thehousingbubble@gmail.com
Blog

Sales Have Fallen For Seven Straight Months, Swelling Inventory And Forcing Sellers To Trim Asking Prices

A report from the Union Tribune in California. ” February sales were down 8.1 percent compared to the previous year, but that was not as severe as the last few months when sales dropped 10 percent to 22 percent. All types of housing in San Diego County had declining sales in February. After months of slowing sales, there are more homes on the market for potential buyers, said the Greater San Diego Association of Realtors. In February, there were 6,362 homes for sale, up from 4,636 at the same time last year and 4,415 in 2016.”

“Dana Kuhn, a director at John Burns Real Estate Consulting, said he didn’t anticipate a heating up of the market like there has been the last few years, mainly because wages have not been increasing as fast as home prices. ‘There is far less motivation for someone to buy today than a few years ago,’ Kuhn said. ‘Even though (interest) rates have come back down, there is a widespread sense that we are at the end of cycle.'”

“Chris Thornberg, economist and founding partner of Beacon Economics, said it was ridiculous to think home prices would not rebound with lowering interest rates and home inventory at historic lows. Thornberg said the slowdown was caused by rising interest rates and a belief by buyers that prices would go down. He said a strong economy and a shortage of homes for sale throughout California mean prices will continue to rise and spring will be a busy time for sales.”

“‘The market was going to move again, regardless,’ he said. ‘It takes a big mess to cause home prices to fall. I don’t just mean a mess in the housing market. I mean an economic mess.'”

The Los Angeles Times. “Sales have now fallen for seven straight months, swelling inventory and forcing sellers to trim their asking prices. The regional median is $24,500 below its all time high of $537,000 reached in June. Last month, prices dropped 1.4% compared with a year earlier in expensive Orange County.”

“‘[Buyers] are just being more cautious where they are putting their dollars,’ said San Fernando Valley real estate agent Deanna Medina.”

“‘I haven’t seen anything come across my desk in several months where someone paid above asking price,’ said Jeff Lazerson, president of Laguna Niguel mortgage brokerage Mortgage Grader.”

The Ventura County Star. “Home sales aren’t just down in Ventura County: February marked the seventh straight month that Southern California home sales have fallen on a year-over-year basis. There were 567 homes sold in Ventura County last month, according to CoreLogic. The report noted that is a 12 percent decline from the county’s 644 home sales in February 2018.”

“Southern California has seen a decline in year-over-year home sales for much of the past year. Sales have fallen on a year-over-year basis for the past seven consecutive months and in nine of the last 10 months, according to the CoreLogic report.”

“The numbers are similar throughout most Southern California regions, all of which saw their sales numbers decrease from February 2018 to February 2019. There were 13,466 homes sold in Southern California at a median price of $512,500 last month. That’s an 11.7 percent decrease from the 15,245 homes sold in the region in February 2018.”

“‘February was the third month in a row in which Southern California home sales were the lowest for that particular month in 11 years, since shortly after the last housing downturn began,’ said CoreLogic research analyst Andrew LePage.”

Related Posts
This Post Has 53 Comments

  1. ‘Chris Thornberg, economist and founding partner of Beacon Economics, said it was ridiculous to think home prices would not rebound with lowering interest rates and home inventory at historic lows. Thornberg said the slowdown was caused by rising interest rates and a belief by buyers that prices would go down’

    Turn those machines back on!

      1. This guy is either a liar or a dumbshit. After the last time the Treasury yield curve inverted, in 2007, housing prices majorly collapsed. Maybe he thinks this time is different?

        “Chris Thornberg, economist and founding partner of Beacon Economics, said it was ridiculous to think home prices would not rebound with lowering interest rates and home inventory at historic lows.”

        The Yield Curve, October 2007
        10.31.07

        Since last month, longer-term interest rates have increased with little movement in short rates, increasing the slope of the yield curve. One reason for noting this is that the slope of the yield curve has achieved some notoriety as a simple forecaster of economic growth. The rule of thumb is that an inverted yield curve (short rates above long rates) indicates a recession in about a year, and yield curve inversions have preceded each of the last six recessions (as defined by the NBER). Very flat yield curves preceded the previous two, and there have been two notable false positives: an inversion in late 1966 and a very flat curve in late 1998. More generally, though, a flat curve indicates weak growth, and conversely, a steep curve indicates strong growth. One measure of slope, the spread between 10-year bonds and 3-month T-bills, bears out this relation, particularly when real GDP growth is lagged a year to line up growth with the spread that predicts it.
        …

        1. “All of Southern California experienced similar market conditions in February. Orange County had the biggest annual drop in sales at 17.1 percent.

          It was followed by San Bernardino County, down 13.8 percent; Ventura County, down 12 percent; Los Angeles County, down 11.8 percent; Riverside County, down 8.9 percent; and San Diego County down 8.1 percent.”

          Busy time Chris? I need to smoke what Chris is smoking

        2. US Markets
          Stocks slip as 10-year Treasury yield hits lowest level since 2017
          Published Wed, Mar 27 2019 • 3:36 AM EDT Updated Wed, Mar 27 2019 • 4:11 PM EDT
          Fred Imbert
          …
          The benchmark 10-year rate traded at 2.386 percent and hit its lowest level since Dec. 15, 2017. Investors are keeping an eye on rates after the 10-year fell below the 3-month rate last week for the first time since 2007. It is a development that investors call an inverted yield curve and is seen as an early indicator of a recession.

          The U.S. Treasury yield curve has inverted before each recession in the past 50 years and has only offered a false signal just once in that time, according to data from Reuters.

          “All eyes are going to be on the Treasury market,” said Michael Reynolds, investment strategy officer at Glenmede. “We are seeing a rising probability of recession in recognition of these rising risks, but we’re not blowing off the top just yet.”
          …

        3. There’s probably no worse possible time to buy a home than just before the onset of a recession.

          Credit Suisse’s global CIO says a recession is coming — but it won’t be ‘right here, right now’
          Published Tue, Mar 26 2019 • 11:42 PM EDT Updated Wed, Mar 27 2019 • 1:50 AM EDT
          Yen Nee Lee

          Key Points
          – The yield on the 10-year U.S. Treasury bill fell below that of the 3-month note last week — a development seen as an early indicator of a recession.
          – Meanwhile, U.S. stocks shook off the bond market’s warning with the S&P 500 closing higher on Tuesday after two sessions of losses.
          – For Credit Suisse’s Global Chief Investment Officer Michael Strobaek, the bond market is usually better than stock markets in predicting what’s to come.

          The bond and stock markets in the U.S. have been sending mixed signals about the American economy over the last few days — and investors are split on which asset class got it right.

          Last week, the yield on the 10-year U.S. Treasury bill fell below that of the 3-month note for the first time since 2007. It’s a development that investors call an inverted yield curve, and is seen as an early indicator of a recession. Meanwhile, U.S. stocks shook off the bond market’s warning with the S&P 500 closing higher on Tuesday after two sessions of losses
          …

          1. Home shoppers who interpret this interest rate dip as a buy signal are likely to later find themselves feasting at a fine crow banquet served up by master chef Christopher Thornberg.

            The Financial Times
            Markets Briefing Equities
            Equities fall as growth fears fuel bond rally
            Edward White
            50 minutes ago

            Equities lost ground and sovereign debt extended its rally in Asia-Pacific trading on Thursday amid mounting dovish signals from central banks around the world and rising worries of slowing global growth.

            Among the major bourses in the region only the S&P/ASX 200 edged higher, buoyed by gains for mining stocks, while the Topix in Tokyo saw the steepest decline, falling 1.7 per cent.

            The yield on US 10-year Treasuries slipped to its lowest in almost 16-months, the New Zealand benchmark 10-year yield fell to a new record low and Japan’s equivalent maturity note was near a 31-month low touched on Monday.
            …

          2. The Japanese stock market experience of the early 1990s to the present offers a tough lesson for investors who believe that lower interest rates always lead to higher stock prices. Rates dropped to near zero, but the stock market refused to stop tumbling, and remains at a fraction of its early 1990s value to date.

        4. BREAKING NEWS
          HUD says it is charging Facebook with violating fair housing laws, accusing the social-media firm of allowing advertisers to discriminate

          U.S. Markets
          Global Stocks Pause as Bond Yields Face Continued Pressure
          U.S. futures point to a flat open on Wall Street
          Mar 27, 2019 1:55 p.m.
          Updated March 28, 2019 7:17 a.m. ET

          Global stocks wavered Thursday as investors weighed whether recent concerns about global growth marked a blip in market sentiment or a permanent turn away from the buoyancy that defined the beginning of 2019.

          The 10-year U.S. Treasury fell early Thursday before rising to 2.375%, from 2.374% on Wednesday, as negative sentiment continued to weigh on equities and pushed bond yields lower world-wide as investors flock to haven assets. Yields move inversely to prices.

          In Europe, the Stoxx Europe 600 was up 0.2% in morning trading. Asian stocks were mostly lower with the Shanghai Stock Exchange down 0.9% and Japan’s Nikkei down 1.6%.
          …

    2. “Q24.Is the lender responsible for the standard representations and warranties regarding the value ofthe property? Fannie Mae accepts the value estimate submitted by the lender as the market value for the subject property when an appraisal waiver offer is exercised. The lender is relieved from Fannie Mae’s enforcement of representations and warranties regarding the value, condition, and marketability of the property. The lender is required to represent and warrant that the data submitted (other than the value estimate) to DU is complete and accurate.When exercising an appraisal waiver, the lender is required to include the casefile ID and SFC 801 on the loan delivery file to Fannie Mae to receive representation and warranty relief. If a lender chooses to not exercise the appraisal waiver offer, the lender must obtain at least the minimum level of appraisal of fieldwork recommended by DU. Refer to Q13 and the Selling Guide for situations in which the appraisal waiver offer may not be exercised.”

      From what I can gather, 90% and under loans qualify, need good credit, and a prior appraisal on the property.
      The sales price is the value. And Fannie has the bit in their mouth because they are ‘helping the consumer.’

      The foregoing is from a poster on my appraiser’s forum. This appears to be a “turn the machines back on” moment.

    3. ‘It takes a big me$$ to cause home price$ to fall. I don’t just mean a mess in the hou$ing market. I mean an economic me$$. ”

      Chri$ Thorn.in.my.$ide.berg:

      What million dollar$ hou$e’$ for $ale? There’$ plenty of opportunitie$ for folk$ to get loan$ for that purcha$e, what’$ the i$$ue?

      $is.boom.buy!

    4. After 12 straight months of y-o-y increases, San Diego inventory is not at historic lows. But I guess once you become an “expert”, you can invent your own statistics. His reasoning boils down to “nothing bad can happen because everything is good”. Trenchant insight. But, aside from that, if everything is so good, why is it that a diminutive 2.5% Fed Funds rate sent the whole system into paraoxysmal gyrations?

      1. I think the “nothing bad can happen because everything is good” concept was the basic principle behind the Long Term Capital Management algorithm. Amazing what you can convince yourself is a good idea when you have a PhD.

          1. It is hard to get a man to understand something when his paycheck depends on his not understanding it.

            — Upton Sinclair

    6. Real Estate Economist Leaves UCLA Forecast
      August 15, 2006

      “Thornberg was one of the first economists to declare that the housing market was peaking. He did so in September, when the median home price in Los Angeles County was $494,000, and he said that there were “signs that the housing party is ending.” Since then, the county’s median price rose another 5%, hitting a record $520,000 last month. But year-over-year sales plunged 25%, the eighth consecutive monthly decline.”

  3. ‘Sales have fallen on a year-over-year basis for the past seven consecutive months and in nine of the last 10 months’

    I bet in the one month sales didn’t fall it was “we’re going to the moon Alice!”

    Jeebus these REIC people are pathetic. Keep clinging to your miniscule YOY median. You’ll all be short sale experts soon enough.

  4. ‘I haven’t seen anything come across my desk in several months where someone paid above asking price’

    Redfin must be a lion.

    1. Going to be interesting times in NYC when people start applying to update their property tax assessment to reflect price declines. NYC is already bleeding red ink like a shipment of Sharpie markers rolled over on the highway.

  7. Dana Kuhn, a director at John Burns Real Estate Consulting, said he didn’t anticipate a heating up of the market like there has been the last few years, mainly because wages have not been increasing as fast as home prices.

    I bet Dana looks dashing in his Captain Obvious costume.

  8. This will make you think twice about staying in an AirBnB with your significant other.

    Technology
    Airbnb Has a Hidden-Camera Problem
    The home-rental start-up says it’s cracking down on hosts who record guests. Is it doing enough?
    Sidney Fussell
    Mar 26, 2019
    An illustration of a giant camera recording two people sleeping in a bed.
    Ruby Aitken

    When Max Vest shook hands with the host of his Miami Airbnb back in January, the man introduced himself as Ralph—even though “Ray” was the name he’d used in all their prior communication.

    This was the first and only indication that something was wrong. But his host had a great rating on the home-sharing site, and many of the comments mentioned how friendly and accommodating he was. So Vest, a children’s-camp director from Gainesville, Florida, didn’t think much of the discrepancy and settled into the two-bedroom, two-bathroom apartment he’d be sharing with Ralph—or was it Ray?—and his girlfriend for the next five days. At about 8 or 9 p.m., he went out for dinner; by the time he got home, his hosts had gone to bed in the room adjacent to his, and he prepared to do the same.

    That was when he saw the light. Two small, black, rectangular boxes were stacked next to an outlet on the far side of the guest room, both facing the bed. From afar, they looked like phone chargers. But when Vest got closer, he realized they were cameras, and they were recording.
    …

    1. RE hidden cameras in airbnb’s… I have wondered if this sort of thing was happening. What a great opportunity for pervs.

  9. After months of slowing sales, there are more homes on the market for potential buyers, said the Greater San Diego Association of Realtors. “In February, there were 6,362 homes for sale, up from 4,636 at the same time last year and 4,415 in 2016.”

    The Fed’s short squeeze on housing has just barely begun to unwind. In the 2000s, there were over 20,000 homes on the market at one point.

  10. ‘It takes a big mess to cause home prices to fall. I don’t just mean a mess in the housing market. I mean an economic mess.’

    Mar. 26, 2019
    Recession Worries Move to DEFCON 3
    By Josh Barro
    Are bond markets signaling a recession — or simply calculating the effects of Trump’s pressure campaign on Fed Chairman Powell? Photo: Andrew Harrer/Bloomberg via Getty

    A month ago, I wrote that it’s not yet time to worry about a recession. Since then, economic indicators have gotten a little worse. It’s still not time to panic — but there’s reason to be a little more worried.

    What’s changed in the last month? Two main things: We got a weak jobs report for February after several strong reports, and the Treasury yield curve inverted. That is to say: The interest rate on three-month government bonds is now higher than the interest rate on ten-year government bonds.
    …

    1. From the article
      “more than 1.7million households pay more than 50 percent of their income toward rent”

      That is not rent burdened, that is rent tortured. But hey, real estate prices are high, the rich are doing just fine, so…no problem

  12. A fun read …

    Lyft IPO: Get Ready For A Bumpy Ride | SafeHaven.com
    https://safehaven.com/investing/stocks/Lyft-IPO-Get-Ready-For-A-Bumpy-Ride.html

    (some snips)

    “Massive-valuation, loss-making startups are all the rage now …”

    Quick, sign me up!

    “And while many might be asking if the market is right for these startups to go public, it’s really a moot point. After all …”

    (Okay, class, pay close attention as to what is said here)

    “… investor appetite is already soaring for startups that are generating huge losses, so the risk is already priced in.”

    Truly, a nation of dummies.

    “Or, as DataTrek, Research co-founder Nick Colas told CNBC’s Trading Nation today: ‘These companies are all remarkably unprofitable.”

    “remarably unprofitable” Bahahaha … no red flag to be found here. So how unprofitable is “remarkably unprofitable”?

    “Lyft lost $900 million-plus last year, and all of these are cyclical companies, as well, unproven by an economic downturn.’

    Bahahahahahaha …

    “The co-founders of Lyft told investors last week essentially that it will be a while before Lyft becomes profitable, though they are sure it will, eventually. The problem is that in order to compete in North America with Uber, it’s got to offer discounts and spend an awful lot on marketing.”

    😁

    1. It doesn’t matter how much the company lost, so long as you can flip your IPO shares to some greater fool at a higher price than you paid.

  14. “Chris Thornberg, economist and founding partner of Beacon Economics, said it was ridiculous to think home prices would not rebound with lowering interest rates and home inventory at historic lows.”
    – Sales did rebound in Q1 ‘19 due to Fed/Powell cave. Temporary reprieve only due to price bubble peak and shelter-buyer debt saturation. This is bubble-mimics, not free market economics. The Fed is micromanaging the economy. The cycle must be respected; can be extended, but not prevented. Bubbles gotta pop.

    1. Bubble might not pop…it could very well keep going as they outright purchase stocks and homes…which would be right before our economy and civilization completely collapses

  16. “Thornberg said the slowdown was caused by rising interest rates and a belief by buyers that prices would go down.”

    That belief is now a reality lol.

    1. Educate yourselves. All the experts agree it’s another soft landing.

      https://m.youtube.com/watch?v=IsN4SQrg2x0

      Sounds the sirens. Alert the emergency crew. Lay the foam down on the runway. She’s coming in with no landing gear. We all know where we are when they start with the “all the experts agree it’s only a slowdown back to normal price growth” talking point.

      1. These would be the same “experts” that told us subprime was contained back in 2006, and that Bear Stearns was fine right before it imploded, nearly taking down the financial system with it.

  17. “‘February was the third month in a row in which Southern California home sales were the lowest for that particular month in 11 years, since shortly after the last housing downturn began,’ said CoreLogic research analyst Andrew LePage.”

    2019 – 11 = 2008. February 2008 was three months into The Great Recession, and things really went to Hell from there on out.

  18. Once the YOY cover game pops, there will be panic. Can you think of any other asset that reports its price trend in YOY terms? Done with real estate supposedly to iron out typical seasonal aberrations. Dont give me crap comparisons with a year ago to assess market direction, tell me what the last few monthly prices and volume were.

    That will tell you what the asset trend really is, just like stocks, paper clips, oil or any other asset. This is a giant smoke screen. As we get further into the downward trend those YOY’s will look really bad since they represent a cumulative effect. There will be people screaming in the streets, and those of us who understand will be ready for the real buying opportunity.

    1. The EU tributarie$ that float the import$ of U.S. Export$ are indicating $hallow water$ ahead:

      France opposes EU trade deal$ with non-$ignatories of Paris accord – Loiseau
      Reuters|March 28, 2019

      RIS, March 28 (Reuters) – Nathalie Loiseau, leader of President Emmanuel Macron’s European election campaign, said on Thursday she opposes trade deals with countries which are not signed up to the Paris climate accord, including the United States.

      “We won’t sign a deal with a country that has exited from the Paris accord,” Loiseau, who quit her job as European affairs minister this week to run for the European Parliament, said in an interview with BFM TV.

      The European Commission, which negotiates trade deals on behalf of the 28 EU countries, has presented two negotiating mandates to governments for approval, one on reducing tariffs on industrial goods, the other on making it easier for companies to clear their products for sale on both sides of the Atlantic.

      (Reporting by Inti Landauro; editing by Richard Lough)

  21. Not in Sacramento- sellers have not come back to reality yet. I see 2 bedroom in midtown selling for over 600k.

    https://www.zillow.com/95818-ca/?utm_content=1524087069|59045420555|kwd-400522703985|289299108227|&semQue=null&k_clickid=4c7a85bb-7f4d-421c-8eb4-e924348b6d28&gclid=Cj0KCQjw4fHkBRDcARIsACV58_HF-wRKyhgZPtMmeSR7LzfRGB0mAvSN8XfRdfNcVDkiBrIwtVc59IoaAu2FEALw_wcB

    Where are the price drops again? And no, I don’t want to commute to downtown Sacramento from Yuba City.

Comments are closed.