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Now People Are Dropping Their Prices By 10, 15 Or Even 20 Percent

A report from the Union Tribune in California. “New home sales in San Diego County fell 20 percent in January from a year earlier, hitting an 11-year low, CoreLogic reported. ‘We seem to be reaching that point at which housing prices are exceeding, at least perceived, affordability,’ said real estate analyst Gary London. ‘What I have advised most people is we are probably post-peak.'”

“He said the real estate market was not experiencing a bubble pop but a normal adjusting after hitting a high point. The problem is not a lack of demand, because numerous people want to buy, but that the type of housing is too expensive for many, London said.”

“Resale condo sales appear to be hardest hit, with sales down 25 percent in a year — 592 compared to 787 last year — and increasing in value less than 1 percent annually. The condo median in January was $412,000, down from a July peak of $432,000.”

“Newly built home sales were the third lowest for a given month — not just January (but it is usually the slowest month) — since at least 1988 when CoreLogic started recording. ‘Developers are probably not real anxious to put out new homes right now,’ London said.”

“Resale single-family homes remained the dominate part of the market with 1,410 sales, 67 percent of all sales, and a median of $588,000. That’s down from the all-time peak of $630,000 reached in June and July.”

“The number of homes for sale each year in San Diego County tends to go down after August, at the end of the summer buying season. That didn’t happen this year. ‘Even back down at the (interest rate) level we are at now, it was already starting to slow,’ said Rich Toscano, a partner at Pacific Capital Associates.”

“The most expensive markets in San Diego County tended to feel the brunt of the slowdown. In La Jolla (92037), the resale median home price, $1.95 million, was down 28 percent in a year. In Rancho Santa Fe (92091), the median was $1.3 million, also down 28 percent in a year.”

The Orange County Register. “What’s up with mortgage rates? Jeff Lazerson of Mortgage Grader in Laguna Niguel gives us his take. Earlier this week, CoreLogic announced a 17 percent drop in Southern California home sales in January compared to one year ago. And, almost 20 percent fewer homes sold in January compared to December.”

“If you are an informed and patient home shopper, and you plan on holding your home for five or more years, I say nonsense to these falling home sale numbers. Consider my client whom I will nickname Patient Perry.”

“Late last summer, Mr. Perry found a Laguna Niguel home that really caught his eye. He made an offer and went into escrow. All was good until the estimated value of the appraisal report fell short of the sales price. Patient Perry and the seller could not come to terms on a price reduction. Escrow cancelled.”

“Some months later, Patient Perry went back and made another offer on the same property and this time the deal stuck. We closed in January. Between the sales price and closing costs, Patient Perry paid $35,000 or roughly 4 percent less than he would have had the original offer stuck.”

“More recently, and in addition to the sales volume drop, home prices are flattening or even dropping. Yet, many real estate listing agents and home sellers won’t acknowledge these facts — as evidenced by increased price reduction trends, longer average days on market and cancelled listings.”

“My takeaways for buyers in this declining market are: Don’t be afraid to low-ball the offer as a first step. The sellers’ counter-offer will speak volumes as to where the seller is willing to land.”

The Ventura County Star. “CoreLogic’s report on the Southern California housing market in December noted that the region’s home sales were the lowest for a December in 11 years. The same report noted that home sales had fallen on a year-over-year basis for five consecutive months and in seven of the past eight months.”

“The statistics aren’t detached from reality, according to Jose Luiz Morales, a local real estate agent with RE/MAX Gold Coast Realtors. Morales said demand was down last year compared to every year since 2015 and cited rising interest rates as a crucial factor in 2018’s lower sales volume.”

“‘Interest rates going up made affordability go down tremendously,’ Morales said. ‘People would see properties and want to make an offer, but after seeing the numbers with the higher interest rates, they wouldn’t come back.'”

“Inventory is up and demand has softened, which has caused some sellers to reduce their prices, according to Morales. Morales added that there were frequent news reports in the past year about the possibility of a recession or housing bubble, which further shook consumer confidence.”

“Longtime Ventura County resident Chuck McQuiddy bought and sold property in the county last year and said the market was unarguably better for sellers early in 2018. ‘A year ago, things were selling for over asking price, but now people are dropping their prices by 10, 15 or even 20 percent,’ said McQuiddy, 56. ‘Right now, it seems like more of a buyers’ market (but) when I sold my Camarillo home last April, it was definitely a sellers’ market.'”

“Today, McQuiddy still views Ventura County’s housing market as a strong one but said it is firmly in favor of the buyer. He wasn’t sure what caused the shift but said politics or rising interest rates could be factors.”

From Patch Los Altos. “Nestled in the Los Altos Hills, this humble estate has everything you need and want behind the gate at a $500,000 price reduction. Price: $6,380,000 Square Feet: 4786 Bedrooms: 5 Bathrooms: 5 Baths Built: 1991 Features: $500k PRICE REDUCTION.”

This Post Has 60 Comments
  1. Eeee-bola La Jolla and Rancho Santa Fe!

    Again, the most expensive areas fall the furthest, fastest. Consistent with a bubble popping.

    1. “Eeee-bola La Jolla and Rancho Santa Fe!”

      You can’t donate blood to the Red Cross if you been living or visiting anywhere close to an Ebola outbreak.

    2. With resale median prices -28% YOY , these areas unquestionably saw the writing on the wall with the SALT and MID caps.

    3. I can’t wait to learn the fate of certain cliffside monstruosities around La Jolla that have been under perpetual renovation for years running, right up to the time of the nascent bust. Quite obviously these multimillion dollar flips have flopped. I’ll be curious to see if the investors reduce the price to sell, or try to ride out the downturn.

  2. “The most expensive markets in San Diego County tended to feel the brunt of the slowdown. In La Jolla (92037), the resale median home price, $1.95 million, was down 28 percent in a year. In Rancho Santa Fe (92091), the median was $1.3 million, also down 28 percent in a year.”

    Where is Chris “No Bubble” Thornberg???!????

      1. I’m seeing more of these:

        It’s Now or Never to Cut a Deal in Seattle
        Mansion Global-21 minutes ago
        If the dramatic slowdown in Seattle’s housing market has you waiting for a crash to buy your next home, don’t hold your breath. New housing data indicates the ..

        It amounts to Redfin horse-hockey opinions.

        OK, so for months all we’ve heard was “buyers have hit a limit in what they can pay.” Now what, buyers just got a whopping raise? “Buyers” have to borrow for shacks. All this flailing around for excuses for why the bubble popped is just REIC damage control. But it’s still shameless boosterism to try and shoe horn in a last few thousands of first time buyers into the mania. I’m pretty disgusted with the media in general these days.

        1. “I’m pretty disgusted with the media in general these days.”

          The media sure does try to swing back the buyer / sheeple views. For every few RE related articles, you will see one that contradicts the factual downward data but typically these are opinionated statements . It’s a sour attempt for REIC’s / realtors to save there ass and continue to profit in a down market. This whole RE market thing comes off bitcoinish to me. You hear it’s going to the moon forever, then it declines, people say HODL, keeps declining, media says it’s a correction and it will go back up, etc… I am disgusted to that shelter, the American dream has turned into a Wall Street gamble.

        2. Last night I received a message out of the blue from a Seattle realtor I last spoke to a couple years ago. I said we still weren’t interested in buying because, with falling prices, there was no hurry to act. Her direct quote: “Prices are bouncing now and the media is using old data to scare people”.

          Although, here in Eastside Seattle I wouldn’t be shocked to see a 1.5 month boomlet this Spring. Still a good economy and lots of true believers. Activity could ease concerns for a dead cat bounce until the fundamentals really drag over the summer.

          1. Although, here in Eastside Seattle I wouldn’t be shocked to see a 1.5 month boomlet this Spring

            Coworker of mine is looking to buy right now. Apparently the place they put an offer on now has 5 other offers…

            Still waiting for this thing to truly turn around here!

          2. “Coworker of mine is looking to buy right now. Apparently the place they put an offer on now has 5 other offers…”

            Dr. Zira: “What will he find out there, doctor?”
            Dr. Zaius: “His destiny.”

  3. Ben, this blog just keeps getting better and better.

    FALLING PRICES are the reality that can no longer be denied.

      1. What a flake of a hysterical prediction …

        “The Connecticut Institute for Resilience and Climate Adaptation, a joint effort of the University of Connecticut and state Department of Energy and Environmental Protection, is calling on coastal communities to plan for a rise in the Sound of 20 inches over the next 30 years.”

        A rise of twenty inches over the next thirty years? Bahahahahaha.

        “The institute is not predicting the Sound actually will rise by that degree …”

        See? Flakey as hell.

        “…  but it is among the possibilities based on a range of factors in a report CIRCA Executive Director James O’Donnell presented to the Legislature’s Environment Committee.”

        Bahahahahahaha. Here, for some genuine hysterics check out this prediction …

        “Sea-Levels, Rising Up To 23 Feet, Could Sink More Than 1,400 US Cities By 2100”

        https://www.ibtimes.com/sea-levels-rising-23-feet-could-sink-more-1400-us-cities-2100-study-1365801

        If one is determined to rile up the ignorant masses they should put in the effort to do it right.

        1. “calling on coastal communities to plan for a rise in the Sound of 20 inches over the next 30 years.”

          That would be 20 inches more than the last 50 years that I’ve seen at Tod’s Point. In fact the Sound is so much cleaner now than it was when I was a kid there are whales and dolphin sightings.

          By Justin Papp Updated 1:09 pm EDT, Tuesday, September 4, 2018

          Dan Lent, a boater from Easton, sighted two whales off Long Island Sound earlier this month. He took this photo of a humpback whale off Stamford and Greenwich on Sept. 12, 2015.

          Because of poor water quality, Humpbacks had totally disappeared from the Sound for many decades, until 2015, when three different whales were seen at multiple locations on the coast.

          Bait fish numbers have increased with the cleaning up of the waterway which, in turn, has attracted larger predators like turtles, dolphin, whales and even sharks — a sand tiger shark was recently found off Penfield Reef in Fairfield.

          “Water quality in the Long Island Sound has changed in the last 30 years. Obviously, if people want to go out there and swim, animals are going to want to swim in the water, too,” Hudson said. “When we think about the improved health of the ecosystem itself, that’s when we see the large animals come back.”

          https://www.thehour.com/news/article/No-confirmed-summer-whale-sightings-in-the-Sound-13198930.php

      2. plan for a rise in the Sound of 20 inches over the next 30 years.

        The ocean has already risen 300 ft since the last ice age.

        People who build a couple of feet above sea level are a special kind of stupid.

        We had 30 ft waves on Lake Ontario last week. Can’t wait to see some of the bubble beach houses on my cruise this year.

        1. “We had 30 ft waves on Lake Ontario last week”

          SS Edmund Fitzgerald
          From Wikipedia

          SS Edmund Fitzgerald was an American Great Lakes freighter that sank in a Lake Superior storm on November 10, 1975,

          En route to a steel mill near Detroit, Edmund Fitzgerald joined a second freighter, SS Arthur M. Anderson. By the next day, the two ships were caught in a severe storm on Lake Superior, with near hurricane-force winds and waves up to 35 feet (11 m) high. Shortly after 7:10 p.m., Edmund Fitzgerald suddenly sank in Canadian (Ontario) waters 530 feet (88 fathoms; 160 m) deep, about 17 miles (15 nautical miles; 27 kilometers) from Whitefish Bay near the twin cities of Sault Ste. Marie, Michigan, and Sault Ste. Marie, Ontario—

          https://en.wikipedia.org/wiki/SS_Edmund_Fitzgerald

          Wreck of the Edmund Fitzgerald, photos of the Great Lakes’ most famous ship

          By Tanda Gmiter | tgmiter@mlive.com | Posted November 10, 2018 at 09:04 AM |

          https://www.mlive.com/expo/life-and-culture/erry-2018/11/1f456e02122586/wreck-of-the-edmund-fitzgerald.html

  4. “He said the real estate market was not experiencing a bubble pop but a normal adjusting after hitting a high point. The problem is not a lack of demand, because numerous people want to buy, but that the type of housing is too expensive for many, London said.”

    What great insight? This is why he gets paid the big Yellan Buxs!

    So people making $15 per hours can’t afford $900,000 dollars houses? The H#LL you say!

    1. Sales down 20%, 30%….new homes in OC down 50% …. Nothing to see here. We are just plateau at “peak”…move along. No bubble.

  5. “If you are an idiot and knife catcher home shopper, and you care about my precious commission checks, I say nonsense to these falling home sale numbers. Consider my client whom I will nickname FB’ed Perry.”

  6. “Good news for homeowners: Prices are still going up, just at a much slower pace.”

    Literally right next to a chart showing prices are down $40k since August. Now they’ll chalk that up to seasonality but come summer there will be nowhere to hide.

    1. Bahaha! I read that too and then saw the chart. I pay more attention to pictures than words so my take home was CRATER. Nice try to rosey it up

  7. take a look at my neighbor to the north, the ZIP code with the largest appreciation in the county, Oceanside’s 92058. Lets see you’ve got Camp Pendleton and then sliver of 2 neighborhoods outside the base. Really Union Tribune? This is hardly representative of anything a few hundred homes at most. So basically, its tanking everywhere in San Diego, and people are dumb enough to buy into a sinking market so expect 2020 to be worse.

    1. Mike in Carlsbad – Employment was still strong in 2018 as well. Now that construction and home sales have stalled, the unemployment rate will certainly rise and kill sales at the low end of the market. Imagine how many people in California are dependent on income derived from buying and selling shacks and perpetual home price appreciation?

      1. Imagine how many people in California are dependent on income derived from buying and selling shacks and perpetual home price appreciation?

        We don’t have to imagine. We remember Housing Bubble 1.0.

        1. IIRC, busts are the perfect time for renovations or large landscape projects because contractors’ work dries up.

  8. “Today, McQuiddy still views Ventura County’s housing market as a strong one but said it is firmly in favor of the buyer. He wasn’t sure what caused the shift but said politics or rising interest rates could be factors.”

    I’ll tell you what happened, the smart money got out, investors, flippers, international buyers looking for safe haven and then the locals noticed all this new inventory, slowing sales, press talking about falling prices and they realzied they don’t want to be burnt like the last downturn.

    Looks at rent to buy ratios, local incomes and make your own educated guess about what the houses for sale are really worth.

  9. “Some months later, Patient Perry went back and made another offer on the same property and this time the deal stuck. We closed in January. Between the sales price and closing costs, Patient Perry paid $35,000 or roughly 4 percent less than he would have had the original offer stuck.”

    With prices already down by well over 20 percent in high end SoCal markets such as La Jolla and Rancho Santa Fe, and no recession in sight (yet), it sounds as though Patient Perry got himself a knifecatcher’s special.

  10. Any nominations for the PR buzzword of the 2019 bubble implosion in lieu of the classic but retired “soft landing”? “Normal adjustment”? “Market normalization”? “Gentle softening”? “Moderated Slowdown”? “Affordability growth”? “Ordered correction” ?

    1. Moderate deceleration in the rate of positive seasonal price increases.

      Mild tempering of the unbridled joy associated with homeownership.

      Partly cloudly skies resulted in a mild and seasonal 56% decline in new home sales.

    1. factory activity

      If the global construction boom falters, there’s all kinds of stuff that doesn’t have to be manufactured for it.

      1. “If the global construction boom falters, there’s all kinds of stuff that doesn’t have to be manufactured for it.”

        Yep. And if this stuff doesn’t have to be manufactured then those employed in manufacturing this stuff get to enjoy all the benefits of being unemployed.

    2. Shades of 1929?

      At least the stock market has done very well, at least since December 24, 2018.

  11. From the progressive Mother Jones:

    Southern California Housing Market Is Down Yet Again

    ‘The Southern California housing market, often a bellwether for the rest of the nation, is officially in bad shape’

    ‘There’s an awful lot of red in this chart from the LA Times’

    ‘None of this means we’re looking at a housing bust à la 2007. But it’s not a great sign of continued economic growth either. Y’all be careful out there.’
    FACT:

    ‘Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn’t fund the type of hard-hitting journalism we set out to do.’

    https://www.motherjones.com/kevin-drum/2019/02/southern-california-housing-market-is-down-yet-again/

    So when prices skyrocketed, year after year, it was gleefully said “supply and demand baby! You gotta role with it!”

    Now it’s hushed tones of “be careful out there, it’s getting scary. All the rich people might have to do their own laundry, yikes!”

    1. I was reading the comments earlier on this and the tone was Generally optimistic RE. I think that speaks a lot as to what the general population of people view towards RE markets. They either pull the good or the bad and believe what they want. It also confirms fear for the optimistic as they believe by typing a few sentences that discredit factual data may influence the reader to swing his or her opinion. The idea that we could possibly experience another bubble scares most, if not all, the people that have either purchased during the run up or whom have financial dependency on there shacks value ie piggy bank.

      “It’s all good here folks, RE will make you rich, get in before your priced out FOREVER, it only goes up, low supply, interest rates down, commission check.” -Realtor

      1. Now or never. OK, what about Miami and New York City? You don’t go on a ten year, double-digit month after month mad over bidding tear and cool off for 6 months. It just doesn’t work that way. And if you explain the setting like I just did, the majority of people would realize caution might need to be considered. Not this fear of missing out horse-hockey we’ve grown accustomed to.

        There’s really no place for it. These are large amounts of money people are borrowing. Snake oil type sales tactics are worse than reckless.

        1. “There’s really no place for it. These are large amounts of money people are borrowing. ”

          True, but it’s not their money…

        2. “There’s really no place for it. These are large amounts of money people are borrowing.”

          Oh, there is indeed a place for it. Drop by my bank and enjoy a free cup of coffee as I explain it to you.

          (Along with your visit please bring with you a certified list of all of your marketable body parts.)

    2. This SoCal slowdown should be great news for renters, who may even someday find buying opportunities if prices fall. Why not celebrate the prospect of new opportunities for renters ahead?

  12. https://www.post-gazette.com/opinion/Op-Ed/2019/02/28/Ruben-Navarrette-Jr-Politics-is-make-believe-and-Beto-O-Rourke-is-made-for-politics/stories/201902280035

    ‘Furious Democrats demand that I stop complaining and learn to love The Beto.’

    ‘My criticism of a Texas-sized cultural enigma who changes his schtick like other people change cell phone companies has enraged both white liberals and Latino lefties. Beware the Beto Bots.’

    ‘The white liberals prefer that Mexican-Americans serve up chips and not opinions. And they’re miffed that I rejected their choice for the preferred “Latino” 2020 presidential hopeful, after they went to the trouble of choosing him for me.’

    ‘The Latino lefties have such low self-esteem and deep insecurities that they’re flattered that a handsome Irish-American who grew up on the soft side of town and studied in the Ivy League wants to be one of them.’

    ‘I don’t feel the love. I think the Texas Democrat is a phony, an opportunist and an underachiever whose thought process is stuck in the shallow end. And what really bothers me is how the media, liberals and the rest of the Beto Bots deify him and demonize critics.’

    ‘As a Mexican-American who fell in love with the Irish when I went to college and graduate school across the Charles River from Boston, the fact that this Irishman is hellbent on impersonating a Mexican-American — or at least doesn’t mind if you think he’s one — drives me loco.’

    1. What’s up with the Beto thing? That’s not his name. I saw a video of him speaking. He waves his arms around kinda goofy.

    2. Another globalist quisling who is all about open borders and unrestricted immigration. How ground-breaking.

    1. “home buyers now being offered 30-year loans at a fixed rate of just 1.5 percent.”

      Whaaa!

      1. Surely this means home sales will rebound as all that pent-up demand rushes in from the sidelines to snap up all available inventory during this brief window of opportunity.

        Gosh, I should go to work as an REIC shill. I’m pretty good at this.

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