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This Is What It Looks Like When The Pendulum Starts To Go The Other Way

A report from Bloomberg. “The real estate frenzies in West Coast cities have become the stuff of lore: buyers jostling at open houses, homes getting offers sight unseen, bids coming in hundreds of thousands of dollars over asking. That’s all over now.”

“Just ask Kelly Randall, an Amazon employee who listed her renovated Seattle condo for $539,000 — a bargain compared with the $615,000 her friend got last year for a smaller place in the same building. Almost four months and four price cuts later, Randall’s still waiting for an offer.”

“‘My timing sucks,’ she said. ‘It’s a little frustrating.'”

“Nowhere is the shift more pronounced than in once-hot areas such as Seattle, San Francisco and Denver, where bidding wars are vanishing, time-on-market is climbing and prices are flattening, or even falling.”

“With prices slipping and more inventory coming up for the busiest time for home selling, buyers who have the means will have a new opportunity to enter the market. Sellers, meanwhile, face a ‘reality check,’ said Lawrence Yun, chief economist of the National Association of Realtors.”

“The median single-family home prices in King County, which includes Seattle, fell 3 percent on a price-per-square foot basis in January, the first annual decline since 2012, according to Redfin. Roughly a sixth of the metro area’s listings had price cuts in the 12 months through January, twice the previous year’s rate, Trulia data show. ‘This is what it looks like when the pendulum starts to go the other way,’ said Felipe Chacon, a housing economist at Trulia.”

“Home sales in January were at 11-year lows in both Southern California and the San Francisco Bay area, CoreLogic Inc. reported. Prices in both the Portland, Oregon, and Denver areas fell this year for the first time since 2012, according to local multiple listings services.”

“In Silicon Valley, there’s been a dramatic slowdown, said Patrick Carlisle, chief market analyst in the region for the brokerage Compass. Santa Clara County saw its median house price fall 1 percent in the fourth quarter to $1.25 million, after a 27 percent surge a year earlier.”

“‘Santa Clara was unbelievably hot,’ Carlisle said. ‘But there has been a reaction to the high prices. When you add in last year’s rise in interest rates and the fact that their stock portfolio dropped, suddenly it made people a lot more cautious.'”

“Caution was apparent on a recent sunny Saturday morning in Northwest Seattle’s Whittier Heights neighborhood as Ruslan Polyak propped up an open house sign by the front door of a yellow townhouse. Recognizing the market’s slowdown, he had listed it last month for $810,000, even though an identical unit sold last spring for $835,000, almost $100,000 above asking, he said.”

“Negotiations are welcome, he told a buyer attending the open house: ‘My client’s super reasonable.’ Later that day, Polyak cut the price to $787,000.”

“Randall, the Amazon employee, is waiting for her condo to sell so she can buy a new town home she signed a contract to purchase in November. In a sign of the market’s softness, the builder is working with her, reducing the agreed-upon price as she’s had to lower her own asking price. It’s now $480,000, a $59,000 reduction from the original listing.”

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This Post Has 28 Comments

  2. ‘In a sign of the market’s softness, the builder is working with her, reducing the agreed-upon price as she’s had to lower her own asking price. It’s now $480,000, a $59,000 reduction from the original listing’

    When the new builds are cutting prices, look out below. Cuz they can keep on building.

    1. This is also very bad news for the “Not gonna give it away” Sellers, who saw what their neighbors place sold for and refuse to budge off of their high asking price. Go ahead and bury a statue in the backyard – you’re gonna need every bit of luck out there!

        1. Be sure you have the statue pointing in the right direction. One seller had his statue positioned incorrectly and the house across the street ended up being sold.

          2. Dont get the cheap plastic one if you want a full price offer. Go porcelain, always porcelain!

  3. ‘Nowhere is the shift more pronounced than in once-hot areas such as Seattle, San Francisco and Denver, where bidding wars are vanishing, time-on-market is climbing and prices are flattening, or even falling’

    I seem to recall all these areas had shortages less than a year ago!

    ‘The median single-family home prices in King County, which includes Seattle, fell 3 percent on a price-per-square foot basis in January, the first annual decline since 2012, according to Redfin. Roughly a sixth of the metro area’s listings had price cuts in the 12 months through January, twice the previous year’s rate’

    But Redfin just said it was “to the moon Alice” in Seattle? Wa happened?

    1. And then there’s this from Redfin….

      MAR 05, 2019 at 12:09 PM

      “A Redfin report shows pending home sales were up 15 percent in January, year over year. It’s a sign that more people are ready to buy homes in Seattle. In January, the number of pending sales increased for the first time since November 2017. That’s according to a report from real estate brokerage Redfin.”

      Homes pending in Jan closed (or will close) in Feb and March. Let’s see how this increase affects prices in Feb/March.

  5. “‘My timing sucks,’ she said. ‘It’s a little frustrating.’”

    Here’s a suggestion: you gotta roll with it.

    1. This is actually bullish….softer, more patient Fed now with any bad data print…stocks go higher 🙂

  8. deep thought
    building depreciation rate
    1/2 the rate vs inflation and building materials ??
    or what
    my county hasn’t changed my building value in 3 years.

  9. if a builder takes only 1500 cash on a 450,000 house and it takes 6 months to build
    the buyer still has power in a down market
    nes paw?

  10. House up the street just went up for sale – thinking the owner either died or moved to elder care. Probably 40+ year old place, 1200 sq ft right on a not busy street but still on the street – 695K. I rent a place down a private road so zero traffic, a little less square footage for just over a grand a month. #winning

    Place has zero chance of selling for anything in the 6es, be interesting if some fool buys it in the 5s. True value? For me I’d be in the 3s, maybe.

    1. True value? For me I’d be in the 3s

      Would it fetch $3K/mo rent? If it’s like yours maybe it’s worth $100K. Maybe less when the market tanks.

    2. “right on a not busy street but still on the street ”

      Huh? Isn’t every house on the street? I honestly don’t get what you mean by this.

  12. “The real estate frenzies in West Coast cities have become the stuff of lore: buyers jostling at open houses, homes getting offers sight unseen, bids coming in hundreds of thousands of dollars over asking. That’s all over now.”

    No one overpaid in this environment. 20% down payment and all 850+++ FICO score. Thats what John/Dave told me….to the moon and beyond soon!!!!

    END OF STORY

    Her agent, Bill Jones with Every Door Real Estate, said the changing market isn’t all bad: “I don’t mind not having to compete with 12 other people to win a client a house.”

    Tears in my eyes….Billy now must do work to make sure commissions…Just dont give the house away Billy.

  13. “With prices slipping and more inventory coming up for the busiest time for home selling, buyers who have the means will have a new opportunity to enter the market. Sellers, meanwhile, face a ‘reality check,’ said Lawrence Yun, chief economist of the National Association of Realtors.”
    ___________________________________/

    Yun’s longevity in that position has been remarkable. How long has it been, twelve years? His predecessor David Lereah retreated from public life entirely, you never see him quoted anymore. And former blog nemesis Sean “Housing Souffle” Snaith has been quiet too.

    We hopefully have passed the time of celebrity economists, although hybrid economist/public relations jobs persist.

  14. “‘My timing sucks,’ she said. ‘It’s a little frustrating.’”

    There’s a little-known rule of finance that the majority of participants in a mania will buy when prices are at extremely high levels compared to normal and will eventually sell or walk away at a lower price than what they paid.

    1. Millennial loanowners deserve everything they’ve got coming.

      Welcome to the rage cage, snowflakes 🙁

  15. Hard Brexit on the way? Nothing that central bank extraordinary accommodation can’t handle…

    The Financial Times
    Brexit
    Theresa May heads for defeat on revised Brexit deal

    Eurosceptic MPs seize on UK attorney-general’s admission over Irish backstop
    updated 41 minutes ago
    …

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