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Several Markets Are Softening, Which Presents A Buying Opportunity — Or A Selling Crisis

It’s Friday desk clearing time for this blogger. “Realtor Kim Trouten said the Charlotte market is starting to shift. Buyers are getting more picky, especially with higher interest rates, and sellers have had to change their expectations, Trouten said. ‘They’ve been able to put a price tag on it and sell it,’ she said. ‘That’s no longer the case.'”

“Metro Orlando home sales slid 5.4 percent in February compared with the same month a year ago as the region’s real estate market continues to cool. The trends are not as good for homeowners looking to sell, as prices peaked during the summer and have come down since. There is both a bigger supply of homes for sale than there were a year ago.”

“Tara Moore, a real estate agent based in Winter Garden, said there are a lot of overpriced homes on the market that aren’t selling, making inventory appear higher than it is. Zillow said the number of listings in the Orlando area with price decreases increased in January to 20 percent of all properties on the market. ‘We’ve been in a seller’s market for so long,’ said Moore. ‘Things seems to be shifting back more towards neutral.'”

“In January, the median prices of homes sold in Boulder, Denver and Douglas turned negative, and the update from CAR shows Adams and Broomfield joined the downward march in February. ‘There is a shift in the market, and everyone is trying to predict where it is taking us. Opinions vary widely on this point,’ Denver Realtor Jim Brown said.”

“Several high-end property markets are softening, which presents a buying opportunity — or a selling crisis. Parts of the Manhattan market have cooled, said Noble Black, a broker at Douglas Elliman. ‘The era of aspirational pricing is over,’ he said. ‘Anyone who is selling a property is selling it for less today than 12 to 18 months ago.'”

“Former New York Yankee Alex Rodriguez slashed $1.25 million off his mid-century Los Angeles home, bringing the asking price down to $5.25 million. Mr. Rodriguez listed the Hollywood Hills home last November for $6.5 million. He purchased the home in 2014 from actress Meryl Streep and her husband for $4.8 million.”

“Call it a sign of the times. A home for sale on Vancouver’s West Side is getting a lot of attention, and for the first time in years, it’s because of how low its price is. The large, detached property on Chaldecott Street was recently listed for just under $4 million. It’s more than $2 million under what the same home sold for last spring.”

“And the sellers are far from alone. ‘Very, very slow sales, and the houses that are selling, you’re seeing these very, very large price reductions,’ economist Tom Davidoff told CTV News.”

“Buying a house in Italy is the stuff of dreams. But try selling one. In the last few years, that has become a nightmare. Well, one man has found a way to beat the market: a raffle. Like so many homeowners in Italy, Jamie Abbott has become a victim of the housing crash. ‘The property market is so bad that even for a gorgeous house like [this]…’ Abbott said.”

“House raffles have been popular in the UK for years, but in desperate Italy they’ve gone past raffles and are practically giving away houses. In January 2018 the town of Ollolai in Sardinia sold 200 uninhabited houses for a euro each. Gangi in Sicily has sold homes for €1 euro since 2014. Sounds desperate? It is.”

“A multi-year bull market for Hong Kong housing came to end in August last year. By the end of December the cumulative loss for home prices was 9.2 per cent. Among other headwinds, smaller developers are expected to offer steep price reductions in areas where large numbers of new homes are under construction, such as Tai Po and Tuen Mun.”

“DBS Bank believes there is little that can stop the correction in asset prices. ‘When buyers realised that there are continuing uncertainties and gloomy outlook about global and regional economies, they will have second thoughts,’ said Jeff Yau, a senior research director at DBS. ‘The market seems to be better just because it is not as bad as we think half year ago, it does not mean we are in good shape.'”

“Million dollar apartments have become luxury prisons for 48 residents at Tauranga’s Cayman Apartments after it was revealed their Code Compliance Certificates ‘may have been issued in error’ by Tauranga City Council. Apartment owner Deborah Lake has joined a $36 million lawsuit after her lock-and-leave lifestyle apartment turned into a ball and chain alleged to have structural defects, weather-tightness issues and incorrect fire protection.”

“‘It is a struggle to pay those fees,’ she said. ‘We’ve all had to come up with a lot of money and I am unsure if a mortgage would be given on these properties with the Code Compliance Certificate in question. I never knew the council could do that, essentially take away your CCC with a notation. It’s just shot our value completely.'”

“The property downturn has left the buyers of as many as 450,000 properties across Sydney and Melbourne with homes worth less than what they paid for them and this figure will almost double if the market continues to fall. The property clock has already wound Sydney prices back to June 2016 levels with values falling 13.2 per cent since they peaked in July 2017. In Melbourne, prices are back to the same level as they were in November 2016, with prices falling 9.6 per cent so far.”

“In Perth, property values have fallen 17.8 per cent since they peaked in June 2014 and are now back to where they were in May 2006, almost 13 years ago.”

“‘That’s nearly 1 million people, which would be almost 10 per cent of households – it’s a significant number and that’s not including Perth or Darwin where property prices have also fallen,’ AMP Capital chief economist Shane Oliver said. ‘These are people who would be under water in terms of their purchase, although not necessarily equity, and there would be another group of people who bought in 2013 who are now finding they are only a little bit ahead.'”

“But investor Wycee Kohr, who has bought two properties in the last two years – one in Sydney’s west for $920,000 and another in Brisbane for $400,000 – isn’t convinced by the ‘wealth effect’ argument. ‘I have three daughters and we just bought a dog,’ he laughed. ‘I don’t think I’m going to be cutting back.'”

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This Post Has 75 Comments

  1. ‘Tara Moore, a real estate agent based in Winter Garden, said there are a lot of overpriced homes on the market that aren’t selling, making inventory appear higher than it is’

    …

    1. So, Tara Moore, let me guess.

      You must of taken the REIC/NAR remedial course “New Math for Realtors who cannot add or subtract”

    2. I guess this is like David Copperfield who appeared to make the Statue of Liberty disappear when it really didnt.

      It’s just a magic trick, inventory only looks higher than it really is. Damn those overpriced listings for creating a realistic appearing illusion. Fortunately we realtors know better and will translate the market into real terms so average people won’t get the wrong idea.

      Boy do I feel gratful! Thanks so much.

      1. So by this logic, if a stupid buyer paid that “unrealistic” price will it not count as a sale?

        1. No that counts. Remember, a shack is o oh worth what someone is willing to pay for it. Doesn’t count if no one buys it… realtor logic!

          1. Confession: I lived down the street from the Sherman Oaks Galleria in the late 80s.

  3. ‘It is a struggle to pay those fees…We’ve all had to come up with a lot of money and I am unsure if a mortgage would be given on these properties with the Code Compliance Certificate in question. I never knew the council could do that, essentially take away your CCC with a notation. It’s just shot our value completely’

    Well, it was cheaper than renting Deborah.

  4. The New York Times article is interesting. It’s sort of a “we all love gambling on airboxes, but we may be fooked for a while” thing.

  5. ‘The large, detached property on Chaldecott Street was recently listed for just under $4 million. It’s more than $2 million under what the same home sold for last spring’

    It might have been cheaper to rent. Actually, it would have been cheaper to hire a helicopter, fly over Vancouver and throw a million Canadian pesos out the door. Think about that!

    2. The thing was these shacks can’t even rent for more than 3.5K per month! Unless you were speculating that prices will go up forever, it made no sense to buy….

  6. I was at an industry conference and the speaker said “Prices are going to fall over the next two years, guaranteed.” Then he talked about how to close deals by saying “Interest rates could go up” and “prices have gone up every year for the last seven years”.

    It was so blatantly anti-consumer that I almost walked out, but I didn’t want to blow my cover. As always, don’t take advice from someone who has a vested interest in the transaction closing (e.g. Suzanne).

    1. “Prices are going to fall over the next two years, guaranteed.”

      The sheep realtors must have gone completely silent hearing that. Cricket…

      Way to keep your cover Magoo, I would want to engage in some conversation regarding the integrity of someone who is supposed to have the buyers best interest at mind but clearly this presenter did not. Always closing!

  8. ” — or a selling crisis.”

    Prices falling from insane to merely outrageous isn’t a crisis for anyone but the green-eyed monster.

    1. Reduced $500K | 2390 Earls Court, Bel Air Crest CA

      $8,700,000

      https://www.zillow.com/homedetails/2390-Earls-Ct-Los-Angeles-CA-90077/20530569_zpid/

      Date Event Price $/sqft
      3/14/2019 Price change $8,700,000 -5.4% $870
      10/9/2018 Listed for sale $9,200,000 +93.7% $920
      12/17/2010 Listing removed $4,750,000 — $475
      7/24/2010 Listed for sale $4,750,000 -13.4% $475
      10/29/2009 Listing removed $5,488,000 — $549
      6/9/2009 Price change $5,488,000 -7.8% $549
      5/22/2009 Listed for sale $5,950,000 +120.4% $595
      10/23/2000 Sold $2,700,000 +42.9% $270
      3/15/1995 Sold $1,890,000 — $189

      1. “10/23/2000 Sold $2,700,000 +42.9% $270
        3/15/1995 Sold $1,890,000 — $189”

        Many Californians believed there was already a bubble in play by 2000, and this price increase certainly is consistent with that belief.

        “5/22/2009 Listed for sale $5,950,000 +120.4% $595
        10/9/2018 Listed for sale $9,200,000 +93.7% $920”

        Greedheads never sell.

  9. “…Gangi in Sicily has sold homes for €1 euro since 2014”

    That’s some serious price discovery there.

    1. “…Gangi in Sicily has sold homes for €1 euro since 2014”

      From Wikipedia

      “…The current settlement dates to 1300…”

      Wonder if the local REIC agent mentions skeletons in the closet?

  10. “…Apartment owner Deborah Lake has joined a $36 million lawsuit after her lock-and-leave lifestyle apartment turned into a ball and chain…”

    “lock-and-leave lifestyle” Not to be confused with “shoot yourself in the foot lifestyle”

  11. “Buying a house in Italy is the stuff of dreams”

    Not my dream.
    Renting a house in Italy for the summer? Absolutely.

  12. Those overpriced houses are not really on the market, is her point.

    If there are 5 houses for sale in a ‘hood for $300K and I list mine for $400K, there are still essentially 5 houses for sale in that neighborhood. The first 5 aren’t competing with me, since no buyer looking at $300K will even bother with mine. And the neighborhood next door that is a $400K neighborhood also isn’t competing with me since for the same money, you can get a better house than mine in that neighborhood. So my house doesn’t exist in any market, essentially making it a non-existent listing.

    It’s a clumsily worded point, but it’s a valid point.

    However…..once my house sits on the market with no showings for months and months, I will lower the price to $300K. And then it will compete with the other $300K houses. But until that happens (or if it happens at all, since some sellers will stay at wish prices for years), her point is valid.

    What is happening, as far as I can see, after years and years of non-stop ZOMG YOUR HOUSE IS NOW WORTH 100% MORE THAN WHAT YOU PAID FOR IT articles in the MSM, people are saying let’s put it on the market and see if I can really get 100% more. And in some cases it’s really only 80% more. But the sellers don’t need to sell so they won’t “only” take 80% more they will try for 100%. If they sell, great. If they don’t, whatever.

    I collect classic cars and I see this exact same thing in certain markets as well. Dude bought an air cooled Porsche in 2000 for $15K. He sees versions of his car going for $42-45K on Bring A Trailer. So he puts an ad up on Craigslist for $50K. Cuz why not? Nobody in their right mind will pay $50K. But he doesn’t care. He doesn’t need to sell it. He keeps the ad up week after week, month after month, thinking you never know, someone might bite. Meanwhile on Bring a Trailer, they keep selling for $42-45K every day. Like the overpriced house example, his overpriced car doesn’t affect the price. It’s as if it doesn’t exist.

      2. “…There is a shortage of non-overpriced house!!!!!!…”

        That sound of pile drivers in the distance is in reality Lawerence Yun jumping up and down on his desk.

    3. “But the sellers don’t need to sell so they won’t “only” take 80% more they will try for 100%. If they sell, great. If they don’t, whatever.”

      and buyers dont need to buy…

      Unless the seller is holding the open houses while they live in the shack (which would be quite an inconvenience) or not having open houses at all, just like selling your cars on craigslist you will attract tire kickers at any price so the 400k price may not attract a buyer but it will surely attract some tire kick’n, cookie eating open house visitors. if the seller is using a UHS to sell the home i am sure they are eating some monthly costs just to “test” there dream price, knife catcher experiment. Sellers likely wont just say “whatever” after vacating and staging a home for an extended period just to pull it off and continue waiting for there stubborn dream price. it goes both ways, buyers can be stubborn too!

      1. “Sellers likely wont just say “whatever” after vacating and staging a home for an extended period just to pull it ”

        Who said anything about vacating and staging. I said the exact opposite. Sellers don’t have to sell. If it sells, great, they move. If it doesn’t – IOW if buyers are stubborn – they stay. That was literally me entire point.

        1. From personal experience, selling a home is much more an inconvenience than taking a few photos and listing a car on Craigslist. If someone is testing the waters by listing with an absurd dream price that doesn’t come without costs regardless of staging or not. It is an out of pocket expense to list. One great example is sellers that attempt to flip there financed shack and list above all other comps because they want 2018 pricing from when they bought the flip but then chase down the market and end up upside down. These types are the ones walking around with brown spots in there pants saying “whaaa happened”. Cant find an FB in time, the bank swoops in and crushes that greedbag sellers dreams. The other type of seller that has a fully paid off home is still losing money every day they have there “dream price” home listed. I just don’t think it can be compared to listing a used car online. You don’t see fake home listings for this reason and therefor (imo) yes they should 100%, count as listings or inventory in RE terms.

          1. My experience is that if you list a little bit low compared to recent comps, you can attract multiple offers and sell in a week.

            We’ve owned two homes and successfully did this twice.

        2. “Sellers don’t have to sell.”

          That’s not always the case.

          A great example is a buyer who purchased at a bubble top, just before a crash. Next thing you know, home prices are falling, the economy is in a recession, she’s out of a job, and has no income to cover her monthly. She has to sell, only to discover that she’s underwater, and has to bring money to the closing table to pay off her debt, or else do a short sale and walk away with zero equity gain, while stiffing the lender for the unpaid loan balance (I guess it’s the US taxpayer if the loan was federally guaranteed).

          This household-level perfect storm situation is a natural consequence of the kind of extreme housing price volatility our Fed has financially engineered over the past couple of decades.

    4. Because the basic human requirement of shelter is now a toy for the rich to speculate on, with which to pry every last nickel from people as they possibly can.

      You’re the poster child for the sickness that is destroying this country.

  13. “Former New York Yankee Alex Rodriguez slashed $1.25 million off his mid-century Los Angeles home, bringing the asking price down to $5.25 million. Mr. Rodriguez listed the Hollywood Hills home last November for $6.5 million.”

    Interesting math there.

    “He purchased the home in 2014 from actress Meryl Streep and her husband for $4.8 million.”

    I must be running the numbers wrong, as I come up with an attempt to extract an extra $450,000 out of the next unsuspecting buyer compared to what the home sold for just five years ago:

    $5,250,000 – $4,800,000 = $450,000

      1. Judging from all the alligators he’s wrestling, he went to the Cage/Depp School of Real Estate.

        1. A-Rod is worth 1/2 a bill and he did not order his wife out of a catalog. Ya cant spend it fast enough at that level.

        2. Lol! Someday you should devote a weekend topic to entertainment figures who went all in to real estate.

  14. Movie ticket 1924 $.25
    Movie ticket 2014 $9.00
    Average doubling time 16 years.
    Years double realized:
    1951 ($.53 took 27 years)
    1966 ($1.09 took 15 years)
    1975 ($2.05 took 9 years)
    1988 ($4.01 took 13 years)
    2014 ($8.17 took 26 years)
    Over time there is inflation on consumer items which includes houses.

    1. Long-term increase in housing prices basically mirrors inflation. After subtracting for upkeep, maintenance, and property taxes it is maybe a bit below. Think of housing as forced savings. If you want a store of wealth, there are other ways that are far more liquid and less of a transaction cost.

        1. Perhaps. Though I will concede that there are many people who can only “save” through making a mortgage payment. If they were to rent and had money left over, they would just blow it. But these are the same people who are in precarious situation since they are living so close to the edge that their savings (e.g. equity) risks going up in smoke at the slightest downturn in the housing market or a change in their job status.

          1. Aplogies if the post I just made is redundant to yours, which I should have read first…

      2. Properties, prices and pesky Instagrammers
        Financial Times-22 hours ago
        … downbeat news from Phoenix, Arizona, where even this Frank Lloyd Wright home is struggling to sell (despite having its price cut by nearly $3m last month).

      3. Some people can’t maintain liquid savings, due to a strong proclivity to spend every available penny. If you or your spouse suffers this weakness of character, then a forced savings plan such as buying a lumpy, illiquid, big-ticket asset on long-term leverage may be the best savings choice for you, despite the lack of diversification and associated risk of loss in case of a protracted market downturn.

        1. Some people can’t maintain liquid savings

          Never in a million years is paying for a grossly overpriced house via a mortgage a smart savings plan. It is very much like throwing dollars off a bridge and shoving dimes into a coffee can. Not smart. Besides, the modern spendthrift gets a HELOC and pays interest on that too. Not savings at all.

  15. OT re: New Zealand, keep the initial narrative blurry.

    Because Real Journalists will script the final, established narrative once it’s confirmed.

    LOLZ I read an article written by Real Journalists that said he live-streamed the whole thing on Facebook and posted a manifesto on 8chan before it happened.

  18. Apartment owner Deborah Lake has joined a $36 million lawsuit after her lock-and-leave lifestyle apartment turned into a ball and chain alleged to have structural defects, weather-tightness issues and incorrect fire protection.”

    Ya know, Debbie, as a renter, I can just walk away from such issues. You, not so much.

  19. ‘I have three daughters and we just bought a dog,’ he laughed. ‘I don’t think I’m going to be cutting back.’”

    Better get the daughters signed up for seeking arrangement.com, Wycee.

  20. “The property downturn has left the buyers of as many as 450,000 properties across Sydney and Melbourne with homes worth less than what they paid for them and this figure will almost double if the market continues to fall.

    I fear that in such a scenario, someone might very well have overpaid. That would be a crying shame.

    1. “…as many as 450,000 properties across Sydney and Melbourne…”

      At a modest lower bound assumption of $100,000 on the average amount by which these 450,000 properties are underwater, would be $45 billion. That’s a lot of underwaterness!

    1. It doesn’t rule out hand wringing. Would you please pass the lotion?

      Opinion: U.S. corporate leaders are getting worried about a recession
      By Brett Arends
      Published: Mar 15, 2019 3:09 p.m. ET
      Latest earnings calls reflect growing concerns about the economy
      Getty
      Gartner researchers analyzed all the fourth-quarter earnings reports, and tuned in to companies’ post-earnings-report conference calls with analysts, to gauge business leaders’ current outlooks.

      Watch out below.

      Top U.S. business leaders are “bracing for a recession,” and many are already starting to slash costs to prepare their companies for a downturn ahead.
      …

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