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Sellers Have Endured Lengthy Waits For Buyers, And Have To Lower Their Asking Price Or Offer Concessions

A report from CNBC on New York. “Manhattan real estate had its worst first quarter since the financial crisis, capping the longest losing streak for sales in over 30 years, according to a new report. The drop stems from an oversupply of high-end apartments, a lack of foreign buyers and the new federal tax law that has hit real estate in high-tax states. The pain is being felt at all levels. While the entry-level market in New York, below $1 million, had been holding up for most of the past year and a half, it has started to suffer as the trouble at the top cascades down.”

“‘It’s like a layer cake,’ said Jonathan Miller, CEO of Miller Samuel. ‘When you have softening at the top, it starts to melt into the next layer and the next layer after that, because those buyers further down have to compete on price.'”

“Sellers who still have unrealistic price expectations are the biggest barriers to sales, brokers say. That has led to more listings piling up and sitting on the market for longer periods. There is now a nine-month supply of homes on the market, with inventory up 9 percent. The glut in new development is even worse: The supply of newly built condos jumped 56 percent over last year, to a 19-month supply.”

From The Daily Advertiser in Louisiana. “A spacious three-bedroom riverfront home for sale near Interstate 10 in Lafayette has vaulted ceilings, hardwood floors, a landscaped courtyard with a fountain, and plenty of windows. But, after sitting on the market for a month, the seller shaved $5,000 off the $235,000 asking price.”

“For years, many Lafayette-area home sellers have similarly endured lengthy waits for buyers, and have had to lower their asking price or offer concessions to move houses. That probably won’t change in 2019. ‘The elevated number of listings has dragged on price growth and will continue to depress price growth,’ said Zillow economic analyst Jeff Tucker. ‘Home buyers will remain in the driver’s seat for at least several months to come.'”

The San Francisco Business Times in California. “The languishing development of the former KRON TV building at 1001 Van Ness Ave. is back on track after a two-year delay. The San Francisco Business Times reported in late 2016 that a 239-unit condo and retail project in the Cathedral Hill neighborhood had been approved to replace the former television building. Plans called for construction to start in early 2017.”

“But that never happened. Now the condo plans have been scrapped. Oryx Partners revamped its proposal late last year to instead build a residential care facility with 247 assisted-living units for seniors and more than 8,200 square feet of retail space. according to SiteSocket.”

“Oryx Partners reportedly retooled the plans because the condo project wasn’t economically feasible. Many planned housing projects in San Francisco have stalled over the last few years as developers grapple with skyrocketing construction costs.”

The city’s housing production decreased by 42 percent last year, with a net 2,579 new housing units added to the city. That was the smallest gain in housing since 2013, when the city built 1,960 homes.

From The M Report. “The frequency of defects, fraudulence, and misrepresentation in the information submitted in mortgage loan applications increased by 4.4 percent in February compared with the previous month, according to First American’s latest Loan Application Defect Index. Year over year, the index rose 14.5 percent.”

“A shift towards purchase loans was a factor that led to a rise in defects, according to Mark Fleming, Chief Economist First American. ‘The shift in the mix of loan applications toward more purchase applications and pressure on borrowers likely fed the 2018 increase in income-specific defects,’ said Fleming. ‘Purchase loan applications typically are more likely to have fraud than refinance transactions. Furthermore, in the strong seller’s market we experienced in 2018, borrowers had more motivation to misrepresent income on a loan application in order to qualify for the bigger mortgage necessary to win the bidding war for a home.'”

This Post Has 30 Comments
  1. ‘Oryx Partners reportedly retooled the plans because the condo project wasn’t economically feasible. Many planned housing projects in San Francisco have stalled over the last few years as developers grapple with skyrocketing construction costs’

    This is a lie. As reported by the Chronicle months ago, every single residential project in downtown SF is for sale (and not selling) cuz they can’t make money with falling prices. Bust!

    1. Guess what is supposed to happen to skyrocketing construction costs when all of the building stops. Supply and demand?

  2. ‘The pain is being felt at all levels. While the entry-level market in New York, below $1 million, had been holding up for most of the past year and a half, it has started to suffer as the trouble at the top cascades down’

    Remember when we were told landlords would raise rents after the concession period passed? It’s only the luxury market, regular airboxes won’t fall? It just gets worser and worser.

    Worst in 30 years. Still no bubble CNBC? What does it take, a 50 year bust?

    1. “… a 50 year bust?”

      Maybe we’ll find out, as we seem on course for that outcome.

    2. I was going to post the same things. This blog has called and predicted this will happen for some time now. This isnt even a “I Told You SO” moment but a “How could they not predict this”. We always have real estate shills on this blogs saying this can’t happen or you need to read both sides of the stories (i.e. read the MSM)! Ha they (MSM) should be reading this blog. Ben archived all the articles and comments here!!!

      NOTE: I’ll be nice and not name those shills. However, most of them has left or at least stop commenting. For the new shills, please stay and watch….maybe grab some popcorns too. This is when the fun starts

    3. There is now a nine-month supply of homes on the market, with inventory up 9 percent. The glut in new development is even worse: The supply of newly built condos jumped 56 percent over last year, to a 19-month supply.”

      That puts NYC resale housing prices in the red for the rest of 2019, at the least. Will have to cut inventory in half to stabilize prices. It is interesting how these bubbles all have their own character. In the last bubble, NYC got hit late. Things were imploding in California but I still had relatives in NYC telling me that they wouldn’t be affected, NYC would be insulated because there would always be demand for the limited housing there. The contagion is spreading and a river in Egypt called denial is starting to flood.

  3. “The drop stems from an oversupply of high-end apartments, a lack of foreign buyers and the new federal tax law that has hit real estate in high-tax states. The pain is being felt at all levels.”

    Which of the three underlying factors mentioned apply in California cities? All of them?

    1. I always thought it was more like a souffle’.\

      HAHA yea I remember that one. Housing metaphors to describe economics of housing.

  4. Actually Jonathan, the housing market is like Jenga. You take a stable structure that can support itself for many years and strip away the fundamentals from the bottom and add risk to the top. What was once a sound structure is a shoddy piece of work, and with every layer it gets weaker and weaker. Eventually you’ll run out of turns and the structure will collapse on itself, leaving a few winners but one loser who has to pick up the pieces. That sir, is our housing market.

  5. The Stupid Idiot’s Guide to the Future of Uber and Lyft

    “When a company is privately owned, full of invested capital and focused relentlessly on changing the world, it is possible for it to coast for a shockingly long period of time on the promise of what it will do, one day. This is the Greater Fool Theory, which propels much of the venture capital industry: It doesn’t matter how wildly overvalued a company is, as long as you can find a greater fool to pay you more than you paid. And you will!”

    https://splinternews.com/the-stupid-idiots-guide-to-the-future-of-uber-and-lyft-1833741006

    1. If Uber/Lyft are not profitable (they are not), then that means that the users who are getting the service are paying below market price. It’s a bizarre form of subsidies in which the financial elite and Wall Street are subsidizing the rides of the user base. Of course this isn’t a charity and if they don’t turn the corner and raise prices or figure out a path to profitability, they will turn out like Movie Pass.

  6. “This time is different”
    All the real estate shills favorite line. You got safety deposit boxes in the sky, cash rich Chinese/Russian/[insert Country here] taking laundered money out of their countries, or just criminals hiding their proceeds. DID anyone really think this could go on forever??? As Ben pointed out, the idea of a “safe” deposit box in the sky is ridiculous. This is PURE SPECULATION! Everyone who brought from 2013 – 2018 TRULY BELIEVE PRICES WILL KEEP GOING UP! It was a MANIA!

    1. ‘The Modlin Group’s Adam Modlin said that back in 2014 and 2015, investors who went into contract for new condos at $2,500 a foot believed their units would be worth $4,000 by the time they closed. ‘If you buy today, are you going to be in the money? No,’ he said. ‘The greater likelihood is that when the project is complete, the price will go down’

      http://housingbubble.blog/?p=1384

  7. ” In other words, it might be time to give Bush’s ownership society a second shot.”

    https://www.bloomberg.com/opinion/articles/2019-04-02/u-s-economy-wall-street-puts-the-squeeze-on-the-housing-market

    This article kills me lol “time to try Bush’s ownership society” vision again… in other words getting the middle class to once again pile into houses right at almost peak prices!? Tempted to email article author, I don’t understand how people can be so blatantly clueless as to how estate markets work and also how they’ve been tampered with so much as to be unrecognizable in the past two decades

    1. “But the most troubling impact could be on the American Dream of homeownership. Increasingly, young Americans looking to buy houses will be competing with big corporate landlords. There are a number of reasons that competition will not favor the aspiring homeowner. Big landlords have cheap financing at their disposal — securitized bonds, REIT share sales — while individuals have to rely on mortgages. Big landlords may also value a house more, due to the high rents that their local market power lets them to squeeze out of tenants.”

      This is unbelievably easy to fix. Simply ban large-scale corporate ownership of residential housing on grounds of a Sherman Antitrust Act violation. If Teddy Roosevelt could figure it out, then certainly some of today’s politicians could do the same.

    2. Yes, let’s do try the “ownership society”. Unfortunately we have conflated “ownership” with “mortgage holder”. A true ownership society would mean focusing policy towards creating homeowners, not indentured servants to the banking cartel.

      What we have now are “loan owners”, not home owners.

  8. Oh bugger…

    Wsj.com
    Commodities
    Copper Edges Lower After Durable-Goods Report
    A stronger dollar has also hurt metals in recent weeks

    1. “Maximum purchase loan-to-value is 97% and maximum combined purchase loan-to-value is 103%.”

      From the BofA website description of this program. Within a year all of these people will be underwater, that is, if they even come up with any of the down payment. Another sign of desperation that they need anybody that isn’t on a cold slab at the morgue to sign for a mortgage to keep applications up.

  9. >From The Daily Advertiser in Louisiana. “A spacious three-bedroom riverfront home for sale near Interstate 10 in Lafayette has vaulted ceilings, hardwood floors, a landscaped courtyard with a fountain, and plenty of windows. But, after sitting on the market for a month, the seller shaved $5,000 off the $235,000 asking price.”

    Jeezus that sounds gorgeous. Why am I still in the Bay Area? Oh yeah, my job and caring for my parents.

    1. I sold my house in the Bay Area in Nov 2017 and moved back to my original home state of Louisiana. Have not regretted it for a single minute. The only thing I even slightly miss is Bay Area weather, but good weather can’t make up for everything.

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