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In The Middle Of A Shift

A report from the Seattle Times in Washington. “The better news for homebuyers in King County keeps coming: Inventory is way up. Sales are way down. And prices have stopped skyrocketing. The slowdown in the market, now six months in the making, continued in September when the number of single-family homes on the market in King County jumped 68 percent from a year prior, the biggest increase on record dating back to 2000, according to new data. Only San Jose saw the number of homes for sale jump faster than Seattle among major U.S. metro areas last month.”

“Sales dropped 27 percent across King County, the biggest decline since 2010, when the market was still in freefall, according to the Northwest Multiple Listing Service’s monthly report, released Thursday.”

“‘We’re in the middle of a shift,’ said Andy McDonough, senior vice president for the home-loan division of HomeStreet Bank in Seattle. ‘A lot of buyers are playing a bit of the wait-and-see game.'”

“We’re now at the time of year where prices usually start to drop from their peaks in the spring and summer, but it’s happening on a larger scale this year. Prices countywide have fallen $58,000 from their spring peak; last year in that same time frame prices went down $8,000.”

“Looking closer, prices on the Eastside dipped to $890,000, down $87,000 from earlier this year. In Seattle, the median house cost $775,000, down $55,000 from the city’s peak. Prices are down more than $100,000 from their spring highs in Central Seattle, East Bellevue, Redmond-Carnation and Kirkland-Bridle Trails.”

“Looking year-over-year, prices have dropped more than 5 percent in Jovita/West Hill Auburn, Enumclaw and the Eastside area south of Interstate 90. Also seeing price drops were Southeast Seattle, Sodo/Beacon Hill, Lake Forest Park/Kenmore and Renton-Highlands/Kennydale.”

“The condo market has undergone an even bigger transformation: In the past year, inventory is up a mind-boggling 133 percent while sales plummeted 34 percent, countywide. Those condos that are selling are still commanding big bucks, however – prices increased 11.6 percent year-over-year, reaching a median of $425,000.”

“Snohomish County inventory surged 40 percent while sales dropped 21 percent. The median price of $485,000 was up 7.8 percent from a year ago, but down $26,000 from the high reached in the spring. Pierce and Kitsap counties saw only a small inventory bump but also had a significant drop in sales.”

The Spokesman-Review. “Spokane County home prices continued to level off in September after posting sharp gains earlier in the year. The average sales price was $259,472 last month, down from $260,812 in August, according to figures from the Spokane Association of Realtors. The median sales price was $235,000 last month, down from $247,500 in August.”

This Post Has 47 Comments
  1. ‘Prices are down more than $100,000 from their spring highs in Central Seattle, East Bellevue, Redmond-Carnation and Kirkland-Bridle Trails…Looking year-over-year, prices have dropped more than 5 percent in Jovita/West Hill Auburn, Enumclaw and the Eastside area south of Interstate 90. Also seeing price drops were Southeast Seattle, Sodo/Beacon Hill, Lake Forest Park/Kenmore and Renton-Highlands/Kennydale’

    Holy cow, Eeee-bola!!

    1. Those poor bashtards that won in the frenzy last spring are fooked. Good thing they all put 20% down…

      ‘We’re in the middle of a shift’

      More likely it’s just the beginning Andy, with a whole shift-load ahead.

    2. “Only San Jose saw the number of homes for sale jump faster than Seattle among major U.S. metro areas last month.”

      Nothing but speculators feeding off of the high-tech employment in both areas, I hope they get stuck in the proverbial exit turnstile and lose their financial shirts.

      1. Six months ago, if you had said these two markets would be where they are today, no one would have believed you.

        1. Ben,

          I think it may have been about six months that I met a couple from Seattle. This was right after I had visited Seattle for a short period. While I was there (in Seattle), EVERYONE was talking about the slow-down in real estate. I came back here and met this couple, and told them what I had heard, and they did not believe me.

    3. ‘down more than $100,000 from their spring highs in…Redmond’

      Where’s that Redmond poster? “Prices will never fall here!”

      DONG!

      1. Him and a bunch of other lying or delusional debt donkey boosters. Where is SC “If you can make the payment go for it” Dave?

      2. Is there enough crow meat available to feed all the real estate shills who will be dining on baked crow this Thanksgiving?

  2. “The better news for homebuyers in King County…”

    Oh, now you on the side of buyers, eh? GTFOH.

    1. Bond yields rise to 7-year high. Time to worry?

      Not for me, but thanks for asking.

      “Fed chair Jerome Powell said at a speech Wednesday that rates are a “long way from neutral,” In other words, one more rate hike is likely this year and several more could be coming in 2019…Bond king Jeff Gundlach, CEO of investment firm Doubleline Capital, told CNN’s Julia Chatterley on the First Move show Thursday that even higher rates could be problematic because it could further slow down the housing market as mortgages rates climb.”

      Bring it. Go big or go home.

  3. Yes. I love it when they come out and say the real estate market is improving as evidenced by substantial increases in listings. I guess when they hit 20% depreciation they will say we have hit the pinnacle! Anything for a commission.

    A year from now we will be telling a different story with different words.

  4. Housing is a leading indicator for U.S. economy.

    https://www.cnbc.com/2018/10/04/a-red-flashing-light-in-housing-market-could-spill-over-into-economy.html
    Keris Lahiff
    18-10-04

    “ECRI’s U.S. leading home price index turned negative last April. The S&P Case-Shiller home price index is not yet negative but is decelerating.”

    “I wouldn’t say there’s a housing bust here now, but directionally we have a home price growth downturn,” Achuthan said. “For the overall economy, we have a yellow light. We think there’s a slowdown that’s happening here but on the housing and home price growth, absolutely it’s a red flashing light.”

    I really don’t understand economics, but when it’s explained at the kindergarten level, in terms of yellow and red (flashing) lights, I think I get it. Gee, it kinda sounds like Christmas, which is nice! Is that right? Christmas is coming to the housing market? Maybe I missed something, ’cause it sorta sounds more like the Grinch is coming instead if I read this right. My brain hurts.

    1. “Housing is a leading indicator for U.S. economy.”

      More like a bleeding indicator.

      When it rains, it pours. Florida now has red tide ring around the lower half of the state, from Pinellas south on the west coast and then curving up the east coast to the Melbourne area. Some of the beaches in Miami are closed. Saw some posts in the local forums a while back with people wondering if they could back out of their contracts. Everything seems to be happening all at once.

      It’s like I said in another post, as housing and finance start to slip, seemingly unrelated phenomena piggybacks. Environmental stuff, even medical. EEEEEEEEEE-bola!

        1. Hi, jeff! I haven’t been around in a while, hope all is going well with you and that you and the family are OK.

    2. Speaking of Christmas, this morning I stopped by my local Walmart Supercenter and they already have tons of Christmas stuff out on display. Desperation?

      1. Same here… the whole garden center area is full of Christmas junk. We’ve still got Halloween and Thanksgiving between now and then!

  5. “‘We’re in the middle of a shift,’ said Andy McDonough, senior vice president for the home-loan division of HomeStreet Bank in Seattle. ‘A lot of buyers are playing a bit of the wait-and-see game.’”

    No, Andy. We’re in the beginning of what will be an epic cratering. And the only buyers will be soon-to-be-impaled knife catchers, with the vast majority of would-be buyers waiting on the sidelines for the carnage to play out.

    Speculators and FBs are screwed, blued, and tattooed.

  6. Bond-market bloodbath likely to hit mortgage rates soon — another test for the housing market
    By Andrea Riquier
    Published: Oct 4, 2018 3:50 p.m. ET
    So far this year, the 30-year-fixed has averaged 4.47%, versus 3.99% in 2017

    What impact will rising rates have on neighborhoods like this suburban development in Texas?

    Rates for home loans moved sideways in the most recent week, but the burgeoning bond market sell-off will likely hit mortgages in the coming weeks, setting up another test for a strained housing market.

    The 30-year fixed-rate mortgage averaged 4.71% in the October 4 week, down one basis point from 4.72%, mortgage liquidity provider Freddie Mac said Thursday. That snapped a five-week stretch of gains for the benchmark product, which had recently hit its highest point since April, 2011.

    https://www.marketwatch.com/story/mortgage-rates-tick-down-ahead-of-bond-market-bloodbath-that-sent-yields-surging-2018-10-04

    1. ‘So far this year, the 30-year-fixed has averaged 4.47%, versus 3.99% in 2017’

      Trolls: “They’ll never let interest rates rise!”

  7. Red Tide not too bad now here in Sarasota, but spoke to someone here tonight that has a client with numerous resort/rental properties who claimed that in season bookings are down 90%. The Florida snowball.

  8. Did your bonds get schlonged?

    Next up: Higher mortgage rates / lower housing prices
    ——————————————–
    The Financial Times
    US Treasury bonds
    Why this week’s bond sell-off may be just a blip
    Technical factors have weighed on the fixed-income market and inflation is subdued
    © Bloomberg
    Robin Wigglesworth in New York and Kate Beioley in London yesterday

    Is this the end? The death of the bond bull market has been predicted more often than the demise of the imperial measurement system, but this is increasingly looking like an inflection year for the era-defining fixed income bull run that began in the early 1980s.

    The bond market has found itself under pressure for most of 2018, as stronger global economic growth has led many major central banks to start to cautiously tighten monetary policy for the first time since the financial crisis. Analysts have dubbed this new environment “quantitative tightening”.

    However, the quiet, low-intensity bond reversal of 2018 exited stealth mode this week. A batch of superlative data and bullish comments from officials of the US Federal Reserve has hammered home the strength of the US economy, triggering a ferocious Treasury market sell-off that reverberated through global markets.

    “The bond market is suffering from the boy who cried wolf,” said Chris Iggo, chief investment officer for fixed income at Axa Investment Managers. “The market was complacent about Treasuries and seems to have underestimated just how strong the economy is.”

    This has led to an unusually painful year for bond investors. The global fixed income universe — as measured by the $52tn Bloomberg Barclays Multiverse index — had lost 2.9 per cent this year, as of the end of Wednesday, with another fall on Thursday. That has lifted the average yield to a four-year high of 2.44 per cent, and put the benchmark on track for its worst annual performance since 2005.

    The rout was fanned by a series of comments and speeches by Fed officials that have all sounded an optimistic note on the economy. Jay Powell, chairman, was particularly effusive on Wednesday, saying he was “very happy” about the “remarkably positive”, “extraordinary” and “particularly bright” US economy, and saw little on the horizon to quell his optimism — reinforcing the case for more interest rate increases.

    “The fact that Powell has repeatedly been on the hawkish side means that people are now realising that he is serious about tightening monetary policy,” said Holly MacDonald, chief investment strategist at Bessemer Trust.

  9. Recalling how stock, bond, housing, and even cryptocurrency prices all bubbled up in lockstep in response to the Fed’s Quantitative Easing stimulus program, is it possible they will collectively crash in response to Quantitative Tightening? Or is it safe to assume that stocks are different, even after crypto has crashed, and cracks are plainly visible in bonds and housing?

    1. Beware when permabulls turn bearish.
      —————————————-
      Opinion: Get ready for an 8% to 13% stock market correction
      By Mark Hulbert
      Published: Oct 4, 2018 4:12 p.m. ET

      Rising large-cap stocks give ‘the illusion of market strength’
      Paramount/Courtest Everett Collection

      The U.S. stock market is headed for a decline in the range of 8% to 13%.

      https://www.marketwatch.com/story/get-ready-for-an-8-to-13-stock-market-correction-2018-10-04

      1. “Beware when permabulls turn bearish.”

        Actually, I would worry much more if the permabears were turning bullish.

    2. The following snippet is from one of Mauldin’s mailings titled: “The Trump Trade War Recession?”

      ” The Federal Reserve is raising rates while selling off $600 billion of Treasuries annually. The ECB and Bank of Japan are reducing their quantitative easing and the ECB may very well stop. God knows what’s happening in Italy. If the dollar doesn’t weaken significantly, emerging markets are in real trouble paying their debt. We are running massive deficits in the US and elsewhere in the developed world, and new technologies are putting old companies at risk.

      I can just keep going on and on.

      If central banks lose what Ben Hunt calls “the narrative,” then it is all over but the shouting. Right now, in central banks we trust. And in my opinion, the Federal Reserve is making a massive mistake in both raising rates and reducing their balance sheets at the same time. They’re going to lose control of the narrative.

      We’re going to see quantitative easing in our future on a scale that will shock everybody.

      Remember that I said it. You heard it here first.”

      The fed has painted itself into a corner.

  10. Bloomberg Opinion
    Markets
    Bond Bears Can’t Get Their Story Straight

    Have Treasuries moved too fast, or is this just the start? It depends on whom you ask.

    By Brian Chappatta
    October 4, 2018, 11:55 AM CDT

    It has been a great 24 hours for bond bears. The benchmark 10-year Treasury yield surged Wednesday by the most since November 2016, busting through key levels and forcing even the most ardent advocates of “lower for longer” interest rates to do some soul-searching.

    The problem for these bearish investors and strategists, though, is they just can’t seem to get their stories straight.

    Some of them point to Federal Reserve Chairman Jerome Powell’s remarks that the fed funds rate “is a long way from neutral” as justification for pushing long-term yields higher. After all, if the central bank pushes its key rate above the nebulous neutral level for a while, therefore raising short-term note yields, then investors holding 10- and 30-year Treasuries need to be compensated more than they are now. But Powell made those comments in the late afternoon Wednesday, after yields had already climbed more than 10 basis points.

    https://www.bloomberg.com/view/articles/2018-10-04/bonds-fall-and-bears-try-to-explain-as-interest-rates-rise

  11. Well, after visiting SoCal, looking at many different areas, wife and I have decided to stay in ATL, starting to appreciate the strong position we are in and looking at taking advantage of whats coming. EVERYWHERE we went, traffic, homeless, trash, smell, crowds, streets lined with what look like abandon cars/campers, but people were actually living in them. Urine and schitt everywhere, needles mostly around camps. BUT, i did like Ventura, still a sleepy surf town, not much traffic, homelessness, trash, and housing was still high, but doable. Came back and had lunch with 2 friends who wholesale/flipp/Buy-Hold property, they are killling it and dont see much of a slow down in ATL, so I might do some investing, if the numbers look right. My .02, be great today

    1. EVERYWHERE we went, traffic, homeless, trash, smell, crowds, streets lined with what look like abandon cars/campers, but people were actually living in them. Urine and schitt everywhere, needles mostly around camps.

      Comrade Pelosi and her progressives are building their collectivist People’s Republic of New Democracy in CA. Taxpayers and the productive are enemies of the state. Forward, Soviet!

      1. How will a state full of broke-a** people honor those sweet pension promises to all those govt employees?

    2. I’m not sure why, but ATL crashed really, really hard back in ’07. BTW, I totally agree with your California assessment… sad, but true.

      1. LA area especially. The best way I can describe it is “used up.” The nice areas are nice. The other areas seem like they haven’t had a fresh coat of paint since the 70s.

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