Sellers Are Starting To Chase The Market Down
The Denver Post reports from Colorado. “Residential real estate markets typically slow in September and the autumn months. But the changes underway in metro Denver appear to be going beyond the normal seasonal changing of colors. ‘Sellers are starting to chase the market down,’ said Anthony Rael, chairman of the market trends committee with the Denver Metro Association of Realtors.”
“Rael said he is noticing more homes in the $500,000 and $600,000 range coming down substantially from the original list price after spending weeks on the market. Of two dozen listings in that price range he recently reviewed for a client, about 20 had dropped their prices. Lower-priced homes are still moving quickly, but not at the frenzied pace seen from February to June, when multiple bids with waived contingencies above list price were common.”
The Seattle Times in Washington. “After the most brisk summer selling season in a decade, the Seattle area’s home prices showed signs of easing in September. Potential buyers may welcome a cooling, but it’s grim news for the large slice of the region’s homeowners whose mortgage debt remains greater than their home’s value. More than 33,500 King County homes had negative equity at the end of June, or 9 percent of homes with a mortgage, according to Zillow. An additional 19,600 homes in Snohomish County, or 13 percent of mortgaged homes, were in the same predicament. Collectively, the homeowners owe $7.5 billion more than their homes are worth, Zillow estimates.”
“‘It’s causing a lot of friction at the bottom of the market, which then ripples through to the entire market,’ said Zillow Chief Economist Svenja Gudell. ‘For some of these homeowners, they may pay off their mortgages before they resurface.’”
The Foothills News in Arizona. “John Schneider, a realtor who specializes in Foothills real estate, and others working the area commonly recognize two markets in the Catalina Foothills community: Those priced at $1 million or more, and those priced below $1 million. Homes priced over $1 million have been struggling for about seven years, creating a buyer’s market. Schneider says he thinks sellers of high-end homes are playing the waiting game.”
“‘I believe, because sellers of high-end homes have the financial means to hold on to their homes, they don’t have to sell — and they continue to wait for prices to climb,’ he said. ‘But, so far, that has not proven to be a good strategy as many overpriced high-end homes continue to languish on the market. And now, with six to seven years of tepid sales at $1 million-plus, it is obvious that many high-end buyers have moved on.’”
“There are currently 73 homes listed at $1 million or more, and only 25 have sold year-to-date. ‘This works out to a 26-month supply of homes — a huge supply,’ said Schneider. ‘At $1 million-plus, it’s a strong buyer’s market, but, unfortunately, very few buyers are jumping in.’”
From Chicago Now in Illinois. “On Thursday I wrote about all of Chicago’s new high rise construction in the South Loop that has recently been announced. With just the 5 projects I wrote about I estimate that we are looking at approximately 2061 new apartments and 1123 new condos/ townhomes. That’s a ton of new housing units so the question is whether or not the South Loop can absorb all that new supply.”
“If you recall the South Loop became a real wasteland during the housing bust and it wasn’t until Related Midwest bought 504 condos and remarketed them that we were able to put that whole series of unfortunate events behind us. But according to a May article in Crain’s it took Related Midwest just about 3 years to sell all those condos. So how long will it take the South Loop to absorb 1123 new condos and 2061 new apartments?”
The New York Times. “Buyers may be reaching a breaking point when it comes to outsize prices for luxury real estate. ‘At the upper end of the market, I believe there is a little bit of a pushback from the buyers,’ said Diane M. Ramirez, chief executive of Halstead Property, which found that the average sales price of co-ops with at least three bedrooms declined 26 percent to approximately $3.1 million in the third quarter of the year, from $4.2 million during the same period last year.”
“Hall F. Willkie, president of Brown Harris Stevens Residential Sales, said that though demand remained strong, ‘more sellers are asking prices that are just not justified.’ Especially at the high end, he said, ‘there’s a glut of inventory that’s overpriced.’”
From DNS News. ” Kroll Bond Rating Agency analysts Christopher Whalen and Joe Scott reviewed the U.S. bank sector’s credit outlook and concluded that having the banking industry reporting zero or low default rates is a clear sign ‘of mounting future credit risk.’ In fact, we may be looking at another asset price bubble within the housing sector among others. During the mortgage bubble of 2004-2005, Washington Mutual and Countrywide—two of the lenders that eventually had to be bailed out by larger banking institutions—reported negative defaults, Whalen and Scott reported. On the surface this looks like good news since it means the banks’ recoveries exceeded charge-offs, the pair explained.”
“But it also could be a sign of overheating in the market with asset values exceeding economic fundamentals such as employment, income and GDP, according to KBRA’s note. Whalen and Scott have this warning about the banking industry’s low default rate data: ‘the credit results measured by metrics such as charge-offs and recoveries are simply too good to be believed—or sustained.’”
“While others have praised the Fed for keeping interest rates low on the grounds that economic fundamentals support a push back against rising interest rates, KBRA’s note says ‘the responsibility for the rising risk in bank loan portfolios lies squarely at the feet of the Federal Open Market Committee (FOMC), which explicitly set a policy to push up asset prices to facilitate greater risk taking.’”
“The problem with rising prices is the creation of an asset price bubble where as Whalen and Scott point out, ‘these higher asset values … have not been validated by the performance of the U.S. economy, either in terms of rising income or GDP.’ In other words, you cannot create confident consumers out of thin air. They are either making enough money to swim in your pond and buy your house, or they’re not.”
“They also warn that loan-to-value ratios are on the rise, which is another déjà vu moment, given the fact that LTVs reached a great imbalance in the years leading up to the housing crash. With rates staying low, asset prices rise artificially, and now consumers who are taking a bite of the apple are buying into a price structure that is artificially stimulated since it is not supported by economic fundamentals. Is this the year 2008 all over again?”
There is no “pent up demand” for $600,000 starter homes in Denver. And realtors are liars.
“And realtors are liars.”
You can say that again.
Debt ages people prematurely. Crows feet around the eyes, hair loss, weight gain, no energy. When you sign that note that says 360 monthly payments it accelerates that feeling of dying inside…
Goon
Depends. Some people make great $, designed their lives well, and can easily handle a mortgage. An M.D., Engineer, Professor, has no problem servicing his/her reasonable debt.
Paying cash for this cottage has been a stress reducer, I’ll grant you that.
And you paid a 250% premium for a rapidly depreciating asset and then threw more good money after bad on it.
Don’t lie.
mafia
Actually, we’re ahead of the game. Don’t you get tired of the same posts. Head meet your ass.
Using LiarsMath, of course you are.
The reality is entirely different. I’d be angry too.
I might say that a “reasonable debt” does not take the major portion of one’s prime working life to pay back at multiples of the original amount.
“Head meet your a..”
Well aren’t you a peach. Can’t control your greed or your anger, your purse or your manners, your story or your tongue.
Well, HA or MB, whatever he wants to call himself does seem to post meanibgless dribble, repeated over and over. I posted the metrics on line for him as proof of one deal and he wouldn’t even comment. Inch apparently is investment positive too. I think we all tire of HA’s antics. It gives the blog an unseemly and unsightly tinge!
No one can find his 25,000,000 empty, foreclosed shadow inventory homes. Luckily he can’t either so he quit talking about them! Ha!
Jingle….He also says he can build a house for $60 a ft. So it begs the question, buy the land, build for $60 and watch the people flock to them and then this person will be rich and leave this site, heck I just may buy the land so he can go away?
Doom? Cheer up my friend and remember….
<bFalling housing prices is positively bullish and good for the economy.
“investment positive too”
It’s called living in the mania.
Tears of Joy.
“He also says he can build a house for $60 a ft…”
Well Newbie, we have discussed this at length. $60 is pretty generous and it includes an hefty profit for the builder. The thing is that people who want housing to make them rich do not want to pay construction cost plus profit. They want to pay as much as possible, so they can leverage up a windfall. Sounds like you are in that camp. And a debt donkey to boot.
Now you sound as stupid as HA. If anyone could build a decent house for $60/sf, and make a ptofit they would.
Saying people CHOOSE to pay more so they can have more appreciation is like saying HA is a “senior housing analyst”.
Remember….. paying multiples over construction costs($55/sq ft for lot labor materials and profit) for a used item like a house is a grave financial error you’ll never recover from.
Anyone know what cheghetto and other illanoy ‘re taxes are going to be?
I figure every 4% lowers prices by 1%
What’s your guess?
I’d guess property taxes really have no bearing on price. Look at places like NY/NJ. Astronomical property tax rates, yet incredibly pricey RE everywhere.
i was referring to change in property taxes
especially in a flat market
So long as prices keep right on a falling, all will be good.
Damning articles.
For those of us just wanting a place to call home, the high prices of 2015, just means higher property tax bills, due Dec 10th 2015 and April 10th of 2016. In Ca, the cap of 2% increases (Prop 13) was reached this cycle.
A house is just not a home unless you can flip it for a profit.
Blue
I met a flipper the other day. His portfolio was commercial and SFHs. Very knowledgeable of SFH flipping. Loves the “country pumpkins” in our city of Simi Valley, Ca. He loves taking advantage of stupid.
As I found in my video, there’s a lot of flipping going on in Colorado with new, under-construction houses. Some of these are $500k and up. Now what are the chances flippers are using cash in these amounts? I’d say no chance. If so, who is loaning that kind of money before a house is even finished?
dumb.borrowed.money.
/sink
I rather enjoyed that video. High prices, particleboard, and a lot of empty land. Welcome to Colorado Springs!
On the plus side, a great view of Pikes Peak, which brings back memories of when I hiked it.
If so, who is loaning that kind of money before a house is even finished?
Our good friend, Mr. Banker?
If so, who is loaning that kind of money before a house is even finished ??
Answer is, nobody….Tie it up with a 3% deposit…Walkaway if you can’t flip it even for a small profit…No way of knowing what the contract might say regarding forfeiting the deposit..Developers are part of the game also…
We have seen this before Ben back in 2006…Remember all the people flying to Arizona, Texas & Florida and putting deposits on many properties…
do many builders allow assignable contracts
allowing resale before closing is rare in my area
During the bubble, lots of builders cracked down on flipping. They would prohibit the resale within a certain timeframe or give the builder an option to repurchase (there were exceptions for things like death, etc.). They didn’t want the competition while building out the rest of their subdivision.
I suspect if this practice becomes too widespread, builders will do the same thing again.
‘February to June, when multiple bids with waived contingencies above list price were common’
Gosh, I hope no one paid (borrowed) too much or hurried into a bad deal under such circumstances.
The emotional component of a SFH purchase is what all those sales classes are about. Open ended questions, finding an anchor and sucking the buyer in. howmuchamonthclub is what they learn in class. Not to worry, just follow the yellow brick road. Waving contingencies was a bid on top of pile angle. T account shenanigans practiced.
I love it when people tell me their realturd is a life long “friend”. Yeah right. Try calling them in an emergency at 11:30PM.
The poem of the remorseful Realtor?
The musings of mutated morals.
mafia
LOL coming from a man of such stellar morals and class. Too much!
.lying.through.her.teeth.the.whole.time.
and Empty Pockets.
Nope. I am in a REAL profession. Just did the classes on the weekends, as a FSBO to get a clue as to my opposition. I’m not in the business of residential.
Ah ha… one of those “We have met the enemy and he is us” things. Taking courses to become a realtor so as not to be a realtor. The mind can justify almost anything!
The young man in front of me last time at the barber shop told he was taking college courses in Criminality. I asked him if it was to be a better one or to fight them better.
Nope again. ICSC Mgmt School grad here, and shopping ctrs and mixed use experienced. FSBOs need to know about the relationship angle and what they are taught. Some watch TV, others like to explore their world. My EE husband went w/ me. It was worth $25K+ to us.
Shopping Center University Certified. Good for you.
That’s an awful lot of money to learn the secrets of using people’s emotions to fleece them. The motivation helps explain the dishonesty here.
Inch didn’t pay $25k. She said that is what is was worth to her, probably in increase pay for better skills. Shopping center management is part art, part science. Retail is a living breathing animal that must be fed three times a day.
I accept your interpretation. Sometimes I have difficulty focusing on the content of Liar’s posts.
8,740 nearby properties found Seattle, WA Real Estate and Homes for Sale
http://www.realtor.com/realestateandhomes-search/Seattle_WA?ml=4
3,124 nearby properties found Seattle, WA Price Reduced Homes for Sale
http://www.realtor.com/realestateandhomes-search/Seattle_WA/show-price-reduced?ml=4
A full 35% of all sellers in Seattle reduced price at least once
“a price structure that is artificially stimulated”
and stimulated and has been for 15+ years. Gets to the crux of the biscuit.
Ooooooph.
‘But it also could be a sign of overheating in the market with asset values exceeding economic fundamentals such as employment, income and GDP, according to KBRA’s note. Whalen and Scott have this warning about the banking industry’s low default rate data: ‘the credit results measured by metrics such as charge-offs and recoveries are simply too good to be believed—or sustained.’
‘While others have praised the Fed for keeping interest rates low on the grounds that economic fundamentals support a push back against rising interest rates, KBRA’s note says ‘the responsibility for the rising risk in bank loan portfolios lies squarely at the feet of the Federal Open Market Committee (FOMC), which explicitly set a policy to push up asset prices to facilitate greater risk taking.’
Like this?
‘multiple bids with waived contingencies above list price were common’
They are building houses up there like there’s no tomorrow. But go ahead Bernanke, do your victory laps in your fancy suits. It’s interesting that the people who got an interview with him didn’t ask one pointed question (see my post yesterday), while the Intercept made it clear he didn’t use any of his regulatory power to charge individuals with crimes. (Something he claims he wanted).
Chasing the market down. And where is CNBC to tell us how HOT Denver is? Come on, fly out to Denver and don’t forget the pom-poms.
He is corrupt. The truth is not in him.
All the PTB are puppets. That’s why all this R vs D is just silly. The FRB works for the banks, which are a cartel. The FRB is a joke. OTOH, reading the FOMC meeting releases is entertaining.
Just think of FRB as a PR firm for the cartel. Their senseless banter will be easier to understand.
Frisco, TX Housing Prices Dive 12% YoY; Economy Accelerates As Oil Prices Plunge
http://www.movoto.com/frisco-tx/market-trends/
Remember….. paying multiples over construction costs($55/sq ft for lot labor materials and profit) for a used item like a house is a grave financial error you’ll never recover from.
Robert Shiller: “Houses Depreciate”
http://www.pragcap.com/robert-shiller-dont-invest-in-housing/
28,049 nearby properties found Tampa, FL Real Estate and Homes for Sale
http://www.realtor.com/realestateandhomes-search/Tampa_FL?ml=4
10,245 nearby properties found Tampa, FL Price Reduced Homes for Sale
http://www.realtor.com/realestateandhomes-search/Tampa_FL/show-price-reduced?ml=4
A Full 36% of all Tampa, FL sellers reduced prices at least once.
Santa Monica, CA Housing Prices Plunge 9% YoY; Housing Demand Falls To 30 Year Lows Statewide
http://www.movoto.com/santa-monica-ca/market-trends/
You clearly no nothing about Santa Monica and have not been looking for a house in that market. It is very tight and prices are rising.
Realtor Charged With Assault
http://www.wsmv.com/story/30211551/couple-charged-in-producers-beating-has-no-prior-charges
‘This is the second year for MoM, a series of events meant to promote and showcase modern design in Colorado (by “modern,” organizers mean “contemporary,” or a spirit of simplicity and innovation, not the century-old art movement). It was founded by Kate Bailey, owner of Annabel Media, a media-strategy company in Denver.’
‘One problem, however, is that homegrown projects too often fail to inspire. The unprecedented building boom in Denver and other parts of the Front Range is exciting on one hand but worrisome on the other. “There’s all this building going on, but the reality is that it’s not very good,” Bailey said. She calls the raft of bulky, slapdash buildings rising throughout Denver “commodity architecture.”
‘MoM organizers are hardly the only ones saying this. In April, top Colorado architect Jeffrey Sheppard sounded the “banality” alarm in a guest opinion in The Denver Post, and the newspaper’s fine arts critic, Ray Rinaldi, in a concurring piece, conveyed Sheppard’s view by writing: “No more blocky apartment buildings that create nearly flat, five-story walls along our pedestrian streets … No more structures that ask people to live in shoe boxes … No more quick construction of lofts-that-aren’t-really-lofts, set along anonymous corridors that dissuade neighborly interaction.”
Put your hand on your wallet:
‘a media-strategy company’
That’s newspeak for public relations. Notwithstanding that, I agree with the criticism. Certainly that’s Kunstler’s point: that most of what we’ve built in the last forty years is disposable, ugly, or dehumanizing.
Jim Kunstler is a favorite of mine. I love the term he coined “stark-itecture”. It fits.
I call it Generica. And it’s soulless and ugly IMO, and not something we will be cherishing in another 75-100 years either.
I travel all over the western US for work. I stay at the typical corporate chain hotels which are often situated near shopping centers, and I take walks around to take in the local scenery in the evenings.
And no matter what state I am in, it all looks the same, especially at night or on a cloudy day. It’s like they are all using the same playbook.
When I was in Colorado, I mentioned to the UHS who was with me that it all looked the same. Fields, houses, strip malls and gas stations. He said it was the California model of development.
Stacked stone — everywhere — seems so dated now…
I was in Santa Fe earlier this year and liked it simply because it looked different, although seeing a faux-adobe Staples admittedly was a bit much.
And no matter what state I am in, it all looks the same,.
Charles Schulz had Charlie Brown make that remark 30+ years ago describing a road trip.
We have entire roads here where the same set of restaurants and stores repeats itself every few miles. One night I was in a sprawl part of northern Pinellas County and ended up completely disoriented; there were no landmarks whatsoever. It was one of the rare times I used “Siri.” I turned on that function and asked “where am I?”
About freaking time!
Denver never had the job market to support those prices. There are almost no Corporate HQs here, mostly satellite offices with lower paying jobs.
We sold our Denver house in June of this year. It had gone under contract in April.
At the time, the local media was repeatedly hyping the market stating that it was the best seller’s market in 20-30 years.
There were articles about bidding wars, waiving inspections, offers on properties site unseen. Did I forget: “Lowest inventory in 30 years!”
When our house went on the market there was still very little inventory in our price bracket. The reality was that there were also very few potential buyers as well. Something not mentioned by the local media.
Our house sold in less than one week. That looks terrific on the surface.
However, to sell our house in this “booming market” we lowered are asking price by 6% after 4 days on the market. This was done despite being told by potential buyers at the home showings that our home was “priced right.”
Because we lowered our initial price, we snagged one buyer who bid about 8% below are reduced asking price. We accepted this offer after some negotiation since our opinion was that time was not on our side and that the “seller’s market” was running on vapors.
During the time our home was on the market and pending sale, we did not see any more offers on our home, very few showings or interest, and no backup offers. Fortunately our house closed after some additional concessions.
Since that time, we have kept track of the market in this price range in Denver, for similar neighborhoods and the market has nearly come to a halt. It seems like the lower end of the market (sub $400,000) continued to have more energy through the summer.
In summary, from May 2015 onward the market has basically stalled out. Now, 5 months later, the Denver Post is reporting a slowdown.
The problem with Denver is that prices went too high. The inflated prices were based on an oil/gas boom, an initial apartment shortage from 2010 (now no longer the case but not reported yet in the local media) and a construction surge of new apartments, offices and retail.
When the oil/gas and construction jobs end (soon), there will be lots of out-migration, a severe apartment glut and no reason to buy. If you did not buy during the boom, why would one buy a house in Denver now?
I really appreciate that report. Very valuable in many ways.
Thanks.
This is an on-the-ground report so happy to assist.
The next major bearish report on real estate from the Denver Post may be the apartment glut no one could see coming.
The Boston Globe did the same thing; hurry! Then, sellers are asking too much. The NYT above; a glut of over-priced listings. Message; sellers are cutting into sales. stop being greedy! The CO UHS; note he tracked 24 listings and NONE sold. Message; you sellers are cutting into our sales - stop being so greedy! And the Houston Chronicle did the exact same thing; oh it started slowing down in February! Huh, funny that because you turned on a dime in September, from up, up, UP, to nothing is selling, cut your prices you greedy sellers. It all shows who the media is catering to: the REIC, not sellers.
The media is good at hyping what is in the interest of their advertising customers.
The media is also good at spinning the news. If you spin the Denver Post story, the Denver market is good for buyers since home prices are slightly lower and there is now more choice on the market. Go out and shop!!
The local media may have a story out in the next month or two about how this real estate slowdown is just a pause and that you should buy NOW because prices will rebound with the 2016 selling season.
Since the Denver slowdown was not predicted by the local media, why would anyone think that they would be able to predict a rebound?
This pause and then rebound pitch will be the spin the real estate agents use on potential buyers: “You better get in now during the “pause” before prices go up 10% when the snow melts in 2016.”
And the glut will specifically be with “luxury” apartments. And as those developers “eat their own” through concessions, the slowdown will trickle into more affordable properties.
25 million excess empty and defaulted houses isn’t isolated to “luxury apartments” Rental_Fraud.
After touting 25,000,000 for 8 years, can’t we agree that 1 sold and there are now only 24,999,999? HA!
Two were built.
Ha, ha! +2
/fail
good report
next up
SAN FRAN
anyone?
Good for you, very wise to discount your price slightly for a quick sale when a bubble pop in imminent!
FWIW thanks the the HBB and OTM blogs by early 2007 was (correctly) convinced that Bubble 1.0 was about to pop, did the same and had a buyer for my house (bought in 1997) under contract within a week.
I’m curious, did you end up renting a place in Denver? Or move out of the area?
Yes, we rent a luxury apartment downtown. We see the glut everyday.
Yes, and we got concessions to rent. Not cheap right now but give it time, prices will come down.
We will probably buy again when prices are right.
Was there an opportunity to buy in Denver in 2010 or 2011, or was the correction minimal there?
The “correction” never reached bottom anywhere…
Remember…. current asking prices of resale housing is 250% higher than long term historical trend.
Yes of course HA. $10 houses in Detroit are WAY overpriced!
That’s your problem my friend…. Houses in Detroit are $240k, not $10.
See for yourself.
http://www.zillow.com/grosse-pointe-park-mi-48230/home-values/
San Diego, CA Housing Prices Fall 11% YoY
http://www.zillow.com/san-diego-ca-92130/home-values/
Weird
Zillow now calls my area up 3.5% nest year
Was predicted as flat unroll now ???
22151 s of Soviet
Yes, it happens. Last year they forecast Santa Monica would drop -2.9% and it’s up about 8-10% in 2015.
Sorry for you Jingle_Fraud.
Santa Monica, CA Housing Prices Plunge 9% YoY; Housing Demand Falls To 30 Year Lows Statewide
http://www.movoto.com/santa-monica-ca/market-trends/
Go back into your rust belt hobbit hole! You have no clue about the west coast market. It will likely correct and prices may fall in the next few years but any Tom, Dick & Harry can tell you that’s not happening today.
Data my friend….
San Francisco, CA Housing Prices Crater 12% YoY
http://www.zillow.com/noe-valley-san-francisco-ca/home-values/
More zillow
Tampa + 9% next yr
Wtf???
They ‘ve gone wild
University Park (Dallas), TX Housing Prices Plummet 10% YoY
http://www.zillow.com/market-report/time-series/48098/university-park-tx.xls?m=19