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Buyers Are Getting Some Of Their Advantages Back

A report from Connect FM. “Thinking about buying a home? Bess Freedman, CEO of Brown Harris Stevens, a realty company in New York, says, ‘We are definitely in a buyer’s market… very price sensitive, perhaps the most price sensitive market we’ve seen.’ Freedman says this the main reason why: ‘There’s a little bit of an oversupply in some areas, and they can really pick up some good opportunities.'”

“Although there seems to be an oversupply in mostly metropolitan areas, it could also be the case for some suburban locations too.”

From Mansion Global. “The price of a waterfront Southampton, New York, home was slashed by $5 million Monday, bringing it down to $24.9 million. The Hamptons estate, however, is no stranger to price cuts. Mansion Global previously reported that it once asked $65 million, and since then, the asking price has been reduced several times.”

The Long Beach Business Journal in California. “The median price of a detached single-family home in Long Beach was $605,000 in January, a 1.6% decrease from December, according to Phil Jones, broker and owner of Coldwell Banker Coastal Alliance. There was a 41% increase in the inventory of homes on the market compared to January 2018, he said.”

“‘Pending sales were down 46% in January. Closed sales were down 9.2% . . . compared to last January. And the same number of listings came on the market. But the supply improved because the rate of sales activity decreased,’ he explained.”

“Phillip Mazzocco, co-owner and operating principal of First Team Real Estate in Bixby Knolls, said that ‘there has been a softening’ in the single-family market so far in 2019, but that he does not expect the trend to continue. ‘[When] the Fed didn’t raise interest rates, it kind of opened some things up,’ he said. ‘We’ll still see some growth in kind of the $500,000 to $900,000 range, but everything over $1 million has really stalled out. ‘”

“Mazzocco said that housing markets in neighboring cities and counties experienced more dramatic slowdowns in activity in recent months, but that Long Beach has retained its appeal to homebuyers. ‘I know [in] range County there was a big softening this winter. But you know, we didn’t feel it as intensely as they did. And I think it’s kind of because we’re the new kid on the block,’ Mazzocco said.”

“Both Jones and Mazzocco characterized the current single-family market in Long Beach as healthy. ‘The market is shifting from a really seller-advantaged market to more balanced. I think buyers are getting some of their advantages back,’ Jones said. ‘As inventory grows, it will become even more balanced between buyers and sellers.'”

” Mazzocco noted that fluctuations in the real estate market are historically normal. ‘I don’t think anyone in our industry is really worried about a big recession. There is just a normalization of the market,’ he said. ‘We’re in a very healthy market. . . . It’s very normal, what’s happening right now.'”

This Post Has 80 Comments
    1. I grew up in Bixby Knolls Long Beach (1950’s, 1960’s) and I think the polite thing to say is that the demographics have changed.

      I drive through my old neighborhood fairly regularly.

      The neighborhood used to be absolutely safe. In my entire life (then) I never saw or heard of one crime. Everyone had a stay at home mom. Teachers were respected. The PTA was active and all the parents knew each other.

      Us kids could ride our bikes and visit anyone’s home with zero sense of fear or anything else.

      My mom had a ’52 DeSoto convertible. The top was always down. We could leave anything in the back seat and nothing was ever bothered with even when parked at a shopping center.

      A SFR on with a big front/back yard was 25K-35K. Note: Some exceptions like the Virginia County Club area was “expensive”. But even then, my friends Dad, who was prominent LB medical doctor paid [I think] only a bit more than $100K for a *giant* house of exceptional fine construction on County Club Drive.

      Those days are long gone. It was paradise. I was lucky and now very grateful that I was able to grow up in that era.

      Looking back, I think the big turning point with respect to general civility and prosperity came on the day John Kennedy was assassinated.

      I used to come home for lunch and remember my mom listening on the radio to the news. I caught the famous scene on TV when Walter Cronkite announced Kennedy’s death.

      Thank you HBB bloggers for reading.

      1. Looking back, I think the big turning point with respect to general civility and prosperity came on the day John Kennedy was assassinated.

        I remember an article long ago on how we tend to think of the different decades is actually off by a few years and what we think of as “the 50s” ended that day. It does seem to have been a turning point from WWII-style post-war thinking to something new.

        1. That’s definitely true. The 70’s didn’t really begin until 1974 or so — possibly with the loss of Vietnam. The 80’s didn’t begin until 1984 or so… probably with Morning in America and Reagan improving the economy with deficit spending. (The clothing fashions brightened to match). The 90’s didn’t begin until about 1994, when Al Gore “invented” the internet. (More accurately, Gore championed the law which opened the internet from military/academia-only to private commerce.)

          The 2000’s began a bit earlier, so to speak. Y2K made us very aware of the decades. Then the Nasdaq crashed in the summer of 2001, and bye bye 1990s. 9/11 finished off any sense of decades. Since then it’s been kind of a blur.

          1. The 70’s didn’t really begin until 1974

            Call be an outlier, but 1960 started the ’60s for me and 1970 started that decade as well with graduation from HS. And so on.

          2. ” The 70’s didn’t really begin until 1974 or so”

            Is that like the same as $1500 per month rent is more than $3000 per month mortgage, taxes and depreciation?

          3. Yeah, thats just babble – makes no sense whatsoever. The 70s started in 74? Ooookay. And we lost Vietnam? Says who, the deep state who got us into it in the first place? Based on damage taken, I’m sure the viets would disagree but what do they know – they probably think the 90s started in, oh I dont know, 1990?
            It must suck being that dense.

          4. Carl was referencing an article which talked about “what we think of as” the 1950s or 1960s. I was extending the conversation to “what we think of as” the 1970s an 1980s.

            I’m sorry if you’re too dense to understand the nuanced difference between an absolute calendar decade and a perceived decade.

          5. you’re too dense

            I’ve heard that the financial stress of making relentless debt payments can make a person cranky.

          6. And we lost Vietnam? Says who, the deep state who got us into it in the first place?

            Based on damage taken

            Well, except that you don’t base it on “damage taken”, you base it on whether you achieved your goals or not.

            Our goal: topple the government and defeat the Viet Cong.
            Their goal: drive out the US and institute communism.

            Gosh, I wonder which side won.

  1. But the supply improved because the rate of sales activity decreased,’ he explained.”

    Whoop, there it is. The real sawin’ and slashin’ hasn’t even begun yet. Trillions of fake Yellen-bux valuations and speculative excesses still need to be flushed out of the system before prices revert to historic (sane) norms. But we renters are a patient bunch.

    1. “…before prices revert to historic (sane) norms.”

      I earnestly hope this happens. But I fear that “they” are going to find some way to shaft us. House prices won’t really fall all that much, and somehow corporate interests Etc will swoop in and buy them all up.

      1. Fortunately the country has overbuilt luxury rental apartments and removed the ridiculous tax subsidies given to house humpers. The cost of renting an apartment with 5 star resort amenities is now significantly lower than buying and maintaining a shack.

      2. But I fear that “they” are going to find some way to shaft us.

        The irony is that once the majority of people are sufficiently shafted, 99% of the houses will be worthless because we won’t have any money.

    2. Prices won’t bottom out until the tailwinds of the next recession, which itself is likely a couple of years out. And home prices are already beginning to correct, as Ben amply documents here on a daily basis. I give it 7 years +/- 2 until a bottom is reached.

      Nation & World
      Tue., February 26, 2019
      Most economists predict recession by 2021
      Only 11 percent in survey believe nation will avoid a downturn
      In January, Federal Reserve Chairman Jerome Powell said the economy has “good momentum” and he didn’t foresee a recession in 2019.

      1. I’m seeing similar in MI! I know, how can prices be that high in flyover country?! I just checked that listing and jeez, my impression that things are way overpriced here must be very true…isn’t Portland a desirable place to live?! Prices are similar here, I just don’t get that…

        1. CrazyHouse – Portland, Seattle, Denver, San Fran, and LA are in the stratosphere right now in terms of pricing. Portland is a cool city but it certainly isn’t an economic powerhouse. The cult of housing spreads to every affordable city Californians move to like the plague.

          Generations of savvy Californian families have amassed unimaginable fortunes just riding the real estate wave and being 2 steps ahead. After sucking out all of the gains from California, they moved over to Oregon, Arizona, Texas, Colorado, and Washington and inflated housing way above median incomes there as well.

          Unfortunately there luck has run out and we have elected officials in Washington that are punishing any state that did not vote for Trump in the past election. The blood bath is very real in heavy democrat states right now.

          1. punishing any state

            Living beyond one’s means brings its own punishment.

            Ironically, I live in NY and am not being so punished.

          2. You forgot CA’s closest neighbor, Nevada, where prices are completely detached from reality, entirely due to Californicators.

    1. Would have never guessed it was a Ca based org… how about we just buy them houses with our tax dollars

  2. Long Beach, Ca median household income: $55,000
    Long Beach, Ca Median house sale price: $600,000

    “This is a totally normal market. The median household is paying 12X annual income to live in a shack in a bad school district. Can’t imagine the blue collar workers that reside in this county will be impacted at all by a slow down in the commercial and residential real estate…” – local realtor

    Is there a way to short sell the housing market right now? Holy sh*t everything is incredibly overpriced.

    1. Ed, housing : building stocks are plummeting. You can short them! PPT may come and rescue them though…

      1. REK is a good etf for shorting RE too. All green today 😉

        Be sure to check the top holdings of ETFs like that though. They don’t necessarily have to do with home builders, as REK is mostly cell tower infrastructure and REITs.

    2. Of course it is not those median-income families who can afford the median homes. If we use the strictest lending standards used by banks for conventional mortgages (you know, those banks that eat their loans when they go bad instead of shipping them off to MBS purgatory a la Quicken), only people in the 90th or higher percentile of income can afford that median house. Problem is, those people don’t want a median house, and that is why they keep renting 🙂

      1. I’d be happy in a median house, but not at that non-median price!
        I could get %age-of-reasonable-price-wise better deal right now on an oversized over-equipped house that the bank would lend me the money to ‘buy’, but I’ve saved and saved to keep my housing costs reasonable not to have marble in the bath or 1000 SF more than I need to live in. The ‘trade-up’ homes in my area are sitting and sitting and ‘regular’ local people are paying *anything* to get into something, anything…

        1. I remember realtors telling me ‘houses are worth what people are willing to pay for them’ to justify higher prices; apparently that saying cuts both ways 🙂 In my neck of the woods (suburbs to the east of LA), the ‘trade-up’ homes are just sitting and sitting as well. The majority of them are in the 1800+ sqft range and priced for upper-middle class buyers , most of whom have 2 or fewer kiddos and don’t need so much space. Agree with you that I would be willing to live in a ‘median-income’ home in ‘median-income’ neighborhood, but as the saying goes: ‘houses are worth what people are willing to pay for them’ 😉

      2. We are one of those millennial households that is fortunate to be in the 95th percentile with no student debt and dry powder for a down payment. The median in LBC is barely affordable for us and we wouldn’ touch those homes. Luxury rental buildings with a few less square feet works perfectly for our family.

        1. Wait, $605K is “barely affordable” yet you claimed a few days ago that you could buy a house for each of your two kids in flyover country???

          1. Affordable meaning 2X our annual income. The joke about buying homes for our kids was based on our $4K per month child care expense. If we didn’t have small children, we could afford much more than a $600k house. Not that we would spend that much or exchange our kids for anything in the world(including a $1M house and a couple Teslas):)

        2. the 95th percentile

          You would think any one really making big bucks would at least realize it’s the 5%tile, not the 95th percentile. The 1%tilers are not the homeless people.

          1. Ed,
            Get a nanny. We did. 2 kids, roughly $2150/mo. L for 30 hours a week. She comes to our house, does light housekeeping and generally decreases our workload by 30%. is a good place to start, but the hiring/interview process is work. Good luck.

  3. From April of last year …

    Homeowners Reap Profits While Fueling Housing Crisis — Shelterforce


    “A new report released this week found San Francisco homes earned $60 per hour in equity. That’s four times more than the city’s minimum wage. And the home doesn’t even have to show up to work.”

    (Mr. Banker now dons his Progressive hat and says):

    “Hey, I have an idea! Let’s treat this sixty dollars an hour as actual income and tax it as such.”

      1. I’ve heard they pay the homeless people $60 hr and give away free H and needles. Must be nice to pay $1.7M for a shack and still have to step in human sh*t on your way to work.

    1. From 2011 …

      “The OECD says imputed rent should be taxed
      When homeowners own their property with equity, they get a tax benefit as important as the mortgage interest deduction: the imputed rent they pay to themselves goes untaxed. To think about how this works, consider two nieghbors who own their houses free and clear. Suppose the houses are identical, and that the nieghbors swap houses, paying rent to each other. They now have a tax liability that they would not have had they remained in their houses. Avoiding this liability is tantamount to a tax expenditure–a benefit to those who own their houses without debt. The OECD is correct that countries rarely tax imputed rent, and argues that this lack of taxation has tilted investment toward housing to the detriment of more productive uses. It also argues that the benefits to homeownership are overstated. I am not sure that this is true (see here and here), but I will leave that for another time.

      “The question is how does one go about taxing imputed rent? It is not easy. One could start by imposing an ad valorem tax on property values (such as a local property tax), but that doesn’t tax imputed rent per se, because it does not take into account expected inflation (if one person expects her house to go up in value, and another does not, the rent the first person pays is lower than the second). Alternatively, one could find comparables in the rental market and attribute rents found there to the owner market. But owner and rental markets are so segmented that this would be difficult to do.

      “This has implications for fairness; if we don’t know what we are taxing, it is hard to know how much to tax it.”

      Mr. Banker says: No dollar will be allowed to escape.

      Richard’s Real Estate and Urban Economics Blog: The OECD says imputed rent should be taxed

        1. I’d much rather tax unused property than imputed rates. We do have to pay generate the tax revenue to support our massive deficits, despite what AOC claims or what the Fed is doing by shutting down quantitative tightening.

          It is kind of funny to hear Powell criticize AOC’s Green New Deal while they have a $4T balance sheet that has is essentially the same thing, but all done without legislative direction and for a narrow segment of the population.

          1. I’d much rather tax

            I’d much rather you control guys wouldn’t spend so much expecting me to pay for it.

      1. Imputed rent would be a good way to get homeowners to bail on house ( cash out refinance) and bail on country ( china style) .
        A little more subtle tax is what I expect , Blackstone and government can work something I’m sure. like boiling frogs slowly.

    1. Flipping Not over in Raleigh
      Cash for homes/ we pay cash for homes at every intersection.
      And not the same sign or the same number!
      Flipping or at least trying to flip appears to still be alive and well in Raleigh.

  4. ‘There’s a little bit of an oversupply in some areas, and they can really pick up some good opportunities.’”

    lmao, if you think they are good now, wait till EOY or 2020, your gonna love the incredible opportunities coming then

  5. Boots info — It’s possible that the flip mania is over, but the FIX mania is clearly NOT over. Several of my co-workers are getting near retirement and are planning to downsize. They are all renovating their homes, planning to sell for top dollar before they downsize into whatever.

    There was an article some time back, saying “only renovated houses are selling.” I guess my co-workers are proving that true. No more grandmas selling 1970s decor for $40K less than comps (which is sort of how I bought). Nope. You gotta have the new kitch/bath, the grey walls, the refinished flooring, the finished basement.

    Yesterday, Blue asked me if I plan to retire in place. Answer: NO. I plan to sell my home and buy a retirement home outright and pocket the proceeds. I don’t know where yet, or even what kind of housing yet (condo, villa, house). But I live in a busy crowded area with lots of traffic and a hectic pace of life. IMO it’s no place for an elderly person to navigate.

    1. the grey walls

      My least favorite new trend. The apartment we’re in got remodeled just before we moved in. Lots of stainless and gray and white. I’m envious of the ones that weren’t remodeled that have the standard wood cabinets and light countertops that don’t show every single drop of water that dried there before it could be wiped up. We’ll be out soon, just hopefully not into a house with the same “upgrades”.

    2. oxide – Unless your home has recently had an HGTV make over you are going to have a hard time selling your house. Buyers right now want brand new construction turn-key in walkable neighborhoods. The premiums I still see being paid on new construction in walkable neighborhoods is totally insane.

      1. Luckily I plan to stay here at least another 15 years. By then I hope I can afford a decent reno. The trend of renovation before selling is probably not going to go away. With any luck, the trend of gray walls will go away.

        1. It will! Luckily, walls are easy to paint. Those grey 12×24 tiles used for bathrooms and flooring will look very dated.

    3. NO. I plan to sell my home and buy a retirement home outright

      That part seems sensible. May your gambles work out in your favor.

      In normal times people do not pay 2+ x cost for upgrades and renovations. They pay maybe 50% at best. Your time has no value in such endeavors.

    1. So, when’s the Fed going to start buying up millions of homes?

      Assuming the answer is “it’s not,” Charles Hugh Smith of the Of Two Minds blog says prices are going to get hit hard across the country.

      They didn’t do that last time, either, but they suppressed rates to levels that made it attractive for gamblers to pool funds and snap up massive numbers of homes at rock bottom prices hoping for a quick gain when the economy came back.

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