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If Enough People Believe Prices Are Peaking Then Sellers Hurry, Buyers Hold Off And Prices Fall

A report from Mansion Global on California. “San Francisco’s median house price was $1.545 million in the first quarter of 2019, a 4% decline from a year ago, according to a quarterly report from Compass. Overall sales in the Golden Gate City plummeted 13% in the first quarter compared to a year ago, reflecting tech stock volatility and the high interest rates that dealt a double blow to buyer confidence at the end of 2018, according to Patrick Carlisle, chief market analyst at Compass and author of the report.”

The Los Angeles Times in California. “In Beverly Hills, the price to live like Cher and Eddie Murphy is now about 44% cheaper. An equestrian compound that counts both stars as former owners has returned to market at $48 million. That’s a considerable discount from when the five-acre estate first listed two years ago for $85 million. More recently, it was priced at $69.995 million, records show.”

“The main house, though unfinished, measures roughly 20,000 square feet and holds the majority of the property’s 11 bedrooms and 17 bathrooms.”

From Builder Online. “Knock forecasts that 75% of current on-market listings will sell below their original list prices heading into Q2 2019. While this is lower than the Q1 2019 Forecast of 77%, it reflects a significant year-over-year increase that is in line with the upward trend in deals over the course of the past three months. In Q1 2019, 72% of homes sold below their original list prices, representing a 7% increase over Q1 2018.”

“‘It’s clear that we’re at an inflection point in the shift to more of a buyer’s market, and the Q2 Forecast provides insights into where and how buyers can capitalize on that, said Jamie Glenn, COO at Knock.”

“In its release, the company stated, ‘As the market cools, we see a widening of the gap between list prices and sale prices both for accurately-priced and overpriced listings. While a home may have been priced at market value when it was first listed in December or January, that market value may have changed, creating more opportunities for buyers. This difference is even more extreme among homes that have sat on the market, particularly if they were originally priced too high. After years of price increases, many sellers’ expectations have not caught up with the market. They continue to unrealistically overprice their homes.'”

“‘As the cooling of the market starts moving West, Phoenix is just one example of how the combined effects of a shift to a buyer’s market and continued overpricing will take their toll in the form of more savings for home buyers,’ said Paul Habibi, economic advisor to Knock.”

“Phoenix is just one example of the overall Forecast’s shift South: Seven out of the top 10 MSAs for deals in Q2 2019 are predicted to be Southern markets. In addition to Phoenix, Houston, New Orleans and four markets in Florida make the list. This is an increase over the five out of 10 Southern markets that made the top 10 in Q1 2019 both in terms of predictions and actual sales.”

From The M Report. “A housing downturn has begun, according to researchers at Trulia. However, there’s no need to panic—this downturn will likely emerge quite differently from the one a decade ago, the researchers say.”

“What’s signaling the current downturn beginning to take shape is primarily declining sales volume. This is typical of housing downturns. First sales decline, then prices follow a year or two later, said Trulia economists Issi Romem and Cheryl Young in their recent outlook.”

“Sales volume growth began to slow in 2014, plateaued in 2016, and then began to fall in spring 2018. For the past several years, sellers have had the upper hand in an inventory-starved housing market, but this is beginning to change.”

“‘Housing market indicators such as days on market (which have finally stopped declining), inventory (which is finally building up), and price cuts (which are growing more common), all indicate that sellers are facing greater difficulty in selling,’ Romem and Young said.”

“One factor that could put additional downward pressure on prices is consumer sentiment. When outlook leads to action, the market can be impacted. ‘Housing market shifts have an element of self-fulfilling prophecy: if enough people believe prices are peaking then sellers hurry, buyers hold off and prices fall,’ the economists explain.”

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This Post Has 56 Comments

  1. ‘A housing downturn has begun, according to researchers at Trulia. However, there’s no need to panic’

    Hey Trulia guys, really, I’m fine.

  2. ‘In Beverly Hills, the price to live like Cher and Eddie Murphy is now about 44% cheaper’

    50% off is unrealistic! End of story, turn those machines back on!

    1. At first I read that as Cher and Audie Murphy and I was confused about what they had in common.

      1. “Beverly Hills is practically free!”

        Here’s sumtin’ from 2008 …

        ‘In Beverly Hills, being homeless has its perks”

        “There are handouts of $2,000 and bottles of Dom Perignon, lucky finds of Gucci shoes and diamond-encrusted bracelets, a chance to rub shoulders with rich and famous locals such as Mark Wahlberg and Master P, even empty houses to live in.”

        (snip)

        “He also knows an opportunity when he sees one. For a few months, he hung out in a vacant house, lounging by the pool drinking the liquor he found in a cabinet until the owner walked in on him. He fled.

        “Bond said some homeless avoid Beverly Hills because they’re turned off by the uberwealthy, who require a certain amount of deference. ‘You have to be respectful and not act like an idiot…. We’re the upscale bums.'”

        https://www.seattletimes.com/nation-world/in-beverly-hills-being-homeless-has-its-perks/

  4. How can you tell fake Bitcoin transactions from the “real” ones?

    The Wall Street Journal
    Most Bitcoin Trading Faked by Unregulated Exchanges, Study Finds
    Bitwise’s research casts new doubts about fraud in nascent market
    A study by Bitwise Asset Management is an attempt to alleviate longstanding concerns that a bitcoin exchange-traded fund would leave investors exposed to market manipulation.
    Photo: LightRocket/Getty Images
    By Paul Vigna
    March 22, 2019 9:00 a.m. ET

    Nearly 95% of all reported trading in bitcoin is artificially created by unregulated exchanges, a new study concludes, raising fresh doubts about the nascent market following a steep decline in prices over the past year.

    Fraudulent trading volume has dogged cryptocurrency trading for years, but the extent of the market manipulation has been difficult to determine. Bitwise Asset Management said its analysis of trading activity at 81 exchanges over four days in March indicates that the actual market for bitcoin is far smaller than previously thought.
    …

      1. My guess is someone inside overstock wanted some and didn’t know how to buy them or wanted to be anonymous.

  5. Overall sales in the Golden Gate City plummeted 13% in the first quarter compared to a year ago, reflecting tech stock volatility and the high interest rates that dealt a double blow to buyer confidence at the end of 2018…

    Tech Bubble 2.0 is still near its historic highs. When the Fed’s Everything Bubble bursts for real, SF is going to be plummeting a lot more than 13% as all those former tech millionaires see their fictitious “wealth” wiped away.

  6. “In its release, the company stated, ‘As the market cools, we see a widening of the gap between list prices and sale prices both for accurately-priced and overpriced listings.”

    Here’s that “list” vs “sale” price thing.

    “While a home may have been priced at market value when it was first listed in December or January, that market value may have changed, creating more opportunities for buyers.”

    You don’t say…

    “This difference is even more extreme among homes that have sat on the market, particularly if they were originally priced too high. After years of price increases, many sellers’ expectations have not caught up with the market. They continue to unrealistically overprice their homes.’”

    Chase that market down greedbag!

    1. “Mr. Banker, how will you survive?”

      Not a problem. Because the debtor is servant to the lender there are a multitude of creative ways for lenders to extract from debtors what rightfully belongs in the lender’s coffers (or perhaps even the lender’s bed). Go here for an example …

      “Illiterate Nigerians Selling Their Young Daughters Over Facebook”

      (snip)

      “Debt-laden parents in the south Nigerian region of Obanliku have been selling their daughters to older men since long before the internet even existed. Now, with the help of their tech-savvy sons, often-illiterate tribesmen have been listing their young daughters on Facebook to be sold into de facto slavery in what is known as ‘money marriage’.”

      Here, grab for yourself a bag of Cheetos and read on …

      https://www.zerohedge.com/news/2019-04-04/illiterate-nigerians-selling-their-young-daughters-over-facebook

      1. often-illiterate tribesmen “…have been listing their young daughters on Facebook to be sold into de facto slavery…”

        Who knew Facebook could be used to aid and abet criminal enterprise?

  9. “San Francisco’s median house price was $1.545 million in the first quarter of 2019, a 4% decline from a year ago, according to a quarterly report from Compass.”

    I have a friend who bought a median quality SFR in San Francisco for around $500K, circa 2000. It seemed like a crazy high price to pay at the time, but apparently prices have subsequently tripled, even after the recent 4% off sale.

    1. PS His experience confirms once again what all true Californians take as their credo:

      California real estate always goes up.

      1. Susanne, johndave, and my neighbor realtor all confirm this credo.

        #trustrealtors
        #ItsNotALieIfYouBelieveItsTrue

  10. “Never underestimate the power of incentives.” – Charlie Munger

    This is for all you “Settled Science” pukes who have ever decided to devote a moment’s thought concerning the incentives for corruption of the concept of peer review driven by the need of scientists and researchers to Publish or Perish …

    “U.S. judge rules deceptive publisher should pay $50 million in damages”| Science | AAAS

    https://www.sciencemag.org/news/2019/04/us-judge-rules-deceptive-publisher-should-pay-501-million-damages

    (snip)

    “In her 29 March ruling, Navarro ruled that FTC had submitted enough evidence to prove that:

    “OMICS, which publishes about 700 journals in scientific and other fields, advertised deceptively that it provided authors with rigorous peer review overseen by editorial boards. Instead, its journals approved many articles for publication in a matter of days with no substantive feedback to authors, FTC alleged. The judge relied in part on the findings of an investigation published by Science in 2013; its author, journalist John Bohannon, submitted a deposition to the court. Of 69,000 manuscripts published by OMICS from 2011 to 2017, the publisher provided evidence that only half had been sent out for peer review.
    “Despite this lack of actual peer review, OMICS’s solicitations to authors didn’t make it clear enough that it would charge them to publish articles in its open-access journals. Some authors complained and asked OMICS to withdraw their articles, but OMICS refused, preventing authors from submitting them to other publications.
    “OMICS advertised its 50,000 reviewers as experts, but some never agreed to serve, and OMICS continued to publicly list some scientists as reviewers even after they asked to be removed.
    “The publisher advertised that its journals had high impact factors, a measure of their editorial quality. But it didn’t sufficiently reveal that OMICS itself generated its own “unofficial impact factor” for some of its journals based on citations in Google Scholar. OMICS also incorrectly stated that its journals are indexed in the U.S. National Library of Medicine’s Medline and PubMedCentral.
    “OMICS organized scholarly conferences and advertised that prominent academics would attend. But a sampling of 100 conferences indicated that 60% named organizers or participants who had not agreed to serve in that capacity.

    “The FTC is closely monitoring this industry,” Ashe said, “and we’re hoping that the decision sends a warning shot across the bow of would-be predatory or deceptive publishers to tread carefully. Re-evaluate the claims that you’re making [so] you’re not making claims that are not true.”

    “Ashe wouldn’t say whether FTC is actively investigating other predatory publishers. But OMICS appears to have plenty of company: A 2015 study in BMC Medicine estimated that questionable publishers issued nearly half a million articles in 2014 and took in about $75 million.”

  12. Are y’all ready for more quantitative easing? I’m wondering how quantitative easing unlimited ends…(also recalling the Japanese experience with it, circa 1990-recent). ‘Tis a puzzlement!

    1. Japan is a nation of savers….will inflation be higher if printed money just sits in an account?

      USA is a nation of spenders….will inflation be higher if printed money is deposited into every illegal aliens bank account?

      1. In addition, Japan is losing population. The question is will the 99% get the printed QE money or the 1% this time. Based on this, you will either see customers price inflation (what the FED wants) or asset price inflation (what the FED don’t want or at least tells us they don’t want).

    2. “Are y’all ready for more quantitative easing?”

      Mauldin is expecting $20 trillion of QE, but he never indicated if any of it would to trickle down to main street.

    2. Things are so good that:

      “Before departing for a trip to the southern border, President Donald Trump on Friday called for the Federal Reserve to cut interest rates and switch from quantitative tightening to quantitative easing.”

    1. You can call me a realtor all you want. Doesn’t make it so.

      I know it make sound weird to you, but not everyone who owns real estate is a realtor.

      AOC is what you’ve been waiting for. Free stuff for everyone and no more evil rich people! Valhalla dude.

        1. “I know it make sound weird to you,…”

          Mispelling while drinking is another telltale sign of a used home salesman.

    2. Id like to see Medicare offered at $250 a mo to compete with Blue Cross. Not free, unless we stop paying Boeing to add new tails to obsolete bombs.

      Like the PO competes with UPS and FEDEX.

      1. Not sure about the price point, but in theory this would be a positive step forward.

    1. “At the end of the contract, the homeowner can either sell the home to make the pay-off or refinance into a traditional loan. Greg Hart expects to refinance, because the extra cash has already helped him raise his credit score.
      “I can now see light at the end of the tunnel and be able to do things that we’ve long needed to do. It’s just like we’re moving again. We’re moving forward again,” he said.

      FUTURE Victims! They tricked me! I didn’t understand the terms! HAHA

      I wonder what happens if you break the contract? Will Point sue or take you to court? Wouldn’t it be better to take out a loan or HELOC, buy a bunch of sh*T you don’t need, default on the loan, and live rent free for 3-7 years before they can kick you out?

      /S

    3. “What a DEAL. Where do I sign up? Mr. Banker???”

      Easy peasy. Just drop by my bank and ask for the “No Dollar Escapes Dotted Line Special”.

      Bring with you a list of marketable body parts. If you have a you a good-looking teen (or even pre-teen) aged daughter then bring her along as well and inquire about the “Back Room Special”.

      1. OK I think that joke went too far Uncle Joe Biden

        ” If you have a you a good-looking teen (or even pre-teen) aged daughter then bring her along as well and inquire about the “Back Room Special”.”

        1. I think that joke went too far

          Mr. Banker’s “joke” isn’t new here. I suspect some people aren’t fully appreciating his shtick and its purpose.

      2. Back room? You’re nobody unless you complete the deal in front of everyone. Like Biden…or Caligula.

    2. The Santa Teresa area in south San Jose had a similar issue caused by Fairchild, which also led to birth defects, IIRC.

    3. “Does this get di$closed when you buy?”

      This article is an addendum to the “meltdown” the occurred in 2008 with mortgage$ @ Countrywide’$ headquarter$ in nearby Calaba$a$, Calif.

      (They would burn the radioactive materials @ night, so no one could see the smoke … )

      Nuclear suburbs
      The hidden nuclear history of suburban Los Angeles

      Scienceline |HARRISON TASOFF • AUGUST 18, 2017

      https://scienceline.org/2017/08/nuclear-suburbs/!!!

  20. Like Trump said, we need QT and to cut rates in this, the strongest economy of all time.

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