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Price Declines Likely Reflect A Slower Market And A Rise In Buyers’ Negotiating Power

A report from the Los Angeles Times in California. “Here’s a look at what roughly $750,000 buys right now in the L.A. neighborhoods of Lincoln Heights, Granada Hills and Hollywood Hills. In the 90046 ZIP Code, based on 12 sales, the median price for single-family homes in February was $1.825 million, down 17% year over year, according to CoreLogic. In the 90031 ZIP Code, based on five sales, the median price for single-family homes in February was $607,000, down 10.9% year over year, according to CoreLogic.”

“In the 90068 ZIP Code, based on 21 sales, the median price for single-family homes in February was $1.305 million, down 11.6% year over year, according to CoreLogic.”

The Napa Valley Register. “The number of Napa County homes sold in February declined 15.1 percent year-over-year — from 93 to 79 — matching a Bay Area-wide trend, reported CoreLogic. At the same time, the median price of a Napa home dipped slightly — from $600,000 to $590,000.”

“Total February 2019 home sales in the San Francisco Bay Area were the lowest for that month in 11 years, since 3,989 homes were sold in February 2008. Sales have fallen on a year-over-year basis the past nine consecutive months.”

“February 2019 sales were 27.5 percent below the February average of 6,008. In February 2019, sales of newly built homes (detached houses and condos combined) were 43.9 percent below the month’s historical average, while resales were 25.3 percent below the month’s average.”

“‘For the third month in a row, Bay Area home sales were at an 11-year low for that month,’ said Andrew LePage, a CoreLogic analyst. ‘Four of the region’s nine counties – Napa, Santa Clara, San Mateo and Sonoma – posted year-over-year declines in their median sale prices last month. Those declines likely reflect a combination of a slower market and a rise in buyers’ negotiating power, as well as changes in market mix in some areas.'”

The Calaveras Enterprise. “The California Association of Realtors (CAR) reported in January that the price of homes in California had declined for the eighth straight month. As of February 2019, the median single-family home price in California was $534,140, as compared to December 2018, when the reported cost was $557,600.”

“‘While February’s sales rebound is welcome news, the market will likely remain constrained as sellers and buyers sort through the realities of today’s market,’ said CAR Chief Economist Leslie Appleton-Young. ‘With the market about to kick off its home-buying season, buyers have a window of opportunity in the upcoming months as interest rates remain stable, there are more properties on the market to consider, and prices are more attractive.'”

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This Post Has 36 Comments

  2. Read, and weep …

    (snip)

    “Financial repression is at all-time highs while leading indicators point to a growing risk of recession.

    “In the first quarter of 2019, stocks have added $9.3 trillion in market capitalization …”

    This increase in market capitalization sure looks a lot like price increases.

    ” bonds have gained almost $2 trillion in value.”

    This gain in bonds also closely resembles price increases.

    “Meanwhile, the Conference Board Index of leading indicators has plummeted for the major economies. The Citi Economic Surprise Index has also fallen, particularly in March, despite a small bounce in the Eurozone at the beginning of the year. Global trade growth, machine equipment orders and manufacturing indices remain poor… while debt soars to another record-high of …”

    (best steady yourself)

    “… $244 trillion according to the Bank of International Settlements and the IIF.”

    (snip)

    “Investors are forced into riskier assets for lower returns and the crowding out of productive sectors in favour of government and crony subsidised sectors accelerates, sending money velocity lower, productivity growth collapses and mainstream economists hail the financial repression madness with the excuse that ‘there is no inflation’, while citizens all over the world complain and demonstrate -rightly- against the rise in cost of living. Intensifying financial repression under the ‘there is no inflation’ excuse is the most ludicrous mantra ever. It is like running a car at full speed down a highway under the premise that ‘we have not crashed yet’.

    For more pain, go here …

    Economic Data Weakens, Markets Soar. Are We Repeating 2008? | dlacalle.com
    https://www.dlacalle.com/en/economic-data-weakens-markets-soar-are-we-repeating-2008/

    1. “… $244 trillion according to the Bank of International Settlements and the IIF.”

      As long as those liabilities are matched by soaring asset values, where’s the downside?

      1. Thee Wanker.Banker Bank$ are strong! … Thee minnow$ NON-Bank$, too $mall to eat.

        Onward$; follow the yellow.brick$ road, to “Thee Fe$tival.of.Fea$ts” we proceed$!

  3. How will Chris “No Price Declines” Thornberg spin this? Are his followers so clueless that recurring news of ongoing California price declines won’t matter.

    “The California Association of Realtors (CAR) reported in January that the price of homes in California had declined for the eighth straight month. As of February 2019, the median single-family home price in California was $534,140, as compared to December 2018, when the reported cost was $557,600.”

    1. “As of February 2019, the median single-family home price in California was $534,140, as compared to December 2018, when the reported cost was $557,600.”

      The annualized two month rate of decline is

      ((534,140/557,600)^6-1) * 100% = -22.7%.

      1. But.. but.. in just a year won’t that wipe out all the equity of those buyers, even the ones that put down 20%?

        Oh the humanity….

    2. “How will Chris “No Price Declines” Thornberg spin this?”

      We could always have his friend maldonash ask.

      But in the end, it will depend on how fat the checks are.

  4. ‘With the market about to kick off its home-buying season, buyers have a window of opportunity in the upcoming months as interest rates remain stable, there are more properties on the market to consider, and prices are more attractive.’”

    Leslie Appleton-Young is a one-note drum: now is always the best time to buy. She is also totally, irredeemably discredited, along with Lawrence Yun, after her permabull cheerleading while House Bubble 1.0 was cratering.

    1. To her credit, at least she is coming right out and boldly announcing the ongoing California housing price declines. There’s never been a better time to buy a house in California…unless you wait until next month.

      1. Leslie Simpleton Young stated in early 2005 that prices in CA would level off like a soufflé .
        We saw a 50-75% decrease
        a high class tarot card reader.

  6. I have it on good authority that the inverted yield curve is no cause for concern. So by all means, back up the truck and buy stocks and houses till you drop, because their prices can only go up from here.

    1. Yield curve ‘overrated as an indicator,’ says Nobel-winning economist Robert Shiller
      By William Watts
      Published: Mar 29, 2019 3:11 p.m. ET
      Curve’s predictive power may partly be product of ‘data mining,’ Nobel winner says
      AFP/Getty Images
      Robert Shiller has some doubts about the yield curve.

      I think personally that the yield curve is overrated as an indicator. I think its success in predicting has diminished somewhat.

      — Robert Shiller

      A lot of ink’s been spilled over the past week on the inversion of the yield curve, weighing its seemingly rock-solid reputation as a predictor of recessions and what that means for the stock market and other assets. But not everyone is impressed.

      One of those skeptics is Robert Shiller, the Nobel-prize winning economist and Yale professor. In an interview with Bloomberg Television on Friday, he argued that much of the curve’s reputation is “to some extent…a product of what you call data mining.” In this case, while it’s true that an inversion of the curve, particularly when the 10-year Treasury yield falls below the 3-month T-bill yield has preceded every recession since the late 1950s, it’s important to ask, “how many recessions have you had?”

      In other words, the fact that an inverted curve has preceded the past seven recessions with only one outright false positive sounds impressive, but is perhaps too small a sample to get that excited about.
      …

      1. Up$ide down … & … Ba$$ackward$!

        Amount of global debt yielding less than 0% approaching $10 trillion

        More investor$ are plowing ca$h into a$$ets that give them back le$$ than they had started with.

        MarketWatch |Published: Mar 30, 2019

        “The financial world is truly upside down,” said Peter Boockvar, chief investment officer of Bleakley Advisory group, … amid a gloomy global backdrop, more investors are willing to accept negative returns.

        The total sum of negative-yielding debt in bond issues represented in the Bloomberg Barclays Global Aggregate Bond Index AGG, -0.01% stood at nearly $9.7 trillion, marking a more than 50% increase from September.

        But the dovish shift among global central banks have stirred inflows into government paper.

        Tightening financial conditions and a deterioration in global growth prompted the U.S. central bank to switch tack in January, leading it to swear by a new watchword of patience. This dovish turn was capped by Fed policy makers cutting their rate-hike projections from two to none at the March meeting.

        And in Europe, the European Central Bank launched another round of stimulus for eurozone banks at its last meeting, in part justified by the cut to growth expectations for the 19-member bloc to 1.1% in 2019, from a previous 1.7%.

        Smaller central banks are also now singing from the same hymn sheet of caution.

        The Reserve Bank of Australia has increasingly voiced its doubts over the economic outlook amid a China slowdown and a soft property-market, stirring market expectations for a rate cut versus an interest-rate hike in a few months ago. And the Swiss National Bank kept rates on hold at its Thursday meeting, trimming its inflation expectations

      2. To be honest, Nobel Winning doesn’t impress me much anymore. Obama and Paul Krugman both won one.
        ‘Nuff said.

      3. There’s no such thing as a recession anymore, yield curve is overrated, more QE before the market even takes a dip, QT finished…these central bankers are getting their jollies off on this stuff. They view the economic world as their little play toy, and people as cannon fodder. Let the lynchings begin.

    2. The stock markets in Zimbabwe and Venezuela went up, too, once those countries’ currency debasement caused hyperinflation to ravage their citizens’ purchasing power.

      1. Central banker will choose hyperinflation before they “allow” the markets to fall this time.

  7. As “Democratic socialists” and far-left progressives start beating corrupt corporate Democrat incumbents in places like NYC, the oligarchs that have been the exclusive beneficiaries of the Fed’s monetary swindles might ending up shelling out more in taxes for the privilege in living in grotesquely overpriced skyboxes purchased with their Yellen Bux confetti shower.

    https://therealdeal.com/2019/03/31/state-budget-deal-includes-a-one-time-mansion-tax/

    2. Is the inference that “democratic socialists” and far left progressives are less corrupt than corporate Democrats and that a “mansion tax” is going to result in a better standard of living for poorer NY residents and a narrower wealth gap between the rich and poor?

      1. No, “democratic socialists” like AOC are every bit as corrupt as the corporate Democrat incumbents they’re overthrowing, but they want to grab their share of Democrat patronage and graft rackets. Whereas the corporate Democrats are bought and paid for by the REIC, the FIRE sector, and the tech giants, the far-left progressives with their “soak the rich” mentality are going to make a much more concerted effort to “redistribute the wealth” from the haves to the have-nots. Starting with levying increasingly punitive taxes on the plutocrats who have rigged the game in their favor and pitilessly plundered the proles thanks to their control of the Fed and financialization of the economy.

          1. She won a primary where only 13% of registered voters showed up to vote. She’s as important as Washington, Lincoln and FDR.

          2. I was delighted to see AOC beat a 10-term corporate stooge who got virtually all of his campaign donations from large corporate donors, and didn’t even pretend to represent his constituents. I was also pleased that AOC specifically called out unaffordable housing as a central campaign issue. I also love the fact that AOC and those two Muslim freshman are taking a wrecking ball to the corporate Democrat Old Guard, which I despise even more than the Establishment GOP. So she’s not my hero, just as Trump isn’t my hero – but her election was a middle finger to the corrupt, crony capitalist status quo, and I find great entertainment value in seeing the sleazy old guard Democrats trying to rein her in.

        2. I empathize to some extent with the sentiment. However, I think you are going to be somewhat disappointed with the results of the progressive agenda. When policies like the green new deal collapse the food supply and destroy the means of industrial production for the foreseeable future, it won’t be the rich who suffer. When someone invents a wind powered blow torch and a solar powered smelter, I’ll reconsider.

          1. Just to be clear, I think to mark a “D” on a ballot is evidence of a seriously defective moral compass. “Progressives” are causing our urban centers to become dystopian hellholes, and are trying to impose their collectivist values – which comes down to stealing from the makers to give to the takers – on people like me whose values are diametrically opposed to theirs. So I have no illusions about progressives. Their redeeming value is that they rip the mask off the collectivists and expose them for who and what they are. That is going to push people off the fence and force them to choose between good and evil. It’s as simple as that.

          2. Ok will have to continue to read more of your comments. Your perspective is multi layered in a way I am having trouble understanding. Some fair points there for sure.

          3. Your perspective is multi layered in a way I am having trouble understanding.

            Abandon the left-right paradigm used to create divisiveness among the population and his perspective will make much more sense. Also pay particular attention to his (as well as Mr. Banker’s) use of adjectives.

    2. She says some truthful things:

      “But it’s the easiest thing in the world to make money if you start with money. And then people give themselves credit for being that smart when they’re not.”

      And this one:

      ““Job creators, entrepreneurs, these are the people who make America great.” So there are people walking around with substantial wealth who think that they have it because they’re better. It’s fundamental to remember that you’re just a member of the human race, like everybody else, and there’s nothing about your money that makes you better than anyone else.”

  10. “February 2019 sales were 27.5 percent below the February average of 6,008. In February 2019, sales of newly built homes (detached houses and condos combined) were 43.9 percent below the month’s historical average, while resales were 25.3 percent below the month’s average.”

    Anyone else who can’t wait to see the numbers for the Spring “selling” season?

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