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The Market Was So Hot, It Really Had Nowhere To Go But Down

The first of two Friday desk clearing posts starting with the US. “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.'”

“The changing trend could help buyers like Aslan Guthrie, who closed on a home Thursday after looking for almost a year. ‘I finally got someone to accept my offer on a house that I liked,’ he said. ‘I guess other people offered more when I tried before. It’s been quite an experience, and I’m glad it’s over. I found what I wanted.'”

“Western Washington had the largest supply of homes in three years this August, according to Northwest Multiple Listing Service. Buyers also saw fewer bidding wars. Northwest MLS director John Deely said many buyers are showing more caution and presenting offers with standard contingencies. These would include inspections and financing provisions.”

“‘Sellers should be careful to avoid overpricing as savvy buyers are wary of properties pushing (on) the upper end of the market,’ Deely said. ‘Properly priced properties will still see heavy activity in this market. Sellers of homes that linger on the market are reducing their prices to spur activity.'”

“Land sales appear to be slowing in Phoenix. According to research from Colliers International, land sales were down 25% in the first half of the year, compared to the second half of 2017. Pricing in the first half of the year also slowed, dropping 25% compared to the median price in 2017.”

“‘About 60% of all land sale in our market are for residential development,’ says Pete O’Neil research director of the Greater Phoenix at Colliers International. ‘We have seen that prices are growing in the overall housing market, but new home prices aren’t really growing. We are not sustaining the momentum when we were at the absolute peak, which turned out to be the end of last year'”

“North Texas’ housing market isn’t what it used to be. After several years of surging sales and runaway prices, the Dallas-Fort Worth home market is leveling off — even declining in some neighborhoods. But one part of the D-FW market that shows no sign of a slowdown so far is super high-end housing.”

“You can’t say the same for the middle of the home market, which has slowed this year in many North Texas communities. ‘It makes sense given how hot the middle of the market had been for so long,’ Realtor.com chief economist Danielle Hale said of the D-FW market. ‘It may take you a little longer to sell your home, but it will still sell.'”

“The San Fernando Valley real estate market may be shifting as buyers have “hit a wall” trying to find an affordable home, according to a recent report from the Southland Regional Association of Realtors. Analysts say the buyers are hesitant to purchase a property while waiting to see whether prices will drop after years of almost constant growth.”

“About 190 condos that changed owners in August marked a 28 percent drop from 2017. Condo sales during the first seven months of this year were down about 14 percent compared to last year. The report said there was a total of about 1,520 active home and condo listings, a 10.7 percent increase from a year ago.”

“Home hunters face more properties to choose from as the inventory of active listings reported at the end of last month posted its first double-digit increase in more than three years. A boost in active listings generally benefits potential buyers, analysts say.”

“‘The market might be transitioning to more of a buyer’s market with downward pressure on prices,’ said Tim Johnson, CEO of the 10,300-member association. ‘We are not seeing all of the elements yet, but the first sign what we are seeing is increased inventory and fewer sales.'”

“Vince Sheehan, a broker with ReMax Gold real estate, which has offices in Novato and Mill Valley, said the Marin market continues to be strong despite a slight slowdown due to rising interest rates and buyer wariness over the future trajectory of home prices.”

“‘I think there’s more talk of ‘are we at the top?’ he said. ‘People are cautious now, and I think the affordability is a part of it. Some people are worried prices may come down or correct — and they’re not jumping into the market like they were six months to a year ago.'”

“He said there is still high demand and multiple offers in Marin for ‘houses that are completely done, and that don’t need any work.’ But homes that are fixers or that need updating and that are priced at the high end of their potential price range ‘are not getting offers, they’re just sitting.'”

“He said that was different than in the spring when ‘everything was selling.'”

This Post Has 19 Comments
  1. I’ll have an international desk clearing post later today. Man, the housing bubble news is flooding in these days.

    Eeee-bola Colorado Springs and San Fernando Valley!

    1. 80922 is nothing special. Typical suburban sprawl with faded wind-blasted fencing and most of the neighborhoods with charmless housing from the 80s and 90s that looks like its seen better days. The school district is mediocre at best, with a high riffraff quotient. Everybody seems to use their garages as storage, so every time there’s a hailstorm the cars sitting in driveways get hammered. A lot of turnover due to the transient military presence assigned to Peterson Air Force Base or Fort Carson. Meh best describes it.

      1. ‘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’

        Just like Las Vegas. UHS.com says you’re number one!

        DONG!

  2. ‘Aslan Guthrie, who closed on a home Thursday after looking for almost a year. ‘I finally got someone to accept my offer on a house that I liked,’ he said. ‘I guess other people offered more when I tried before’

    You got locked in just as the local media rings the bell for the peak. Congrats Aslan!

  3. ‘‘I think there’s more talk of ‘are we at the top?’… homes that are fixers or that need updating and that are priced at the high end of their potential price range ‘are not getting offers, they’re just sitting.’

    That’s blasphemy Vince. Everybody knows bay aryans will submit multiple offers over asking for a burned down shack.

    ‘He said that was different than in the spring when ‘everything was selling.’

    Gosh, I hope no one overpaid in such an environment.

  4. “The changing trend could help buyers like Aslan Guthrie, who closed on a home Thursday after looking for almost a year. ‘I finally got someone to accept my offer on a house that I liked,’ he said. ‘I guess other people offered more when I tried before. It’s been quite an experience, and I’m glad it’s over. I found what I wanted.’”

    Congratulation Aslan.. You brought at peak housing bubble price…at least you won’t be wasting money on rent anymore

  5. “According to research from Colliers International, land sales were down 25% in the first half of the year, compared to the second half of 2017. Pricing in the first half of the year also slowed, dropping 25% compared to the median price in 2017.”

    “‘About 60% of all land sale in our market are for residential development,’ says Pete O’Neil research director of the Greater Phoenix at Colliers International. ‘We have seen that prices are growing in the overall housing market, but new home prices aren’t really growing. We are not sustaining the momentum when we were at the absolute peak, which turned out to be the end of last year’”

    I hope no developers overpaid for land last year. I guess there are a few options, from bad to worse
    1. Sell the land and take a 25% loss
    2. Build “luxury” units that no one can affordable to break even…again assuming that these units sell.
    3. Wait it out a few years and maybe the Fed will blow a third bubble to bail you out
    4. Declare bankrupty

  6. ‘North Texas’ housing market isn’t what it used to be. After several years of surging sales and runaway prices, the Dallas-Fort Worth home market is leveling off — even declining in some neighborhoods. But one part of the D-FW market that shows no sign of a slowdown so far is super high-end housing’

    They’re getting kinda somber in Dallas. Not long ago they were still “to the moon Alice!” Then they said, a little slower still hot. Now they point to one tiny sliver of the market for solace. This has all happened in just a few months (like everywhere else).

    1. It looks like the crash is happening faster than last time…I think people still have memories of last time but most people think they are smarter now and will beat it (i.e., sell all their investment properties before the crash). The problem is only a few lucky will get out before the crash. The prices should go negative YOY by early next year.

    2. What’s going in blue-blood enclaves like University Park is going to be different than what’s happening in the newly developed subdivisions of Allen and McKenney… At least for now… due to numbers and types of properties, and who the customers are.

      That doesn’t make them immune .. the e-bola will hit their gated enclaves soon enough.

      What it does mean is that you can’t point to one and say ‘because it’s still healthy, this means we don’t have a crash in the making’. It like saying ‘never mind the gangrene on your leg – as long as your nose is ok, everything’s fine’.

  7. Things seem to be getting juicy here in North Phoenix. I’ve previously mentioned how corporate landlords have invaded the surrounding neighborhoods. Well, below is one of their listings. Market rate has been about $1/sqft in this area but they’re nearly 20% over. Sitting over 2 months and now 1 month free if you sign right now! Even with the free month you’re still over market value for effective rent.

    https://www.zillow.com/homedetails/4034-E-Danbury-Rd-Phoenix-AZ-85032/8018371_zpid/

    1. Not a good sign for the owner if they have to offer such consessions. Times a changin and them greed heads gonna be having a lot of trouble sleeping at night. For the rest of us, we can sleep soundly with smiles on our faces as we have beautiful dreams of the RE market tanking 😉

      1. It’s actually owned by mega-corp private equity firm Cerberus, with their subsidiary FirstKey Homes doing the management.

        Below is another one of theirs in the 85032 zip code. This one is a in a lower-middle, working class neighborhood. Looks like they bought at bubble prices and have a cap rate they need to hit. Price drops and a free month’s rent now! For bonus points, peruse that neighborhood and look at all the rentals and homes for sale.

        https://www.zillow.com/homedetails/3827-E-Friess-Dr-Phoenix-AZ-85032/8012547_zpid/

  8. It’s amazing how the average person only looks at their local market and has a crafted narrative (that has nothing to do with people taking on massive debt) on why prices were going up.

    They are always shocked when you point out there was a home price boom in Topeka Kansas and Omaha Nebraska. And then disagreement when you suggest because the price boom happened simultaneously everywhere, maybe the local narrative isn’t the right answer. Maybe something bigger happened.

    Now when pointing out that prices are falling everywhere, they run back to their local narrative on why it’s different and it will be okay in the long run.

    1. “It’s amazing how the average person only looks at their local market and has a crafted narrative”

      Amazing? Why so when all they read on the internet and hear on TV is deliberate misrepresentations and fables?

      We’re working on that problem.

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