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Reports That Sellers Are Slashing Prices

A report from the Review Journal in Nevada. “The Greater Las Vegas Association of Realtors said in a new report that 2,621 single-family homes sold in March, up 33.3 percent from February but down 16.8 percent from March 2018. Just a month ago, GLVAR President Janet Carpenter, said there are ‘signs that we may see a slower spring selling season than we have during the past few years.'”

“But amid falling mortgage rates and reports that sellers are slashing prices, Carpenter said in the latest report that ‘things may be looking up’ this spring, especially for buyers.”

The World Property Journal on Nevada. “By the end of March, GLVAR reported 7,091 single-family homes listed for sale without any sort of offer. That’s up 84.9 percent from one year ago. For condos and townhomes, the 1,751 properties listed without offers in March represented a 130.1 percent jump from one year ago.”

The Desert Sun in California. “Moises Amador, a real estate agent and in Palm Desert, attributed the slow down in home sales at the end of 2018 to interest rates. ‘If we get to the fives again, then yeah, we’re going to see prices decline because buyers are not going to be interested in purchasing,’ he said. ‘Not at that interest rate.'”

“Renee Edly, president of the Palm Springs Regional Association of Realtors, said that while inventory is low, the valley isn’t seeing the same influx of homebuyers it received a year ago. ‘We haven’t really gained much in buyers, so that just creates a little more of a flatter market,’ she said.”

“With housing inventory low, Chris Thornberg, director of the UC Riverside Center for Economic Forecasting & Development, said home sale fluctuations are the normal ebb and flow of the real estate market. Thornberg has been focusing more on building permits instead.”

“Coachella Valley cities permitted 1,207 homes in 2018, by a preliminary Census estimate, a precipitous drop from before the recession, when the cities permitted as many as 8,479 homes in 2004.”

“‘Why aren’t homes being built?’ Thornberg said. ‘There’s tight supply across Southern California … It’s not a transaction situation, it’s a permit situation.'”

The Sacramento Bee in California. “Houses have become more affordable in recent months thanks to plateauing prices and to a notable dip in mortgage interest rates down. CoreLogic reports the median home sale figure in Sacramento County increased slightly in February, from $350,000 the previous month to $354,000. But that remains below the most recent high median of $365,000 in September of last year.”

“Sacramento real estate appraiser and analyst Ryan Lundquist said moderate price increases may encourage buyers and sellers into the market. ‘Price increases are not going crazy,’ Lundquist said. ‘The market is competitive, but it’s not insane price increases like we saw in the past.'” 

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  1. ‘CoreLogic reports the median home sale figure in Sacramento County increased slightly in February, from $350,000 the previous month to $354,000. But that remains below the most recent high median of $365,000 in September of last year’

    Now who was it that said prices weren’t going to fall?

    ‘The market is competitive, but it’s not insane price increases like we saw in the past’

    And this guy is an appraiser!

    1. Oh the Horror! $11,000 drop!?! BooHoo…what was the drop in gold prices the last 5 years?

      Did you know that Apollo 11 landed on the moon 50 years ago?

    2. Appraisers no more understand the what the price is than a realtor.

      Two make-work positions. Or as one of our more eloquent contributors says, “they’re bubble jobs and the worst thing about it is that they exist in the first place.”

    3. Even RE shills concede 2006 California real estate was at the peak of an epic bubble. But they insist that NOW it’s different. No bubble here. Well let’s review, shall we? Here are the first homes I found just randomly searching for homes that sold around the last bubble peak and are listed now. These are not cherry picked. So let’s compare the epic bubble prices of 2006 to the ‘no bubble’ prices of 2019.

      04/2006 498k sold 04/2019 listed 610k
      https://www.redfin.com/CA/San-Diego/10184-Summerview-Ct-92126/home/4853616

      09/2005 459k sold 04/2019 listed 549k
      https://www.redfin.com/CA/San-Diego/10223-Eagle-Rock-Ave-92126/home/4851759

      08/2006 522k sold 04/2019 listed 699k
      https://www.redfin.com/CA/San-Diego/9471-Compass-Point-Dr-S-92126/home/4793603

      08/2006 600k sold 04/2019 listed 899k
      https://www.redfin.com/CA/San-Diego/1866-Frankfort-St-92110/home/5219117

      02/2007 650k sold 04/2019 listed 980k
      https://www.redfin.com/CA/San-Diego/3553-Utah-St-92104/home/5383799

      03/2006 480k sold 04/2019 listed 829k
      https://www.redfin.com/CA/San-Diego/3120-Myrtle-Ave-92104/home/5387041

      1. Nice list of Bubble 1.0 peak vs Bubble 2.0 peak. I like seeing those prices for reference 👍

        1. Thanks. These were literally the first examples I found just randomly surfing a Redfin map and looking at property histories. The question is who is buying these properties and how are they buying them. If we could get a geographic breakdown of the FHA mortgage data, I think there would be a lot of very nervous people on the west coast. It was 60% non conforming at the end of last year. That number must be more like 80% in CA. Maybe even higher. And there must be an epidemic of fake incomes and bogus appraisals. These numbers just don’t work if you extrapolate from median incomes and savings rates. Something doesn’t compute.

      3. Great list, thanks for posting. It shows just how readily available this data was to buyers all along. No excuses. So if there was a bubble in ‘06, then surely paying over that would mean buying into an even bigger bubble now. Rather like a version of “no one saw it coming;” instead, “everyone saw it coming and willfully ignored it.”

      4. Prices are rising because of inflation. But at the same time, all those houses are 15 years older and will need more maintenance.

        2. Asset inflation, but not wage inflation. Unless we get wage inflation, incomes cannot support these levels.

          1. Bank of America did announce $20/hr minimum wage this morning. Target is now at $13/hr. Maybe wage inflation is starting to rear its head.

        3. Prices are rising because of inflation.

          Which isn’t why it’s called a Housing Bubble. Prices rose because of ever increasing levels of debt and the willingness to go into debt to get rich.

          all those houses are 15 years older and will need more maintenance.

          Houses depreciate!

          1. Lot size smot size, it’s all about the “amenities”. Didn’t you see the newly added sign that points the direction of the beach? Think of the possibilities! These FBs are motivated to sell, please submit an offer before you lose out on this diamond in the rough!

          2. Thanks but I’ve already got a beach cottage gold mine that I need to start mining!

      2. I inherited a property with a side deck mount clawfoot tub that I’d rip out in a second if it didn’t require completely replumbing for a shower or tub/shower combo. They’re very impractical when injured or debilitated.

      3. The listing says “Hurry this will not last”. Is that referring to the listing, or the house itself? It is 84 years old, after all .. I suppose it’s sort of an honor to be the last person to live in a house before it collapses?

  4. Last year I took Steve Miller’s advice to “take the money and run” and sold my rental property in San Diego County. Looking at the stagnating market there now, I’m very glad I did.

  5. Is it similar to synchronised swimming — while underwater?

    The Financial Times
    Global economic growth
    Global economy enters ‘synchronised slowdown’
    Disappointing indicators show similar picture in US, China and Europe
    Christine Lagarde, managing director of the IMF, said the IMF would cut its growth forecasts © AFP
    Chris Giles in London April 6, 2019

    The global economy has entered a “synchronised slowdown” which may be difficult to reverse in 2019, according to the latest update of a tracking index compiled by the Brookings Institution think-tank and the Financial Times.
    …

    1. Is it already time for another central bank rescue operation? My how time flies!

      Business
      Can the world’s central banks rescue the slowing global economy even if they try?
      Ambrose Evans-Pritchard in Cernobbio, Italy
      7 April 2019 • 4:00pm
      Federal Reserve, Washington

      The fear is palpable. Central bankers and policy strategists gathered at the intimate “euro Davos” on Lake Como are shell-shocked by the collapse of bond yields and recessionary warnings across the world.

      Monetary ammunition is exhausted or running low across the G10 economic universe. The US Federal Reserve has been stripped of key tools needed to fight a financial crisis. It may not be able to rescue the international system as did in 2008.
      …

        1. HOW IS THE FED PREPARING FOR RECE$$ION?

          Four top Federal Reserve officials speaking since the March meeting suggested the central bank could hold more short-term bonds than it does now.

          Doing so would shore up its ability to fight the next recession, they say, because it could easily trade in its short-term bonds for longer-term ones, putting downward pressure on borrowing costs without having to bulk up the balance sheet.

          It’s an approach called a maturity extension program, or “Operation Twi$t,” and the Fed did it 2011.

          Federal Reserve Bank of Boston President Eric Rosengren and his counterpart in Chicago, Charles Evans, gave speeches suggesting that approach is being considered.

          Philadelphia Fed President Patrick Harker went further, saying there is a “general consensus” to do so.

          BUSINESS NEWS|APRIL 8, 2019

          Explainer: For Fed’s trillions in bonds, size isn’t all that matters

          By Trevor Hunnicutt, Ann Saphir

  6. I love how realtors cling on to the belief that the prevailing interest rate is the only thing that prospective home buyers concern themselves with.

    Gotta keep pushing that myth that home prices only go up. LOL

  7. I’ve been scouting pre-foreclosures in Arizona. There’s a lot the media isn’t telling us. I came across this one:

    $72,7813 bd2 ba1,216 sqft
    320 W Placer St, Ajo, AZ 85321

    1/9/2019 Foreclosure auction unpaid balance

    The owner of this property has been served a Notice of Sale.

    This property was scheduled to be sold at a foreclosure auction. Because auction dates often change or are postponed, it is unknown at this time if this auction was held. Please confirm with a foreclosure specialist.

    Public records indicate the owner of this property is in pre-foreclosure.
    12/6/2011 Loan issued $85,800

    A loan was issued by JPMORGAN CHASE BANK NA on 12/6/2011 in the amount of $85,800.

    Time on Zillow
    7993 days

    https://www.zillow.com/homedetails/320-W-Placer-St-Ajo-AZ-85321/8662255_zpid/

    1. I’ve been scouting pre-foreclosures in Arizona.

      I actually don’t know what that means you’re doing. Cherry picking for an investor?

      Does the dog come with the house?

      1. There are so many loans in some stage of default, and with the lenders still playing games, it’s a full time job to sort through the data. I have to develop a system to track each case. Determine if the property is occupied and what its condition is. Wait for the sale date, see if it’s cancelled and if so put that back into the data.

        So we’ll see how it goes. Right now I’m determining how much of Arizona I want to take on.

        1. Sounds like some PI work for the banks or is this analytics for some sort of housing data firm? Figure out what deadbeat underwater FBs are still occupying the bankers rightful homes, do you get to show up and interrogate these squatters? I’m shooting in the dark here 🙂

          1. No it’s for people trying to navigate the buy side. I might make a business of it. There’s a whole business in knocking on the doors and seeing if you can salvage an FB some of his equity before he gets the heck outa dodge!

          3. “No it’s for people trying to navigate the buy side. I might make a business of it.”

            Interesting. Well consider me a future customer (after the crater happens though 😉

          5. “There’s a whole business in knocking on the doors and seeing if you can salvage an FB some of his equity before he gets the heck outa dodge!”

            I surmise you’re talking about a “Deed in Lieu of Foreclosure?”

      1. Opening Pandora’s box here. So why are different sites showing different data and why 🤔

    3. “320 W Placer St, Ajo, AZ 85321”

      How did Ajo, AZ happen? It’s out in the middle of nowhere.

      1. Seems like the kind of place where the narcos would roll through on a regular basis, maybe even own a couple of houses for their human trafficking and drug operations. Looks like hell on earth.

    4. “Time on Zillow
      7993 days”

      They must have ignored the Zestimate when they set the list price.

  10. https://www.realtor.com/realestateandhomes-detail/615-Felch-St_Ann-Arbor_MI_48103_M33356-79874?view=qv
    I’m seeing new highs for asking prices in Ann Arbor. $460 /sf for this 2100 sf house in a neighborhood near the park where dioxane keeps appearing in the puddles and the train noise is audible all night long but you can walk to Starbucks and a ‘local’ cafe or two as well! Only 1.1 million ! A bargain compared to the coasts so step right up software engineers! It’s a very educated city and makes lists!

    1. “…where dioxane keeps appearing in the puddles and the train noise is audible all night long…”

      $460 /sq. ft. ($1.1M) for nearby Dioxin puddles and train traffic? Peak insanity, IMHO.

      1) Dioxin: The U.S. EPA has set a limit of 0.00003 micrograms of 2,3,7,8-TCDD per liter of drinking water (ug/L). The Food and DrugAdministration recommends not eating fish andshell fish withmore than 50 parts per trillion (50 ppt) of2,3,7,8-TCDD.

      Dioxin is the extremely nasty contaminant component in Agent Orange. Very very small amounts cause cancer and a host of other very very bad things. Glyphosate is like a health tonic compared to this.

      2) Trains at night (not in a romantic way):
      https://www.youtube.com/watch?v=BqO_irSdY1Q
      My Cousin Vinny Train Scene

    1. I expected to see California dominate that list with Bay Area and Socal on the top. New Jersey and Ohio took it though. We will catch up I am sure 😉

      1. I expected to see California dominate that list with Bay Area and Socal on the top.

        We may be bubblicious but thankfully we’re not as economically depressed/distressed/disadvantaged as the top 7 cities! I’m not familiar with the other 3 cities.

        1. Valid point you make there. My thought was that the highest price inflated areas would be most at risk rather than the lower cost areas. I suppose places like Detroit are getting hammered on jobs with the automotive industry hitting some headwinds. Jersey I had no clue, I recall a few of bens posts awhile back but my locality of California has me a bit ignorant of other states. I would have thought NY, CA, WA, CO, TX would have ran lead

          1. I thought that too until I read the criteria:

            Researchers then used key factors, including the percentage of homes with mortgages with negative equity (also known as “underwater”), meaning the home is currently worth less than the total cost of the mortgage, along with city’s mortgage delinquency rate from Zillow’s February 2019 index.

            Additionally, the personal finance website calculated each area’s homeowner vacancy rate and rental rate using data from the Census Bureau’s 2017 American Community Survey combined with foreclosure rates from RealtyTrac.

            To make the list, cities had to have rates of negative equity in excess of 8.2 percent, which is the current the U.S. national average rate of homes “underwater.”

          2. ‘To make the list, cities had to have rates of negative equity in excess of 8.2 percent, which is the current the U.S. national average rate of homes “underwater.”’

            That’s a pretty high percentage underwater for peak boom. Which gets to one of the dirty secrets of underwaterness: These households made the decision to put themselves in this situation. They are aided and abetted by lenders encouraging them to borrow, and used home sellers who insist that real estate always goes up, but nobody put a gun to their head and made them sign on the dotted line for a cash-out refinance.

          3. Oh yes, the details! Even those are likely skewed but nonetheless, it does make sense. I’m sure my list would be accurate if it was based on bubble 2.0 value vs current peak FB purchase price. It went way above and beyond sustainable values which means it can go way below what the present value is today.

    1. That backyard looks like you could put in a pool that would hold a 9 foot 300 pound gator.

      Huge gator removed from Palm Beach Gardens swimming pool

      Posted: 11:06 AM, Apr 08, 2019

      Vanessa Schultz said she was walking her kids to the bus stop around 7:15 a.m. Monday when she was told a large alligator was in her neighbor’s pool.

      “It was big, really big,” said Schultz, who captured images of the alligator. “I was totally in panic. When I saw the alligator I was scared.”

      Schultz said she’s lived in Marlwood Estates for three years and has only seen a gator there once before. She said the an alligator was spotted in a lake last year behind her property.

      Schultz, a mother of three, thinks the gator in the pool was likely 9 feet long and over 300 pounds.

      https://www.wptv.com/news/region-n-palm-beach-county/palm-beach-gardens/huge-gator-removed-from-palm-beach-gardens-swimming-pool

  14. Opinion: These risk-taking mortgage lenders could trigger the next housing crisis
    By Sanjiv Das
    Published: Apr 9, 2019 8:03 a.m. ET

    It’s not easy to be a home buyer these days. With home prices rising around 6% annually, owning a home has become less affordable. As you might expect, it’s also been difficult for lenders in the mortgage business whose firms provide the financing for the millions of Americans wanting to buy their own residence. With loan origination and volume decreasing, and after executives reduce their company’s costs, they are faced with the decision of whether to lower margins or credit standards.

    Such a “race to the bottom,” which partly caused the 2008 U.S. economic meltdown, isn’t the only thing that could precipitate the next housing crisis.

    I’m referring to what’s known in the financial industry as “liquidity risk.” In basic terms, this is the ability for a firm to meet short-term financial obligations such as compensating employees. Liquidity risk is particularly acute within the housing sector because non-bank lenders originate more than 50% of home loans, up from just 9% in 2009.

    Non-banks also make up more than 45% of total “servicing,” by which I mean performing functions such as collecting monthly mortgage payments, accounting for taxes, and so forth. Indeed, non-banks filled the void after several banks cut back their mortgage practices after the 2008 financial crisis. But these two entities, banks and non-banks, are interdependent. Typically, banks such as Wells Fargo (WFC, -0.89%) and Citigroup (C, -1.50%) provide lines of credit to non-bank lenders so these entities can originate and service mortgages.

    Unlike banks which can rely on short-term deposits as a source of capital, non-banks don’t have a captive deposit base. Here is how the financing works: non-banks originate loans and then sell them to other entities such as Freddie Mac and Fannie Mae, which pay nonbanks an ongoing fee to service the loan. The lifetime value of this fee is an asset known as a mortgage servicing right or MSR. Non-banks use MSRs as collateral, so that they can borrow money from banks to use as working capital.

    But MSRs are extremely sensitive to interest rate moves. If rates fall, several smaller and thinly capitalized non-bank lenders may find it difficult to access funds needed to service loans. In addition, non-banks hedge the value of mortgages on their books to guard against moves in rates, and this requires the posting of collateral with counterparties. If the value of this collateral drops, it will also be difficult for the underperforming non-banks to obtain financing.

    Some 40% of non-banks didn’t turn a profit in 2018, according to Richey May & Co, and these institutions are likely to be in a tough situation if liquidity dries up. Well-run non-banks should perform an analysis of their liquidity situations and identify risk factors. They also ought to shore up capital, in anticipation of a market event.

    What’s concerning is that an external event could generate liquidity risk in the housing market. For example, when the threat of “Grexit” rattled the markets in 2016, 10-year Treasury (TMUBMUSD10Y, -1.24%) yields fell to 1%. This decline meant that MSRs weren’t worth as much. Therefore, banks could seek margin calls and demand more collateral from non-banks.
    …

  15. Las Vegas is making the news, finally! 🙂

    Bad news for FBs, good news for people looking to buy a home in the future.

  16. Well for instance my Ex finally listed/sold their home in a town 30 mins north of Boston. It took 60+ days and 2 price reductions. I kept saying in 2016-2017 they should sell out now and just retire down to their small condo in West Palm, nope didnt listen. Lost out on $100k and a lightning fast sale. I knew right then and there that the market was cooling significantly, because their house was a beautiful SFH in a nice location/quiet neighborhood road.

    Shame…win some lose some.

    I’m waiting on the sidelines for the boom boom

    1. Uggghhh. Speaking of which, in my ex’s trailer park (where I bought back in about 2009) in Boulder things have gone insane. Some poor young couple just paid 200k for a new singlewide there. Go figure. Anyway, we paid 40k for the doublewide in the trough of 2009 and she might be able to sell it for a lot more now just due to location. Trying to mind my own business but if I were her I’d sell. Except that the money will run out and she still has no intention of supporting herself but that’s a whole different story…6 more years of it being my problem. It’s still the cheapest way to live in Boulder and she doesn’t want to go back to her hometown and listen to her sisters tell her how stupid she’s being.

      1. “Except that the money will run out and she still has no intention of supporting herself but that’s a whole different story…6 more years of it being my problem.”

        I’ve experienced all sorts of schitt, but nothing like that.

      2. 6 more years of it being my problem

        You’ll get there. It’s been 15 years now since “it” was my problem. How time flies.

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