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Sellers Are Cutting Prices More Often And Waiting Longer To Close Deals

Two reports from the Orange County Register in California. “There might be some good news for Californians stretching to buy a home. The statewide median home price declined to $538,690 in January. The statewide median price was down 3.4 percent from $557,600 in December and up 2.1 percent in January from a revised $527,780 in January 2018.”

“‘California continued to move toward a more balanced market as we see buyers having greater negotiating power and sellers making concessions to get their homes sold as inventory grows,’ Jared Martin, the president of the California Association of Realtors, said in a recent report.”

“January is typically the slowest month for home sales. This year, sales statewide in the first month were the slowest of any month since April 2008. Has the real estate market cooled in California?”

“The median price of an existing Orange County house fell 1.6 percent year over year in February, decreasing to $792,500 from over $805,000 in February 2018, CAR reported Tuesday, March 19. It’s the second time in three months Orange County home prices fell from year-ago levels.”

“Sales, meanwhile, continued to lag year-ago levels across the board. In the region as a whole, sales were down 10.7 percent year over year, with drops of 10.9 percent in Los Angeles County, 16.5 percent in hardest-hit Orange County, 7.7 percent in Riverside County and 14.1 percent in San Bernardino County.”

“Orange County was one of 17 counties statewide to experience a price drop last month, while prices increased in the remaining 35 for which home price data was available.”

The Bay Area Newsgroup. “The bidding wars and quick cash sales have abated, and home sellers are cutting prices more often and waiting longer to close deals than a year ago. Sales slumped nearly 13 percent in January from the previous year. Agents say homes priced over $2 million are spending longer on the market, and CoreLogic data found transactions for luxury homes in San Mateo and Santa Clara counties dropped by more than 25 percent in December and January.”

“About 15 percent of homes listed in the San Jose metro area took a price cut. Homes still sold for a robust 97 percent of asking price. Last year, the typical property sold for a 7 percent premium over asking price. In the East Bay and San Francisco, 11.5 percent of sellers dropped prices and sold their homes for an average of 98.6 percent of the asking price.”

From Xinhua. “As economic and market uncertainties sent home sales in California in January to their lowest level since April 2008, business insiders say growth in the Golden State’s housing market appears to be slowing. There are currently 27,522 homes on the listing in Southern California this year, much more than 21,219 in 2018.”

“But analysts think the market slowdown does not mean a large-scale price drop in the short term. Price reduction varies from area to area. ‘In hot areas of Southern California, homes priced under 1,000,000 U.S. dollars still sell good,’ Kevin Zhang, a local real estate agent, told Xinhua. ‘The monthly mortgage payment for these kinds of properties is almost same as the rental payment. That’s why their sales are still relatively stable.'”

From Los Altos Online. “State Assemblyman Marc Berman, whose 24th District includes Los Altos, Los Altos Hills and Mountain View, remains uncommitted, at least publicly, on a controversial bill that would force high-density housing along major transportation corridors.”

“‘When is enough enough?’ one attendee asked. ‘All we’re getting is giant buildings … that only rich people can afford.'”

“‘Enough (housing) will be enough when we don’t see rows of RVs along El Camino, when 19 percent of students attending community colleges aren’t homeless,’ Berman responded. ‘We don’t have nearly enough.'”

From Eyewitness News. “Unless local housing prices are able to come closer in line with incomes here, L.A. could be facing a serious demographic shift in the near future. ‘We’ll become, basically, a luxury place to live in and we won’t have a rich and wide range of incomes living here in Los Angeles,’ said Professor Richard Green, the director of the USC Lusk Center for Real Estate.”

“Green said the high cost of living in L.A. is an even bigger problem when you realize that incomes here are just slightly above average.”

The Paradise Post. “The Bay Area has become one of the most popular places in the country to leave in recent years. About 64,300 residents exited the region, many for other states, between 2015 and 2018, according to a recent survey by Joint Venture Silicon Valley.”

“But along with the high cost of living, politics has become a key component pushing some out of the liberal region. One-party domination in Sacramento and constant chafing with neighbors has driven conservative Bay Area refugees to communities in Texas, Idaho, Colorado and Florida. Former residents say their views on immigration and taxes put them on the margins of a region they once embraced.”

“In Idaho, Boise agent Kerri O’Hara said her clients regularly share horror stories from the Bay Area, usually about the high rates of homelessness and public defecation in San Francisco. ‘I’ve heard every story with the feces,’ she said.”

From KSRO. “According the Press Democrat’s monthly housing report, the median home price in the month of February dropped 10 percent from the same month last year to 620 thousand dollars. Home sales also dropped 15 percent with 227 single family homes sold in February 2019 compared to 267 sold in February 2018. This continues the downward trend of median home prices dipping since their peak of 700 thousand dollars last June.”

This Post Has 41 Comments
  1. ‘Orange County was one of 17 counties statewide to experience a price drop last month’

    The media’s been kinda quiet about it.

    ‘Enough (housing) will be enough when we don’t see rows of RVs along El Camino, when 19 percent of students attending community colleges aren’t homeless’

    ‘the high rates of homelessness and public defecation in San Francisco. ‘I’ve heard every story with the feces’

    Wow, when can I sign up for Paradise?

    ‘Green said the high cost of living in L.A. is an even bigger problem when you realize that incomes here are just slightly above average’

    Oh dear…

    1. You know if I was homeless, pooping in the alley, I think I would find a J-O-B instead of learning basket weaving.

        1. Much of the problems of mental illness and homelessness was caused by companies like Purdue Pharma that caused the opioid epidemic, and other drug dealers. Why no mention of those that profit from the drug trade?

          1. The problem is much worse than anyone realizes. I am amazed at how many addicts there are of all socio-economic backgrounds from the opioid crisis. So many med seekers when I was working at my hospital.

      1. Denver is on its way there. I stopped at Santiago’s at 6th and Santa Fe at 3:00 this afternoon and there was a vagrant passed out with his head and torso in the planter and his legs sprawled out on the sidewalk, he looked like he might even be dead 🙁

        Eastbound 6th Avenue Freeway is a major artery into downtown, this is your “Welcome To Denver” brought to you by the Denver Chamber of Anti-Commerce and the Anti-Visitors’ Bureau.

        1. From the Seattle video:

          “The drain on the system, the drain on resources, and manpower, is incalculable.”

          Incalculable… where have we heard that word before? LOLZ

      2. yes, if you were a normal person who is homeless. Most are addicts and or crazy. I’m not hiring them–too much liability to even sweep the shop.

    1. I think those speculators were using some of those loans to launder money outside China. You know cash paying Chinese. Watch out below if those loans become due

  2. “But analysts think the market slowdown does not mean a large-scale price drop in the short term. Price reduction varies from area to area. ‘In hot areas of Southern California, homes priced under 1,000,000 U.S. dollars still sell good,’ Kevin Zhang, a local real estate agent, told Xinhua. ‘The monthly mortgage payment for these kinds of properties is almost same as the rental payment. That’s why their sales are still relatively stable.’”

    Looks like Kevin is blowing smoke up his @$$. I don’t see 5k per month rents even for shacks!

      1. I can tell you living in SoCAL for many years before moving up to SV, there are not many jobs paying much to afford 1M shacks let alone 5k/month rent….

        1. Somebody said something I thought was profound a while back. It was that people buying $700,000 houses don’t intend to pay that off over 30 years. They fully expect to do as others they’ve observed. Pull out a couple hundred grand every two years, blow it, and some time in the future, fund their retirement or move to BFE and pay cash with all that sweet equity. Kinda irrational, but I think he was right.

        1. somebody with a good income who thinks RE is headed down, yet wants to live in a big fancy house in a good hood.

      1. Those are the same exact houses that were there 2 years ago.

        They’re still empty?

        Ooooooph.

          1. Uncle Rico: Kip, I reckon…you know a lot about…cyberspace? You ever come across anything…like time travel?

  3. “‘Enough (housing) will be enough when we don’t see rows of RVs along El Camino, when 19 percent of students attending community colleges aren’t homeless,’ Berman responded. ‘We don’t have nearly enough.’”

    With sanctuary state California welcoming a flood tide of illegals with open arms, you’re never going to have enough housing, Berman.

    1. They asked $598,000 for this on 6/27/2018. And it’s been downhill ever since 🙁

      Boise, you’re not Denver (yet). But you are getting close when it comes to the amount of incalculable losses you’re facing if you bought since 2016.

      Incalculable losses, so sad…

    2. The same property had an assessed value of $320,200 in 2012 as per the Ada County Assessor, a 39% drop from the current wish price. Step right up folks and try the new exhilarating carnival ride Housing Rollercoaster! Put your head between your legs and kiss your assets goodbye.

  4. “There might be some good news for Californians stretching to buy a home. The statewide median home price declined to $538,690 in January.”

    It should be much better in five years, after the incipient bust has played out.

  5. BETO O’ROURKE JOINS 2020 HOPEFULS IN BACKING OCASIO-CORTEZ’S GREEN NEW DEAL: ‘IT IS THE BEST PROPOSAL I’VE SEEN’

    BY RAMSEY TOUCHBERRY ON 2/12/19 AT 11:12 AM EST

    The handful of Democratic senators already running for president, including Elizabeth Warren, Kamala Harris, Amy Klobuchar, Kirsten Gillibrand and Cory Booker, have co-sponsored the legislation filed as a resolution. Independent Senator Bernie also co-sponsored the deal.

    https://www.newsweek.com/beto-orourke-ocasio-cortez-green-new-deal-1328205

    The urge to save humanity is almost always only a false-face for the urge to rule it. Power is what all messiahs really seek: not the chance to serve.

    H.L. Mencken, Minority Report

  6. GDP Now forecast for GDP growth is 0.4% …

    GDPNow – Federal Reserve Bank of Atlanta
    https://www.frbatlanta.org/cqer/research/gdpnow.aspx

    The Fed cuts it’s GDP growth forecast to 2.1% thus there will be no rate hike this year ….

    Fed rate hikes: Fed rate hikes won’t happen until next year, Chair Jerome Powell says – CBS News
    https://www.cbsnews.com/news/fed-rate-hikes-none-in-2019-federal-reserve-projects-no-rate-hikes-slower-growth-this-year/

  7. Mr. Banker says: “When Price equals Value an increase in price will produce an increase in value, thus an increase in price will not be seen as a sign of inflation but will instead be seen as a sign of increasing wealth.”

    Mr. Banker also says: “An increase in value for one item will increase the values for all the comparable items. If these items are stocks or houses then the increase in value for a few will generate values for the many.”

    This is Mr. Bankers lead-in to the following article …

    “Why The Fed Keeps Propping Up The Market”
    https://realinvestmentadvice.com/why-the-fed-keeps-propping-up-the-market/

    (snip snip snip)

    “This is an important consideration because stocks are one of the major components of U.S. household wealth, when the stock market rises, household wealth does as well (and vice versa)”

    Mr. Banker points out that houses are also important components of U.S. household wealth.

    “In turn, household wealth is a major variable that affects U.S. consumer spending. When household wealth is growing, consumers feel more confident and have more buying power, which means that they are more willing to spend money – a phenomenon known as a wealth effect. Wealth effects can also run in reverse, as it did in the early-2000s and during the Great Recession. Because the U.S. economy has been in such a precarious situation in the last ten years and the federal government has little ammunition left to fight a recession, the Fed has been doing everything it can to prop up stocks and household wealth in order to prevent a reverse wealth effect from occurring. Though household wealth plunged at the end of 2018 (which is why the blue line in the chart below fell so sharply), the Fed panicked and began to boost the market again starting in late-December. By the time the next quarterly household wealth statistic is reported, it will be much higher due to the Fed’s re-inflation of the stock market (the S&P 500 is up 20% from its December low).”

    Mr. Banker is highly impressed with this activity and considers this activity to be a sort of magic in that wealth is something that can be conjured up by price increases rather than some ancient old-school method associated with actual production and (gasp) actual work.

    However, there is this caviet …

    “Thanks to the Fed’s constant inflation of the market in the past decade, the S&P 500 rose much faster than earnings and is now at 1929-like valuations, which means that a painful correction is inevitable one way or another:”

    “The Fed’s constant intervention in the market has created a moral hazard on a scale that has never been experienced before by humanity. A generation of traders and speculators now believe that the market never goes down and that the Fed will always have their backs, so they can take virtually unlimited risk. By backstopping the market, the Fed is inadvertently enabling and encouraging an unprecedented buildup of risk that will eventually overwhelm its ability to step in and rescue the market, which is when the ultimate crash will occur.”

    Bummer.

  8. Not in Sacramento!

    So how come downtown and midtown Sacramento real estate prices are sky high? Limited Sacramento inventory as well. I was walking around downtown and 2 bedroom selling for over 600k! WTF?

    1. Asking $600k, not selling at: an important distinction, unless you can bring data that says otherwise.

  9. So we are now 3 basis points away from a 3m to 10y yield curve inversion. That is red fooking alert territory.

    No one can spin that (I’ve seen people saying the 3m to 7y curve inversion is “no big deal” or doesn’t have the same track record as the 3m to 10y).

    It’s not different this time.

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