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Sales Took A Hit Because People Can’t Afford Them Anymore

A report from the Reno Gazette Journal in Nevada. “The last time Reno-Sparks saw a year-over-year dip in median house price, Benedict XVI was still pope and Apple was the most valuable company in the world. This makes the beginning of 2019 notable as the greater Reno-Sparks area saw its first year-over-year decrease in median home price in nearly six years, a Reno Gazette Journal analysis found.”

“The median house price in Reno-Sparks during March was $369,000 — down from $375,000 during the same month last year, according to the Reno/Sparks Association of Realtors. It is the first annual drop in median home price reported by the RSAR since early 2012. Last year the area broke the median price record several times, culminating in a new record of $404,500 for Reno, $364,500 for Sparks and $389,000 for Reno-Sparks.”

“Even as the pace for median price increases have slowed, Brian Bonnenfant, Center for Regional Studies project manager, does not expect a repeat of the housing bubble collapse from a decade ago. ‘With those job numbers and those wages, this housing correction is not going to turn into a bust,’ Bonnenfant said. ‘It’s not going to be like 2007.'”

“Bonnenfant says that there are ‘lots of moving parts’ contributing to the annual decrease in median home price in Reno-Sparks. The main culprit, however, ties to area incomes. ‘Once we finally passed that median price of $360,000 to $365,000, that’s pretty much what our median wage can afford in the area,’ Bonnenfant said. ‘Sales took a hit because people can’t afford them anymore.'”

The Press Herald in Maine. “March home sale figures provide the strongest evidence yet that the current real estate cycle in Maine may have reached its peak. After leveling off in January and February, the value of Maine homes began to decline slightly in March compared with a year earlier, reversing an upward trend that had lasted about three years. The number of home sale transactions in Maine also fell compared with a year earlier, continuing a downward trend over the past few months.”

“Maine is coming off a record year for home prices in 2018, and this year is expected to remain nearly as good for sellers. However, the buying frenzy of 2018’s spring and summer seasons has been slowly winding down as more potential buyers choose to take a wait-and-see approach. Many have become frustrated after losing out on multiple offers or failing to find a desirable property in their price range.”

“Even Cumberland County, the hottest housing market in the state, has experienced a decline over the past few months with both sales volume and median price dipping slightly from the same period a year earlier.”

“‘I think the best way to look at it is that it’s been softening from a pricing point of view for the last four to six months,’ said Michael Sosnowski, broker/owner of Maine Home Connection in Portland. ‘We’ve seen some appreciation over those months, but the rate of growth has definitely slowed down. Also, sales have been slow for the first quarter, but I don’t think that’s any reason to get alarmed yet.'”

“‘Nationwide, applications for mortgages are up, so I think what you’re seeing is a bit of pent-up demand,’ he said. ‘It’s not going to be crazy like it was, you know, two years ago, but I think we’ll see some steady sales through the second quarter. Higher-priced homes definitely have more competition, and they’ve got to find a way to be outstanding from the rest to sell really quick.'”

“Association President Peter Harrington said it’s too early to tell whether March’s home sales figures represent the beginning of a downward trend or just a momentary pause. Still, he said buyer frustration and other factors have clearly caused the state’s housing market to reach a plateau.”

“‘A little slowing of the market, a little moderating of price could be good for some of the buyers that have been on the sidelines a little bit and been priced out of the market and competed out of the market,’ he said. ‘It’s got to be frustrating for a buyer when they go put an offer on a house and there’s five other offers.'”

From Go Local Prov in Rhode Island. “Rhode Island’s cooling housing market has 10% more single-family homes were available for sale in March of 2019 than a year earlier, according to the Rhode Island Association of Realtors.”

“‘Last year, home ownership was out of reach for many home buyers as the inventory shortage, rising home prices and increasing mortgage rates created significant barriers. As supply increases and rates stabilize, we are starting to see tempered price appreciation. However, we don’t anticipate a significant drop in prices like those seen a decade ago, as we don’t have the questionable lending practices that we had at that time,’ said Dean deTonnancourt, President of the Rhode Island Association of Realtors.”

This Post Has 39 Comments
  1. ‘Maine is coming off a record year for home prices in 2018, and this year is expected to remain nearly as good for sellers. However, the buying frenzy of 2018’s spring and summer seasons has been slowly winding down…Many have become frustrated after losing out on multiple offers’

    ‘Even Cumberland County, the hottest housing market in the state, has experienced a decline over the past few months with both sales volume and median price dipping’

    ‘It’s not going to be crazy like it was, you know, two years ago’

    A blow-out peak followed by a sharp drop. Good thing everybody was putting 20% down.

    ‘we don’t anticipate a significant drop in prices like those seen a decade ago, as we don’t have the questionable lending practices that we had at that time’

    1. ‘Ohio home sales plummeted last month, down nearly 7% compared to a year ago. The data from the Ohio Association of Realtors shows that although sales went down, the average sale price has climbed to $177,000. Out of all 18 housing markets across the state, only five showed increased sales but 12 of them had an increase in average sale price. It’s similar to what’s happening on a national level, with average sale prices increasing to more than $250,000. The Midwest overall experienced the biggest slump in the country since the beginning of this year.’

      https://www.wksu.org/post/morning-headlines-ohio-home-sales-plummet-akron-continue-great-streets-initiative#stream/0

      1. I guess the low interest rate didn’t help as some troll said it would. With regard to the East Coast, as I stated in the past, is behind the West. Sales collapse is accelerating while price gains slow down. Eventually will be none then go negative. I don’t expect to see that on the West until end of year or early 2020.

        1. Doomed and johndave both verified that low rates will revive this “pause”. The reason that hasn’t worked yet is because Easter and the 4-6 months behind and in front of it is also a vacation time so be patient. If you keep talking about RE dropping it will make it happen which will make Yun very angry. From now on please post references to the credible MSM outlets such as: realtor.com news.com tollbrothers.com NAR website is also ok long as it’s upbeat news, the other news is fake news

      2. First it was the rhetoric that prices may level off but not retreat. Just like I heard around 06 to 07. Now the rhetoric line is that we won’t see another 07 type bubble drop. Additional rhetoric includes how the positive is the balance that is occurring and it’s good news for buyers and there is greater selection available for buyers etc. No one just saying In plain terms what is happening.

        Wish the subscribers here could see what i am seeing in new home developments. I see every day because i provide services in these places. It is truly unlike anything i have seen over past 5 years. I am seeing developments with 200 or 300 vacant lots where maybe a small handful of active construction sites are evident, mostly in late phases of completion and very few new ground breaks or permit boxes. Furthermore, when i look at MLS, i see that a high proportion of these under construction are active listings and not under contract.

        Yet, I still see CNBC reporting glowing new home sales figures. Specialized market here? I dont think so. High growth area of SW Florida has not traditionally been an isolated or specialized market. Gibberish reporting of “seasonally adjusted annualized sales” as seen on MSM sources is prevalent. Our peak activity was last summer which is our “out of season” period. The current dramatic slowing is occurring “in season”. Please adjust for that. Wish I could post photos here to show you what I am seeing. It is visually obvious.

        When the truth gets out, this sucker is going down. Gone, are the traffic jams of construction related trucks, scores of construction workers everywhere you look up and down streets in these developments, taco trucks patrolling through the roads, large land tracts being cleared etc. You just dont see this now with possible exception of a few apartments projects. Things have definitely changed.

        A few observations for what worth.

        Regards

        1. A few observations

          The US Census is observing the same thing nationwide. They are also seeing the size of new houses decline.

          1. Blue think of how much less space you need to live in today… with everything digital and wireless big screen tv on the wall, how many people still have multiple bookcases full of records cds vhs books? When we were cat sitting lots of people bought captain beds with a lot of drawers underneath so 1 or 2 less dressers and more space . so I wonder who is going to buy all those 2500+ sq Mcmansions in the future?

          2. all those 2500+ sq Mcmansions

            I grew up in a 1,000 ft2 house. My mother grew up in an 800 ft2 house. My 4 kids grew up mostly in a 1,200 ft2 house (but I had an outbuilding for my workshop). I did own a 4,000 ft2 Victorian for a while but that stoopid didn’t last long. Couldn’t even find all my teenagers sometimes. Then when they all left the nest I lived on a 12×32 ft boat. Plenty of room! No TV on the wall.

            The main reason people have been buying bigger and bigger houses was to gear up their magical wealth creation machine. The dream appears to be melting, along with that useless extra 1,500 ft2.

          3. Hey Blue, thought you might find this guy’s story a bit intriguing:

            The Affluent Homeless: A Sleeping Pod, A Hired Desk And A Handful Of Clothes
            NPR
            23 April 2019

            “More young people are leaning into the rental or sharing economy — owning less of everything and renting and sharing a whole lot more. Housing, cars, music, workspaces. In some places, such as Los Angeles, this rental life has gone to an extreme.”

            “Steven T. Johnson, 27, works in social media advertising and lives in Hollywood. He spends most of his days using things he does not own.”

            “He takes a ride-share service to get to the gym; he does not own a car. At the gym, he rents a locker. He uses the gym’s laundry service because he does not own a washing machine.”

            “Johnson doesn’t even have an apartment, actually. He rents a bed in a large room with other people who rent beds, for nights, weeks or months at a time, through a service called PodShare. All the residents share a kitchen and bathrooms. Johnson also rents a desk at WeWork, a coworking space.”

            “And he says the only clothes he owns are two versions of the same outfit.”

          4. A Sleeping Pod, A Hired Desk And A Handful Of Clothes

            I lived that way for a couple of years during/after my divorce. Nice way to decompress from being married to a packrat. I kind of liked it. Every day at a hotel anywhere in the world on the company dime was money saved. But I was able to leave stuff like music equipment at my parent’s house so it wasn’t like I truly owned nothing. And I did use a whole suitcase worth of clothes.

  2. This makes the beginning of 2019 notable as the greater Reno-Sparks area saw its first year-over-year decrease in median home price in nearly six years, a Reno Gazette Journal analysis found.”

    Didn’t someone post about a month ago that the Reno market was bustling and houses were selling in less than 24 hours?

    Nationwide, applications for mortgages are up, so I think what you’re seeing is a bit of pent-up demand,’ he said.

    Let’s have a look at all that pent up demand.

    “Mortgage applications in the United States fell 3.5 percent in the week ended April 12th 2019, following a 5.6 percent decline in the previous week, data from the Mortgage Bankers Association showed. Refinance application decreased 8.2 percent while applications to purchase a home rose 0.9 percent”
    https://tradingeconomics.com/united-states/mortgage-applications

    1. its first year-over-year decrease in median home price in nearly six years…Even as the pace for median price increases have slowed, Brian Bonnenfant,

      Nice job tying up the loose ends Brian.

  3. ‘With those job numbers and those wages, this housing correction is not going to turn into a bust,’ Bonnenfant said. ‘It’s not going to be like 2007.’”
    —————–
    It’s going to much worse than 2007, Brian. People are broke, personal debts have skyrocketed, Fed still has very low rates, tax laws revised against loan ownership…….I mean where is the good news in all of this?

    1. “Bonnenfant says that there are ‘lots of moving parts’ contributing to the annual decrease in median home price in Reno-Sparks. The main culprit, however, ties to area incomes. ‘Once we finally passed that median price of $360,000 to $365,000, that’s pretty much what our median wage can afford in the area,’ Bonnenfant said. ‘Sales took a hit because people can’t afford them anymore.’”

      Oh the Horror! Everyone in Reno makes $120,000 Sean. If you don’t make that much, that be a jealous loser. Listen to Cramer and use the power of compound magic. Also BUY NOW! The more you buy the more magic you will have.

      https://www.cnbc.com/2017/09/22/cramer-how-compounding-can-help-you-double-your-money-in-7-years.html

  4. ‘Japanese billionaire Masayoshi Son, the founder of conglomerate SoftBank, personally lost over $130 million when he sold his position in bitcoin, the Wall Street Journal reported on Tuesday.’

    ‘Son made the investment in late 2017 the report said, near the digital currency’s record high near $20,000 in December of that year. Bitcoin has traded around $5,000 in recent weeks. While it is unknown exactly how much bitcoin Son bought, he sold early last year after the speculative digital currency’s value collapsed.’

    ‘He is known widely as someone who will make multi-million dollar investments in companies after only spending a short time with founders and CEOs.’

    ‘SoftBank is the largest venture capital firm in the world, with a total net asset value estimated as high as $190 billion. Son’s focus on long-term investments in tech companies helped him lead the $100 billion SoftBank Vision Fund, with stakes in Uber, Nvidia, Flipkart, WeWork, OneWeb and more.’

    https://www.cnbc.com/2019/04/23/masayoshi-son-invested-in-bitcoin-and-reportedly-lost-130-million.html

    Have you noticed that the only thing about these fake coins in the news is when they are up or down? Never about what they are actually for. Might as well be pet rocks.

    1. That’s the question I ask every crypto shill. What IS Bitcoin, and what’s it good for aside from speculating and money laundering? It’s not a currency – it’s not stable enough or widely accepted for that. It’s not a store of value. The answer is that it is nothing more than a speculative tool that people are hoping to buy then sell to the next person for more.

      If you don’t believe that, just look at Litecoin, Ethereum, etc. They are ALL trading in lockstep with Bitcoin. Where’s the distinction? If they are all their own separate entities with differentiating utilitarian usage, why are they all trading exactly the same? It’s because it’s all one “big, fat, ugly bubble.”

      1. They make a big deal out of the limited number of bitcoins that can be mined. But aren’t these things infinitely divisible? Even if there were just one coin, what difference would it make if you can slice it up infinitely?

        How divisible are bitcoins? A bitcoin can be divided down to 8 decimal places. Therefore, 0.00000001 BTC is the smallest amount that can be handled in a transaction. If necessary, the protocol and related software can be modified to handle even smaller amounts.—-bitcoin wiki

          1. “A single Ethereum account seems to have siphoned off a fortune of 45,000 ether—worth at one point more than $50 million—using those same key-guessing tricks.”

            And yet the world’s governments won’t shut this shit down, because Wall St. has their meat hooks in it.

    2. Never about what they are actually for

      Aren’t they for getting money out of China and into US real estate?

  5. Listened to this week and loved how Hogan Gidley laid this out in a no-nonsense way:

    “GIDLEY: So we looked at it and said, where are the logical places to spread the wealth, if you will? And places like San Francisco, for example, or a sanctuary city – they are designed and set up specifically to have people there who aren’t here legally. That’s what their stated goal is. So there’s no reason we shouldn’t be looking at a way to give them exactly what they want.”

    https://www.npr.org/2019/04/14/713304646/trump-administration-considers-transferring-immigrants-to-sanctuary-cities?preview=

  6. “Bonnenfant says that there are ‘lots of moving parts’ contributing to the annual decrease in median home price in Reno-Sparks. The main culprit, however, ties to area incomes. ‘Once we finally passed that median price of $360,000 to $365,000, that’s pretty much what our median wage can afford in the area,’ Bonnenfant said. ‘Sales took a hit because people can’t afford them anymore.’”

    This asshat never paid attention in math class. Reno has a median household income of $52,106. That puts the current median house price at a whopping 7.08x median income. That’s “affordable?” GTFO, Bonnenfant, you’re a clown.

      1. Alot of these real estate “experts” say no bubble because loan criteria is tighter! No subprime lending! I don’t think so but lets assume bad loans is a small percentage of the total.

        https://www.forbes.com/sites/johnwake/2019/03/30/new-study-of-old-real-estate-bubbles-1582-1810-finds-two-surprising-similarities-with-modern-booms/#2a7577806969

        It doesn’t matter.

        “Changes in the amount of mortgage money chasing homes, however, was not one of the similarities because mortgages were uncommon in Amsterdam back then. Credit booms are not necessary for real estate booms but an increase in the amount of money chasing homes is.”

        “The Great Real Estate Bubble in the United States is often attributed to crazy mortgage lenders. The craziness was exemplified at the peak when some lenders fought to sell more “Liars Loans” to borrowers who didn’t even have to prove they had the income to pay back the loans.

        In Amsterdam in the 1600s and 1700s, mortgages were uncommon but Amsterdam saw three large real estate bubbles. How did house prices boom in pre-modern Amsterdam without having a crazy mortgage industry pumping out more and more money to chase homes?”

    1. San Luis obispo median income $60,534
      median home price – $740,600
      ___
      Boulder – Home $ $740,300, city has a median household income of just over $57,000

      __
      Santa Fe, $58,821, house = The median home value in Santa Fe is $397,400.

      1. Just did this for my neck of the woods:

        St. George, UT median household income: $48k
        St. George median home price: $310k

        income to home price ratio: 6.45

  7. The funny or not so funny thing is price has outpaced income for the last 7 years . 7 Years! It wasn’t an issue until sales are crating in 2018. However, the higher prices made up for the drop in sales in 2018. Fast forward 2019, as sales and prices are cratering now, it now becomes an issue…for realtors.

    BTW, I have successfully negotiated a discount for my rent in Milpitas, CA. With so many rental options now, I can easily find a cheaper place but with my wife 4 months prego and sick, I will just take a $100 /month increase and stay put. My RSU easily handles that.

    1. No greed here, please don’t mind the 516% price jump over the last 6 years. Many hours of Home Depot parking lot hired labor put into to this gem. The 8’s in the sellers dream price means it will be bring suitcases full of monies to the next FB I mean lucky buyer. Buy now or suffer the fate of other stubborn “side liners”.

      4/4/2019 Listed for sale $1,278,888(+516.3%)
      6/12/2013 Sold $207,500(-53.9%)

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