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Builders Have Been Willing To Offer Significant Discounts And Incentives To Move This Inventory

A report from the Dallas Morning News in Texas. “Homebuilders eased back on Dallas-Fort Worth construction in the early months of 2019. North Texas builders started 8,439 homes in the first quarter, down 4.4% from a year ago. It was the second quarter in a row that year-over-year home starts in the area declined, according to Residential Strategies Inc.”

“‘It’s very evident the big builders have throttled back on their starts,’ said Residential Strategies principal Ted Wilson. ‘Selling unsold speculative inventory that was completed near year end has been a priority, and in many instances builders have been willing to offer significant discounts and incentives to move this inventory.'”

“The supply of unsold new homes on the market has grown in recent months. At the end of the first quarter, there were 6,931 finished vacant houses, 8.3% more than a year ago.”

“‘Builders will continue to focus on moving unsold inventory in second quarter 2019,’ said Wilson. ‘Homebuyers will continue to benefit from builders that are motivated to sell.'”

The Los Angeles Times on Florida. “Yoenis Céspedes is sitting out the first few months of baseball season following heel surgery, but the Mets slugger is keeping busy in the real estate game. Records show he recently sold his golf course home in Boca Raton, Fla., for $1.8 million.”

“The sale chalks up as a slight loss for Céspedes, who paid $1.85 million for it five years ago. He first listed the half-acre estate for $2.2 million in October.”

The San Francisco Chronicle in California. “With the Golden State Warriors moving from Oracle Arena to the Chase Center in Mission Bay next season, the Curry family will most likely have to move out of their East Bay residence to make Stephen’s commute easier.”

“In an interview with KRON, Ayesha confirmed the family is looking for a place in San Francisco. Like many families searching for housing in the city, the Currys have been taken aback by the astronomical home prices.”

“‘We’re searching, we’re on the hunt,’ Ayesha said. ‘I’ll tell you what though, San Francisco, we’ve had some sticker shock here.'”

“According to a Realtor.com report, national median list prices crossed the $300,000 mark for the first time in March. That is still only roughly a quarter of San Francisco’s median asking price of $1.35 million. The same report states that home prices in San Francisco were actually down 3 percent from February to March.”

From My Record Journal on Connecticut. “A luxury colonial in the town’s southeast corner is now listed for under $1 million after a $151,000 price drop. ‘It’s in a great neighborhood in Cheshire,’ said listing agent Thomas Tussing. ‘It has 15 rooms, five bedrooms, it’s been updated with a custom kitchen.'”

“The 5,178 square-foot home at 95 Jinny Hill Road is 12 years old, has a newly painted interior, an open floor plan, and hardwood floors. It was listed for $1.1 million. The price was reduced last month by $151,000 to $949,000.'”

This Post Has 52 Comments
  1. ‘Céspedes…paid $1.85 million for it five years ago’

    Five bubble years – gone. Eeee-bola Boca Raton!

    1. Oh the Horror! How will this millionaires ballplayer survive? I bet he’s crying over his utility bills too. $50,000 lost is still cheaper than renting. He should have listen to me and buy in 2012 and not 2014! I told him to buy in 2012! People who listen to me will become rich.

  2. ‘The same report states that home prices in San Francisco were actually down 3 percent from February to March’

    Wasn’t there some economist who said prices weren’t going to fall?

    1. “In a slowing market, it’s not uncommon to have a gap between list prices and sale prices. It can take sellers a little bit of time to catch up to the reality,” Hale says.

      Lots of little hints hidden in that one

      “Median national home value spikes … to a quarter of San Francisco’s asking price
      Forget about that housing market slowdown. Home list prices aren’t coming down—instead they just reached a new all-time high.”

      LIST PRICE reached a new all-time high… That’s great but doesn’t mean ah!t if they slash the price while they chase the market down. All this says is that sellers have reached there highest level of greed ever.

    2. 3 percent a month can add up fast. One year’s worth of losses at that rate would be an annual decline of

      (0.97^12-1)*100% = -30.6%.

  3. ‘At the end of the first quarter, there were 6,931 finished vacant houses, 8.3% more than a year ago’

    Golly, that’s way more than Orange County’s 3,400 finished unsold shacks. And of course these significant discounts put recent buyers underwater.

    1. I don’t have any alerts set up but for some reason redfin sent me this bit of bubblicious San Diego flippage I thought I’d share. Listed at 759k for 1100 sq ft was purchased in December 2018 for an already ridiculous price of 570k. You would have been lucky to sell this place for 500k in 2006. Flippers are paying 2006 bubble prices, throwing down laminate flooring, splashing some paint on the walls, doing a bit of landscaping, and a quick kitchen update, and putting these back on the market for another 150k. We have easily surpassed the last bubble. That zip code is rather patchy and the schools aren’t great either. No offense to anyone living there intended. I used to live in that zip code myself. The word bubble doesn’t even describe this anymore. We need a new metaphor.
      https://www.redfin.com/CA/San-Diego/4366-Donald-Ave-92117/home/4958955

      1. Haha, the mulch yard work and then”modern” updated kitchen scream flip. The last of the knife catchers will likely be all over that one. I’m not surprised when I see these shacks sell. I was surprised on this one:

        https://www.redfin.com/CA/Santa-Cruz/450-8th-Ave-95062/home/2245151

        Not sure what price is sold for but in “pending” status so it tells me FBs are still out picking these under 800k homes up. Might be awhile before those buyers dry up.

      2. “But according to CoreLogic, the analytics firm that provided the data for the WSJ story, the odds of another crash are slim, even as speculative transactions presently comprise the largest share of the market since 2006, just as US home sales have become mired in a serious slump.”

        https://www.zerohedge.com/news/2019-04-10/dont-worry-its-different-time-home-flipping-frenzy-matches-pre-crisis-highs

        Won’t see the bubble coming until it pops on their face.

      3. Should I be ashamed to say that I actually like this new aesthetic of minimalist Millenium gray? It beats the heck out of the avocado green and harvest gold and brown of the 1970s. Or the slate blue and dusty mauve of the late 1980s. Or the English-garden pallet of hunter green and rose of the late 1990s. Or the pergraniteel and Behr Swiss Coffee flip paint of the mid 2000s.

        Not to mention all of those styles were accompanied by their class of knick knacks. Yikes.

        The only two modern trends I DON’T like are
        1. Mixing the cool gray with warm hardwood.
        2. Being lectured by my own walls with cliches like “Beach,” “Dine,” “Family,” “Faith,” and the WOAT: “Live Laugh Love” (damn that was painful to type)

        1. I agree. Gray makes me feel sad and cold (4 years in Philly and you’re never really the same), but in paler iterations it is quite nice, especially with minimalist decorations and finishes. I personally love high gloss white white white. Yay subway tiles! It goes with my “cleaner is better” mentality. Plus, all the reflected light helps my SAD.

        2. “2. Being lectured by my own walls with cliches like “Beach,” “Dine,” “Family,” “Faith,” and the WOAT: “Live Laugh Love” (damn that was painful to type)“

          Absolutely the worst.

  4. I was out running this afternoon and I saw a realtor truck with this message in vinyl on his back window:

    “Do you wish you purchased houses 20 years ago? Just imagine what you will think 20 years from now.”

    Okay, here I go. I imagine that 20 years from now I will be so grateful that I didn’t buy in an absolute mania period of housing when housing prices relative to income was so distorted and pushed up to absurd levels. I imagine that I will be so grateful that when prices finally do get back to some inkling of historical normalcy I will find that there are much better options.

    I imagine that I will be so grateful that I didn’t succumb to REIC propaganda to throw away my financial freedom by shackling myself to something that is overpriced which will bring lots of financial headaches, too much of a time commitment, and which I don’t really want/need. That is what I imagine right now. What do you imagine?

    1. If I were a bankruptcy attorney, I would slip my business card under his windshield wiper blade.

      1. “If I were a bankruptcy attorney…”

        These guys (and ladies) must be doing a killing. I’m under the impression that most debtors simply welsh on their creditors and begin the debt build-up all over again.

        1. “I’m under the impression that most debtors simply welsh on their creditors and begin the debt build-up all over again.”

          Yes, American citizen$ who abu$ively claim “Financial Amne$ty” of their debt$ by the million$.

          Enabler$: Federal Reserve Dignitarie$, Wanker Banker$, lawyer$, Non-Bank lender$, Indu$trial Medical Facilitie$ & Operation$ … ($hort.li$t)

    2. Okay, here I go. I imagine that 20 years from now I will be so grateful that I didn’t buy in an absolute mania period of housing when housing prices relative to income was so distorted and pushed up to absurd levels. I imagine that I will be so grateful that when prices finally do get back to some inkling of historical normalcy I will find that there are much better options.

      The thing we have learned over the last 10 years is that the Fed will do their best to crush that dream in order to help their friends. And they seem to be willing to use EVERY tool at their disposal for that purpose. Which may mean that by the time they lose control the whole system is a big smoking crater as they fly off to the ranch in Paraguay. I hope not, but it makes me really wary…

      1. Well said Mr Carl. Savers, retirees, and financially sensible people in general were the cord wood they heaped on the speculative bonfire to keep their constituents cozy and warm. The Fed is not going to stop until the supply is exhausted.

      2. we have learned over the last 10 years

        This is nothing new, and the solution is also known.

        “Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out!”

        President Andrew Jackson

        1. It shouldn’t be legal to speculate in the breadstuffs of the country. But if you disallow it, then it becomes socialism/communism. There is no good solution, is there?

          1. It shouldn’t be legal to speculate in the breadstuffs of the country. But if you disallow it, then it becomes socialism/communism.

            According to who? I think it’s been banned/strongly discouraged before.

          2. Or maybe medieval (think “just price” instead of “what the market will bare”)

            Then again, we have some unicorns like Uber basically dumping, selling below cost.

          3. to speculate in the breadstuffs of the country

            The subtle point that should not be missed is that they speculate with the money of the people who need that daily bread (or a house).

  5. I suppose it’s reassuring to know that the problems our household faces are widespread.

    The Financial Times
    Global inequality
    Rich nations’ middle classes in ‘rocky waters’ as incomes flatline
    Rising living costs and less stable jobs could fuel political instability, OECD warns
    Housing and education costs are rising faster than inflation and middle-income jobs face an increasing threat from automation © Getty
    Valentina Romei in London 11 hours ago

    The middle classes in developed nations are under pressure from stagnant income growth, rising lifestyle costs and unstable jobs, and this risks fuelling political instability, a new report by the OECD has warned.

    The club of 36 rich nations said middle-income workers had seen their standard of living stagnate over the past decade, while higher-income households had continued to accumulate income and wealth.

    The costs of housing and education were rising faster than inflation and middle-income jobs faced an increasing threat from automation, the OECD said.

    1. ” … under pre$$ure from $tagnant income growth, rising life$tyle cost$ and un$table job$”

      It’$ different this time + “$oft landing$”
      =
      “Never.a.better.time.to.buy.a.$helter!!!”

  6. Not around here, they haven’t — sellers digging in their heels, properties sitting on the market mostly unsold. Majority of activity, what little there is of it, is in the $300,000 and less range.

  7. Will there ever be an end to the central bankers’ post-2008 easy money hair-of-the-dog hangover cure?

    1. Opinion: A tragedy is unfolding in the stock market that should worry both bulls and bears
      By Sven Henrich
      Published: Apr 11, 2019 8:39 a.m. ET
      When this rally runs out of steam, the ensuing crash could topple the economy
      Getty Images
      A combination of slowing global economic growth, artificially low interest rates and a surge in debt could combust the U.S. stock market.

      In the U.S. stock market, it’s all going to end badly. Even some ardent bulls will freely admit to it. The question is how, when and where.

      Frankly, a tragedy is unfolding, and discerning eyes can see it. Since the December lows, the stock market has taken the scripted route higher, salivating at the prospect of dovish central bankers once again levitating asset prices higher. It’s a Pavlovian response learned over the past 10 years. Record corporate buybacks keep flushing through the market, and cheap-money days are here again as yields have dropped markedly since their peak last fall.

      But investors may sooner or later learn the hard way that this sudden capitulation by central bankers is not a positive sign, but rather a sign of desperation.

      Fact is, central banks are hopelessly trapped:

      1. Warren Buffett: ‘$omething different’ is happening in the economy right now.

        Scott Gamm Reporter | Yahoo Finance| April 11, 2019

        For example, the yield on Germany’s 10-year Bund is negative. That means investors have to pay to hold government debt.

        “I don’t think there was any economist I’ve ever read that talked about negative interest rates for long periods of time,” he said.

        Buffett added, referring to the economists John Maynard Keynes and Paul Samuelson, “If you go back and read Keynes or you read Samuelson, or you read any of them, they do not get into a negative rate environment.”

        Another quirk in today’s economic landscape is the lack of inflation given ultra-low intere$t rate$.

    2. Will there ever be an end to the central bankers’ post-2008 easy money hair-of-the-dog hangover cure?

      Rhetorical question?

    3. Trump, Kudlow, Ro$$ & Companie$ : “The eCONomy is $trong, lower the damn intere$t rate$ .50% … Now!”

      1. We are at a safe cruising altitude and all systems are normal. However, we are going to deploy the oxygen masks. Remember to secure your mask before tending to children and the infirm. Again, we repeat, there is no danger to the aircraft.

  8. Fretting over debt seems so 20th Century!

    IMF warns governments to get debt under control before the next downturn
    By Greg Robb
    Published: Apr 10, 2019 10:53 a.m. ET
    While financing debt is not a concern at the moment, this could change quickly, agency warns
    Getty Images
    The IMF is not ready to embrace theories that argue low interest rate environment can allow more public spending.

    Public debt ratios are now “significantly higher” than before the global financial crisis across the globe, and governments need to get their fiscal houses in order ahead of the next global downturn, the International Monetary Fund said Wednesday.

    “Fiscal policy needs an upgrade,” said Victor Gaspar, director of the IMF’s fiscal affairs department, at a press briefing after release of the latest fiscal monitor report.

    Total public and private debt totaled $184 trillion or 225% of global GDP at the end of 2017.

    Advanced economies have levels of public-debt-to-GDP ratios that are close to unprecedented in peacetime, the IMF said. At the same time low interest rates are helping to make it easier to finance these high debt levels.

    Asked about calls from some economists for the IMF to change its orthodox thinking about the need for low budget deficits in the environment of low interest rates, Gaspar said it was an open question how long these low interest rates can persist.

    “Financial conditions are volatile and they can turn abruptly,” he noted. “There is no scarcity of financial crises,” he said.

    “The risks associated with the rollover of high levels of public debt have not gone away and those are the risks that we believe finance ministers would be well advised to manage carefully,” Gaspar said.

    “In this environment, fiscal restraint is generally recommended,” Gaspar said.

    1. “Asked about calls from some economists for the IMF to change its orthodox thinking about the need for low budget deficits in the environment of low interest rates, Gaspar said it was an open question how long these low interest rates can persist.”

      If you don’t like what the data suggest in light of current theory, change your theory.

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