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Sellers Often Have To Reduce Their Asking Price To The Point Where Buyers Are Interested

A report from Florida Weekly. “Home buyers had many more options to choose from in February as housing market inventory increased 7 percent to 7,442 homes in February 2019 compared to 6,912 in February 2018. The Naples Area Board of REALTORS report, which tracks home listings and sales within Collier County (excluding Marco Island), also reflected a 4 percent decrease in the overall median closed price to $335,000 in February 2019 compared to $350,000 in February 2018.”

“‘This is typically the time of year when we see inventory jump,’ said Wes Kunkle at Kunkle International Realty. ‘New listings increased 34 percent in the single-family home market and 7 percent in the condominium market (based on a comparison of February statistics). That’s a lot of great new options for buyers!'”

“While there were 100 fewer closed sales in February 2019 compared to closed sales in February 2018 (a 14 percent decrease), the added inventory has broker analysts like Dominic Pallini convinced that buyers are not rushing into a sale like many did when inventory levels were much lower; and instead, are meticulously evaluating all their options that include new and existing homes.”

“‘The average days on the market increased in February, which tells me that buyers are looking at more homes before they make an offer,’ said Mr. Pallini. ‘Plus, there is a lot more new construction this year than a year ago.'”

“‘Our statistics show that the closed prices of properties that were sold in February averaged 95 to 96 percent of the current list price,’ said Brenda Fioretti at Berkshire Hathaway HomeServices Florida Realty. ‘This shows that once a property is priced to attract buyers, the seller can realize a final closing price within 4 to 5 percent of asking price.'”

“Ms. Fioretti added that ‘many of the current listed properties are priced in excess of the range that is attracting buyers so sellers often have to reduce their asking price to the point where buyers are interested, looking and ready to make an offer. Pricing a home appropriately from the start helps the seller realize a much shorter marketing time and makes for a smoother transaction.'”

From Greenwich Time in Connecticut. “‘What we’re seeing post-recession, and this isn’t everybody, but the trend is to live closer to town on smaller lots,’ said long time Realtor Mark Pruner. ‘Large acreage and large houses are seen as expenses, not necessarily as examples of great success.'”

“He gave an example of a backcountry mansion on Moreland Road that was put on the market for $26 million in 2013. In 2017, it was rented out for $22,000 a month. The house was ultimately taken over by the bank and sold in 2018 for only $6.5 million.”

“And while sales were up in 2018 over 2017, Pruner said sales in the first three months of 2019 have been ‘poor.’ Of the 591 listings of single-family homes in town, there have been 65 sales as of March 25, he said. There’s been a bit more activity in March, but overall it has ‘been a difficult period,’ Pruner said.”

“Also for 2018, 158 condominiums and 23 co-ops were sold in town, showing a 14.1 percent increase since the 2015 revaluation, he said. ‘We’ve got a mismatch between what’s being built and what the demand is for those units,’ Pruner said. For condos, builders construct ‘the largest unit that they can sell for the most money… The problem is they’re having trouble selling them because the demand is in the condos that are under $1 million.'”

This Post Has 47 Comments
  1. ‘He gave an example of a backcountry mansion on Moreland Road that was put on the market for $26 million in 2013. In 2017, it was rented out for $22,000 a month. The house was ultimately taken over by the bank and sold in 2018 for only $6.5 million’

    Didn’t somebody here say the other day that 50% off was absurd?

    1. Yeah, “only 50%” was way too small. Should have started at 75%…

      In all seriousness, the (very) high end of the market will probably see some of the very worst haircuts due to multiple factors from having just so much further to fall, too few potential buyers, too many alternatives and just not being a necessity.

      1. Somehow going way out on a limb to pay $26 million for an investment property you expect to sell after a few years of double-digit returns no longer seems attractive when prices are falling.

        1. ‘Large acreage and large houses are seen as expenses, not necessarily as examples of great success’

          They always been an expense. A few years ago, they were seen as an investment that was going to make people millions in no time. (Funny how everybody forgets that). Yes, about the same time as the “safe deposit boxes in the sky” insanity was peaking, huge and expensive shacks were booming. Remember the $250 million new build in LA? Last I heard it was $150 M and hadn’t sold.

          These Connecticut shacks are:

          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”

          Nobody needs a $25 M shack. Why would you buy one? You expect to sell it for $35M. It’s pure speculation.

          1. “Large acreage and large houses are seen as expenses, not necessarily as examples of great success.”

            You beat me to the punch Ben. This was the line that stuck out the most to me today. It has what I’ve always thought. The more you spend on a house, the more you have to keep spending (e.g. property tax, maintenance, cleaning, etc.). It is a mystery to me why people want more house. It only makes sense when they think it will make them money. P Diddy said “Mo’ Money, mo’ problems”, but he should have said “Mo’ house, mo’ problems.”

    2. “Didn’t somebody here say the other day that 50% off was absurd?”

      Yes, it was our resident shill “Doomed.” Reading his posts, I think he’s a closet REALTOR.

      1. Nope. Not a realtor. Just someone who can see with my own eyes that the doom and gloom everyone here hopes happens isn’t happening. Could it happen some day? Sure. Anything’s possible. Is it happening now? Not at all.

        If you think nationally prices have fallen 60-70% from 2013, I don’t know how to even respond to that.

        1. “If you think nationally prices have fallen 60-70% from 2013, I don’t know how to even respond to that.”

          What are you talking about?

    3. Yeah that was me. And it is absurd. And the 50% off was for homes purchased (not listed) prior to 2012. Your example is of something listed in 2013, so apples to oranges.

      And as always there are exceptions to the rule. You’ll always find the oddball stories. Chances are there was fraud involved in this somewhere. Houses don’t go from $26M to $6M in value during a period of rapidly rising home prices. Even during the height of the 2009/10 crash prices didn’t collapse like this.

  2. ‘Plus, there is a lot more new construction this year than a year ago’

    Well what do you know? Builders have been undercutting the existing market in Naples for around two years. And they keep building, faster! This is when the sellers are fooked!

  3. I have so much money left after “throwing money away on rent” every month that I don’t know where to throw it.

    1. And after 30 years of “throwing money away on rent,” enjoying many different neighborhoods and cities, free as a lark, you can compare notes both financially and spiritually with an FB who has been chained to the same house anchor the entire time.

      1. Remember that article a few days ago of the homeless car camper in San Diego that was posting of the “$1 million dollar views” by sleeping in their car on the beach? That is sometimes how I feel when I run by the gorgeous landscaping of some of these white elephant houses. I often marvel at these 30, 40, 50 year-olds who are toiling to keep their largest investment from falling into ruin. All the while I am actually out enjoying life with my wife and my son, running, hiking, playing, etc. There is tremendous freedom at not being shackled by a mortgage.

          1. Been holding FAZ for some time now. These financial stocks have so many backstops though. My current average cost is $13 and change. Got badly burned on this a few years back. Hate to dump it in case it breaks out. But getting tired of it not being able to hold 11, 12 or above. It always falls back to the 9s .. hopefully not any lower. Holding 4000 shares, tempted to get another 1000 in the low 9s.

      1. Buying leverage ETFs and holding for longer than a day is a really bad idea. They are not designed for that and will not track their index over time that way. Much better to buy an unleveraged ETF and leverage it yourself with margin if you intend a holding period longer than 1 day.

  4. Treasurys stay popular even as rates fall
    By: Bloomberg News
    March 22, 2019 1:40 pm

    U.S. Treasurys are, once again, proving to be a buy at almost any price.

    After the Federal Reserve’s surprise dovish turn this week, investors have piled into the $15.8 trillion market, leaving the 10-year note yielding less than 2.5 percent. Just a few months ago, it surged past 3.2 percent, sparking all sorts of talk — yet again — that this was the dawn of a new era of rising rates.

    Of course, one might be forgiven for wondering who would put money in 10-year Treasurys now, particularly when you can earn nearly as much in interest on a run-of-the-mill savings account from any number of banks.

    Yet for investors like JPMorgan Asset Management’s Alex Dryden, it’s perfectly sensible. The Fed’s darkening outlook about the U.S. economy is compounding worries over global growth, and few see inflation running hot enough to eat significantly into returns. If anything, the concern is that with inflation so low and growth so weak, yields will keep falling, which would make locking in today’s rates for years a smart move.

    “Inflation has been persistently and stubbornly low,” said Dryden, the firm’s global rates strategist.

    1. Seems like global bond markets are trying to price in more future rounds of quantitative easing, something that wasn’t a factor in previous yield curve inversions. If investors believe yields will fall in the future, they will collectively act to drive them down immediately.

      The Wall Street Journal
      Credit Markets
      Global Bond Yields Slide to Fresh Lows Following ECB Comments
      Yields have slipped as central banks have signaled they are willing to hold rates low for significantly longer than expected
      By Akane Otani
      Updated March 27, 2019 3:30 p.m. ET

      Government-bond yields from the U.S. to Germany slid Wednesday, falling further below recent lows, as signs that the European Central Bank could consider additional delays in interest-rate increases spurred a fresh round of bond buying.

      The yield on the benchmark 10-year U.S. Treasury note, used as a reference for everything from mortgage rates to student debt, fell to 2.374%—its lowest level since December 2017—after settling at 2.418% Tuesday.

      To Read the Full Story
      Subscribe

  5. The Naples Area Board of REALTORS report, which tracks home listings and sales within Collier County (excluding Marco Island), also reflected a 4 percent decrease in the overall median closed price to $335,000 in February 2019 compared to $350,000 in February 2018.”

    Chris, come home for dinner dear. Your favorite on the menu again: CROWS

  6. Good morning! Feb.,’19 (National) Pending House Sales down -1% MoM and -4.9% YoY (TD/ZH). PHS is a leading housing indicator. Housing is a leading economic indicator. The trend appears to be intact as bubble 2.0 continues to deflate. Of course there will be local variations. Cheers from So. Cal. today. Life’s a beach.

  7. This article definitely needs to be posted on this blog …

    “7 Reasons Your Realtor Is The Best Friend You Never Knew You Had”
    https://lightersideofrealestate.com/real-estate-life/agent-life/your-realtor-is-your-best-friend

    (snip snip snip)

    “Some people may come and go in your life, but one special person will always be there for you; to stand beside you, and guide you, comfort you and console you. This amazingly special person is: YOUR REALTOR.

    “Realtors are Superheroes who make your dreams happen, and will travel the ends of the county, working tirelessly for YOU.

    “Realtors go above and beyond to protect your best interests and get you what you want and deserve. When you are buying or selling a home you are vulnerable, emotional, and some of your worst traits rear their ugly heads, but your Realtor will love you anyway.

    “Here are 7 reasons why your Realtor is the best friend you never knew you had:

    1. They know what we can truly afford (even when we don’t).

    2. They’re the most honest people in our lives (not including our mothers).

    3. They’re more loyal than our pets.

    4. Nothing shocks a Realtor.

    5. They are the greatest listeners.

    6. Their intentions are always PURE.

    7. When a Realtor becomes a real-life friend, nothing in the world is sweeter.”

    😁

    1. I realize it isn’t quite April 01, but article is a gag isn’t it? <;}}

      Please don't tell me no.

      1. Here’s the name of the writer and a hint as to her bio …

        Sarah D’Hondt – The Broke Agent
        http://www.thebrokeagent.com/author/sarah-dhondt/

        (snip)

        “Sarah is a Metro Detroit Realtor and a total bad ass. Besides helping her clients with buying and selling real estate, she keeps busy by writing about real estate, remodeling her home, and raising two genius children (often all at the same time). In her free time, which is never, she wishes she was drinking wine. Follow her on Instagram @realtorforhire for daily laughs and relatable content that will drive you to drink.”

        My assumption is she wrote this about herself.

        So the question was: “I realize it isn’t quite April 01, but article is a gag isn’t it? <;}}"

        The answer is: Apparantly not.

  8. This comment from last night got me thinking:

    ‘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’

    Collectively we develop these “truths”. Take down the financial system? I would think making huge loans on old shacks was the bigger threat. Or maybe that was all scary BS to herd the sheep? So I was thinking about Thornberg and his “economic mess” that just had to happen for prices to fall. (Never mind that they are falling around the globe). Luxury shacks/condos have been falling for around 3 years now. Where’s the economic mess? Yesterday we read about prices 5% down in the entire state of Connecticut, despite “low unemployment” and generally high consumer confidence. Miami Beach airboxes have been hammered, but I haven’t come across stories of soup lines down there.

    Greenspan used to say, there can’t be a national housing bubble cuz it’s never happened before. And various posters have said here “there’s no bubble if there aren’t negative amortization loans with Mozilo on TV.”

    Maybe all it takes for there to be a bubble is if prices are way too high. No matter how they get there. And considering all the cities and towns around the world in that boat, with all the variations involved, it seems a more likely definition.

    1. It’s all drama by design put out there by hacks, HousingHens and MortgageMonkeys.

      The reality is nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels.

    2. “Maybe all it takes for there to be a bubble is if prices are way too high. No matter how they get there.”
      – Yep! I would add that housing bubble 2.0 is a lot like 1.0. GSE’s + Smelly Mel cut standards, 0-3% down (97-100+% LTV), 50% DTI, speculators (cheap credit/Yellen bucks), etc. Check, check, check. This is direct result of Fed action. Just like 1.0. Not different this time. Massive wealth inequality, as intended. Central banks are hazardous to your financial health.

    3. It was the exact same story in 2005. If you go back and read the Fed economic updates from that period, you will see the same talking point. The high prices of homes are the new normal based on the strength of the economy. Nothing bad can happen because everything is good.

      1. Also, obviously, you can’t have a bubble if everybody is unemployed and standing in bread lines. There has to be enough money sloshing around and enough optimism that people become oblivious to risk. “Nothing bad can happen because everything is good” has to become the prevailing sentiment,

        1. I still see the bubble as being a function of no alternative between buy/rent, other than the deviants who are parking in Palo Alto in their RV or camping out as homeless. Home prices are high and so are rents. Sky rocketing house prices also is driving up rent, although to a lesser extent. The big unwind will be a demographic shift or when there is some disruption to create a viable way to chose “none of the above”.

    4. “Maybe all it takes for there to be a bubble is if prices are way “

      As I see it, the last bubble was ‘housing is a get rich quick’ scheme financed by NINJA and other mortgage perversions. It was likely a “rebound mania” from the then recent tech bubble mania.

      This time, everyone believes themselves to be real estate investors. It seems less manic but a gradual cornering of the market, where more and more housing supply is taken off the market by “investors.”

      Just like share buybacks reduce share count, and make EPS look better and thereby raise stock prices, this supply constriction also helps to cause rising house prices (which draws in more “investors” and of course, more real estate seminars). Couple this with ZIRP, which severely limits the number of profitable places to invest and investing in housing becomes even more appealing.

      The final support is that all these non bank lenders are able sell all their mortgages to FHA, Fannie or Freddie. So it appears that the brokerages packaging all the mortgages, now the GSEs do it. But the free flow of mortgage financing goes on, with seemingly ever loosening credit requirements.

      1. Perhaps you’d like to sign up for a free house flipping class in San Diego. Yes, folks, flippers are still scavenging the landscape for anything they can slap paint, laminate flooring, and granite countertops on and selll for an extra 150k.
        https://event.fortunebuilders.com/class-paul/?Contact0State=CA&utm_term=San%2520Diego&utm_content=V1&utm_source=DTM-Banner&utm_medium=DTM-Search&utm_campaign=DTM-Search&Contact0Area=San%2520Diego&CLICKID=6666b524-8051-e911-93fe-a0369f1303c6

        1. Hope it didn’t sound like I’m a fan of this bubble. To the contrary, when I read about the Fed induced homelessness, I feel as if I drank a whole bottle of Ipecac

    5. My general rule of thumb is to ignore anything an “expert” tells me. Not just financial advice, generally speaking. True experts in a field don’t call themselves experts.

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