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The Current Trend Is Not Sustainable, But What’s Going To Stop It?

A report from the Idaho Statesman. “Home prices leaped to record-setting levels in April in Canyon County. The median house price jumped $18,500 from March (which also was a record) to April, to $248,500, the Intermountain Multiple Listing Service reported. Still, that’s $83,490 less than April’s median price Ada County, which fell slightly from March’s $335,000 record. In Ada County, there were 596 existing homes sold, with a median price of $308,450.”

From KPAX on Montana. “Bob Oaks, executive director of North Missoula Community Development Corp. said more affordable housing is needed across Missoula. But land costs there are among the highest in Missoula and building costs come equally high. Lee Gordon Place and its seven units cost around $2 million. ‘It has to be subsidized,’ Oaks said. ‘There’s no affordable housing anywhere without some type of subsidy going into it, and especially for home ownership.'”

The Jackson Hole News and Guide in Wyoming. “Katie Brady, an associate broker at Jackson Hole Real Estate Associates, calculated that dollar volume in the first quarter was up about 40 percent, riding a strong 2018. When Brady hears people say they’re waiting for a break in the market and a chance to get in cheap, she says, ‘I don’t think that’s good advice, I don’t think that’s happening.'”

“‘Part of me says the current trend is not sustainable,’ she said, ‘but the other part says, ‘What’s going to stop it?'”

The Dallas Morning News in Texas. “‘There are vast home price differences among metro markets,’ said Realtors chief economist Lawrence Yun. ‘The condition of extremely high home prices may not be sustainable in light of many alternative metro markets that are much more affordable.'”

“Home price increases in North Texas have slowed to a trickle in the last six months as more houses have come on the market and sales of high-priced properties have slowed.”

The Colorado Springs Gazette. “Here’s a head-scratcher about the local housing market — and one that many homebuyers probably will find hard to believe. A National Association of Realtors report shows Colorado Springs median home prices actually declined during the first quarter of this year — dipping 0.1% to $296,400 from $296,600 during the same period last year.”

“‘I don’t buy that,” said Harry Salzman of ERA Shields Real Estate and Salzman Real Estate Services, who tracks the national group’s reports. ‘There’s no way.'”

From KTVN in Nevada. “The median sales prices for homes in Sparks during April was nearly $340,000 which shows a five percent decrease from last April. Shannon Dubose’s house in south Reno has been on the market for about four weeks now and her asking price for the home is $467,500.”

“‘When your house first lists, you do get all sorts of people requesting showings because it’s brand new on the market and everyone wants to see it and you’re really excited thinking, great some offers are going to come in,’ says Dubose.”

“Since that hasn’t happened yet, and the offer her family made on a home in Las Vegas is contingent on them selling this house, she says she’s had to stay patient. Realtor Justin Hertz says that people are going to have to get used to being patient since the housing trend doesn’t seem to be changing all that much.”

“For the sellers like Dubose, he says it’s important to remember that despite the busy housing season kicking off, your house might not sell right away as more inventory hits the market. ‘You’re probably not going to put your house on the market and have multiple offers within three days,’ says Hertz. ‘The average days on market, depending on price point, tends to be 30 to 45 days.'”

The Financial Times. “Prices for luxury homes are falling in London, New York and more than 20 other cities globally, according to Knight Frank. ‘Super-prime properties hold their values over time if and only if the property is incredibly rare and offers buyers a true, once-in-a-lifetime opportunity,’ says Lauren Muss, associate broker at Douglas Elliman in New York. ‘I have been in this business a long time and have seen people overpay for average townhouses or apartments.'”

“‘What we’re seeing, especially in the Manhattan market right now, is an increasing disparity between the super-wealthy, those buying homes for $US30 million or above, and the mere wealthy,’ says Garrett Derderian, director of data at the New York real estate agents Stribling. ‘The super-prime market has diverged from the rest, at least in terms of the numbers of transactions happening even as the wider market is softening.'”

From Mansion Global on California. “One of the priciest homes for sale in the U.S. is selling with a $40 million discount. British heiress Petra Ecclestone is now asking $160 million for her mammoth 56,500-square-foot Los Angeles mansion, which hit the market again on May 1 after a brief hiatus. Ms. Ecclestone first started shopping the home around in 2016 and originally listed it for $200 million.”

The Orange County Register in California. “Southern California had 35,491 existing residences listed for sale as of May 2 — 6,373 more than a year earlier, or a 22% increase. That’s the latest homebuying inventory number for homes in the four-county region, according to ReportsOnHousing, which tracks patterns in brokers’ homebuying data networks. Since 2012, listings have averaged 30,822 at this time of year.”

“These forces put market time at 79 days — up 15 days in a year. (Market time is an estimate of selling speed combining listings and escrows.) Since 2012, market time averaged 63 days at this time of year.”

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This Post Has 65 Comments

  1. ‘April’s median price Ada County, which fell slightly from March’s $335,000 record. In Ada County, there were 596 existing homes sold, with a median price of $308,450’

    Eeee-bola Ada County! And Sparks too.

    1. No worries. Everyone is putting at least 20% down so we’re copacetic. Gotta put in an offer over asking lest you be priced out foreva.

    2. Boise boots on the ground… the frenzy is back. Listings in desirable neighborhoods under $400k move quickly. FOMO is strong here, newcomers are all fighting over the same scraps. Open houses are very busy. North End prices are ridiculous. Bench prices are crazy. This area has seen roughly 50% appreciation in 3-4 years.

      This city is noticeably busier than even a year ago. Downtown restaurants are packed, never used to be wait times on weekends – there are now. On weekdays, still busy – middle of the day. Tons of development and construction, contractor and construction materials/transport are on all roadways.

      With Idaho being fastest growing state in US (attributed to Boise area), I am not sure when this is going to slow down – things seems to be utterly unsustainable, but the influx of out of state money has changed the entire dynamic here. How long to turn off the spigot? I was hopeful of the unwind of QE, but that has hit a brick wall – yet we hear over and over how “healthy” the economy is. Laughable. Completely propped up by market shenanigans. Locals are divided between being pissed at development vs. embracing change and new opportunities in Boise.

      I’m just trying to buy a house for my family, and you get hammered whether you rent or buy right now – very strange times. Rents are getting jacked up by out of state companies who are buying up lots of property – I’m talking 30-40% rent hikes. I have well over 20% to put down, but not looking to be underwater in 3 years. But, also not interested in hopping from rental to rental for 3 years with two young kids. Best of luck out there!

        1. Well, because you can’t rent for half the cost…

          Whether the market here craters 70% is unknown…

          But, hey – I do love your consistency!

          1. Are you kidding? In CA you certainly could rent for half the cost back in the day. But today the rent Zestimate on my house is 3900, the mortgage would be 6900, don’t worry I pay way less than either of those numbers.

          2. Actually, it is worse than that. There is property tax which would add about 2k/mo to the 6900, plus homeowners of about 500 plus opportunity cost on the 400k down payment (another 2k mo) .. So in CA in my little townhouse complex right now it is easily half the price to rent vs own.

            It wasn’t always so we bought in 2012 and it was sorta even, we also bought in 1995 and again it was sorta even. Prices have a long way to fall or rents have a long way to increase before buy v rent tilts to buy in this area.

      2. It “feels” like 2005/2006 to me in terms of traffic and business activity. Everybody is partying like there is no end to things. How far off is a downturn or collapse? I have no idea. I never thought this “re-bubbling” was possible in the first place. This is uncharted territory and I’m just observing with wonder and amazement.

      3. Boise – that inversion layer all winter is brutal. Californians with a pension are fleeing to ID, Meridian is like OC with bad weather. Almost every retiring cop in Calif has Boise on his short list. Traffic will ruin Boise like it did Denver.

      4. The progression:

        Seattle is number one!

        DONG!

        Las Vegas is number one!

        DONG!

        Boise is number one!

        1. Actually, if you think about it, prior to Seattle was San Jose, and before that NYC IIRC.

      5. “This area has seen roughly 50% appreciation in 3-4 years.”

        How about the region’s wages?

        Any family supporting jobs?

        1. Of course not! It’s remarkable. I’ve heard some talk of people working remotely, and keeping their well-paying jobs from other regions – but that cannot be the majority.

          Of course, equity locusts can pay cash – so they probably don’t have mortgages at all. Others are scraping to get 3% down, they are gonna be fooked.

      6. The hangover in Boise will be very painful. The state and local governments in Idaho will have hell to pay since so much of their revenue is tied to bubble property prices and the construction business, whose workers will all be drawing unemployment benefits soon enough. Meanwhile our insouciant leaders like Mayor Dave Bieter insist on building $100 million Taj MahLibraries and baseball stadiums to nowhere. It’s gonna be a doozy.

        1. Did those downtown “luxury apts” fill up? Who would move to Boise to live in an apt?

          1. Apartment buildings have popped up like mushrooms here in the last several years. And most have been built using wooden/OSB construction like standard shacks are, not steel/masonry. I drive past them and think, “Yeah, these are going to be the projects in a few years.” Who knows, maybe Boise will produce the next Oprah or Aretha Franklin?

          2. They have not filled up – tons for rent. Others are quietly being turned into AirBnb type stuff. No shortage of 1-2 bedroom places downtown asking 1700-2500/mo. LOL

          1. As a Democrat in Idaho, he can’t go much further politically than Boise Mayor. And he is basically unemployable outside of politics having been mayor for the last 15 years. The glass ceiling is real.

    1. A quick check shows recent price reductions in Colorado Springs (Sorry Harry). Not big, but starting to show up. Still a strong market though. My take is let the current Spring selling season run its course and review the data. Case-Shiller is very much lagging. Late July will have June E/N/PHS. June is last mo. for season. I can wait. I think the trend is changing. Spring ‘19 data should show this. Housing is like an aircraft carrier. Turns slowly, but “Trees don’t grow to the sky.”

      BTW, There’s a lot of “spin” going on from the REIC. Are prices peaking/declining? Is inventory growing? Nationally, yes, but plenty of local variations. No hurry on my side. Waiting for the “China trade deal.”, which I think is still a few thousand tweets away. 🙂

  4. ‘Southern California had 35,491 existing residences listed for sale as of May 2 — 6,373 more than a year earlier, or a 22% increase’

    Wa? But Thornberg. Shortage? Where are all these thousands upon thousands of shacks coming from?

    1. “…Where are all these thousands upon thousands of shacks coming from?…”

      Well, at least one of them is listed as “FORECLOSURE” in a snooty area of Irvine known as Shady Canyon.

      Apparently, yet another wanna-be lets pretend mega-millionaire has bit the dust. (Or perhaps paying off the trophy wife). (or both)

      Property address 59 Copper Creek 92603 MLS #NP18224609

      When you see a listing like this, makes your wonder how many other wanna-be lets pretend mega-millionaires are standing on the edge of the cliff. (Me thinks more than just a few)

      https://www.ziprealty.com/property/59-Copper-Crk-Irvine-CA-92603/82828351/detail?utm_medium=email&utm_source=internal&utm_campaign=zip_notify

  5. ‘Prices for luxury homes are falling in London, New York and more than 20 other cities globally, according to Knight Frank’

    But no bubble, right Financial Times?

    ‘I have been in this business a long time and have seen people overpay for average townhouses or apartments’

    No shortage BS in New York these days.

  7. “Listing$ jump 22% as $outhern California homeowner$ ru$h to $ell”

    Title from Thee “Oh, $ee!” Article

    Hey, the “no inventorie$ of $helter $hacks” , but let$ have a “hurry.up.&.$ell.it!” parade has $tarted.

    Imagine that!

  8. Someone please explain to me the relationship between the cost of a house and the cost of the land it sits on.

    1. Not necessarily related. In average new home developments 15 to 20 per cent allocation if frequently used as a rule of thumb. However if the house is on a premium site, then it can skew toward the site. If the buyer specified substantial physical upgrades in the structure then it skews toward the structure. In real property valuation, the site is valued separately from the structure, then the total value is the sum along with site improvements. I.e. impacts fees, fences, seawalls, driveways, wells and septic systems etc.

      With older homes in high value areas, the land may possess 90% of the property value I.e. waterfront properties, acreage sites.

      There is no consistent answer to your question and needs to be evaluated on a case by case basis.

      Hope this helps.

    2. There isn’t a relationship.

      In the case of a resale house, break out the cost of the structure(s)($/sqft less depreciation), assign a value to septic/sanitary, well/potable supply and you’re done.

      Dirt? this is where the suckers get suckered. Land doesn’t represent much value considering there is so much it but if you’re paying more than $500-1000 an acre, you’re paying too much.

    3. It’s always changing. The bubble is in the land, not the structure, so at times like this the percentage of lot value to the total value of lot and house is much, much higher. Once the bubble pops, the lot percentage goes way down.

      Further, different land has different value. An oceanfront parcel is always going to bring an extreme premium. A desert scrub lot, not so much. Then you have to take into consideration the lot size. Is it a postage stamp or acreage? Lots of variables there, too. What is the zoning? For instance, a 10 acre lot zoned R1 is much more valuable than a 10 acre lot zoned R10, because the former can be subdivided whereas the latter cannot.

      To conclude, buying raw land is not for the uneducated or the faint of heart. It is a whole different ballgame and is much more speculative than houses.

    4. I would argue that (at least here in South Orange County, Ca.) the value of many structures is zero or even negative.

      Many 40-50-60 year old tract houses were built (and maintained) so poorly that they are, in economic reality, just tear-downs.

      Add in all the [governments] regulation to actually tear down, not to mention banned materials (ie. asbestos, lead) removal/disposal issues and your ledger will show quickly show red ink.

      IMO, (with goading on from the REIC) the reason so many get-rich-quick flippers are now in trouble is that instead of thinking they bought an asset, they are holding a liability.

      Darwin was right. Helps explain why so many bones in the La Brea tar pits. The South Orange County REIC tar pits are now adding a few more.

      1. “I would argue that (at least here in South Orange County, Ca.) the value of many structures is zero or even negative.”

        Now Octal77, there are many fine house$ in Dana Point, $an Juan Capi$trano, $an Clemente$, they may co$t a few.million$, but hey there’s many homemoaner$ loan$ that can bee acce$$ed easily. Just have the u$ed $helter.$hack agent bring along a gieger counter to verify the radiation status.

        1. $32.80 + free $hipping,

          (what % is that of their commi$$ions on $2,000,000.86 $helter.$hack.$ale?)

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          High sensitivity measurements- using a precise signal measurement technology.
          Real time display of measurement results- Use the Semiconductor sensors, measurement of radiation (Gamma, X-ray).
          Easy to carry and convenient-World smallest geiger counter (30mm)
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          You will get 1 Smart Geiger Counter and our 1 year warranty after-sales service.

      2. Wasn’t there an article that showed up a couple weeks ago about some condo sellers in Miami offering their place up for $1 just to get out of the white elephant HOA/golf club dues?

  9. “‘Part of me says the current trend is not sustainable,’ she said, ‘but the other part says, ‘What’s going to stop it?’”

    If interest rates drop… it may continue.

  10. With cities like Boise, Denver, and Austin being ruined from refugees. Let’s discuss the other great places to live. The ones with jobs and the ones you bring your job to.

      1. Tuba City
        Those of you not familiar with Tuba City, it is on the reservation.
        I went to school and ran with 2 Hopi’s who went to school in Tuba City. I think they were bused in from Third Mesa if I recall correctly. I think the reservation is the Navajo reservation

  12. If prices YOY stay flat, that’s actually a 2.5% drop if you consider inflation, right?

  14. Isreal wants the USA to destroy Iran. China wants to buy Iran’s oil… time for a trade war. Who will Russia side with? This “trade war” is far from over.

    1. Well war with Iran is good for oil prices, it is good for separating the US from the Europeans, it is good for bleeding the US of $ and blood, good for testing weapons and tactics. The only negative for Russia is that they by and large appear to value stability and they would be on the front line for accepting refugee flows.

  15. It has to be subsidized,’ Oaks said. ‘There’s no affordable housing anywhere without some type of subsidy…

    We all know subsidy makes everything more expensive. Oaks is a snake.

    1. Makes sense to me! Look at all these other companies that seem to be chugging along just fine with negative earnings. It’s the new key to a successful company long as there are d00med fools to fund them

    2. Don’t forget to diversify your pocket book: stawk in companies that make negative earnings, fake air monies like bitcoin, gatoraid because we will use it for agriculture, and depreciating structures or air boxes.

    1. One of my favorite reads in awhile!!!

      “But it’s still sending shivers through brokerage offices, which have a lot invested in the status quo. Without it, the United States could end up looking more like Australia and the United Kingdom, where buyers’ agents are rare.”

      Be afraid, be very afraid REALTOR!

      “It kills the industry,” said Rob Hahn, a real estate marketing consultant with the firm 7DS Associates, who predicts the number of people in the profession would drop to just 200,000 if the lawsuit is successful. “A lot of things that we as consumers value go away.”

      There is a god!

      1. “A lot of things that we as consumers value go away.”

        Paying an extortionate 6% fee when I can find my own house on the Internet? That’s a needless $18,000 on a typical $300K house. Please explain to me how realtor parasites add $18k in value to the transaction, especially when they conspire with sellers’ agents to ensure I pay top dollar.

        “You’re obsolete, my baby, my poor old fashioned baby
        I said baby, baby, baby you’re out of time.”

        — Rolling Stones, Out of Time

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