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They Know It’s Been A Buyer’s Market, So They Think They Can Demand Anything

A report from KGW 8 on Oregon. “For the first time in seven years Portland home prices have gone down, according to new numbers from Regional Multiple Listing Service. The apartment building boom has left many units vacant across the metro area. Now, owners are giving incentives for people to move in. We’ve seen landlords offering free rent for three months, free parking spots, free furniture.”

“In the case of the TwentyTwenty building, developer Patrick Kessi of PHK Development says the market’s cooled so much, he’s offering up to a $100,000 price cut to get these sold over the next few weeks. ‘So the flash sale is 15-20 percent off, and it’s on a select 10 homes. So, the starting price is in the 200-thousands for a one-bedroom urban apartment, which is a great price. And it’s discounted into the $500,000 for a two-bedroom, two-bathroom condo,’ Kessi told KGW.”

“Portland’s biggest influx are still Californians. Many tech companies are creating small hubs here, and Portland is a short plane ride away. But many of them are coming up with families and want to buy a house, not an apartment. Real estate professor Gerard Mildner says we need to expand the urban growth boundary in the suburbs to get enough land for new homes.”

“‘The Californians are coming, the question is do we accommodate them or not? If we don’t build the subdivisions they’re looking for, then they’ll heat up the markets in the inner city like they have been doing for the last 10 years,’ Mildner said. ‘We’re living in a constrained world and constrained supply. We’ve got urban reserves, we should bring those out given the housing emergency.'”

“Mildner says home prices will keep going up for the next several decades.”

The Dallas Morning News. “All of the economists who are meeting with builders from around the country this week say they see growing signs of a recession — but probably not this year.”

“‘In June, this will be the longest expansion in U.S. history,’ said David Berson, chief economist with Nationwide Mutual Insurance. ‘We think it will last considerably longer as well. Although the risks of the expansion ending have gone up.'”

“‘There are lots of concerns that are bubbling up right now,’ Berson said. ‘The expansion won’t go on forever. Once the recession hits — as with all recessions — there will be a hit for housing demand.'”

“Unlike in previous economic cycles, there’s no glut in the new-home market. ‘There has been no overbuilding, at least on a national basis,’ Berson said. ‘Even regionally there is no evidence of overbuilding.'”

The Los Feliz Ledger in California. “After two previous campaign finance reform motions by Los Angeles City Councilmember David Ryu fizzled, a third may succeed, as the Los Angeles City Ethics Commission voted today to ban donations to political candidates and officeholders from all non-individuals and from real estate developers and their associates.”

“Today’s hearing and votes–all unanimous from the 4-person board–come amid an FBI corruption probe of city hall and multiple media reports alleging city officials may have traded political favors for donations–either to the officials themselves, or to charitable causes they support.”

“A speaker said the city’s current crises, a lack of affordable housing, epidemic homelessness and perceived corruption by local officials are inter-related. At the same time, the speaker said, ‘we have a luxury housing glut.'”

From Crain’s Chicago Business in Illinois. “If you’re buying a home this year, you’ll have less time to nitpick about its out-of-date looks than you used to, thanks to revisions in the contract for Chicago-area home sales.”

“Prompted by a spate of buyers and real estate lawyers who were misusing the time allotted for negotiating over flaws that a home inspector finds—the time to ask for roof repairs, boiler replacements and other substantial repairs—the contract revisions clarify that after the inspection is not the time to request that old wallpaper be replaced or moldy window treatments cleaned.”

“The aim of the changes was not to take away buyers’ opportunity to have the seller make cosmetic changes, but to clarify that there’s a time for that: when submitting an offer on the property, say two people who were on the committee of about two dozen who revised the Multi-Board Residential Real Estate Contract. The contract has been rolling out in recent weeks and becomes the standard March 1.”

“In the past few years, ‘buyers have gotten a little out of hand asking for cosmetic changes,’ said Lynn Madison, a real estate trainer and past president of the suburban Mainstreet Organization of Realtors. ‘They’re watching all these HGTV shows, and they think the house has to look perfect.'”

“‘They know it’s been a buyer’s market, hard to get a home sold,’ she said, ‘so they think they can demand anything. And if they’re millennials, a lot of them have so much debt that they can’t afford to spend more on repairs, so they ask the seller to do it.'”

“Along with millennials who are overloaded with student loans, move-up buyers may have such a small cashout from their old address that they, too, have little to spend after the purchase.”

From Mansion Global. “‘Things are looking good for buyers in 2019,’ Redfin chief economist Daryl Fairweather said in the report. ‘The supply of homes for sale is increasing faster than it has in nearly four years.'”

“Despite a national increase in home prices, 10 of the 81 metro areas Redfin tracks suffered a decline, including Portland, Oregon, down 1.3%, and San Francisco, down 5%. Neither of these cities have faced a significant price drop since 2012, and both experienced consistent growth throughout most of last year.”

“‘We predicted price growth would slow down and that prices would drop in coastal cities like San Francisco and Seattle, but we didn’t know how sellers would react to a cooler market,’ Mr. Fairweather said. ‘It’s encouraging to see that listings are up—it means that sellers aren’t taking the ball and going home.'”

“San Francisco’s median sale price dropped to $1.235 million from $1.3 million, but just under half of its homes sold above list price. The number of houses sold remained down for the sixth consecutive month, falling in 57 of Redfin’s 81 metro areas and 7.6% nationally from January 2018.”

“This decline in sales is reflected in several of the U.S.’ larger metropolitan areas. Year over year, Philadelphia fell 34.3%, West Palm Beach, Florida, fell 26.2%, Chicago dropped 25.5% and Los Angeles was down 16.4%. The biggest growth in inventory occurred in Seattle, with a 109.1% annual increase, and San Jose, California, which rose 100.8%.”

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This Post Has 56 Comments

  1. From the Chicago article:

    ‘The most egregious misuse of the post-inspection window, Diamond said, involved buyers in the western suburbs last year whose inspector discovered that the pull chains on the home’s ceiling fans were too short. They requested that the seller put in longer chains before they would agree to close the deal.’

    “It’s hard to get your head around what would possess them to ask for that,” Diamond said.’

    So I guess the feeding squirrels thing is over?

    1. The pull chain is kinda dumb to ask for – that’s 2 bucks at HD, but in my experience when I walk through houses that older folks own it is a laundry list of things that need (and needed for years) repaired and fixed. My in laws place is like that: Broken cabinets, ripped carpets, broken tile, unfinished bathrooms – and they will be the first people to say “Well, I’m not gonna give it away” and demand a very high price. Neglected maintenance on houses can be a HUGE blow to a FBers budget

      1. The full price for repair/replacement should be slashed directly off the price, and then a little more for the headache of lining up the contractors and dealing with it. Either that, or the owners hire it done before the deal is made.

    2. In a rational sane market.

      The seller says “no” and tells the buyer he is putting the house back on the market.

      But with the insanity of QE and ZIRP we bounce from both extremes.

      Buying a house with no inspection or unseen (just to get on the property ladder) to letting a sale fall through over a ceiling fan chain.

      In past days from long ago – this is where, typically, the RE agent jumps in with a few bucks from their commission to make the sale happen.

      1. How dare you suggest those dry comission rags get off their butts and earn something lol
        How can these fools even pay their bills when they are so stupid and greedy. And these worthless baby boomers that can’t do basic maintenance.. It takes a year of price reductions for something as spectacular as an old $230k home to become a $160k home that sells here in flyiver country. Greedy filth have ruined this country

        1. Nailed it with the baby boomer comment. The homes they put on the market haven’t been updated in two decades and they expect somebody to give them 4X what they paid. The lucky ones bought in formerly lower middle class inner ring suburbs 30-40 years ago and the dirt under the house has appreciated 10-20X in major cities.

    3. “So I guess the feeding squirrels thing is over?”

      Work this right and this squirrel thing can be seen as a rodent problem.

      2. If you cast those squirrels you might be able to get an IG thing started, and the legion of followers will pay your mortgage.

      4. Squirrel is the new Realtor(tm) food. It may even be on the hors d’oeuvres tray at this spring’s open houses. Squirrel… The Other White Meat.

  2. ‘There are lots of concerns that are bubbling up right now…The expansion won’t go on forever. Once the recession hits — as with all recessions — there will be a hit for housing demand’

    ‘Unlike in previous economic cycles, there’s no glut in the new-home market. ‘There has been no overbuilding, at least on a national basis…Even regionally there is no evidence of overbuilding’

    A little back ground. Back in the day all the RE writers went to the shack building convention every year. Now only Steve at the DMN does. So while Dave here says it’s gonna end, it just won’t be anytime soon, so buy a shack! Which is what he is paid to say.

    1. Recession risk is contained by the Fed’s QT pivot. So why not buy several houses during this market swoon, and HODL for gains?

  3. ‘developer Patrick Kessi of PHK Development says the market’s cooled so much, he’s offering up to a $100,000 price cut to get these sold over the next few weeks. ‘So the flash sale is 15-20 percent off’

    What about the poor bashtards that bought one of these airboxes last month? Ah, fook em, they’re from California.

    ‘Mildner says home prices will keep going up for the next several decades’

    Portland prices are sinking like a turd in a well Gerard.

    1. Well, the previous buyers did put down 20% so they are still good and above water…and won’t walk away.

      Oh wait…

    1. The difference in price is meaningless since you are only dealing with under a 100 homes 12 months prior (and they were, on average, much larger than currently pending). However, if that change in pending homes is correct, from 92 to over 3,000 that would be very significant. There must be something wrong with that data.

  6. Airbus’s Lesson for Young Socialists

    ‘Socialism is currently in vogue. If the word means anything in today’s context, it means projects of unusual government ambition, built on our globally shared capitalist technological and commercial base. The A380 was exactly such a project. Underwritten by massive European government subsidies, the plane was an engineering sensation. Passengers loved the roomy jet. Yet now it’s kaput.’

    ‘In the end, enough socialism could be mobilized to get the plane built, but not enough to make it commercially viable. When the end came, it came because the A380’s last dedicated customer, the government-backed Emirates Airline of Dubai, gave up on the superjumbo. Planes in pristine condition were lingering unsold on the used-plane market. A 10-year-old jet was recently retired by Singapore Airlines. Now it’s being broken up for scrap, proving once again socialism’s knack for making grown men cry.’

    ‘The parallel to California’s bullet train hardly needs to be drawn. Gov. Gavin Newsom seems already to be walking back his apparent cancellation of the grossly over-budget project. He may hope that Green New Deal dollars from Washington will become available after 2020 to replace the funds California isn’t willing to provide.’

    ‘But California voters have already gotten the right message: Billions were poured into the project so former Gov. Jerry Brown wouldn’t have to admit a mistake.’

    ‘The same consideration for years deterred Airbus from blowing the whistle on the A380, but let’s end on a positive note. Today the socialist miscalculations of our infallible leaders are measured mainly in dollars. This represents a great leap forward over the socialist failures that characterized the last century.’

    https://www.wsj.com/articles/airbuss-lesson-for-young-socialists-11550619950

      1. That is a pretty conservative estimate. Approximately 66% of people have little or no liquid net worth. That number seems to correspond to my observation if I leave the wealthy major cities and venture into a mall in the suburbs. 50%-60% of people walking around malls are noticeably poor. The irony is that they are all buying expensive stuff that they can’t afford to prop up my stock portfolio.

        America is truly a disgusting place.

      2. The poorest and sunniest state with the 5th largest economy on the planet. Go figure.
        “California produces a sizable majority of many American fruits, vegetables, and nuts: 99 percent of artichokes, 99 percent of walnuts, 97 percent of kiwis, 97 percent of plums, 95 percent of celery, 95 percent of garlic, 89 percent of cauliflower, 71 percent of spinach, and 69 percent of carrots (and the list goes on and on)”

        No one misses the rust belt.

  7. “And if they’re millennials, a lot of them have so much debt that they can’t afford to spend more on repairs, so they ask the seller to do it.’”

    “Along with millennials who are overloaded with student loans, move-up buyers may have such a small cashout from their old address that they, too, have little to spend after the purchase.”

    So both the buyers and the sellers of houses are broke-assed losers. And we are at the top of the economic cycle.

    Truly, a nation of dummies.

    1. “And we are at the top of the economic cycle.”

      More like at the top of a very, very tall precipice. Looking down from there is pretty scary.

  8. “‘The Californians are coming, the question is do we accommodate them or not?'”

    Bahahahahahahaha … if you had any sense the answer would be “not”.

    1. As a new Oregonian that sometimes commutes via plane to a job in the Bay Area, I’ve learned to avoid mentioning that I’m from California. I think as CA prices fall, the mass exodus may stop as CA renters see a light at the end of the high speed train tunnel.

    2. The bummer is, they get the failed Californians that cant cut it on the coast. Got Fresno? No one is fleeing Malibu for Denver.

  10. “A speaker said the city’s current crises, a lack of affordable housing, epidemic homelessness and perceived corruption by local officials are inter-related. At the same time, the speaker said, ‘we have a luxury housing glut.’”

    Of course they’re inter-related. You vote for corrupt, incompetent “leadership” and you get malgoverance. Funny how that works.

    1. 2019

      Subtract the increase in debt from the Department of Truth’s growth numbers for the past decade and you’ll have your answer.

      Debt is not wealth and neither is it prosperity.

        1. The Age Of Debt And How To Profit From It – | Seeking Alpha
          https://seekingalpha.com/article/4223654-age-debt-profit

          (snip)

          “At the peak just before the financial crisis the aggregate debt level hit a record high, yet ten years later we are seeing a massive increase in the level of debt across the economy to levels beyond the pre-crisis peak. This aggregate debt level which has surpassed 370% of GDP, will continue to place a strain on our country’s ability to grow the economy. As GDP growth is negatively affected by the large build up in debt from the government, household and corporate sectors. We are also seeing a generational shift, that is causing a reduction in overall consumer spending. The millennial and younger generations are increasingly burdened by large amounts of student loan and other debts, which delays their ability to become homeowners, and fully participate in the economy.”

        2. A Minsky Moment …

          “A Minsky moment is a sudden, major collapse of asset values which generates a credit cycle or business cycle. The rapid instability occurs because long periods of steady prosperity and investment gains encourage a diminished perception of overall market risk, which promotes the leveraged risk of investing borrowed money instead of cash. The debt-leveraged financing of speculative investments exposes investors to a potential cash flow crisis, which may begin with a short period of modestly declining asset prices. In the event of a decline, the cash generated by assets is no longer sufficient to pay off the debt used to acquire the assets. Losses on such speculative assets prompt lenders to call in their loans. This rapidly amplifies a small decline into a frank collapse of asset values, related to the degree of leverage in the market. Leveraged investors are also forced to sell less-speculative positions to cover their loans. In severe situations, no buyers bid at prices recently quoted, fearing further declines. This starts a major sell-off, leading to a sudden and precipitous collapse in market-clearing asset prices, a sharp drop in market liquidity, and a severe demand for cash.”

          A chart …

          https://en.m.wikipedia.org/wiki/Minsky_moment#/media/File%3AStylized_Minsky_Cycle.PNG

  13. Got this voicemail this weekend on my Google Voice line
    “Good afternoon, this is Nicole with the Stacy and Nicole real Estate Team. Just checking in to see if you are still looking to purchase a home this year or if you have already found something?🏡 We are slowly changing in to a buyers market, so please let us know if you’re still looking to buy in 2019. Interest rates are low, inventory is high and home values are decreasing, making it a great time to purchase with less competition. We’d love to help. ”

    This team is in the Newport Coast area. A rich, expensive like hell, sandwich between Irvine and Newport Beach. Irvine is China money launders’ dream until last year. Newport Beach is old money rich with alot of new foreign money too. I even shocked that they admit a buyers marketing is coming but I assume sales cratering hurt all realtors. Once the foreign money runs out, like Ben said, “they’re fooked”….

    1. “Newport Coa$t” = an expen$ive luxurie$ enclave overlooking the Pacific ocean, where the viewing occupant$ seldom, if ever, wiggle their toe$ in the beautiful wet beach sand below their view$. Free shuttle to the bar.on.the.$and!

      1. “Irvine is China money launders’ dream until last year.” NB is the fraud capital of the USA. The OC is disgusting. Persians took over South oc.

  15. ‘They’re watching all these HGTV shows, and they think the house has to look perfect.’”

    — Well, that’s just as ridiculous as someone sitting on a 50 year old house in need of repairs demanding they deserve a huge pay-out by virtue of owning it. They built that equity with their bare hands, and Zillow says it’s worth this much!

    “Along with millennials who are overloaded with student loans, move-up buyers may have such a small cashout from their old address that they, too, have little to spend after the purchase.”

    — But I thought we were creating wealth hand over first the past decade? Are you telling me those move-up homebuyers aren’t swimming in equity?

    1. I never understood how moving up to a more expensive home was supposed to make people richer, particularly when it comes to cash in hand in the short term.

  16. They know it’s been a buyer’s market, hard to get a home sold,’ she said, ‘so they think they can demand anything.

    Did she ever say this about the sellers when it was a sellers market?

    “They know it’s been a seller’s market, hard to buy a home, so they think they can demand anything.”

    LOL. Stomp your foot sad little realtor.

    Me thinks her commissions are drying up.

    1. Incredible double standard here… love letters, waive inspection, rodent feeding, etc… OK

      BUT fixing old shack problems Bad Bad Bad

      Picky buyer No Like –> Picky Buyer No Buy

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