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The Year-End Data Wasn’t An Anomaly, And Might Reflect A Correction-Trend In The Market

A report from Wink News in Florida. “A few high rises overlook the Caloosahatchee. But lots bought for condominium have been sitting vacant for years. ‘Build it and then if its gonna sit there vacant because they can’t occupy because no one can afford,’ Ed Tucker said, ‘that’s stupid to me.'”

“‘There are some complexes that are going through a glut, said Bert Parsley, a real estate agent . ‘But I think that’s more based on the price points.'”

The New York Post. “Pop superstar Taylor Swift’s former West Village rental has finally found a buyer — at less than half its original asking price. By 2017, the 21-foot-wide brick home, which was built in 1912, was on the market for a grand $24.5 million. It closed for $11.5 million.

From Westport Now in Connecticut. “The home-selling season is under way in Westport, and our current real estate climate is not quite conducive to ‘testing the market’ or ‘fishing’ for the highest price possible if recent sale comparables do not support it. The operative term here is ‘asking price.’ Out of the 39 homes that sold year to date, almost half of them had at least one price adjustment before obtaining a deposit that resulted in a sale.”

“Of the 19 homes that had price changes, the home at 4 Christmas Lake Lane was adjusted 18 times in its 478 days on the market before it sold at 97.62 percent of its final asking price, or 66.38 percent of its original asking price. Another home at 10 Minute Man Hill had four changes during its 793 days on the market, and closed at 88.06 percent of its final asking price, or 54.2 percent of its original asking price.”

“The highest priced sale occurred at 10 Minute Man Hill in the Compo Beach area. Originally built in 2003, the home was first listed at $6,495,000, reduced on four occasions to $3,998,000 and closed at $3,520,500 after 793 days on the market.”

From Culture Map on Texas. “Houston has been named one of the friendliest markets for buyers by Zillow. The report drilled down further to name Bellaire, where 20.7 percent of homes saw price cuts last year, the most buyer-friendly location in the area.”

The Daily Camera in Colorado. “Housing inventory is outpacing demand in Boulder County. The latest data for February from the Colorado Association of Realtors suggests the local housing market, though healthy, shows signs of cooling off. ‘In Boulder County, we have 13 percent more inventory than we did at this time last year,’ said Kelly Moye, former president of the Boulder Area Realtor Association.”

“Sales of single-family homes over the year (from February 2018 to February 2019) declined about 18 percent, she said. But prices have dipped only marginally, Moye said. This suggests the year-end data wasn’t an anomaly, and it might reflect a correction-trend in the market, she said. ‘The Front Range market is experiencing a bit of a plateau. Affordability is an issue.'”

“The median sales price for single-family homes in Boulder County dropped 1.6 percent to $568,750 last month from $577,900 in February 2018. Sales of townhouses and condos in Boulder County also were down about 18 percent over the year, while new listings increased more than 22 percent in the same period. Their median sale price was down 5.2 percent from $385,000 in February 2018 to $365,000 last month.”

This Post Has 58 Comments
    1. Wasn’t the shortage talk was loudest two years ago? Now they’ve filled the shortage with all those new condoze which have come online. At least that’s a theory.

      1. “At least that’s a theory.”

        It’s not a good theory, as it only considers the supply side of the market.

        Collapsing demand in the face of falling prices is what is driving the slowdown in sales and increases in inventories.

  1. ‘The highest priced sale occurred at 10 Minute Man Hill in the Compo Beach area. Originally built in 2003, the home was first listed at $6,495,000, reduced on four occasions to $3,998,000 and closed at $3,520,500 after 793 days on the market’

    From a mania perspective, the importance of these reports is found by going back 793 days. These people really thought they were going to get these prices then. That’s why you see shacks and airboxes selling for half. This was the peak of the luxury bubble. Now they are white elephants.

    white el·e·phant
    /ˌ(h)wīd ˈeləfənt/
    noun
    noun: white elephant; plural noun: white elephants

    -a possession that is useless or troublesome, especially one that is expensive to maintain or difficult to dispose of.

    “a huge white elephant of a house that needed ten thousand spent on it”

  2. “Pop superstar Taylor Swift’s former West Village rental has finally found a buyer — at less than half its original asking price. By 2017, the 21-foot-wide brick home, which was built in 1912, was on the market for a grand $24.5 million. It closed for $11.5 million.

    Gosh, it’s almost like the housing market peaked in 2016 and has been crashing ever since. But surely Real Journalists would’ve apprised us of such a momentous development.

  3. No shortage of luxury housing options for all of the freshly minted millionaires that don’t live in the northeast or on the west coast, and can easily afford them. Oh, wait.

  4. ‘Build it and then if its gonna sit there vacant because they can’t occupy because no one can afford,’ Ed Tucker said, ‘that’s stupid to me.’”

    Ed cracks the code.

  5. Of the 19 homes that had price changes, the home at 4 Christmas Lake Lane was adjusted 18 times in its 478 days on the market before it sold at 97.62 percent of its final asking price, or 66.38 percent of its original asking price.

    “Prices changes” and “adjustments” invariably seem to be euphemisms for “reductions.” Why do Real Journalists always feel the need to obfuscate inconvenient truths?

    1. Why do Real Journalists always feel the need to obfuscate inconvenient truths?

      Is there any chance at all that the truth might cost them a sale?

    2. The one I see down here is “price improvement” get a laugh every time I see one of those. How about “Price Destruction” then I check it out. Those might be a few months down the road.

    3. Let me decrypt this for you boo:

      Of the 19 shacks that had there price marked on clearance like Halloween candy in November, the delapitated money pit of a shack at 4 Christmas Lake Lane was bent over backwards without lube 18 times in its 478 days on the used shack market before a knife catcher / FB got an shadow bank no questions asked loan at 97.62 percent of its final begging price, or 66.38 percent of its original dream price.

  6. ‘The Front Range market is experiencing a bit of a plateau. Affordability is an issue.’”

    With housing prices so out of whack with incomes, and inventories rising, that “plateau” is about to get a downslope trajectory, Kelly. But the good news is, Costco sells Ramen noddles in bulk.

      1. More Sunshine!

        Imagine what guys like this get away with in places like Asia. Oh that’s right, he’s moving shop to China.

          1. I’m sure the willingness to commit fraud is strictly limited to college admissions. /s

    1. Iffin’ ya got$ a $weet tooth, “organic honey” is a better option$ than $ugar or high fructo$e corn $yrup … $tick with what’s good for ya, just in case ya get $tuck with it. (Imhto)

    2. Precious metals are contrarian investments. When other markets get destroyed is when the metals rise and miners really crank. That’s were I am investing now. Check out 2011 Dow or S&P. Then check out 2011 gold, silver, or prominent miners. The metals are early phase and everything else is late phase. Aberrations in miners and metals now is due to exchange rate bounces and some confidence issues. But when housing and overall stocks get hammered, the metals fly.

  7. From Daily Camera (Boulder, CO) article:
    “This suggests the year-end data wasn’t an anomaly, and it might reflect a correction-trend in the market, she said. “The Front Range market is experiencing a bit of a plateau. Affordability is an issue.”

    “But given the healthy local economy and a strong job market, the real estate industry remains positive about the months ahead, she said. “We typically see more listings in spring.”

    There’s that “plateau” word again. Remember, prices never go down… 🙂

    Side bar: Current blizzard/whiteout conditions here in Front Range region of CO. Not uncommon weather event in March.

    My comment on Daily Camera article: Yes, people put houses on market in the Spring, which is peak selling season. Watch inventory and price. A lot of people think that we’re in a normal market, but housing bubble 2.0 isn’t that. See housing bubble 1.0 for reference. The big question is what the Fed + Gov’t. + GSEs will do next. Markets already wildly distorted due to machinations/interventions.

    Here’s what I expect, based on housing buuble 1.0:
    1) unconventional buyers/speculators exit the market as they lose access to cheap credit and/or recognize that the peak is in. Note that not all can exit at the same time. Musical chairs. For every seller, there needs to be a buyer.
    2) Meanwhile, prices have once again been driven up to the stratosphere, as intended by Fed + Gov’t. attempts to “reflate” housing bubble 1.0. This has priced conventional/shelter buyers out of the market, because, of course, the Fed + Gov’t. are laser-focused on helping out Main St. (sarcasm intended).
    3) Actions of cohort (1) and status of cohort (2) leaves huge air pocket as demand (1) was pulled forward, but now declining due to (1), (2). Read lack of buyers at exorbitant prices.
    4) So now, either wages need to increase by a huge factor, or prices need to decrease by a huge factor for market to return to normalcy (earth). Since the Fed is pro-capital (i.e. banks + corps.) and con-labor (i.e. wages), guess which one will now happen?

    Summary: Unless the Fed + Gov’t steps in and is ready to become “the buyer of last resort” for housing (i.e. purchase millions of houses at nosebleed prices), then prices have nowhere to go but down. Bubble-nomics 101. We’ll know a lot more as the prime Spring selling season progresses, but based on data so far, mostly from this blog, things are progressing as per above scenario. It’s “not different this time.”

    1. Maybe this time the Fed will sell those millions of houses to the Chinese gov in return for the Trillion dollars they own of US debt…ya think

      1. Nah, the wealthy special interests in the US will own everything. What they’ve been doing during this “recovery” is setting all the peons up for another massive scalping. They extended mass credit to get the sheeple up to their necks in debt again, and once all the peons are underwater, the wealthy will, once again, take back all those assets and distribute them to their cronies for pennies on the dollar.

    2. A saying comes to mind:

      “The market can remain irrational longer than you can remain solvent.”

      We’ve been in an irrational market for 2 decades. I’m resigning myself to the fact that I’m probably going to be dead and gone before this whole thing plays out. These bankers have figured out how to play games with the currency and the sheeple which can apparently go on indefinitely. I mean, look at the stock market right now. What a frickin’ joke.

    3. FED+Gov’t becomes buyer of last resort and while they are at it take over all the Banks. Seems some of the newest government doesn’t believe in capitalism and would like to be in charge of everything just needing a disaster to justify it.

    1. Anti stall sofware pushes nose of aircraft down when it THINKS there is a stall. Can you image the pilot fighting that at low altitude? have about 10 seconds to figure out how to disable that feature before you’re in the ground.

      1. Yeah, with a software bug (even if it’s due to a sensor signal glitch) there is no way to just inspect the craft and find the problem. You have stop everything and play code games for as long as it takes to find and prove root cause and then test the fix before you can release it.

        1. stop everything

          There’s been a time or two that I’ve just thrown out the anchor and sat until troubleshooting and fix could be completed. Kinda hard for an airplane to do that.

          Can the captain even turn off the autopilot in these new monsters?

          1. Check out the interview (can’t find a link) with Oliver McGee on FBN’s “After the Bell” a little more than 2 hours ago. He says the problem is with the plane’s center of gravity and suggests a “clean sheet” design.

          2. Can the captain even turn off the autopilot in these new monsters?

            I mean once they are on the ground. They could be stuck there for a long time.

  8. Never heard his name before, never listened to this song to hear the drums either.

    The Ronettes – Be My Baby

    https://www.youtube.com/watch?v=ZV5tgZlTEkQ

    WRECKING CREW DRUMMER PLAYED ON HITS INCLUDING “BE MY BABY”…

    By: Linnea Crowther 1 day ago

    Hal Blaine was the drummer for the Wrecking Crew, the session band that played on some of the greatest pop and rock hits of the 1960s and ‘70s. The songs he played on include “Be My Baby” by the Ronettes, “Good Vibrations” by the Beach Boys, “Can’t Help Falling in Love” by Elvis Presley, “Mr. Tambourine Man” by the Byrds, “Strangers in the Night” by Frank Sinatra,” “Bridge Over Troubled Water” by Simon and Garfunkel, “Thank God I’m a Country Boy” by John Denver, “Everybody Loves Somebody” by Dean Martin, “These Boots Are Made for Walking” by Nancy Sinatra, “Theme from Mahogany (Do You Know Where You’re Going To)” by Diana Ross, “Love Will Keep Us Together” by Captain & Tennille, “California Dreamin’” by the Mamas and the Papas, “Aquarius/Let the Sunshine In” by the 5th Dimension, the theme song from “Three’s Company,” and hundreds more. He played on 40 Billboard No. 1 hits, was awarded 263 gold and platinum records, and his drums were featured in six consecutive Grammy Award Record of the Year recipients, from 1966 through 1971.

  9. The seller of Taylor Swift’s house bought it for $5.3M in 2005, sold it for $11.5M in 2019 and rented it out at $39,500 a month to Taylor Swift for 2 years. $39K more than covers a mortgage and tax on a $5M home.

    So he made $6.2M profit on the sale, and rented it out with a positive cash flow. And that’s buying at Bubble 1.0 peak or near peak.

    Not sure why we’re supposed to be laughing at him.

    1. Who said anything about laughing? What’s significant from a mania perspective is the price cut. Plus I think he blew some dough on renovations.

  10. Precious metals are contrarian investments. When other markets get destroyed is when the metals rise and miners really crank. That’s were I am investing now. Check out 2011 Dow or S&P. Then check out 2011 gold, silver, or prominent miners. The metals are early phase and everything else is late phase. Aberrations in miners and metals now is due to exchange rate bounces and some confidence issues. But when housing and overall stocks get hammered, the metals fly.

    1. So let me get this straight.

      House price have doubled in the past 7 or 8 years and this means it’s a huge bubble that is about to blow up.

      But Gold, which has doubled in value since 2007 and nearly quadruped in value since 2005, is a great buy poised to shoot to the moon.

      ‘Splain that logic to me please.

      1. The problem is debt. When the debt can’t be serviced, assets will be sold at a discount. Houses, art, gold, whatever. Then might be a time to buy what you feel like having if you’re not one of the frightened debt donkeys. Of course, I am only imagining this.

        1. Yeah exactly. Which was what I was replying to jdog. If/when housing crashes, everything will crash with it. Gold included. And gold even more so since it’s in a much bigger bubble than housing ever was.

  11. “Plus I think he blew some dough on renovations.”

    Too Customized To Sell?
    By: Caroline Biggs
    Published: 9/21/2018
    Source: The New York Times

    Mr. Aldea bought the house for $5.3 million in 2005 and spent roughly $5 million on the renovation. He has listed it with the Deborah Grubman team at Corcoran for $14.9 million, or for $42,500 a month as a rental, he said, because he is “eager to build another one, and the design-and-build process is my passion.”

    Finding the right buyer for the customized townhouse, which has been on the market since April 2017, has proved tricky. But Taylor Swift rented it last year, and Mr. Aldea has no qualms about holding out for an exceptional buyer who will understand his vision.

    https://www.nytimes.com/2018/09/21/realestate/too-customized-to-sell.html

    1. $5M reno on a $5M house and then listing for $20M. No bueno senor. This is the equivalent of buying a house for $200K, putting in a $100K kitchen and then expecting to sell it for $500K. Doesn’t work like that dude.

      So this guy is obviously a moron when it comes to investing. Still even with that, he spent $10.3M, and sold for $11.5M. Even as hard as he tried he still made a small profit after accounting for transaction costs.

        1. $5Mil in property taxes and insurance along with that expensive coffee the Realtor serves at the closing table has this Pup upside down by much more than most people make in a lifetime.

      1. “Not sure why we’re supposed to be laughing at him.”

        “So this guy is obviously a moron when it comes to investing.”

        Maybe that’s why you’re supposed to be laughing at him.

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