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With The Bay Area Leading The Way, Home Values Nationally Have Declined

A report from CNBC. “A sizable drop in mortgage interest rates didn’t do much to help home sales in April, as high prices and tight supply at the low end of the market continued to sideline buyers. ‘We see that the inventory totals have steadily improved, and will provide more choices for those looking to buy a home,’ said NAR’s Lawrence Yun, adding that sellers have to realize that price growth has moderated. ‘When placing their home on the market, home sellers need to be very realistic and aware of the current conditions.'”

From The Mortgage Reports. “According to a new report from Trulia, the nation’s housing market is shifting toward the buyer. The news is particularly good if you’re looking in a high-priced area.”

“‘This national shift from a sellers’ market toward a buyers’ market is also playing out locally in the most expensive neighborhoods within a metro area,’ reported Trulia economists Felipe Chacon and Elliott Deal. ‘On average, in ZIP codes where home values are highest, more homes are being sold further below their asking prices and selling more slowly than they would otherwise.'”

“Conditions in 50 of the 100 largest metros ‘are now shifting in favor of buyers, a tenfold increase from just five metros a year ago.’ But Vegas buyers win out the most. According to the report, ‘Las Vegas shifted the most away from sellers and toward buyers over the past year, from the third-worst market for buyers a year ago to the fifth-best today — a 93-spot swing.'”

The San Francisco Business Times. “Home values have likely peaked in the Bay Area, according to Zillow’s April housing numbers. This could mean that the solid year-over-year gains the market has experienced might be a thing of the past. In San Francisco, home values have fallen in each of the past five months and are down quarter-over-quarter, indicating the start of a longer-term trend, according to the report.”

“In San Jose, values have fallen in each of the past six months, as that city remains the only major market where home values are also down year-over-year, falling 2.7 percent from last year. The report stated that with the Bay Area leading the way, home values nationally have declined month-over-month for the first time in more than seven years, breaking a streak of 85 consecutive months of gains that brought home values to record highs.”

“But it’s far from all gloom and doom for the market, according to other experts who weighed in. ‘As far as I can tell, the most expensive housing market in the country has stopped, for the time being, getting more expensive,’ Patrick Carlisle, chief market analyst with Compass, told the Business Times. ‘I’m hearing that the S.F. market is pretty damn competitive right now with very low inventory and multiple offer bidding — though not quite as crazy as last year — so we really need to see the results for the rest of the spring selling season, which will show up in sales closing in May and June.'”

“However, Carlisle said the picture in the San Jose — or Santa Clara County generally — is clearer: That market appears to have peaked in 2018 and has seen significant declines in median sales prices since last summer.”

From Seattle PI in Washington. “According to the latest Northwest Multiple Listing Service report, home prices for completed sales in April (the last month for which they have data) rose 2.4% across the 23-county system. But six counties — including King — did see year-over-year decreases. And condos within King County in particular saw a fall.”

“While across the MLS counties condo prices dipped 3.2% as inventory jumped 75% compared to the same time last year, within King County those prices dropped about 9.6%, with inventory surging 122%.”

“‘Interestingly, condominium prices in King County continue to fall as the number of properties on the market continues to climb rapidly,’ James Young, director of the Washington Center for Real Estate Research at the University of Washington, said in the report.”

“According to Young, that may have something to do with the new accessory dwelling unit decision that the Seattle City Council has under review. ‘Anecdotally, this corresponds with possible regulatory and tax uncertainty signaled for private landlords in Seattle ahead of local government elections. Given this situation and significant supply in the multifamily sector coming online, many smaller landlords may be selling to lock in capital value growth and exit the rental market ahead of the November election,’ he said.”

From Forbes on Florida. “The recent $11.5 million sale of a six bedroom mansion at 2914 Washington Road broke the record for the most expensive single family home transaction in West Palm Beach by $6.5 million. But it took the seller almost a year and half to find a buyer. Moreover, the waterfront property sold at 15% below its initial preconstruction price of $13.5 million in 2017.”

“The amount of time the house was on the market and the price drop is a reflection of the luxury single family home market in Palm Beach County, where mansion buyers are taking longer to find the right deals. During a recent visit to Palm Beach, Liam Bailey, head of global research at London-based Knight Frank, said rising interest rates have contributed to a slower growth in prime property prices. ‘The beginning of the end of ultra-low interest rates … is beginning to put pressure on [residential property] prices in many markets,’ Bailey said.”

“He added that wealthy individuals are taking longer to make home buying decisions because there is an oversupply of luxury properties. A Douglas Elliman 2019 Q1 Palm Beach report shows single family home sales have declined as the inventory has risen sharply. For instance, 19 luxury single family homes sold in the first quarter compared to 22 during the same period last year.”

“And the number of active listings increased 15% to 180 compared to Q1 2018. The average sales price in the luxury market is $8 million, a 38% drop compared to the same quarter in 2018, according to the report. The average time on the market is 106 days and there is 34 months of supply of luxury properties, including condos.”

This Post Has 65 Comments
  1. ‘the nation’s housing market is shifting toward the buyer. The news is particularly good if you’re looking in a high-priced area…‘This national shift from a sellers’ market toward a buyers’ market is also playing out locally in the most expensive neighborhoods within a metro area…On average, in ZIP codes where home values are highest, more homes are being sold further below their asking prices’

    As it is around the world, further confirming a bubble. The most expensive cities prices fall first and fastest. The most expensive areas within those cities fall even more. These people were speculating, and they rush the exits, thus the skyrocketing supply.

    1. The markets may be shifting towards buyers, but the properties for sale aren’t — what’s going to happen to homeowners in more moderately priced housing if the glut of unsold luxury homes in more affluent cities pushes the $/sqft value down for everyone in the community they are in?

  2. ‘I’m hearing that the S.F. market is pretty damn competitive right now with very low inventory and multiple offer bidding’

    Yeah Pat. That’s why prices are sinking like a turd in a well.

    1. “multiple offer bidding”

      The snake oil is becoming very diluted. I have been hearing used shack salesman use this line on many recent occasions. The truth of it is that they are getting “multiple” low ball offers and settling for less than asking.

      1. https://www.zillow.com/homedetails/407-Clubhouse-Dr-Aptos-CA-95003/16140246_zpid/

        Realtor at open house made it very clear to being in a strong offer as he has “multiple” offers and this one will sell quick!

        DATE EVENT PRICE
        5/17/2019 Sold $515,000
        4/28/2019 Listing removed $599,900
        4/18/2019 Pending sale $599,900
        3/11/2019 Price change $599,900
        2/25/2019 Price change $624,900
        2/6/2019 Price change $679,900
        1/29/2019 Price change $679,250
        12/14/2018 Listed for sale $715,000

        I have lists of these that all sold way below asking. I find it very hard to believe that the “multiple offers” for any property are making for a competitive hot market as we experienced last year. Stock up on ramen realtor!

        1. WOW… 200K off, what’s going on. was it a all cash offer or what?

          I guess with the 200K they can tear up and reno the interior and add a master bedroom with bath.

  3. Well, Encino, CA must have missed the McBust memo.

    Let’s go through this little exercise again, as we did in the previous thread regarding Vegas McPrices:

    1. The median household income for Encino, CA is approximately $98k, as stated here: https://www.areavibes.com/los+angeles-ca/encino/employment/ , but we’ll just round it up to a cool $100k for purposes of this discussion.

    2. Yet, as shown at Zillow, here: https://www.zillow.com/homes/encino-ca_rb/ , prices for the most-modest of McShacks start at SIX-POINT-FIVE times median household income, or $650k!!!

    3. Case in point, this little McBeauty: https://www.zillow.com/homedetails/17925-Califa-St-Encino-CA-91316/19936515_zpid/ , which is a TWO-BEDROOM McHovel, with no basement, I might add.

    4. The reason I chose the McMansion in point number three is that I am personally familiar with it, having lived in Encino for a number of years, and having walked by that very property hundreds of times.

    5. Yet, despite all the wailing and gnashing of teeth regarding “McBust!!!”, this McHome, which was built in 1949 and sold then at $12k, is listed at a whopping SIX-HUNDRED AND FIFTY THOUSAND DOLLARS!!!

    Lest one get the mistaken impression that this little beauty is a “one-off”, I challenge the readers here to peruse the rest of the offerings in Encino. To make it even more fair, just concentrate on those properties “N.O.B”, not “S.O.B.” (Which, for those unfamiliar with LA nomenclature, means “North of Ventura Boulevard”, where the homes are far more modestly priced, versus “South of Ventura Boulevard”, where they run into the millions of dollars.) Find even ONE McProperty that is only 2.5 times the median household income there (Hint: don’t wast your time; you won’t find any.)

    So, again, would someone please tell a Sin City Saint how much longer he has to wait for this “McCrash”, that has supposedly been underway for THREE YEARS now?

    A guy could grow old and feeble hoping to snap up a McShack for pennies-on-the-dollar.

    1. ‘how much longer he has to wait for this “McCrash”, that has supposedly been underway for THREE YEARS now?’

      IIRC, prices in general peaked about this time last year, bay aryan anyway. Median is a lagging indicator. Watch sales and inventory to see where things are going.

    2. “A guy could grow old and feeble hoping to $nap up a Mc$hack for pennies-on-the-dollar.”

      Plea$e allow time for the “good fortune$” of thee NON.bank$ to flouri$h & blo$$om … (the financial toxic fertilizer$ take time to make it to the root$!)

    3. snap up a McShack for pennies-on-the-dollar.

      The trouble with popping the biggest bubbles in history is that all the bubble jobs go down with them. $100K might not be the median income when reality sets in.

      1. What was that quip??? It’s a shame the jobs were created in the first place. Or something like that.

        1. The only shame in losing Bubble jobs is that they were ever created in the first place.

  4. Per Zillow in my near San Jose area prices are projected to decrease 6.8% in the next year. So why would anybody who believes that buy today? Rent is free compared to that loss of principle.

    1. Is particularly believable as it is a “statement against interest” I assume Zillow would much rather see a steady increase in values of RE so when they say it is going down it is something they really would prefer not to say. So -6.8% likely represents kind of a best case scenario. We are already 10% off the peak (per Zillow)

      1. Definitely, that’s the “value of biased information.” Same principle as when Fox says something bad about Trump — you know it’s gotta be bad if they are saying it. This is a well established result in informational economics.

      2. You have to consider that Zillow also now has an interest as an investor to snap up homes at fire sale prices, which creates an incentive to deflate perceived values. It seems like their business model is rife with conflicts of interest.

    2. This current crash in the making is even more alarming to me than the last one. I don’t think the taxpayers can pay for another 10 trillon dollar bail out. The last bail out hasn’t been paid.

      1. “The last bail out ha$n’t been paid.”

        Bugs: “eh, you could bee on to $omething Doc!”

    1. ” …cata$trophic”

      It’$ an infrerno, a 1% $quirt gun ain’t gonna $uffice.

    2. What’s to stop the Fed from keeping interest rates below historic norms for an indefinite period of time?

      1. Interest rates notwithstanding, home valuations in the U.S. are at the point of collapsing of their own weight. Higher rates would hasten the collapse, but are unnecessary to precipitate it.

    1. “In a quiet neighborhood near Google’s headquarters last month, rusty, oleaginous sewage was seeping from a parked RV onto the otherwise pristine street. Sergeant Wahed Magee, of the Mountain View Police Department, was furious.

      “You guys need to take care of it, like ASAP,” he said, lecturing the young couple living in the vehicle. “I’m not going to tow it today, but tomorrow if I come out here and it’s like this, it’s getting towed!” As he delivered the ultimatum, a self-driving car rolled past.

      Mountain View is a wealthy town that’s home to Alphabet Inc., the world’s fourth-most valuable public corporation and Google’s owner. Magee spends a lot of his time knocking on the doors of RVs parked on the city’s streets, logging license plates and marking rigs that haven’t moved for several days.

      This is the epicenter of a Silicon Valley tech boom that is minting millionaires but also fueling a homelessness crisis that the United Nations recently deemed a human rights violation. Thousands of people live in RVs across San Francisco and the broader Bay Area because they can’t afford to rent or buy homes. In December, Mountain View police logged almost 300 RVs that appeared to be used as primary residences. Palo Alto, Berkeley and other Bay Area towns have similar numbers.”

      https://finance.yahoo.com/news/silicon-valley-shame-living-van-090010246.html

      1. From the article:

        “One 24-year-old Google contract worker lives in a rented RV with her girlfriend close to the internet giant’s campus. She asked that her name not be published, because she didn’t want her employer to know about her living situation. She grew up in the Bay Area and served in the Navy for three years. After that, she studies psychology, then moved to Atlanta where she rented a townhouse for $1050 a month.

        “She applied online to be a Google security guard and when the contracting firm gave her the job, she moved to Mountain View in April. She initially considered renting a small apartment, but realized she couldn’t save any money that way. “An apartment out here would cost at least $2500 a month,” she said. “The money I make here is great, but I would be pretty much spending the majority of that on rent and I just don’t want to do that.” So she decided to rent the RV for $800 a month.””

        This girl is a hustler. I like her style. The article goes on to say she is studying at a community college to get onto the Firefighting crew and then plans to move back to Georgia to buy a house on the cheap. Social mobility is at an all-time low in the US. The decile of income you are born into is pretty much where you are going to stay for the most part. This girl though has the right idea. It’s not the avocado toast or even the $1000 iPhone that is going to imperil your financial prospects, it’s the mortgage and the rent. With this radical way of living, she might just manage to get ahead.

        1. She asked that her name not be published

          But allowed enough other personal information to be published so that her employer could deduce who she is.

          1. With GIS software and Google’s user-geospatial database everyone on those streets can be determined in a couple of minutes.

      2. o·le·ag·i·nous
        /ˌōlēˈajənəs/
        adjective

        1. rich in, covered with, or producing oil; oily or greasy.
        2. exaggeratedly and distastefully complimentary; obsequious.

  5. “We see that the inventory totals have steadily improved, and will provide more choices for those looking to buy a home,’ said NAR’s Lawrence Yun, adding that sellers have to realize that price growth has moderated. ‘When placing their home on the market, home sellers need to be very realistic and aware of the current conditions.’”

    READ: YOU MOTHERF*CKER SELLERS! DROP THE PRICES SO MY REALTORS CAN MAKE THE SALE AND AFFORD TO EAT SOMETHING OTHER THAN RAMEN NOODLES!!!

  6. “But Vegas buyers win out the most. According to the report, “Las Vegas shifted the most away from sellers and toward buyers over the past year, from the third-worst market for buyers a year ago to the fifth-best today — a 93-spot swing.””

    Eat yer crows Sin City Saint! LOL

    1. No Curtains on many of the windows , a renovation flip of a old house. I wonder if that pool leaks?

      1. I hadn’t noticed the lack of window treatments, but now that you mention it all but the two front windows with shudders appear to be the original single pane windows. Most homes in this area have long replaced those.

        I’m not seeing a note on the MLS about the pool, but I’d wager it suffers from deferred maintenance and is being sold “as is.” Common for this neighborhood.

  7. Let’s hope this trend towards banning counterfeit electronic money catches on internationally!

    India may lean towards banning of cryptocurrencies says Supreme Court Advocate
    Several countries have opted for a “ban” instead of regulation and it appears that India may also lean towards banning of cryptocurrencies. It in fact has issued several advisories warning not just against cryptocurrencies but the larger category of “virtual currencies”.
    ETCIO | May 21, 2019, 12:19 IST
    https://cio.economictimes.indiatimes.com/news/government-policy/india-may-lean-towards-banning-of-cryptocurrencies-says-supreme-court-advocate/69424127

  8. “The report stated that with the Bay Area leading the way, home values nationally have declined month-over-month for the first time in more than seven years, breaking a streak of 85 consecutive months of gains that brought home values to record highs.

    Obviously we have just witnessed the onset of the second wave of collapse in the largest housing bubble in U.S., if not world, history.

    If you disagree, then please show me another period of 85 consecutive months (seven years + one month) of consecutive monthly home price gains on a nationwide basis. I don’t think this has ever previously happened, but please produce the evidence to prove me wrong if it has.

    The other amazing part of the current situation is that prices are already falling against the backdrop of historically low interest rates. Just imagine what will happen when rates normalize!

    1. ” … against the backdrop of hi$torically low intere$t rate$.”

      May 2019 … dtRump, Kudlow, Mnunchin & Ro$$: “lower the dang Fed fund$ rates 1% + … NOW!

    2. Normalization of interest rates in our current monetary system is not possible. They kick the can down the road or throw it in the trash compactor and start over.

  9. Falling prices will get a lot more attention when Case-Shiller goes negative.
    My best guess is Q3 2019.

    Last year I thought it would occur Q2 due to changing Taxes.

    Moving my guess back a quarter.

      1. Be cautious with your friends regarding discussions of debt, RE bubbles, etc., or you may find yourself ostracized.

        1. Truly good advice, but my friend group is a already a small collection of nice people that appreciate my inability to disguise my thoughts. Im happy this way, but I know others may prefer a broader network of acquantances. The majority of the world ostracized me years ago, or maybe I ostracized it.

        2. I brought trouble upon myself by sharing my predictions for housing market declines circa 2007 with work colleagues, all of whom were San Diego homeowners. First I was just a Housing Bubble crank, but when my predictions came true, I became a pariah.

          Now my discussions at work of the housing situation are limited to fellow renters.

          1. I recently noticed that a discussion of future PG&E rates was not warmly received…back to the Audi 3L twin turbo and the awesome 0% financing deals.

    1. ” … it would occur Q2 due to changing Taxe$.”

      $hock & Awe, + IR$ liability realization$ takes time.

  10. From a local thread about the Denverite article posted here recently:

    “I am nowhere near a structural engineer and I can tell that all of these new fast builds that have shot up in Denver, Boulder, Lakewood, Arvada, and Littleton are built like shit.

    This whole region is going to have horrendous housing in a decade when the “luxury” homes and apartments all shit the bed at once.”

  11. This time, it is different; the 2007/2008 crash began at the low end and worked its way up. Now in 2018/2019, its starting at the upper high end and working it way down. This real estate bubble is structured upside down.
    Observations:
    1. The recent drop in rates appears to have given Seattle a ‘step function’ of support; The price drops seem to have paused (rough estimate). I am guessing that this will only last about 3 months.
    2. The Chinese money seems to be mostly gone(net additive). I expect this to be completely gone by the end of the year and maybe we might start to see forced selling from foreign ‘investors’. In Bellevue, I saw new upper end mcmansions ( nice but not the best designs ) going for $4M. I now think there is a top at $3 and in 2020 that will arrive at $2.

    1. Can’t write off that big mortgage and property taxes affecting higher end homes the most ?

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