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If Someone Is Way Overpriced, Those Properties Still Sit

A report from News 3 LV in Nevada. “It was only a matter of time before the blistering hot real estate market in Southern Nevada cooled down a little. The slower sales mean home sellers won’t see multiple offers piling up within hours of their home going on the market. ‘If you’re competing against your neighbor down the street,’ said past GLVAR president Christopher Bishop. ‘You want to make sure that you’re priced effectively for buyers to look at that home. You’re not going to be able to overprice your home and think that you’re going to have multiple offers. It’s just not this market.'”

From The Gazette in Colorado. “Colorado Springs-area home prices continued to climb last month, even as Denver’s slipped for the first time in several years. The supply of homes listed for sale totaled 1,518 in February, up nearly 24 percent on a year-over-year basis.”

“‘Sellers are getting at or above asking price, when they’re priced correctly,’ said Donna Major, board chairwoman of the Pikes Peak Association of Realtors . ‘If someone is way overpriced, those properties still sit.'”

“Jill Schafer, who chairs the market trends committee for the Denver Metro Association of Realtors, said prices fell partly because of sluggish sales in outlying portions of the 11-county metro area. The Denver-area inventory has increased at a much higher pace than in Colorado Springs, so buyers also have more choices and can negotiate a more favorable price, she said.”

“But Denver’s market remains strong and February’s price drop ‘was a little bit of a blip,’ Schafer added.”

The Post and Courier in South Carolina. “There’s no cause for alarm, but the number of borrowers who owe more on their mortgages than their homes are worth edged up oh-so slightly during the fourth quarter in the Charleston region and across the nation.”

“Nationwide, that figure edged up 1.6 percent to 2.2 million homes, or 4.2 percent of all mortgaged properties during the fourth quarter of 2018 from the third quarter last year. It was the first quarterly increase in the U.S. since the fourth quarter of 2015.”

From News 10 in California. “There are still people fixing and flipping houses, but if you want to make it in San Diego, you have to be a smart and savvy investor. Take the home Elijah Zuniga purchased in late November for example. It’s a 1974 single family home in San Carlos.”

“In November when Zuniga bought the house, Zuniga’s agent Lisa Becker, figured after renovations it could sell for $750,000. Fast forward to the end of February, with more homes on the market, suddenly the home is valued at $720,000. ‘The buyer of this home is going to get a gorgeous home $30,000 less than they could have purchased at the end of last summer,’ Becker said.”

The Carlsbad Current Argus. “A booming and fluctuating oil and gas industry stimulated New Mexico’s housing market in recent years, causing shifts in home sales and valuation, particularly in areas known for extraction of oil and gas.:

“Sam Todd, broker at RE/MAX of Farmington said changes in San Juan County’s economy – as the natural gas industry began its exodus from the area, bringing many workers and their families with it – drove up the amount of available homes and drove down the prices.”

“‘Our sales are going up, because our prices have trended downward to where they needed to be,’ he said. ‘When oil and gas busted, we felt it here. All it was cause people to make adjustments in their values. We’re no longer a seller’s market. We’re a buyer’s market.'”

“But across the state in the southeast, Carlsbad is seeing almost the opposite trend. Russel Hardy saw that growth during his 20 years as a home owner in Carlsbad. He recently put his family home up for sale, planning to retire from his job and move north to Roswell.”

“Hardy wouldn’t divulge how much he bought the home for originally, but the $445,000 price tag on it today, he said, gave him ‘sticker shock.’ The 3,118-square-foot home was valued at about $100 per square foot when he first bought it, Hardy said. Today, he said it’s worth about $150 per square foot.”

“That means Hardy’s house grew in value by up to $150,000 in 20 years, which could allow Hardy to recoup about $100,000 in renovations he said he made during his two decades of ownership.”

“‘I’m ashamed by how much I’m asking,’ Hardy said. ‘Affordable homes are hard to come by. I’m used to what prices used to be, not what they are now. It’s because of all the workers coming in and putting stress on the market. They can’t build enough to keep up with demand.'”

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This Post Has 70 Comments

  1. ‘I’m ashamed by how much I’m asking’

    Without the slightest sense of irony.

    ‘and move north to Roswell’

    Jeebus that’s a depressing thought.

    1. ‘Denver’s market remains strong and February’s price drop ‘was a little bit of a blip,’ Schafer added’

      Yeah, a 12 month blip Jill.

      1. Nobody wants to live here anymore.

        I’ve been working from 6 to 2 (because traffic) the past few months and the road rage on the highways at 5:30am is just disgusting.

        Move to Denver if you like deadly commuting conditions, air pollution, homeless, drugs, crime, driving 4 hours each way to drive 70 miles to ski in Summit County on the weekend, and overpriced housing.

        Meanwhile, the down payment to buy a house not in Denver only continues to grow, because after “throwing money away on rent” every month I have so much money left that I don’t know where to throw it.

  3. ‘Fast forward to the end of February, with more homes on the market, suddenly the home is valued at $720,000’

    Wa happened to my shortage?

  4. ‘There’s no cause for alarm, but the number of borrowers who owe more on their mortgages than their homes are worth edged up oh-so slightly during the fourth quarter in the Charleston region and across the nation’

    ‘Nationwide, that figure edged up 1.6 percent to 2.2 million homes, or 4.2 percent of all mortgaged properties during the fourth quarter of 2018 from the third quarter last year’

    But Senator Running Deer? Tight lending!

  5. ‘The buyer of this home is going to get a gorgeous home $30,000 less than they could have purchased at the end of last summer,’ Becker said.”

    No thanks. I’ll wait for the foreclosure auction.

    1. Prices are so outrageously high at this point that the foreclosure sale will be double what a fair price should be.

      1. Funny you say that because I have recently seen auctions that started at a higher asking price than the most recent comps have sold for. Definitely not a good time to look for foreclosures as the banks or auctioneers are just as greedy as the “not gonna give it away” shack sellers are.

        1. This is the stage where everybody still thinks they are smarter than everybody else, and somebody else will be the bagholder. The music may have stopped but people are still spotting an empty chair or two around the room and trying to get to them before anyone else notices.

    1. Oops, I missed the part about how he sunk 100K into renovations. It appears to me he has actually lost a bunch of money.

  7. “That means Hardy’s house grew in value by up to $150,000 in 20 years, which could allow Hardy to recoup about $100,000 in renovations he said he made during his two decades of ownership.”

    Dude owns a house for 20 years, nets only $50K (far less than inflation) and feels he is asking too much? What is wrong with people?

  8. “Colorado Springs-area home prices continued to climb last month, even as Denver’s slipped for the first time in several years.

    More confirmation, as if more were needed, that it’s different here in Colorado Springs.

    Say, there’s a slight almond aftertaste in this Kool-Aid….

    1. Real estate is local, but ZIRP and QE are national, and central bank intervention/easing has been global. Denver Metro Stat. Area (MSA) borders on El Paso county (CO Springs), but doesn’t include it. While CO Springs is smaller vs. Denver, it’s hard to believe that housing markets will diverge significantly between the two cities, given their close geographic proximity. Plenty of commuters now also I’m sure, and so Denver employment affects CO Springs housing as well.

      I didn’t see month-over-month (MoM) (leading) data for CO Springs housing prices (?). Year-over-year (YoY) data is lagging. Median price and Case-Shiller index are also lagging, but CO Springs inventory is rising (leading).

      In my view, It’s too early in ’19 due to insufficient data to determine market direction in CO Springs, but based on Denver MSA, and national trends, I suspect that CO Springs will follow the trend. Keep an eye on the ’19 Spring selling season; number of sales and inventory. Avoid confirmation bias. In any case, RE is cyclical and “trees don’t grow to the sky.” My 2 cents.

      1. September 28, 2018

        “Local housing industry experts said the red-hot Colorado Springs real estate market is finally cooling off after several years of record sales and construction. Last week, the website realtors.com rated the 80922 ZIP code in northeast Colorado Springs as the second-hottest nationally for home purchases but that likely will change as ‘for sale’ signs become more common.”

        “Bill McAfee, of Empire Title, who has been closing home sales since 1991, said he doesn’t expect a market correction to be as significant as during the 2008 economic recession. ‘The market was so hot, it really had nowhere to go but down,’ he said. ‘What we saw the last few years here, and particularly this year, is nothing we’ve seen before.’”

        http://housingbubble.blog/?p=121

        2. “red hot”
          “second-hottest”
          “was so hot”

          Who writes this horseshit? Oh right, REALTORS do.

          Realtors are liars.

        3. Thanks, Ben for re-posting!
          So, it looks like prices were moving lower and inventory higher back in Sept., ’18…
          From the Sept., ’18 KRDO article:
          1) “Average home price down, available homes up” [potential peak in mid ’18]
          2) “Last week, the website realtors.com rated the 80922 ZIP code in northeast Colorado Springs as the second-hottest nationally for home purchases…” [bubble indicator]
          3) “What we saw the last few years here, and particularly this year, is nothing we’ve seen before.” [another bubble indicator]

    2. talking to in-laws in the Denver mostly personal – both in the RE business so the topic came up

      They claim that sales / sprint selling season in good neighbourhoods like Lowry, Cherry Creek etc. are doing ok.

      Does this seem reasonable? Or do they just have a better Rolodex

      1. There will always be knife catchers that get lured into buying in any market. The key thing to watch is are who these knife catchers are. Foreign buyers have almost completely disappeared so shack sellers have the local ones that competed with them left over perhaps in their roledex to sucker into buying. The smart ones (IMO) will continue sitting on the sidelines as Inventory sky rockets, tax deductions amounts (much less) are known, and the prospect of + appreciation disappear. The unfortunate FBs will jump in head first and think that with the lack of competition, price reductions, and new negotiation power and contingencies make it a good time before it’s back to the moon. Realtors are having to do much more work to get clientele. I don’t recall seeing RE ads on social media, television, radio, or other outlets like I have over the past 6 months EVER. I have friends and family that have been expressing interest in getting in or trading up for no reason other than they feel like now is a good time to get in. Now is the time to be a sheep or a wolf.

      2. A friend here recently listed her small (1 bed/1 bath) 100-year-old home in a popular but still working class neighborhood in the Denver area for $375K. She had 40 showings 4 offers in 2 days. Things are still moving here but not universally. I’ve seen things fly off the shelf and things molder for no real reason other than a lack of granite counter tops. Anything under $400K or in popular neighborhoods is moving reliably. As you go up in price, lower in square footage, and outward in geography, quick sales are less assured.

        1. Anything under $400K

          Yet it remains that anyone bringing in $50K cannot afford anything like that. It’s a huge bubble.

  9. …In November when Zuniga bought the house, Zuniga’s agent Lisa Becker, figured after renovations it could sell for $750,000…”

    Flipping houses is a cancer upon society. It does not add value, it actually subtracts value.

    Flipping houses in a declining market is like playing financial Russian roulette, but with 5 bullets instead of 1 in a six shooter. You are hoping to get lucky, but odds are you’re toast.

  10. Ok, I don’t understand rent control:

    https://www.curbed.com/2019/3/8/18245307/rent-control-oregon-housing-crisis

    All the economists say it is terrible and causes rent to rise and dampens efforts to increase supply…but those are the same people who say we have a supply shortage right now and that building more housing stock will solve everything and that’s clearly not helping affordability, so I don’t know what effects it actually will have.

    1. Always a day late and a dollar short. All of this stuff could be avoided by getting rid of the Fed and overhauling the tax code to severely penalize 2nd home ownership as well as “flipping” houses. But bankers and the REIC will have no part of it.

      1. “…overhauling the tax code…”

        A complete phase out of the MID would help a bit too.

        BTW, does anyone have stats of the effect of 2018 MID changes?

    2. In general I am suspicious of rent control. It mainly doesn’t work. Having said that, I don’t have any major problem with the way Oregon’s rent control law is written. It is 7% + CPI, so in theory landlords can still raise rent 10-12% per year. Over time rents are still going to be what the market rate will be, but prevent egregious spikes of 30%, 50% in one year which can be jarring.

    3. I think the basic argument against rent control is that over-regulation at some point disincentivizes property owners from leasing their properties thus reducing overall supply, increasing demand for fewer units resulting in higher rents.

      1. Yes, this is what is taught in classical economic theory. But we don’t live in a nice clean textbook econ world, especially when you have strict zoning rules (e.g. single family housing only), NIMBYism, excessive regulations preventing construction, and the mortgage interest deduction which incentives larger dwellings with higher tax deduction.

        It’s kind of like how more supply doesn’t necessarily lead to lower prices if the only supply that is built is luxury. Some of the laws of textbook econ don’t appear to be working properly, which is why I’m kind of okay with Oregon’s experiment. I don’t see it doing anything major, just smoothing the path to what rent will be in the end.

        1. In my world of econ incentives I would tie the fate of home owners to the existence of affordable housing. If the market will not/cannot provide it, then don’t punish landlords. Instead increase property taxes on that “sweet equity” that is going up for no reason. Make it an automatic property tax increase and earmark it to a fund to provide affordable housing which would be affordable to the median income. Something like that.

          2. In my world of econ

            Here’s what you might be missing; the cause of housing being too expensive. Housing is like a goose. It doesn’t cost much to produce and it isn’t worth too much to consume. Worth something but affordable. Now introduce the golden egg. Not a natural egg, just sneak in and salt the golden eggs near the goose. Suddenly the goose gets too expensive.

            It would be ridiculous to tax the eggs so you can give geese to ordinary people. Just stop with the golden eggs. Stop helping!

      2. In short: Government interference often makes things worse when it doesn’t address the fundatmental problem.

        1. ^This. You’d have affordable housing with rates back around 8-10%, down payments at 20%, and requiring lenders to keep their loans (no GSEs). Trying to get there with rent control and affordability mandates just papers over the issue.

          1. requiring lenders to keep their loans (no GSEs)

            The moral hazard created by mortgage-backed securities is the fundamental problem.

          2. Agree with this, but I don’t think we will ever get back there. Canada’s tax on foreign buyers (e.g. Chinese) is showing that taxes can be a significant lever on pushing speculation out of the market, even with rates staying the same. I don’t see why we couldn’t also apply a non-resident tax as well to housing. This is what NY is now considering doing to fund their decrepit transit system now that the SALT deduction is causing millionaires to decamp to FL. I’ve always said that taxing wealthy people is a fool’s game because they can move. Better to tax their property.

          3. in by admission is OneAgainstMany

            To him I say:
            You practice socialism. It’s no wonder that you espouse it. Newsflash: you’re not the only one that walked uphill to and from school.

          4. You practice socialism

            I understand he works for a living and is quite happy to do so. Yes, he has a lot of ideas how he would run things in a rather command control way, but why do you think he practices socialism?

          5. he practices socialism

            His “wealth” has been largely amassed by living rent-free with family. His attempts to rationalize a financially irresponsible purchase using childhood poverty also reads as a sense of entitlement. As someone who was raised to be self-sufficient, I find these to be rather abhorrent.

          6. Living with family is kind of a stretch to call socialism. Just my opinion.

            My dad wouldn’t ever have considered letting me “come live at home”, but he let his mother. He was no socialist.

            Things were pretty tight for me as a single dad with four kids. When they all moved out, I made a few rather “irresponsible” purchases. That’s what renters can do.

          7. Financially benefiting to extent he claims by living with family is what I find abhorrent and liken to socialism, essentially confiscating and redistributing his family’s wealth to himself. I’d wager that more was given to him than just a roof over his head (e.g., food, utilities). What I find even more abhorrent is the purchase of a luxury item roughly equal to a year of his income BEFORE putting an independent roof over his family’s head.

          8. I’d wager

            I’m suggesting that you confirm before you condemn. As for the car, he says it’s cash and that he can afford it. The kind of irresponsibility that hurts all of us are the donkeys that buy a big house 10x the price of the car, with borrowed money! These types raise prices for everyone.

            If he were like a young man I know only too well, he spent all his money on cars and left nothing for food for his wife and child, I’d join you. Fortunately, that kid’s Grampa helped with some food and utilities, but that’s not socialism.

          9. I’m suggesting that you confirm before you condemn.

            I have a half-brother and a step-brother that inform this opinion. I’d also wager that some of his family might feel differently if they were privy to some of the information he’s shared here. If he can’t take the heat, he should get out of the kitchen.

            but that’s not socialism

            Whatever you want to call it, there is a common theme to his beliefs and actions with which I vehemently disagree.

            Dead horse beaten more than enough!

          10. I have a half-brother and a step-brother that inform

            You misunderstood my meaning. That’s your family and your experience. Fine if you’re sensitive about it, but it gives you no cause to project this onto the rest of us and offend without cause.

          11. but it gives you no cause to project this onto the rest of us and offend without cause

            On the contrary, his mentality is arguably more destructive than a donkey buying a house 10X that of the car.

          12. arguably more destructive

            Maybe self impoverishing, but do you mean destructive to the rest of us, like a donkey buying an overpriced house on credit is?

            I have an Airstream. Totally frivolous. I suppose it’s an electrical vehicle as it has an awesome 7kW generator onboard. Also a Chevy 454. I am doing preflight checks to go homeless in the Blue Ridge Mountains for a month or so. I worked hard and contributed to society as an adult for 50 years. Anything I do now is frivolous or charitable.

            If this other guy is evil for buying an impractical expensive ride, I don’t think we should call him evil in general. Or perhaps it is me that is the bad actor.

            Disclosure: I mooched off my cousins once when my ride broke down. It was fun and I did lots of work for them, like cutting down and disposing of the ancient dead pine tree in their back yard. They were thrilled. I’m not a socialist.

            You should apologize.

          13. but do you mean destructive to the rest of us, like a donkey buying an overpriced house on credit is

            Yes, this is exactly what I mean. A vote with this underlying mentality is far more concerning to me than a donkey buying an overpriced house on credit. You, BlueSkye, have paid your dues many times over. I sincerely hope you enjoy your frivolous and irresponsible purchases; you deserve to. I take issue when my liberty and more importantly my son’s liberty are at stake.

          14. @Redpilled Redhead

            Since I can’t comment below, I’ll try here. Blue and I don’t see eye to eye on everything, but I do agree with him that you have a strange definition of socialism. Some parents save money for their kids to attend college. My parents couldn’t do that financially. What my mom did was allow me to live in a spare room in her house while going to school. Of course this wasn’t a free ride, I helped out enormously where I could. This room was not something that was going to be rented, nor was she going to downsize, so basically a spare room. I’m sure I could have decided to live on-campus with the cool kids and in luxury dorms and partied all the time, but I didn’t. I also didn’t have a car during the first few years college, I took the bus. I bought a cheap Chinese 50cc scooter my 3rd year though for about $400. My senior year I bought my first car ever, a Honda Civic.

            The gift my mom made was allowing me to live rent-free. I suppose you think that I should be charging my 4-year-old rent for expropriating my wealth? I have a hard time following your logic.

            I like James Altucher’s rule of thumb in that your house should be about 10% of your net worth. I think a vehicle should be about 3-5% of your net worth.

        2. I take issue when my liberty

          Well, one of my four is handicapped as well and I am fully engaged. So how are we posing an issue to your or his liberty? I mean, that was never my intention.

          1. Members of Congress, new and old, are openly violating their oaths to uphold the constitution. We have attacks on at least our first, second and four amendment rights as well as on the electoral college that protects us from mob rule. We have at least one generation with a mentality of “life’s not fair” buying into what the “here’s everything for free” politicians are selling. Our liberties are literally at stake. People seriously need to wake up to the path we’re heading down.

        3. I think a vehicle should be about 3-5% of your net worth

          LOL. It should be what you can afford.

          1. Agree. But, define “what you can afford.” To me, a 3-5% target is one definition of affordability. There are others. But basically a vehicle purchase shouldn’t impinge on one’s quality of life and one shouldn’t stretch oneself so thin that financial health is in jeopardy.

            A former co-worker of mine bought a house in 2012. It was very modest and not particularly nice. He said to me, “I am buying this house because I know that even if I lose my job I can still work at minimum wage and make the mortgage payment.” While I would never buy a house unless I could pay cash, I do think he showed a level of prudence that is rare for loan owners.

    1. I don’t understand why these big jets don’t have some sort of emergency parachute system for deployment in the event that the aircraft enters a stall or steep dive.

    2. From the previous Lion Air crash:

      “…The Indonesia plane crash turned a harsh spotlight on the MAX 8, Boeing’s latest update to its workhorse 737. A preliminary investigative report release in late November found that a malfunctioning sensor and an automated response from the aircraft’s software left pilots to fight furiously to control the aircraft before it careened into the Java Sea outside Indonesia shortly after takeoff, killing 189 people….”

      1. “…The report found that a sensor measuring the plane’s “angle of attack” fed erroneous data into the plane’s flight control system, at which point an automatic feature kicked in, sending the plane into a nose dive…”

        Good ‘ol “technology.” How are those “self-driving cars” coming along?

    1. AOC Slams Capitalism As “Irredeemable” System

      by Tyler Durden
      Sun, 03/10/2019 – 11:31

      Speaking on the subject of her Green New Deal, Ocasio-Cortez said she hopes to take care of minority communities and places like Flint, Michigan, first, because these groups were left behind by the original New Deal – the one passed by FDR.

      While most Americans see the New Deal as the progenitor of welfare programs that benefit millions of White and minority Americans, Ocasio-Cortez said that the law was, in fact, deeply racist, because of something called “red-lining.”

      “The New Deal was an extremely economically racist policy that drew little red lines around black and brown communities and it invested in white America.”

      “It allowed white Americans access to home loans that black Americans didn’t have access to, giving them access to the greatest source of intergenerational wealth.”

      AOC might be on to something, but she neglected to mention that the New Deal’s minimum wage laws resulted in 500,000 Black Americans losing their jobs, according to the Cato institute.

      https://www.zerohedge.com/news/2019-03-10/aoc-tells-bougie-tech-conference-attendees-capitalism-irredeemable

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