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It’s Tough Out There, But There’s No Reason For Sellers Or Their Agents To Panic

A report from the Orange County Register in California. “House prices fell last month in Los Angeles, Orange and San Diego counties and in half of all counties included in the California Association of Realtors’ latest housing report. It’s the first year-over-year price drop for Los Angeles and San Diego counties in seven years and the third in Orange County in the past four months.”

“House sales, meanwhile, were down in all major regions in the state – falling 12 percent year over year in the Los Angeles metro area, CAR reported. ‘It’s tough out there,’ said Jordan Levine, a CAR senior economist, ‘but there’s no reason (for sellers or their agents) to panic.'”

“‘As a seller, you have a lot more competition for your unit than a year ago or even two years ago,’ Levine said. With more homes to choose from, buyers are taking their time.”

The Herald Tribune in Florida. “Foreclosure filings declined in Southwest Florida in first-quarter 2019 from the previous three-month period, tracking with the national trend. But unlike the U.S., local foreclosure activity accelerated when compared over the year.”

“From January through March, foreclosure filings in the Sarasota-Manatee region fell 18 percent from late 2018 but were up by 39 percent from a year earlier, according to ATTOM Data Solutions. Charlotte County reported 205 filings, or one in every 501 housing units. That was down by 11 percent from fourth-quarter 2018 but 24 percent higher than the year before.”

“In Florida, filings were down 19 percent from the fourth quarter but up 24 percent for the year. Florida ranked fourth in the nation with one in every 487 homes subject to default notices, scheduled auctions or bank repossessions. Foreclosure starts spiked 65 percent over the year in Florida, a likely result of homeowners in the northern part of the state who suffered economic losses from Hurricane Michael last year.”

From Crain’s Chicago Business in Illinois. “It’s been a tough year so far for the local residential real estate market. Prices are down from a year ago in nearly half of the 121 suburbs Crain’s analyzed, and the number of home sales is down in almost two-thirds.”

“‘This should be a busy time for us,’ said Aly Tesar, a Compass agent who focuses on Winnetka. ‘But it hasn’t been what it should be’ this year, she said. ‘A lot of buyers are getting cold feet.'”

“The data show a chill in Winnetka’s housing market so far this year: Home sales are down more than 16 percent and the median sale price by almost 10 percent. Homes are taking an average of 191 days to sell, 6 percent longer than in the first quarter of 2018. For every suburb winning in this tough climate, two are losing. In 18 suburbs Crain’s looked at, including Winnetka, all three metrics worsened in the first quarter compared with last year.”

“The slowdown has been a wake-up call of sorts, said Cory Kohut, a Berkshire Hathaway HomeServices KoenigRubloff Realty Group agent in Oak Park. Homeowners who just a year or so ago ‘saw their neighbors getting multiple offers and selling over the asking price are (finding out) that it’s not that way anymore. That petered out.'”

“In Oak Park, both the number of sales and the median sale price saw double-digit drops in the first quarter, with sales there down 11 percent from the first three months of 2018 and median sale prices almost 18 percent. The average time a house spent on the market is 133 days, up from 88 in the first quarter of 2018.”

The Denton Record-Chronicle in Texas. “Affordability levels were very poor in the Dallas-Fort Worth area, and home sales began to falter as rates ticked higher. The sudden dip in the stock market in December was a wake-up call that the economy was ill-equipped to deal with higher interest rates.”

“One of the more interesting developments in the DFW market is that the median price per square foot of new homes was still climbing until it dropped from $135 in February to $133 in March. The average price per square foot of new DFW homes peaked in June at $144, and the average total price of a new DFW home peaked in June 2017 $398,559.”

“The community of Beaver Creek is a new home development by LGI Homes catering to many first-time buyers. LGI even offers 100% financing options if you are strapped for a down payment. That no-money-down scenario can become a big problem, however, when a real estate market begins to turn.”

“With home prices at record levels in many markets like Denton, creative mortgage financing is creeping back into the market to stimulate sales volumes. LGI Homes has become even more ‘creative’ with its sales approach, partnering with American Homes 4 Rent, selling new homes to AH4R as the company adds to its massive rental empire.”

“Beaver Creek closed what appears to be its first resale transaction last month, and it didn’t go well. Multiple listing service data show that the owner apparently sold the property for several thousand less than what the new home cost in 2018, and this would be before any selling expenses. Ouch!”

This Post Has 62 Comments
  1. ‘In Oak Park, both the number of sales and the median sale price saw double-digit drops in the first quarter, with sales there down 11 percent from the first three months of 2018 and median sale prices almost 18 percent’

    Good thing everybody is putting 20% down. But hey Oak Park, it could be worse, Santa Barbara is off 20%. They’re just catching up with Vancouver.

  2. ‘The community of Beaver Creek is a new home development by LGI Homes catering to many first-time buyers. LGI even offers 100% financing options if you are strapped for a down payment’

    In a falling market. Yeah, lending is rock solid.

  3. ‘Foreclosure starts spiked 65 percent over the year in Florida, a likely result of homeowners in the northern part of the state who suffered economic losses from Hurricane Michael last year’

    Amazing how some rain and wind can make an entire state stop paying their mortgages a year later…

    1. A reader just posted this on the previous comments:

      No-income, no-asset mortgages are back (at one lender, at least)
      360 Mortgage Group plans as much as $1 billion in “NINA” loans
      April 16, 2019

      ‘This isn’t the first time that 360 Mortgage has been near the forefront of the expansion of the credit box. Just over four years ago, 360 Mortgage was one of the companies to offer Fannie Mae and Freddie Mac 97% LTV products. But things have come a long way since then.’

      https://www.housingwire.com/articles/48810-no-income-no-asset-mortgages-are-back-at-one-lender-at-least

      1. Sort of gives us an indication of where we are in the cycle. They’re running out of responsible borrowers, and working the irresponsible ones now.

        1. It’$ tough out there + re$ponsible borrower$ + $oft.landing$ = …

          MARKET NEWS | APRIL 17, 2019 | Reuters

          Truck driver$ see order$, miles fall in latest U.$. $lowdown $ignal
          Stephanie Kelly, Jessica Resnick-Ault

          April 17 (Reuters) – At a truck stop in Ridgefield, New Jersey, driver Paul Richards reviews a notebook where he tracks miles driven and what he is hauling. His paycheck is down about 25 percent from the same period a year ago, and his weekly miles have dropped as well.

          “This hasn’t been a very good week,” said Richards, who carries building materials and recycled goods through the U.S. Northeast. “Last week wasn’t, either.”

          Across the United States, drivers, regional operators and industry officials say the $700 billion U.S. trucking sector slipped in late 2018, with the fall continuing into this year. While the decline in freight rates and hauling does not suggest the United States is headed into a recession, that softness is consistent with slippage in the economy as a whole.

          The effects have been uneven nationwide, with weaker orders and miles in the U.S. Midwest and Southeast than on the West Coast, economists and regional officials said.

          Trucking accounts for 70 percent of U.S. shipment tonnage, and is key to supplying the manufacturing, construction and retail sectors, all of which showed sluggishness in the first quarter. The most common factors for the decline include the U.S.-China trade war and weakness in the Farm Belt.

          An ACT Research index of truck carrier volumes that surveys about 60 fleets crossed into negative territory in November for the first time since July 2016. It briefly returned to positive territory in January but dipped again in February. It matches forecasts for a soft first quarter for U.S. gross domestic productp

      2. Cut from article:

        “…Rather, a no income, no asset common sense FICO and LTV based solution for those that are willing and capable of making timely payments but don’t fit within the highly regulated, ultra conservative, guidelines every other lender offers.”

        Now who would these folks be? Me thinks: Money Launderers, Organized Crime, Tax Evaders, anyone handling large amounts of cash from sketchy sources.

        1. You forgot democratic presidential hopefuls like Avenatti and the offspring of democratic presidential hopefuls like Bidens son. And all their “donors”, lol.

  4. I can attest that the traffic in the Sarasota/Bradenton area is getting very close to gridlock; yet more and more new buildings are slated. There are so many new structures in downtown Sarasota that especially during the summer you can barely breathe; the cavernous buildings are blocking any air movement. Paradise has been lost

    1. Same story out west. I’ve never seen the roads this packed before. There are places where I’m waiting through 3 stoplights in order to turn, and that was never the case in the past.

      I very rarely eat out, but last night decided to do pickup at a Thai place. They told me 20 minutes. I arrived at 19 (set my alarm), and waited another 15 to get my food. The place was an absolute zoo and I’ve never in my life seen it so crowded. And, on a Tuesday night? Weird. And their prices sure do reflect that. Ouch, I won’t be doing that often.

    1. This is accelerating faster than I expected. I thought the spring would have enough momentum that it would forestall YOY price declines in SoCal till the summer. But this is looking like the spring that never sprung. Next month is going to be a worse sh#t show because pending sales are tanking. And 4$ gas isn’t going to help in a state where long commutes are routine and budgets are already stretched to the limit and beyond. If we are hitting YOY declines this early in the year, double digit price declines for most major metropolitan areas is quite possible by year end. That will put a whole lot of people underwater. This is going to be interesting.

      1. I guess this is the end of the “just returning to normal market price appreciation” talking point. Didn’t take long for the flies to start landing on that turd.

      2. It is turning for sure but it isn’t moving to fast. Most of these moveto posts by Mortgage Watch have a scary median decline but the decline per sq ft is down -1% or -2%. So they are almost certainly housing mix declines in a market with low volume.

  5. “‘This should be a busy time for us,’ said Aly Tesar, a Compass agent who focuses on Winnetka. ‘But it hasn’t been what it should be’ this year, she said. ‘A lot of buyers are getting cold feet.’”

    Lets see these excuses don’t work anymore

    Lack of Supply
    Weather
    People on Vacation
    High Interest Rate
    Stock Market
    Tariffs
    Cold Feet

    Yes, COLD FEET. They have cold feet! Amazing when the bubble was peaking in Spring of 2018, everyone had Hot Feet!!!! Now everyone has cold feet

    1. I don’t think it’s cold feet. It’s warm hands, from holding the popcorn while waiting for the housing bubble bust to play out in all of its terrible glory.

  6. “House sales, meanwhile, were down in all major regions in the state – falling 12 percent year over year in the Los Angeles metro area, CAR reported. ‘It’s tough out there,’ said Jordan Levine, a CAR senior economist, ‘but there’s no reason (for sellers or their agents) to panic.’”

    Please Ben Don’t Panic! Don’t Panic! Everything looking good! Chris told me no bubble! No Bubble! Strong economy. Jobless rate record low! Stock market booming! Please don’t Panic!!!

    1. ‘Chris told me no bubble!’

      He also said prices wouldn’t fall. Which is a really strange thing for an economist to say.

  7. “With home prices at record levels in many markets like Denton, creative mortgage financing is creeping back into the market to stimulate sales volumes. LGI Homes has become even more ‘creative’ with its sales approach, partnering with American Homes 4 Rent, selling new homes to AH4R as the company adds to its massive rental empire.”

    This is essentially 2005 all over again. Back then, and on this blog I might add, I can remember places like Port St. Lucie, FL getting absolutely hammered, yet places out west were at record prices and climbing. We are basically at the pinnacle peak, it would seem, but I was wrong in that I never thought this 2nd bubble would even occur.

    1. its massive rental empire

      Which apparently earns essentially nothing. What could possibly happen when prices/rents/occupancy drop by double digits?

    2. I was wrong in that I never thought this 2nd bubble would even occur.

      It wouldn’t have, had the first one been allowed to run its course. Our outlook for the future would be much better now.

    3. I have to wonder what happens to the business model of AH4R and Blackstone in a declining RE market. Probably an accounting gimmick will allow them to not recognize the losses.

        1. Why won’t they just dollar cost average by buying more houses as prices continue to fall? These entities are so massive that they apparently have unlimited access to capital.

          1. If they are required to write down the assets to match their actual value, it will impair their balance sheet. That might affect their ability to raise new funds, especially when lenders see that they are investing in depreciating assets. My suspicion is that the accounting rules will be such that no losses will be recognized and thus no hit to the balance sheet

          2. In Coastal Orange County, foreign money is buying up all the residential property, so locals just can’t get in, regardless of housing bubbles or fluctuations in interest rates.

          3. “My suspicion is that the accounting rules will be such that no losses will be recognized and thus no hit to the balance sheet…”

            Naturally. It’s a rigged system. They know exactly what to do to protect the assets of the wealthy, covertly of course.

          4. They know exactly what to do

            Until that doesn’t work. A reversal of asset prices could make quite a mess. It is all based on people’s willingness to borrow.

          5. “In Coastal Orange County, foreign money is buying up all the re$idential property”

            Over priced U$A coastal $helter.propertie$ are a $afer depo$it/repo$itory the any China.Russia $tate bank saving$ account.

  8. It happens at different times in different places. Eventually they all go over top of hill and snowballs down the other side.

    What I am seeing in new home developments however is unmistakable. Few if any construction crews in some of them and no new ground breaks. Only apartment construction in some areas evident. Single family in our areas had definitely hit the skids. Impacting my main service very significantly.

    Investing currently in domestic uranium equities and developing alternative services. Looks a lot like 2006 to me.

  9. “It’s the first year-over-year price drop for Los Angeles and San Diego counties in seven years and the third in Orange County in the past four months.”

    Ebola is on the march.

    1. Maybe this time is different, but in previous periods when California housing prices started to fall, the period of falling prices continued for five years or so.

      Just suggesting that better buying opportunities may lie ahead for the patient.

      1. the only difference this time is the year. i recall a pretty funny comment i heard on hbb. ” the only thing that’s going to get better in the spring is the weather” so true!

      2. But that hasn’t happened in Silicon Valley for ~25 years.
        House prices started coming down in 2002 (I remember seeing new construction price reduced signs), but then started re-inflating before getting back to normal. Same thing happened in 2008.

        I’m tired of bubbles (dot-bomb, housing bubble phase 1, housing bubble phase 2, “tech” bubble 2).

          1. ” I bet we’ll really hate what they’ve got planned next”

            Nix, nix, nix … Plan$ are already baked into the financial$ cake, it’$ $imply the implementation$ the we’ll bee witne$$ing.

            Thee Wanker Banker$ Mega.Bank$ are $trong!!! … Thee NON.bank$ are $acrificial lamb$ to bee $heared & $laughtered.

            Got popcorn?

        1. The bubbles aren’t going away until people cease believing that they have the ability to get rich without working for it and earning it.

  10. https://patch.com/california/palmdesert/price-drop-unique-desert-retreat-lands-it-below-1-million

    PALM DESERT, CA — With more than 6,600 square feet of living space, this Palm Desert home boasts incredibly high ceilings, a gourmet kitchen and a large master suite. The private pool, spa and outdoor entertaining area creates the perfect space to enjoy the warm desert nights and breathtaking mountain views.

    https://www.zillow.com/homedetails/72600-Sun-Valley-Ln-Palm-Desert-CA-92260/18107304_zpid/

    Date Event Price
    2/20/2019 Listed for sale $989,000(-14%)
    9/19/2018 Listing removed $1,150,000–
    3/29/2018 Listed for sale $1,150,000(+16.8%)
    9/18/2015 Listing removed $985,000–
    10/24/2014 Listed for sale $985,000(+33.8%)
    9/30/1999 Sold $736,000–

  11. Recession looms as subprime borrowers default loans
    RT America
    Published on Feb 13, 2019

    A record 7 million Americans have stopped making car loan payments. Rick Sanchez reports on this supreme example of the continuing plight of American working people, who have by and large been left behind by Wall Street’s recovery from the brutal 2007-2008 financial crisis. Economists warn that the next recession to impact the US may be even more disastrous. What happens to these people if the next one hits? Economist and co-founder of Democracy at Work Prof. Richard Wolff joins Rick Sanchez to weigh in. He discusses the “very, very painful” circumstances of those facing unemployment, dwindling savings, and a deteriorating quality of life for American workers.

    1. The numbers of delinquent auto payers is probably accurate, but RT is a Russian propaganda outlet. They will take any data point that reflects poorly on western democracy and push a narrative.

      1. ‘Voice of America (VOA) is a U.S. government-funded international multimedia agency which serves as the United States federal government’s official institution for non-military, external broadcasting. It is the largest U.S. international broadcaster. VOA produces digital, TV, and radio content in more than 40 languages which it distributes to affiliate stations around the globe. It is primarily viewed by foreign audiences, so VOA programming has an influence on public opinion abroad regarding the United States and its leaders.’

        https://en.wikipedia.org/wiki/Voice_of_America

        1. Yes, we have our own propaganda. I haven’t watched anything by VOA, so I can’t opine on the degree to which they skew pro-US. But I am willing to bet that they are not equivalent in their biases. The freedom of the press is a lot more alive and well in some countries than others.

  12. This attitude is why teachers and parents have a moral imperative to teach children to weigh the evidence provided rather than judging the source. The statement above is based 100% on personal bias rather than experience and investigation.

  13. I have watched RT stuff plenty and it’s pretty clear they have an angle. People should judge the evidence, but they should also know the source to because conflicts of interests and hidden agendas are very real. It should be abundantly clear that Russia was trying to sow discord among democracy by supporting both pro-DJT (e.g. “lock her up”) troll movements and anti-DJT (e.g. “not my president” marches). The point was to sow discord and create disenfranchisement with democracy.

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