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Prices Have Softened Across The Board As Sales Slackened

A report from the Bay Area News Group in California. “Home sales flagged 14.3 percent Santa Clara County and 11.8 percent in San Mateo County. Median sale prices fell by 11.1 percent to $1.2 million in Santa Clara County and 2.4 percent to $1.5 million in San Mateo County from the previous March. The median sale price for an existing homes in the nine-county region was $860,000 in March, down from $865,000 the year before and from a peak of $935,000 in May, according to CoreLogic.”

“Prices fell in 1.1 percent to $603,000 in Contra Costa County, and dropped 6.3 percent to $1.2 million in Marin County. Overall transactions dropped 14.2 percent. Home sales flagged 14.3 percent Santa Clara County and 11.8 percent in San Mateo County.”

The San Francisco Chronicle. “The price on a vast expanse of bucolic California coastline, only 40 miles south of San Francisco, has been cut by $6 million. The 414-acre Bolsa Point Ranch was originally listed for $25 million in August 2018; the new price is $19 million. The property was originally listed for $35 million in 2017 by Sotheby’s and never sold.”

“‘The property sits in a rare location and is very special,’ says realtor John Ward of California Outdoor Properties, who is co-listing the property with Cornerstore Realty. ‘That given, we believe the original listing price was still a bit high, as this could potentially be a second home for someone, so we think the asking price needs to be under $20 million.'”

The Orange County Register. “The main reason for last month’s price dip was fewer sales at the high end of the market, skewing the statistics downward, CoreLogic reported. For example, high-cost Orange County and pricier new homes both made up a smaller proportion of total sales.”

“‘It’s a mix issue — that’s all it is,’ said Christopher Thornberg, founding partner of Beacon Economics. ‘The stock market’s back. Interest rates are down. The economy’s still growing … prices always fall in the face of severe economic circumstances. Right now we don’t have that.'”

“Home prices have softened across the board as sales slackened. As a result, more home sellers are cutting their prices. Zillow reported that 15.5% of listings in Los Angeles and Orange counties had price cuts last month, vs. 11.6% in March 2018. In the Inland Empire, 15.9% of sellers reduced asking prices last month, compared with 13.6% a year earlier.”

“‘Populations in L.A. and Orange counties have just stopped growing. Essentially all the growth is in the Inland Empire,’ added Richard Green, director of USC’s Lusk Center for Real Estate, citing 2018 U.S. Census data released recently. ‘I’m not surprised the overall median dropped. The center of gravity is moving east … because homes are so much cheaper than on the Pacific Ocean.'”

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  1. “‘It’s a mix issue — that’s all it is,’ said Christopher Thornberg, founding partner of Beacon Economics. ‘The stock market’s back. Interest rates are down. The economy’s still growing … prices always fall in the face of severe economic circumstances. Right now we don’t have that.’”

    What kind of sauce would you like with that crow, Chris?

      1. This goes back to what I’ve described as a lack of curiosity on the media’s part. Sure UHS will twist and turn to spin a worsening situation (cough, Bay Area Newsgroup). But this is the media. Given all that’s happened, are they not willing to at least consider that something big is happening, right now? Santa Clara is supposedly pretty desirable, right? Why is it falling first and fastest among the bay aryans? And why has the exact same thing happened all round the worlds, including the US? Even down to the most expensive neighborhoods doing this same pattern within the most expensive cities, like Sydney, London and Manhattan. There’s no clearer sign this is a bubble not a correction, because it’s a sign of speculation.

        Just how many economists that the MSM turns to, again and again, is saying this is a bubble? Sure Shiller will stick his head up once in a blue moon and say, “I don’t know…” Are there no economists who see any problem with the sudden reversal of these “high flying cities”, cuz that’s a classic bubble sign. No plateau. Right off a multi-year frenzy face down in the mud. And who can deny that foreclosures will follow with so little skin in the game?

        Remember the Palo Alto UHS who told us months ago of shacks getting whacked a million bucks and still not getting an offer? I check Palo Alto online a couple of times a week: she’s gone. So I ask the media, what if it is a bubble? Surely that’s newsworthy, after month and months of crater, REIC exclamations that “it’s picking up”, only to crater even more. Look at the Denver article today: compare the rosy headline with the dive most of the city is taking.

        1. This house is headed for foreclosure sale in a month:

          https://www.zillow.com/homedetails/1594-Main-St-Santa-Clara-CA-95050/19556862_zpid/

          Off Market
          Zestimate®: $1,026,277

          Date Event Price $/sqft Source
          3/30/2005 Sold $620,000 +53.1% $556 Public Record
          5/12/2000 Sold $405,000 — $363 Public Record

          Cash out refi anyone?

          https://www.zillow.com/homedetails/1560-Bird-Ave-San-Jose-CA-95125/19684421_zpid/

          $1,733,9184 bd3 ba3,070 sqft
          1560 Bird Ave, San Jose, CA 95125
          Pre-foreclosure / auctionForeclosure

          3/27/2019 Foreclosure auction $1,644,732 unpaid balance

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

          Public records indicate the owner of this property is in pre-foreclosure.
          10/1/2006 Loan issued $1,062,500

          From 1M to 1.6M? Cash out refi anyone?

          3. 4/4/2019 Foreclosure auction $880,960 unpaid balance
            12/31/2018 Home in default $22,368 past due
            7/24/2018 Loan issued $848,000

            Wow just wow. So they got a loan for 848k purchased for 999,888 and within 5 months defaulted. That 150k they put down gone. Definitely NOT cheaper than renting ( oh but those 8s in the purchase price are lucky remember!).

            4/17/2019 Foreclosure auction $723,220 unpaid balance
            1/15/2019 Home in default $225,129 past due
            7/2/2007 Loan issued $532,000
            10/5/2000 Loan issued $532,000

            I’m not getting the two loans from 2000 and 2007 for 532k. $225k past due. That’s at least a few years of free rent right! This one was cheaper than renting

        2. The narrative will endure until it’s no longer possible to do so.

          “Always when markets are in trouble, the phrases are the same: ‘The economic situation is fundamentally sound’ or simply ‘The fundamentals are good.’ All who hear these words should know that something is wrong.” -John Kenneth Galbraith

          “Money, again, has often been a cause of the delusion of the multitudes. Sober nations have all at once become desperate gamblers, and risked almost their existence upon the turn of a piece of paper.” – Charles Mackay

          “The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers’ stone to make it last.” — Ludwig von Mises (1940)

        3. “The conventional view serves to protect us from the painful job of thinking.” – John Kenneth Galbraith

        4. “And why has the exact same thing happened all round the worlds, including the US?”

          This is where the lack of journalistic curiosity becomes a real embarrassment. In a nutshell, investigative journalism as we used to know it is dead.

        5. https://www.theinstitutionalriskanalyst.com/single-post/2019/04/29/Falling-Real-Estate-Prices-the-Return-of-Risk
          Risk On: Falling Real Estate Prices
          April 29, 2019
          By: R. Christopher Whalen

          “Stock prices have reached what looks like a permanently high plateau.” – Irving Fisher, Autumn 1929

          “The chart below is from Weiss Analytics (Note: Whalen Global Advisors LLC is a shareholder in WA) shows the percentage of houses falling in value in various markets around the US. Suffice to say that high end home prices are decelerating in some of the most desirable areas. The WA home price index includes more than 80 million residential homes.”

          “As we’ve noted before, low interest rates and tight spreads have the benefit of concealing credit risk for a time, but eventually the proverbial trend line reverts to the mean.”

    2. Evidently home prices can even fall in the face of benign economic conditions, if they previously were artificially propped up to above fundamental value by government (i.e. the Fed) financial engineering measures.

      This is not to suggest that they won’t eventually fall much harder in the face of severe economic circumstances.

      1. The conditions in CA are not benign. The Trump tax law has whacked a lot of folks with the loss of SALT state and local tax exemptions.

        The economy in general is doing fine but the economics of buying a house have shifted.

        On top of that, overseas demand is way down on top of that and most important the psychology has shifted. With prices flat the urgency is gone. Per Zillow I am down 10% from the peak I think that is reasonably accurate. Don’t worry I am fine but the folks that bought last year…

        1. The next domino will be the demographic shift in the next 10-15 years with boomers aging out of their homes.

          2. The next domino will be the demographic shift in the next 10-15 years with boomers aging out of their homes.

            I predict the return of “haunted” abandoned houses. Too many of those boomer houses are in locations and conditions that will make them worthless.

          4. 4/16/2019 Sold $1,200,000 -39.4% $200
            :
            12/31/1996 Sold $1,000,000 — $167

            If everything would go back to 1996 + 20% I would no longer consider it a bubble. That’s where we ought to be. Nice to see at least one example of it going there.

  2. ‘It’s a mix issue — that’s all it is’

    What about the price reductions?

    ‘15.5% of listings in Los Angeles and Orange counties had price cuts last month, vs. 11.6% in March 2018. In the Inland Empire, 15.9% of sellers reduced asking prices last month, compared with 13.6% a year earlier’

    ‘prices always fall in the face of severe economic circumstances’

    Are there severe economic circumstances in, say Santa Clara?

    ‘Median sale prices fell by 11.1 percent to $1.2 million in Santa Clara County’

    Or the area?

    ‘The median sale price for an existing homes in the nine-county region was $860,000 in March, down from $865,000 the year before and from a peak of $935,000 in May’

    Contra Costa? Marin?

    ‘Prices fell in 1.1 percent to $603,000 in Contra Costa County, and dropped 6.3 percent to $1.2 million in Marin County’

    These last two are just the YOY horse-hockey. It’s sinking like a crow’s turd in a well.

    1. These shills love to cheer up the MASSIVE 5% or more gains but we hear it dips 11% and they whimper out “Bay Area dipped ever-so-slightly in March“.

      Glad we got that out of the way, time for them to dip, no crater April onward. I think as this cratering plays out we will hear less and less from the current REIC sponsored authors (mainly realtors) and more from the actual journalists and headlines will be more transparent without all this damn fluff.

    2. ‘prices always fall in the face of severe economic circumstances’

      Thornberg seems to believe this statement implies that prices cannot fall in the absence of severe economic circumstances. Perhaps he is in denial about current news stories documenting that falling prices in many U.S. cities, not to mention in Australia, Canada, England, and other once-bubbly markets. These locations are just the tip of the iceberg of developed world housing markets where purchase prices became unmoored from fundamentals, thanks to a flood of central bank fueled speculative purchases.

  4. “‘It’s a mix issue — that’s all it is,’ said Christopher Thornberg, founding partner of Beacon Economics. ‘The stock market’s back. Interest rates are down. The economy’s still growing … prices always fall in the face of severe economic circumstances. Right now we don’t have that.’”

    LOL HAHAHAHAHAHA (EVIL LAUGHTER) HAHAHAHA

    1. See Australia. No recession. Still Ultra low interest rate. Cratering even more than here. Also see Canada. They are two years ahead of us. That’s what coming to YALL!

      1. London, New York City, Miami Beach. These cities have had RE in the crapper for as much as 3,4, 5 years.

        1. Oh the Horror! They are just selling more low priced units. This mean the market has SHIFT and moving toward Normalcy balanced market. These were in shortage until now. The low end meets the high ends and everything is great! If you calculate the price per sqft, it is still increasing. No Bubble here. Stop looking for Bubble. If you look for Bubble you can find it. I bet the Golden State will win the NBA finals again. I bet housing will the Golden state will go to the moon if they do!!! Buy now or be priced out!

  5. “For example, high-cost Orange County and pricier new homes both made up a smaller proportion of total sales.”

    It appears the market value of high cost and pricier new homes in OC have fallen. Sellers are going to need to lower their list prices to move them.

    1. “Sellers are going to need to lower their list prices to move them.”

      Well Prof, every time the Bear growl$, they find $till more tranquilizer dart$!

      FEDERAL RE$ERVE
      The Fed is looking at a new program that could be another ver$ion of ‘quantitative ea$ing’

      Jeff Cox | CNBC | 4/29/2019

      Federal Reserve economists have floated the idea of a “standing repo facility” which would allow bank$ to exchange Treasurys$ for reserve$.

      The idea would be to get banks to hold fewer reserves, and thus would help the Fed in its quest to $hrink its balance $heet.

      “This is a bad idea for the market$. We need to know if the markets can function on their own,” said Christopher Whalen, head of Whalen Global Advisors and publisher of the Institutional Risk Analyst blog. “Every time they try to fine-tune this thing they get it wrong.”

      Whalen said the Fed now faces an inten$ifying danger of being a perpetual liquidity provider, rather than just the lender of last re$ort that had traditionally been its function before the cri$i$.

      “The Fed has to rethink their approach to short-term markets,” he said. “They just decided on their own without consulting Congress that they can do this. They’re way out over their skis.I

      ” Future chairmen are going to be held to account for these extraordinary policy moves.”

      What the Fed Head$ gonna bee called to the wood $hed fer a $panking?

      Indemnified, … NO penaltie$ … By De$ign

      1. “Every time they try to fine-tune this thing they get it wrong.”

        Almost like…they shouldn’t be doing it.

      2. Hair-of-the-dog hangover cures work great up until the onset of cirrhosis of the liver.

      3. The U.S. is hardly the only developed world market where traders are 100% dependent on stimulus for clues on when and what to buy.

        China Triple Whammy Sees Stocks, Bonds, Yuan All Sink in April
        Bloomberg | Apr 30, 2019 04:21AM ET

        (Bloomberg) — A huge tumble in government bonds, the worst rout in months for stocks and a weakening yuan — April was a month of selling in China’s markets.

        There was no place to hide as the risk-on rally that had added some $2.5 trillion to the world’s top-performing equities started to lose steam. The Shanghai Composite Index is down for the month amid record foreign selling and small caps just entered a correction. China’s sovereign debt is heading for its worst monthly drop in more than eight years, while the yuan slid the most since October.

        With mainland trading shut from Wednesday for three days, investors will be looking for fresh catalysts next week. They’re facing a growing pile of headwinds, the latest being a rallying greenback that often hurts stocks as well as the yuan. A slew of economic reports could bring more volatility to bonds, as traders consider whether good news — an improving economy — is bad news for stimulus.
        …

  6. “Inland Empire broker Nazar Kalayji noted sales in his region are stronger than in coastal counties because homes there are more affordable. He closed on the sale of an Ontario house, for example, that went into escrow in three weeks and ended up closing at the asking price of $550,000. The average time to sell a home has been closer to two months, he said.”

    This will end well lol

  8. “People are putting more on their credit cards now as they feel good about the future and being able to pay it off”

    Spin

    1. MSM yellow journalism: “Households are repairing their balance sheets.”

      Reality: “Shameless consumers are filing bankruptcy in droves.”

  11. As this leather-faced hag not only blathers on about “low inflation” but has the audacity to say “everybody would like it to be higher,” my groceries have really been jumping in price. My cheese is now 7 ounces instead of 8. My oatmeal, something so “cheap” you’d think they could at least forego skimping there, continues to shrink in size. My beans are going up, and all my fruits and vegetables, too. Curiously, the prices aren’t going down.

    https://www.zerohedge.com/news/2019-04-29/imfs-lagarde-laments-highly-mysterious-low-inflation-says-everybody-would-it-be

    1. My gas went from under $3 a gallon during the stock market’s December 2018 swoon to over $4 a gallon after the Fed loosened up its punchbowl removal process. Got consumer price volatility?

      1. What’s Behind The Gasoline Price Spike?
        By Robert Rapier – Apr 27, 2019, 2:00 PM CDT

        According to data from the Energy Information Administration, during the first week of January this year the average retail price of gasoline was $2.24/gal. By mid-April, the price had risen to $2.83/gal — an increase of 26%.

        Although gasoline prices usually rise between January and April — for reasons I explain below — this year’s rise has been particularly steep. There are three primary factors behind this.
        . ..

        1. I paid roughly $4.20/gal for premium around San Jose the past few weeks. One small town near the coast was $4.70/gal. Driving a recent used car purchase back north the price dropped nearly a dollar when I crossed into Oregon near Klamath Falls.

        1. I noticed that Walmart has a EV charging station in the parking lot of their San Jose store on Almaden near Blossom Hill.

          1. Lowe’s gives special front row parking for veterans. Some grocery stores give special parking for pregnant mothers. Ikea gives priority parking for low emission vehicles. Just a weird proliferation of the narrowness we are dividing ourselves into.

        2. My electricity for my EV didn’t budge

          The price of the coal you’re burning has been falling Pennywise.

          1. Coal is going the way of the dinosaurs:

            Utah’s energy profile from EIA:

            “In 2017, 70% of Utah’s net electricity generation came from coal, down from 78% five years earlier and 82% in 2007. Natural gas accounted for 16% of the state’s net generation. Almost all of the rest of Utah’s in-state electricity generation came from solar, hydropower, wind, geothermal, and biomass energy. Most of Utah’s recently added electricity generating capacity is powered by solar energy.”

          2. recently added electricity…solar

            Actually, that financial boondoggle died in Utah over two years ago.

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