously, while complicit regulators, enforcers, and politicians turned a blind eye if not actively enabling and participating in the frauds and swindles.
The financial reckoning day, when it can no longer be deferred, is going to make 2008 look like a walk in the park.
‘It’s not a bubble; bubbles are over-building or over-borrowing; nothing like that is occurring. We need more housing, and we’re just not building it.’
I’m going to revisit something about manias. So why do believers say this about building? To explain away something that is irrational: ridiculously high prices. Almost everybody agrees the prices are ridiculous. They’ll say it’s crazy. Ah, but the shortage, that’s why these prices won’t crash!
When people start talking about new paradigms, you are in bubble land. So here’s an economist: let’s ask, just when in human history have we not been able to build affordable housing? I’m not talking about short term stuff like they have right now in west Texas. But what period of history did shack prices shoot up to 6-7-900,000? Prior to the past 20 or so years they didn’t. And really it’s gotten seriously stupid in the past 15 years.
Thus the new paradigm. Suddenly, there’s this perpetual shortage that even with a decade of furiously building everywhere, will never be satiated.
Until the glut. And then the whole phony situation collapses because it was just bunk all along. This is partially why trolls are so angry. It offends their whole world view, makes them look foolish. They bought into the new paradigm with a 30 year loan.
One more thing: the people spouting this shortage nonsense are the exact same group of self interested, real estate industrial complex related that said this 15 years ago. In some cases it’s the exact same persons!
Yet no one in the media will ask them directly: didn’t you say there was a shortage back in 2005 right before millions of loan owners got their asses kicked?
“They bought into the new paradigm with a 30 year loan.”
A wise man once said, “If you have to borrow for 15 or 30 years, you can’t afford it nor is it affordable.”
He’s right.
Camarillo, CA Housing Prices Crater 10% YOY As Home Sellers Beg For Offers. Any Offers
https://www.movoto.com/camarillo-ca/market-trends/
Shortage isn’t the only new paradigm. There are lots. Remember the “safe deposit box in the sky” thing a few years ago? We were told repeatedly: “super rich people are looking for a safe haven for their cash!” This explained away the absurd idea of building huge expensive condo towers, all over the world, that no one would really live in. And it was understood at the time that no one would live in them, not for any long period of time anyway. And so they sit dark to this day, even as tens of thousands of them are still under construction and the developers are going under.
And the safe deposit box wasn’t a deposit, and wasn’t safe. But the media nor the industry doesn’t address that failed new paradigm in light of its undoing.
Others include rich Chinese (they’re money laundering!), rich tech employees (even though they are basically broke). Any feeble concept can be hoisted up to explain why a thing is suddenly worth multiples of what it has been in the past.
“Any feeble concept can be hoisted up to explain why a thing is suddenly worth multiples of what it has been in the past.”
Yeah, well it’s not as if their target audience (which is composed of most people) has any sense or the ability to just say no.
“The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil. Perhaps this is inherent. In a community where the primary concern is making money, one of the necessary rules is to live and let live. To speak out against madness may be to ruin those who have succumbed to it. So the wise in Wall Street are nearly always silent. The foolish thus have the field to themselves. None rebukes them…
It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale.”
John Kenneth Galbraith, The Great Crash of 1929
“If there must be madness something may be said for having it on a heroic scale.”
So it goes with the present housing mania.
“Builders aren’t the only home sellers facing rising inventories. ReportsOnHousing says there were 7,001 existing homes and condos listed for sale as of Aug. 23, the largest supply of resale housing on the market since September 2016.”
Gosh, I’m no REIC economist, but it looks like this sudden overhang of inventory being brought to market by panicked FBs or owners who want to bail while the bailing is good belies the “shortage” mantra we’ve been hearing ad nauseam.
First this: he/she who panic first, panic best
Gosh, who knew that a business model based on lending to people who were manifestly incapable or unwilling to honor their financial obligations could ever bring down a payday lender?
https://www.independent.co.uk/news/business/news/wonga-stops-lending-payday-loans-stops-collapse-a8513976.html
“The controversial firm has been on the brink of collapse for weeks now, after a surge in compensation claims, and is trying to find investment to keep itself afloat.”
Say what? Compension claims? What are compension claims?
“The company said its struggles were due to a “significant” increase industry-wide in people making claims in relation to loans taken out before 2014. Many lenders have been forced to pay back interest and charges on loans deemed to have been mis-sold on the basis that they were unaffordable for the borrower.”
Oh, so they are going under due to loans made prior to 2014 via compension claims now submitted by broke-assed losers.
That seems fair (not).
I desperatdly need to borrow some money.
Sony, no can do. You are a broke-assed loser and if I loan you money today then you will come back to me years from now and suck my coffers dry.
But … but … you are my last hope!
Sorry, but from now on I only loan money to people who don’t need to borrow. If you are desperate to borrow then I can’t help you. And you are welcome.
The NAR - an industry of dissemblers - is going to have to get creative to spin these headlines as anything other than “you’d be crazy to buy a shack in this environment.”
https://www.cnbc.com/2018/08/29/pending-home-sales-fall-for-seventh-straight-month-in-july.html
General update from Folsom-Prison-Adjacent:
Got wife calmed down a little regarding the condo she wanted next to the school where our daughter will be attending the next 3 years (and she headed back to Shanghai for a couple of weeks on business so that helped too). Realtor/owner tried to create some FUD and asked for offers by today and we declined to make one. They seemed a bit touchy but I didn’t ask. I can tell that it’s early for lowballs because they had an almost full price offer recently but then couldn’t get financed, but in a few months who knows? Hopefully the ridiculous offers will dry up…I’ll know in a week or two if it doesn’t go pending.
In the meantime on LinkedIn I noticed that a newly divorced hot chick I knew back in Colorado that went into RE a few years ago just changed her job status to not RE. I thought that was an interesting data point since it seemed like a logical place for her to stay. I suspect you guys may be right about commissions drying up recently.
Strange - Most girls I know who get divorced become UHS after the divorce. Congrats on not putting in an offer.
Good luck Carl. My wife is the same way but I’m glad we didnt buy anything in CA the last few years. Now just need to convince her to hold off while renting in Milpitas for another couple of years!
Part of the reason I’m here is the rent in Milpitas. I could have stayed there if I had wanted to. But here I’m choosing between renting a nice small 3br or owning a nice small 3br for about $2500/mo either way, which is at least a little better than Milpitas, but still double the price of 5 years ago.
We’re delaying buying a bigger house because I would rather wait and my wife is still having problems getting the money she wants to use out of China.
High end market cities supply is really building now…Who crumbles the most? Seattle, Irvine, Portland, Denver?
For complexes, Seattle is mostly ‘luxury’ rentals coming online - fewer new condo units. However, for single family, OMG, the prices of stuff that is not that great has gone through the roof. So it will take a while, but the prices will be really low in the 2020 timeframe. Hope they were not leverage to the hilt.
2020 seems a bit soon for “really low prices.” If it’s anything like the last bust, the real deals won’t be seen until 2023 at the earliest.
As discussed here previously, I wouldn’t be surprised to see this one move faster. And if the Fed manages a rescue again I would expect the next one to be even faster. Like a slowing top…until it all crashes down. In the meantime everybody is trying to game the system and is learning more about how to do it each cycle and trying to get ahead of each other.
Same here regarding increased speed of this next drop. The Everything Bubble is being completely discounted in the media and in reality. We have the makings of a globalized and synchronized downturn happening right now. There is no way in hell all this debt unwinds as slow as it did last time. I wouldn’t be surprised to see the Uhmerikan financial system nationalized after this one pops.
Yep, judging by articles I’ve seen here, things are already falling pretty quickly in many places.
I didn’t save the link, but I recall one recently in which sellers were advised to drop their price by 20% if the shack hadn’t sold within a month !!
b,
As I’ve said a few times, it has been pretty apparent that nearly all builders in King County have all been targeting the same small group of top-end buyers, and the new inventory doesen’t match the overall demand demographic.
ROI and Profit to the exclusion of anything and everything else. So all it takes if for that ‘top-end’ slice of the pool of viable buyers to contract and *poof*
Hang the “for sale” sign now, while you still can.
I don’t know, but the full folly of letting a criminal private banking cartel handle our monetary policy and currency issuance is about to be laid bare for all to see.
Hey, let’s start a betting pool!
(I am willing to hold the cash.)
I’m in
Another question when housing really slows down (maybe 2020 onwards). What happens to all these people in sales, remodelling, interior decoration, etc.
Through work i have been spending a lot of time in Plano Tx, Denver and live in downtown Seattle. Granted a small sample size ….
But the amount of people i over hear at coffee shops and resturants during the work day. They are there in their expensive but casual looking cool clothes and seem to be in sales or co-ordination for housing. These guys are going to be in for a suprise.
“What happens to all these people in sales, remodelling, interior decoration, etc.”
If they are lucky enough to be living in Southern California then they get to fully enjoy the camping experience currently enjoyed by hundreds of others along the Santa Ana river.
Lets hope they saved their earnings and didn’t buy any overpriced housing in the last 5 years…
Let’s hope not.
I like to keep pukes hungry. Makes them easier to manage.
I rarely go to coffee shops, preferring to make my own to save mass cash, but a few months ago I stopped in one mid-morning and overheard a woman explaining to a man that higher interest rates were going to lead to lower prices. They had paperwork on their table so I suspect she was a REALTWHORE.
RE: Sales of Rental complexes
I am looking (at what i believe) is an escalating amount of rental complexes being sold. Especially in working class neighbourhoods in the Seattle area.
Is this smart money getting out? Or is this companies trying to get into fully rented units to get cash flow for their investors (without counting on appreciation? Or is this something else?
“On Friday, August 24th, Everett, Washington-based Coast Equity Partners acquired the Collins Junction Apartments in Lynnwood for $37.75 million, or approximately $224,702 per unit, according to public records filed with Snohomish County. The seller of the property was Grosvenor USA Limited, a property management company headquartered in the United Kingdom.”
https://news.theregistryps.com/coast-equity-partners-spends-37-75mm-to-acquire-the168-unit-collins-junction-apartments-in-lynnwood/
Both? For every buyer there’s a seller.
I’ve seen apartment complexes changing hands semi-regularly the whole time I’ve lived here (10 years), I think we’d need to see actual stats on the volume and size of transactions to be sure it’s really a deviation from the norm, (or an escalation or elevation)
Clackamas OR Housing Prices Crater 9% YOY As Consumer Spending Falls Off
https://www.movoto.com/clackamas-or/market-trends/
I read an article that showed a chart that 52% of new originated mortgage in the Bay Area, 52% are for 1 million or above. I pulled recent closing here in Menlo Park, CA and randomly chose that past 9 closed sales in my direct area (7 out of the 9 had mortgages for 1 Million Dollars or above). Paying $7,000-$10,000/ month for a 1,000 square foot shack is insane
(Mostly) Gone are the days of commitment and responsibility to pay debts. It’s a business decision to walk away.
And maybe that’s a good thing. Maybe underwriters will see that and tighten up. Then again, with taxpayer as final bagholder maybe there’s no risk in any of it anymore. Which brings us back to loanownwer as business deal decisonmaker. Vicious cycle, that.
Where have you gone, azdude, the HBB turns it’s lonely eyes to you….
‘The slowing we’re seeing boils down to a lack of bodies…if you don’t have a person, you can’t hire them, and we hit that wall,’ said Thornberg. ‘Labor force is basically growing at a fairly slow basis.’”
BS, buddy. Raise wages and people will be fighting to get through the door first. Asshat.
We don’t have bodies because they can’t afford to move here, but there is no price bubble.
And that’s your Keynote speaker? Who was your opening act?
Argentina is the next basket case…
https://www.cnbc.com/2018/08/30/argentina-crisis-peso-crashes-to-record-low-amid-imf-plea.html
Argentina’s central bank hikes rates to 60% as the currency collapses
Investors are increasingly concerned Latin America’s third-largest economy could soon default as it struggles to repay heavy government borrowing.
The peso is down more than 45 percent against the greenback this year, exacerbating pre-existing fears over the country’s weakening economy and inflation running at 25.4 percent this year.
Orange County, CA
DOM: 30+ days
Price Reduced
$0-$1M - 1,663 results
$0-Any - 2,359 results
https://www.movoto.com/orange-county-ca/reduced-30/price-0-1000000/dom-30-0/@33.7174708,-117.83114280000001/
LMAO, look at the price history on this one. It was listed July 31. Starting August 21, they’ve been making near-daily $100 price reductions. $100 is a pointless reduction when you’re asking over $884K.
https://www.movoto.com/rancho-santa-margarita-ca/23-via-pelayo-rancho-santa-margarita-ca-92688-202_oc14129293/for-sale/
Comical! It’s RE marketing, every time that shack shows any reduction, it moves up on the advertising list. I have seen $5 reductions and wondered the same. By my calculations, this liability will be priced to sell in 5000 days