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People Know That The Seven-Year Run Isn’t Going To Be Here Forever

A report from KTVQ in Montana. “The trend continues as it’s more expensive than ever to buy a home in Missoula. Earned income is also up, but housing experts say it’s not catching up fast enough. Brint Wahlberg with the Missoula Organization of Realtors says there are plenty of homes available in the Missoula area, but ones listed under $350,000 are hard to come by and go up quickly when they get onto the market.”

“‘What happens is when the right property comes up, people are bidding as close as full price, or over full price, and our stats show that. The houses just keep going up, we set the new benchmark, and away you go,’ Wahlberg said.”

The Wall Street Journal. “The spring home-buying season is shaping up as the best in years, offering new opportunities after last year’s tough housing market drove away many would-be buyers. Evan Busteed, a 28-year-old attorney in Philadelphia, has been looking or a home off and on for a year and started looking seriously in January. In the trendy Fishtown neighborhood, he found homes that looked overpriced and had sat on the market for weeks. He saw about seven places between January and mid-March that fit his criteria.”

“Then suddenly, on the first day of spring things shifted. Mr. Busteed saw seven places in one March weekend. ‘My phone was exploding with notifications about places going on the market,’ he said. ‘Once I find the right thing and I’m serious about it, if one of these turns into a bidding war where I can’t afford it, it’s not like there’s a lack of inventory.'”

“The most dramatic turn has been on the West Coast, where price growth has slowed after soaring over the past five years. The rising number of homes on the market has braked that ascent. Inventory in Seattle, for example, doubled in February compared with a year earlier; it was up more than 80% in the San Jose, Calif., metro area, according to Redfin.”

“Other major markets like Philadelphia also are experiencing a shift to the buyer. Only 17% of offers written by Redfin agents in Philadelphia faced a bidding war in March 2019, compared with 47% a year earlier.”

“Economists and real-estate agents caution that for those planning to resell a home in a few years, now may still be a risky time to buy given that the market appears to be heading for a longer-term slowdown. ‘People know that the seven-year run isn’t going to be here forever,’ said Mike McCann, an associate broker at Keller Williams Philly. ‘It’s a good time to buy as long as long you’re going to stay in the property five-plus years.'”

From The Hour on Connecticut. “The number of new housing permits issued in Connecticut last month was down by 33.4 percent compared to February 2018, according to the state Department of Economic and Community Development. The dramatic decline in new housing permits is further evidence Connecticut’s economy is slowing, said Donald Klepper-Smith, chief economist for New Haven-based DataCore Partners.”

“‘The resale markets are softening up, as well,’ Klepper-Smith said. ‘Labor market conditions are adversely affecting what is happening on the housing side. Builders are taking a cautious approach toward bringing new inventory onto the market and it’s likely 2019 will represent a step down from previous years in terms of housing activity.'”

From Crain’s Chicago Business in Illinois. “One of five homes that were vying to be River Forest’s first $3 million sale in over a decade has sold, at significantly less than $3 million. The six-bedroom Italianate house, built 100 years ago on Ashland Avenue, sold March 22 for $1.6 million. That’s half the $3.2 million the sellers were asking when they first put it on the market, in June 2017.”

“The seller, who had owned the house at 914 Ashland since the mid-1980s, ‘had moved out and was ready to get rid of it, and that was the price we could get,’ said Robert Swindal, the agent who represented the house.”

“All four of the other contenders in the $3 million derby on a two-block stretch of Ashland Avenue have cut their prices to well below $3 million. ‘This is where the luxury market is in River Forest now,’ Swindal said. ‘It’s declining.’ The asking price had fallen several times, the last time in December, to $2.25 million.”

From CNN Business. “In the wake of recent tax reform, affluent homeowners are paying a lot more attention to their property taxes. Now large property tax bills are hitting homeowners harder and spurring buyers to think twice before buying in a high-tax neighborhood.”

“‘If I have a buyer that is looking for a million dollar house,’ says Lehigh Cohen, a realestate agent who works in the northern suburbs of Chicago. ‘They will look closely at the tax bill. Is it $20,000? Or is it $30,000? That’s a significant difference for the budget of people moving up. They may nix the houses with $30,000 tax bills.'”

“‘In Westchester County — towns like Larchmont, Rye, Mamaroneck — the taxes are crazy high,’ says Mary Ellen Gallagher, a real estate agent and partner of Compass Westport Team KMS Partners in Connecticut. She says for many luxury buyers, taxes don’t always play into their decision to buy a new home, but can be a deterrent for those looking to move up to a larger and pricier home.”

“‘I think it is hurting the luxury market,’ says Gallagher. ‘Because people aren’t trading up.'”

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This Post Has 82 Comments

    1. Not that I’m disagreeing at all where housing is headed, but…

      Most of your posts are just due to the average sqft being listed this year being lower. The price/sqft on nearly every one of these updates is flatlined or slightly up.

        1. But smaller houses likely come with smaller lots, fewer bathrooms, are less likely to have a swimming pool, and etc. So $/SF is really the best thing we’ve got for the time being.

          This cuts both ways. Ben shared a link showing that DC prices were up but $/SF was down a lot.

          1. Square footage of house has no bearing on lot size or swimming pools. Bathrooms are square footage.

            The most accurate metric is construction cost and lot size, adjusted for depreciation of course.

        2. His data is wishful thinking. Of course, home size is relevant. But the biggest issue is the data can easily be skewed. For example, in the data set above, if you dig into it, you will find that one year ago, condos were one out of four listings (roughly). They are one out of three in the current data. If you have a lot more condos on the market, proportionately, and smaller homes, obviously it is going to drive down listing prices. Yes, prices are headed down in some coastal markets, but this data have almost no value.

          1. A lot of people paid too much and now that prices are falling again, those same people are getting a little anxious. If you paid the amounts everyone paid over the last 15 year or so, you’d be getting anxious too.

            Let’s get back to the question;

            How does one evaluate the value of a house?

            The most accurate method is totalize the production cost and lot(and other items if they are included in the transaction) and adjust for depreciation.

            Oakton, VA Housing Prices Crater 10% YOY

            https://www.movoto.com/oakton-va/market-trends/

  2. ‘What happens is when the right property comes up, people are bidding as close as full price, or over full price, and our stats show that. The houses just keep going up, we set the new benchmark, and away you go’

    Like a money tree, huh? Except there’s supposed to be appraisers, Senator Running Deer, etc.

    1. I will be living in Missoula for another 8 weeks and then on to my new rental in another part of the State. Prices are going up in Missoula due to an influx of people outside the State, a good deal from California and Seattle. There isn’t a lot of stand alone job creation drawing them in. As usual the locals are priced out and move further from their jobs etc. The University is trying to recover from a decade of poor decisions. Years ago I was told by a Realtor that Missoula/Montana is 2 years behind whatever real estate trends are happening nationally. I am guessing that the time difference has come down a little but still it’s not a huge surprise that the frenzy in the rear view mirror of larger markets has come to Missoula.

      1. They are no longer 2 years behind. What the speculators learned from last bubble is to run to the far flung areas quickly, because they will follow the bubbles in the expensive metros. So, the far flung areas started bubbling up immediately following the metros, with nowhere near the lag this time.

        1. They are no longer 2 years behind.

          They were when the HB1.0 popped. Which meant that the runway foam got to them before the crash got there. Which means the lesson they learned was different than the lesson learned in Vegas and Phoenix and Central CA. Not only did they learn to buy the dip, they learned that there will be no dip where they are because everybody wants to live there. Thanks, Bernanke.

      2. Just one winter on the east side of the Bitterroot mountains from Hamilton up to Missoula should be enough for any Californian.

      3. “There isn’t a lot of stand alone job creation drawing them in”

        The jobs are back in Seattle to Cali. It’s the ultimate arbitrage, flyover cost of living with coastal incomes. As long as you’re willing to do some travel, it’s very doable.

        1. How many people are actually living in Missoula, Montana and flying back to Seattle or California for work? That would get old after the first week and sounds like Realtor propaganda.

          1. Yeah, that would be terrible. I commute 4 hours once a week, stay on-site 3 days, and return and I find that pretty taxing.

          2. I didn’t mean work in LA 5 days a week and live in Montana on the weekend. I mean work remotely and fly back as needed. A few days here and there every month. I’ve done this for years and know lots of people who do it. Not in Montana, all over the country.

    2. There is so much money still sloshing around that I wonder how long this thing can run, especially given the Fed’s complete 180 on rate hikes and QT. Just look at the stock market, for instance. It’s almost scary if you look at a chart and compare it to 2007/2008. The bubble prices are double.

      1. Doubled is nothing….fed balance sheet is up 400% since the great recession. Stocks are probably a bargain at this point, especially since we know MMT is on the horizon.

  3. “The six-bedroom Italianate house, built 100 years ago on Ashland Avenue, sold March 22 for $1.6 million. That’s half the $3.2 million the sellers were asking when they first put it on the market, in June 2017.”

    …
    “This is where the luxury market is in River Forest now,’ Swindal said. ‘It’s declining.’ The asking price had fallen several times, the last time in December, to $2.25 million.”

    Swindal-boy, still overpriced. If it’s a declining market and the last one sold for 1.6M, I would cut the price to 1.5 M and 100K cut every month until a Sucker, I mean a Buyer, come along…

  4. “‘If I have a buyer that is looking for a million dollar house,’ says Lehigh Cohen, a realestate agent who works in the northern suburbs of Chicago. ‘They will look closely at the tax bill. Is it $20,000? Or is it $30,000? That’s a significant difference for the budget of people moving up. They may nix the houses with $30,000 tax bills.’”

    Dont worry Scaremonger. The sky is falling for you poor snowflakes. DOOMED told me that rich people dont care about wasting money! They loved burning cash like those morons that brought LYFT shares and soon UBER, AIRBNB, ZOOM, PINTEREST, etc….That’s why they are RICH. THEY GOT MONEY TO BURN!!!!

    1. On joy$! … “Nix” has returned back into the hou$ing vernacular.

      Nix, nix, nix … “Eye do knot like the price of yer hou$e!, Eye will knot pay such a price! Goodbye!”

      Go dog go!
      By P.D Eastman

    2. I said nothing of the sort. I said someone who buys a $25M beach home (which was the home in question at the time) doesn’t sweat utility bills.

      $25M beach home, ie second home vs $1M primary home.

      See the difference?

      2. I lived about a half-mile from the Central Coast’s Pacific Ocean for about seven years, and the climate was hard on everything especially the rental house and my cars. Boxed cereals would go flat if you didn’t re-seal the package immediately. We had to put our books into large baggies to prevent mold on the pages. That said, I would move back to that life tomorrow if the expenses made sense.

  5. “The six-bedroom Italianate house, built 100 years ago on Ashland Avenue, sold March 22 for $1.6 million. That’s half the $3.2 million the sellers were asking when they first put it on the market, in June 2017.”

    It seems like the financial media puts way too much emphasis on cases of homes that sell for far below asking price. There is no law preventing sellers from asking twice as much as the market will bear, but it is ultimately a willing buyer with the financing to make the purchase who determines the sale price. While the presence or absence of delusional sellers reveals little about market values, it is possibly a good indicator of whether a mania is underway.

  6. This is the dumbest sh*T I read all day. You can tell that Mary is a used house saleman and not a new house saleman. Property taxes must be lower for new house vs old house LOL.

    “‘In Westchester County — towns like Larchmont, Rye, Mamaroneck — the taxes are crazy high,’ says Mary Ellen Gallagher, a real estate agent and partner of Compass Westport Team KMS Partners in Connecticut. She says for many luxury buyers, taxes don’t always play into their decision to buy a new home, but can be a deterrent for those looking to move up to a larger and pricier home.”

  7. “Earned income is also up, but housing experts say it’s not catching up fast enough.”

    Catching up fast enough to what? Borrowed income, perhaps?

    Think how screwy things have become:

    Income (in the form of equity wealth) that is generated by price increases outpaces earned income.

    These price increases that generates equity wealth which outpaces earned income are made possible by borrowing, hence, at root, it is borrowing – income generated by borrowing – that is outpacing earned income. And this situation is considered by many to be a good and wonderous thing.

    A nation of dummies.

    1. https://www.marketwatch.com/story/in-interview-indias-rajan-says-monetary-policy-has-run-its-course-2016-04-15

      MarketWatch: You’ve said you’re concerned with the wealth effect of quantitiative easing – that asset prices have gone up and investors are worried they are going to come back to earth.

      Rajan: This is the problem of the bridges. If you build a bridge it has to reach to the other side. So I think a bridge that relies on wealth effects, you better hope that you got enough growth to justify the asset price increase which created the wealth effect in the first place. So there is some sort of virtuous cycle that gets kicked off which becomes self-fulfilling over time. The alternative is you kick off the wealth effect now, but over time people realize the wealth ain’t coming and then you have an asset price adjustment. I think the jury is still out on which one we’re going to go through.

      1. The jury I think is well shifted to the realization that the apotheosis of this asset bubble is going be another crisis perhaps of greater magnitude than the previous as this bubble has now consumed virtually all asset classes from art and classic cars to sovereign bonds to condos in rural nowhere towns to manufacturers that lose money on every product they sell to social media internet companies with no physical assets that will disappear like MySpace and Netscape, and on and on. There is one hold out on the 12 member jury. I think his initials are CT. It is already obvious that QE failed because the entire system went into a grand mal seizure at a measly 2.5% fed funds rate and now we are back tracking again. So the answer is “no”, we did not get enough economic growth to cover the inflation in asset prices. It’s a bridge to nowhere.

        3. “…the entire system went into a grand mal seizure at a measly 2.5% fed funds rate…”

          Not sure about that. We’re still at that rate and the stock market is absolutely pumping higher, near all-time highs.

          Some wealthy elitists decided to take some profits in December, and a minor correction occurred. Big whoop. But when it’s affecting the moneyed set, the entire country needs to backstop their losses. Fvck them. Fvck this system.

          1. If you look at the DJ chart from end of September through about mid november 2018, the cardiac arrest of the market was imminent. So what would have happened if the Fed went ahead with another two interest rate increases and we had mortgage rates well above 5%?

          3. A return to normalcy

            Normalcy is now unacceptable. Too much pain for People Who Matter.

    1. And more to come. They’ve already ended rate hikes, ended QT, and are firing up some more QE – all at a time of peak asset prices.

  9. Ben, thanks for all you do.

    I just want to say I made time to watch Seattle is Dying last night and recommend everyone to watch, and share.

    This is where sanctuary cities, safe shoot sites and what I call “obedience certificates” get us. (No offense to anyone with useful phd’s or anything but this docu clearly shows how misled this “progressive” thinking we have coming out of the colleges is and what it leads to. )
    I’m referencing the clips of city council meetings, there is a similar mindset in Portland also and we rarely go to the Bridge City anymore due to these same reasons, which is sad because I grew up here and used to live Portland as much as a country girl is able to anyway..

    Also as a dual citizen I can tell you assuredly that it’s no coincidence that Seattle is downhill from Vancouver and its fentanyl crisis. I read a comment by someone who said they had a friend who works at the ports in YVR, longshoreman and how they said that there are insiders at the port who conveniently change container #’s that are due for inspection… look up the Tr.ia.ds. You can find some of this in Canadian news but not a lot. You see, the MSM News up there is “supported by the gov” as of 2015 when Trudeau wormed his way into power. The “reporting” changed tangibly after that “support”. My point is is that Vancouver and Toronto have this same problem as Seattle. I admire this news station for shaking this out into daylight in a compelling way. Thank you whoever shared this.

      2. “Has everyone seen “Seattle is Dying?”

        I have now.

        I felt bad for everybody except the politicians and the tax people that got shouted down.

    2. Is that the video piece put out by Scamclair ($$) media? It is true that homelessness is growing in cities that are insanely expensive, but it is the result of overinflated asset prices, Chinese investors hiding money overseas, and perhaps the opiate crisis. Scamclair’s solution as to lock more people up. Don’t we have one of the mostly high incarcerated populations in the world already? During the last housing bubble there were a lot of tent cities as well that ebbed when house prices decreased. Sadly, the remedy is to let prices fall.

    3. The whole assault by China on western civilization is a reverse of the opium wars. No surprise they attacked the British commonwealth nations first, starting over 20 years ago (invading canada and australia and opening up drug pipelines, with the profits used to buy real estate and create businesses).

      And treatment of the victims/zombies is probably not possible – we just dont have the money. They will be left to rot most likely.

      1. This is a very astute perception. You are definitely on to something. The Chinese were absolutely devastated by the opium wars (e.g. sick man of Asia). Now they are getting their payback. Of course the Sackler family has done their part at decimating scores of Americans too.

      1. I’m tired of shelter being turned into a speculative orgy dominated by, and favoring, deep pockets and Wall St.. In fact, I’m absolutely sick to death of the central bank shenanigans which have turned the entire economy into nothing more than a casino.

        I am wondering if a Presidential candidate exists who will put an end to this rot, once and for all. Our current President sure talked a good game – “big, fat, ugly bubble” – but then completely did an about face and is massively in favor of more cheap rates and asset price bubbles. I will vote for anybody who rejects this status quo, even if it’s Bernie Sanders.

        1. I share the same feelings as you ….it’s sickening. But every once in awhile, I think about how bad the depression/collapse can be if it all unwinds….maybe it’s for the best to keep the pedal to the metal 🙁

          2. “There will be such a candidate…”

            “The people always have some champion whom they set over them and nurse into greatness. This and no other is the root from which a tyrant springs; when he first appears he is a protector.” —Plato, Republic

        3. “I am wondering if a Presidential candidate exists who will put an end to this ”

          Socialism never works. No matter how many times it has been tried it has always ended in disaster. Oh but I know, I know THIS TIME they’ll get it right and utopia will emerge.

          2. Yes you are. When you want the president to “do something” about housing prices you want socialism. Come on man, you can let your socialist flag fly, it’s cool now, all the kidz are into it.

          3. When you want the president to “do something” about housing prices you want socialism.

            It’s possible for “doing something” to actually be doing less instead of allowing all the previous “somethings” to continue. Not that there appears to be much hope of that at the moment.

    3. “I$ now a $mart time for Zillow to load up on hou$es?”

      Igor: “ye$ Ma$ter, ye$!”

  11. Breaking new$:

    Kudlow mis-$poke, wants Thee Fed to lower fund$ rate .75% right.friggin’.now!

    Baitbart news | April 1 2019

      1. It looks like the recession is here already for the 1%. For the 99%, they are still in the recession since 2008. They are becoming Japanese!

  13. This one is scheduled for a trustee sale in a couple of weeks:

    9151 N Fireridge Trl
    Fountain Hills, AZ 85268
    5 beds 6 baths 6,208 sqft
    For Sale
    $1,650,000
    Price cut: -$225,000 (3/23)

    https://www.zillow.com/homedetails/9151-N-Fireridge-Trl-Fountain-Hills-AZ-85268/81997143_zpid/

    Date Event Price
    3/23/2019 Price change $1,650,000 -12%
    3/15/2019 Price change $1,875,000 -14.8%
    1/31/2019 Price change $2,200,000 +18.9%
    1/30/2019 Listed for sale $1,850,000 +1.4%
    3/16/2016 Sold $1,825,000 -7.6%
    1/14/2016 Listing removed $1,975,000 —
    1/1/2016 Listed for sale $1,975,000 +46.3%
    5/11/2009 Sold $1,350,000 -15.6%
    4/7/2009 Listing removed $1,599,900 —
    3/7/2009 Price change $1,599,900 -5.9%
    2/22/2009 Price change $1,700,000 -2.9%
    1/20/2009 Price change $1,749,900 -7.9%
    12/6/2008 Listed for sale $1,900,000 -5.4%
    10/27/2008 Sold $2,009,247 -14.5%
    9/29/2008 Listing removed $2,350,000 —
    7/12/2008 Listed for sale $2,350,000 +628.7%
    12/27/2004 Sold $322,500 +61.3%
    12/27/2002 Sold $200,000 —

    It’s the March 2016 loan that’s in default apparently. Lender: Quick Source Capital, LLC.

  14. Article is from November, 2018. This has been in effect since 2016? Huh.

    U.S. Expands Coverage of Real Estate Anti-Money Laundering Program
    New requirements lower the cash threshold and add more metropolitan areas
    wsj.com/articles/u-s-expands-coverage-of-real-estate-anti-money-laundering-program-1542322224

    “The U.S. Treasury Department said Thursday it has expanded an anti-money-laundering data program that requires title insurance companies to reveal the owners of shell companies buying luxury real estate.

    The changes lower the value threshold of potential acquisitions subject to the requirement and expands the coverage to five new cities (Las Vegas, Seattle, Chicago, Boston and Dallas-Fort Worth and their surrounding counties).”

    First comment:
    “It is still horrible in Las Vegas. So sick of these criminal rings making it impossible for real people to afford to buy homes in this country…”

    Another article:
    mansionglobal.com/articles/u-s-expands-geographic-targeting-orders-to-las-vegas-boston-chicago-114490

  15. Let’s see. Another de-emphasis quote from an reic member: “price growth slowing”. Dont you think there is a more accurate way to describe Seattle and related cities?

  16. Is endless hair-of-the-dog with ever-levitating asset prices better than allowing the business cycle to run its normal course?

  18. new housing permits issued in Connecticut last month was down by 33.4 percent compared to February 2018,

    I’d call that a recession in CT

    1. CT, NJ, NY, IL, etc. are losing population like crazy. Like Detroit many decades ago. They should be destroying homes to reduce supply LOL. Don’t let me get started with property taxes

  19. The Lyft report:

    Price at the close: $69.01. Change from yesterday’s close: −$9.28. Percent change at the close: 11.85%.

      1. You are forgiven your lapse as your class has been well conditioned to run to the FED discount window whenever a minus sign peeks its head above the horizon.

  20. Seattle is dying. Lots of cities like this without a solution for the drug addicts living on the streets. Gonna cost a bundle to round them all up and get them in treatment. Should be cheaper then jail “IF” done right. Cost goes up each year. This is a taxpayer problem, not political. Not a “Get a job” problem, either. Insane people cant hold a job.

  23. Maxine Watersloves her some Jussie Mullet.

    (There are 80 species in the mullet family)

    MAXINE WATERS GUSHES: ‘JUSSIE SMOLLETT IS LIKE A SON TO ME’

    ‘It’s the correct thing that the charges were dropped,’ says California Democrat

    Infowars.com – APRIL 1, 2019

    “Jussie Smollett is like a son to me. I’m very pleased about the verdict. I’m very pleased that he now has an opportunity to pick up and go on with his life,” Waters told Black Enterprise after accepting the NAACP Chairman’s Award. “I would love to see him, and I am looking forward to seeing him very soon.”

    The California Democrat also praised Soros-backed Chicago attorney Kim Foxx’s sudden decision to drop all 16 felony charges against Smollett, adding that such a decision wasn’t “unusual” — precisely the opposite assertion of the Illinois Prosecutors Bar Association.

    “It’s the correct thing that the charges were dropped,” Waters told ExtraTV. “First of all, we probably will never know all of the details. We’ve heard a lot of information. No one was hurt — that is, physically, killed, shot — he never committed a crime before, he forfeited the bail and it’s this kind of situation where they close the case all over the country every day. I have learned this isn’t unusual.”

    “Chicago has a lot of problems; a lot of killings go on every day. I would much rather they spend time and their money and their effort to apprehend killers and folks that are wreaking havoc on that city,” she told BE.

    1. “he never committed a crime before, he forfeited the bail and it’s this kind of situation where they close the case all over the country every day.”

      Jussie Smollett previously charged with providing false information to police back in 2007

      POSTED 1:00 PM, FEBRUARY 20, 2019, BY CNN WIRE AND WEB STAFF

      Back in 2007, Los Angeles police pulled Smollett over on suspicion of driving under the influence, according to WMAQ.

      Officers said, however, that Smollett identified himself as his younger brother and signed a false name on his promise to appear in court.

      The actor was later charged with false impersonation, driving under the influence and driving without a valid license.

      Smollett ultimately pleaded no contest and was only charged with giving false information and both driving under the influence and without a valid license.

      After an alcohol education and treatment program, he finished out his sentence in May 2008, WMAQ reports.

      https://myfox8.com/2019/02/20/jussie-smollett-previously-charged-with-providing-false-information-to-police-back-in-2007/

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