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Other Economic Factors May Be The Driving Market Forces Right Now

A report from the Associated Press. “Andy and Stacie Proctor made a bid on a house in the Salt Lake City suburbs, only to rescind it upon learning there were 13 rival offers. At one point, they almost decided not to buy a house just yet, figuring the bubble was going to burst eventually, said Andy. But there was also the opposite risk: ‘There is the question about whether it’s going to keep going up,’ his wife said.”

From The Bay Net in Maryland. “In making it’s transition from the Spring to Summer real estate market, looking at the year-over-year numbers for St. Mary’s County raises interesting economic questions.In April 2019, there was a total of 462 active listings with an average sales price of roughly $293,000. When comparing these figures to April of 2018, we see a rather steep decline in both categories; average sold price dropped by 6.9 percent and active listings dropped by 8.88 percent.”

“While one might imagine that a decline in supply of active inventory would cause an increase in the demand as reflected in the sales price, as was observed in April of 2017 and 2018 when sales prices skyrocketed after seeing a nearly 20 percent inventory decline, this housing market now does not tell that same story.”

“The traditional economic theory of supply and demand does not seem to be holding up in light of the St. Mary’s County housing market, leading one to believe that other economic factors may be the driving market forces right now.”

From Community Impact in Texas. “Both Cedar Park and Leander experienced a boost in home sales this April compared to last year. Cedar Park’s total residential sales grew by 32.4%, while Leander’s grew by 15.2%, according to data from the Austin Board of Realtors. However, median prices of single-family homes have started to level out.”

“The median price of a single-family home in Cedar Park fell by 2% in April compared to April 2018, landing at $325,000, according to the data. In Leander, the median single-family home price fell by 3.1% year over year to $286,375. ‘In the first quarter of the year, the median price of a single-family home in the Austin-Round Rock [Metropolitan Statistical Area] increased by just 0.2%, which is a much smaller margin compared to previous year,’ said Kevin P. Scanlan, the 2019 president of ABoR. ‘These narrower margins are a strong indication that market prices are starting to stabilize.'”

From Crain’s Chicago Business in Illinois. “Phil Chiricotti felt the double-barreled blast when he sold his home in Burr Ridge. Chiricotti built the four-bedroom, 6,800-square-foot home in 2002, ‘when Tuscan-style homes were what everybody was doing,’ he says. He put the house on the market in 2009, asking just under $2.7 million, and sold it almost six years later at a real estate auction for $1.47 million.”

“Chiricotti’s tale is replicated every day somewhere in Chicago’s suburbs, where at least one luxury home sells at a loss. Every day of the week, Crain’s has tweeted news of homes that sold for below their past sale prices. They’re not just selling for less than someone paid during the boom years, when housing was overvalued all over the country; they’re selling below prices from the early 2000s and even the 1990s.”

“From World War II up until the housing bust, ‘who ever sold a house at a loss?’ Chiricotti asks. ‘Home values always went up every year,’ even if only a little.”

From Curbed New York. “Four years after it first hit the market for $39.9 million, the spectacular domed penthouse that once served as the New York City Police Department headquarters has just re-listed for $19.5 million.”

From Seattle PI in Washington. “A surge in inventory helps very much to quell and even reverse quickly-inflating home prices. Here, that influx of new listings has helped facilitate not only lower selling prices for King County condos, but also and longer days on the market.”

“Need proof? A year ago, Seattle condos, according to Trulia’s data, commanded a median selling price of over $720,000. That price went steadily down all year, recently floating back up slightly to land at under $680,000 in this May. Whether this trend will continue or not is hard to say, but if summer brings more listings (as it usually does, that could keep prices down and buyer power up.”

The Daily Republic in California. “Based on our April closings we can see that in Fairfield the listed to sales price was 98 percent. This is a 2 percent drop from same time a year ago. We listed 36.2 percent (203) more homes for sale in April than in March and only sold 87 homes in April, which is 20.9 percent less (110) than in March. For the same period year over year, our inventory is up 46 percent while the sold properties are down 16.6 percent, indicating a slower spring than a year ago.”

“In April 2018, our average Fairfield home price was $484,000. In April 2019, that same Fairfield home is selling for $468,000, a $16,000 difference or drop of 3.3 percent. It’s not very uncommon to see matching model homes selling for $10,000 to $25,000 apart from each other in a span of a month or two. If three homes in the same neighborhood with similar size and features are for sale at the same time, the price will slip because the buyers will have a few choices and the seller will want their home to be chosen first and will usually drop the price a bit.”

“Our inventory shot way up in April, which in turn decreased home values slightly. In March 2018, inventory levels were 1.3 months of supply. While in April 2019, inventory levels remained consistent at 1.2 months of supply. Like many of us, Realtor’s will attest that last spring was on fire!”

“In March 2019, inventory levels slipped to 1.4 months then shot way up to 2.3 months in April 2019. That is our highest level of inventory in the past 12-plus months. If we have another major or even equal spike in inventory in May 2019, we could be in for price reductions this summer.”

“We’ve been listing more homes than we are selling for most of the past 12 months. This, in turn, has slowed the market some. It is still very much a seller’s market and buyers should be aggressive with their offers. I continue to hear buyers say, ‘I am waiting for prices to drop.'”

“I covered this before but think it’s worth saying again. If prices drop, interest rates will most likely go up. In fact, rates are predicted to go up through the remainder of the year. Unless you plan to live in the home for a year or two, you should be buying when you can afford to, not trying to gamble with the market. Buying now is a smart decision.”

This Post Has 42 Comments
  1. ‘A surge in inventory helps very much to quell and even reverse quickly-inflating home prices. Here, that influx of new listings has helped facilitate not only lower selling prices for King County condos, but also and longer days on the market’

    But redfin said market go boom now? Actually they said that a few months ago. Wa happened redfin? Eat yer crow!

  2. Published May 19, 2019:

    “San Francisco is the nation’s leader in property crime. Burglary, larceny, shoplifting, and vandalism are included under this ugly umbrella. The rate of car break-ins is particularly striking: in 2017 over 30,000 reports were filed, and the current average is 51 per day. Other low-level offenses, including drug dealing, street harassment, encampments, indecent exposure, public intoxication, simple assault, and disorderly conduct are also rampant.

    Many in law enforcement blame the crime wave on Proposition 47, which in 2014 downgraded possession of illegal narcotics for personal use and theft of anything under $950 in value from felonies to misdemeanors. Anti-incarceration advocates disagree with that argument, but theft is indisputably booming, and narcotics activity is exploding on sidewalks, parks, and playgrounds. When compounded with other troubles for which the city is now infamous (human feces, filth, and homelessness, which is up 17 percent since 2017), San Franciscans find themselves surrounded by squalor and disorder.”

    https://www.city-journal.org/san-francisco-crime

    1. ‘Private investments in six of the 10 best-funded U.S. tech startups to go public since 2015 have fallen from the peak levels they hit in funding rounds before the companies’ stock debuts, according to a Wall Street Journal analysis of data from research firm Pitchbook.’

      ‘With Uber and Lyft, “there’s no profitability within sight even with binoculars and that’s been a tough pill for investors to swallow,” said Daniel Ives, a tech analyst at Wedbush Securities. “It’s a totally different ballgame trying to get public investors around the valuations,” he said.’

      ‘Over the past half-decade, venture investors have pumped tens of billions of dollars into the largest startups, betting that stock-market investors would look beyond companies’ heavy losses and embrace their visions of industry disruption—a position that so far looks increasingly dissonant.’

      ‘Every few days it seems, the Silicon Valley startup machine elevates some new company to a valuation over $1 billion, often aiming for a rich IPO some years down the line. Recent entrants include a company that makes luggage and another that handles drone delivery of medical supplies.’

      ‘One of the challenges for the better-funded consumer companies is that when they are considered a good bet, they often are swarmed by investors pushing up their valuations early on, before it is clear how long rapid growth can continue, and before paths to profit are fully ironed out.’

      ‘That’s in part because there is more money than ever hunting for big hits. A record $132 billion of investment went into U.S. startups in 2018, a giant jump from $47.8 billion five years earlier, according to PitchBook.’

      ‘For Uber, Snap and others, the investors were “betting the market will believe the narrative,” said Brent Goldfarb, a management professor at the University of Maryland who has researched market bubbles.’

      https://www.wsj.com/articles/wall-street-isnt-buying-what-silicon-valley-is-selling-11558756810

      1. I used Lyft again last night and the driver had a new car – Kia something or other. Said he puts on about 1K miles a week driving people around. Thats some serious mileage. Lots of people driving for these companies (all the drivers seem to drive for both) and lots of people besides me using it. I think a lot of people are balking at renting a car that might go unused for all but an hour a day.

        As far as prop 47 – Stevie Wonder could have seen it coming. You do NOT want to live or even visit these leftist “utopias” after they pass a law like this. Open season to rob people.

        1. “and lots of people besides me using it.”

          That’s why you should bring your own hand sanitizer.

          Back-seat passengers in Uber, Lyft, ride-hailing vehicles face germs, safety risks

          Nathan Bomey, USA TODAY
          Published 6:29 a.m. ET May 10, 2019

          According to a study by insurance company Netquote, the average rideshare vehicle has about 219 times as many germs as the average taxi, which is cleaned regularly.

          It’s nearly three times germier than the average toothbrush holder and more than 35,000 times germier than the average toilet seat.

          https://www.usatoday.com/story/money/cars/2019/05/10/uber-lyft-germs-health-safety/1128117001/

    2. Broken windows theory

      Consider a building with a few broken windows. If the windows are not repaired, the tendency is for vandals to break a few more windows. Eventually, they may even break into the building, and if it’s unoccupied, perhaps become squatters or light fires inside.

      Or consider a pavement. Some litter accumulates. Soon, more litter accumulates. Eventually, people even start leaving bags of refuse from take-out restaurants there or even break into cars.

      https://en.wikipedia.org/wiki/Broken_windows_theory

      1. Many years ago I drove a pickup truck. I always kept the bed clean and free of trash and debris. I can’t recall a time when someone placed litter in it.
        Contrast that with a pickup bed with empty cans, papers and assorted trash. That invites you to throw your litter onto the pile.

  3. ‘If we have another major or even equal spike in inventory in May 2019, we could be in for price reductions this summer’

    You’ve already got the ebola Don.

    ‘Our inventory shot way up in April, which in turn decreased home values slightly. In March 2018, inventory levels were 1.3 months of supply. While in April 2019, inventory levels remained consistent at 1.2 months of supply’

    Inventory way up, months supply down = somebody is a lion.

    ‘Like many of us, Realtor’s will attest that last spring was on fire!’

    Yeah, and once at a sock hop I danced with three girls in one night.

    1. At what point does something like this become a factor in the rent versus buy decision? At least if you buy with a fixed rate mortgage, you’re in control of your monthly payment, and not the landlord. My P&I is about half what rent would be in this area now.

      1. I will buy someday, just not in Denver.

        Renting in Denver, and working in an occupation with nearly unlimited geographic mobility, means I can save alot of money here while waiting to buy somewhere else.

        My electric bill was $19 last month. I live frugally and save money. Alot of money.

      2. This is the problem with the credit cycle fueled boom and bust housing market. The time where people feel like they’re being squeezed is at the end of the cycle, then they become the suckers that buy at the peak and lock in a monthly cost that ends up being higher than the market rate for the next decade, as prices come down and they’re stuck under water with ever-increasing property taxes.

        You bought when buying made sense, the equation is vastly different now.

    2. When the cabal of idiots of the Fed contemplated the wealth effect of QE[123], they only saw the positives of rising asset prices. No doubt, they would deny responsibility for the homelessness epidemic. Yet, ever increasing housing costs *are* the cause. Congrats Alan/Ben/Janet, you have really done yourself proud

      1. Yes, the Fed’s plan since the GFC was to boost stocks and housing and turn consumer psychology back to “positive” via “the wealth effect.” So we have blatant intervention/manipulation/interference in the markets; the Fed thinks that they can control a hugely complex and dynamic system via their “visible hand” policies, when in fact it can only be done via the “invisible hand” of free markets. “Slip-sliding away.” Example: Former USSR.

        http://www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110307372.html
        What the Fed did and why: supporting the recovery and sustaining price stability
        By Ben S. Bernanke
        Thursday, November 4, 2010
        “For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

        Some “minor” problems: 1) Increased wealth inequality, since not everyone owns stocks and houses, and 2) Blowing asset bubbles never ends well on the downside (starts now), 3) Huge asset inflation, but the Fed doesn’t see it. See (1).

        The closer the U.S. gets to a centrally-planned, command economy and the farther from a free market economy, the worse everything gets. For validation of this statement, just review the history of Socialist regimes, both past and current.

        https://www.heritage.org/economic-and-property-rights/report/comparing-free-enterprise-and-socialism
        Comparing Free Enterprise and Socialism
        April 30, 2019 | Over an hour read | David Burton
        “Summary
        What is being offered by contemporary socialists are fairy tales, and we should not mistake them for the truth. These portrayals of socialism and their caricature of capitalism are inaccurate, vacuous, and utopian. Socialism takes from those who work, take risks, innovate, educate themselves, or save and gives to those who do not—or to those who have political power. A century ago, at the advent of the Russian Revolution, one could be a socialist and hope in good faith that socialism could achieve, or at least advance, its utopian aspirations. Now, socialism has a long record of dismal failure. In fact, it has been tried many dozens of times and failed each time.
        Key Takeaways
        1) The U.S. economic system today is a hybrid of free enterprise and socialism with a strong element of crony capitalism.
        2) Socialism has a long record of failure and has been tried many dozens of times. It is arithmetically impossible to pay for the progressive agenda by taxing the rich.”

        Pretty soon: “We pretend to work and they pretend to pay us.” You think I’m joking? Ever heard of negative rates, helicopter money, UBI? These are real constructs today.

    3. you could imagine that if 25% of apartments suddenly went vacant that the rents would come down.

  4. “Andy and Stacie Proctor made a bid on a house in the Salt Lake City suburbs, only to rescind it upon learning there were 13 rival offers.”

    Which means: One bid, the highest, will land the house and twelve bidders won’t.

    Which means: Some, most, or all of the losing bidders will strengthen their resolve not to be outbid on the next house they once again fall in love with and just gotta have.

    Which means: The buying intensity for the next bidding war these potential buyers engage in will intensify. IOW, these pukes are being CONDITIONED by the market to lose their sense of perspective. And this intensitive will strengthen and feed on itself as long as money is made available to these pukes so as to bid up prices. The moment this money is yanked away is the moment the price of the market peaks.

  5. ‘Rates are expected to go up’

    Nonsense
    They said the exact same thing last May and rates are down, what, 50 bps year over year.

  6. “2007 Toyota Tundra TRD, only 170k miles, new starter put on at 160k, runs and drives like brand new. Reduced, $15,000.”

    The loan has reached its end and the balloon is due, but they probably can’t refinance with too many miles. 🙂

    1. After some other recent layoffs in the “real journalism” industry, the 4chan troll army started trolling them on Twitter with the hashtag #LearnToCode, this in response to previous real journalists suggesting just that to laid off miners in Appalachia.

      Twitter blocked and banned accounts posting the #LearnToCode hashtag, because real journalists who will now be eaten ramen are too fragile to be given their own advice…

  7. “I covered this before but think it’s worth saying again. If prices drop, interest rates will most likely go up. In fact, rates are predicted to go up through the remainder of the year. Unless you plan to live in the home for a year or two, you should be buying when you can afford to, not trying to gamble with the market. Buying now is a smart decision.”

    What kind of person buys a house and plans to stay more than 2 years? You get 20% appreciation easily with those 2 years, so you sell and move up into a bigger house, get your 20% appreciation again, and buy another house in 2 years…

    1. Some guy in the first article claims he got 25% in two years. Of course, they always forget to add in the costs.

    2. Yes around ten percent appreciation per year when wages are rising 3 percent per year is a reasonable assumption. Especially if the house is used to transit illegals brought in thanks to Nancy’s refusal to have effective border control. I am sure it will not come back and bite Democrats since we know how law abiding MS-13 members are.

    3. 20% appreciation easily with those 2 years, so you sell and move up

      Or, you buy a house you cannot afford and instantly realize that you are underwater. You never intended to have to actually do spring cleaning again, because you would “move up”. A year or two down the line you are deeper underwater and panic starts to set in. Why did you ever risk buying a house with debt when you could have rented for half the cost?

  8. In Seattle, King County, WA, sellers and agents have gone against tradition and decided to list an unusual amount of new product ahead of a holiday weekend (memorial day weekend). Posting new listings and holding open houses on a holiday weekend is usually not good for sellers, because so many potential buyers will be out of town or otherwise busy with the holiday .

    But this year is different. What caused agents to advise sellers to list before a holiday weekend? My guess is that agents estimated that it would be getter to get the listing on the market now, rather than drown in a flood of new product next week.

    I’m sensing a bit of a selling panic taking hold…

    https://twitter.com/coqumragep279/status/1129804666911334400

    1. There must be some kind of panic afoot, because REIC shills are unanimous in telling me there is no reason to panic. Oddly enough, as a renter, I don’t feel anything remotely resembling panic or even unease when I see all the cratering that’s coming down the pike. Cool as a cucumber, that’s me.

    1. “Chad Haag considered living in a cave to escape his student debt.”

      Did Chad get a 72 or 84 month loan on that elephant he is riding?

      1. Has to be 84, living the US to escape $20000 in debt? He is a moron. I thought the story would be a story about someone with a $250, 000 in debt and a liberal arts degree. He could have taken a job in the oil fields and live like he is now and paid off the loan in a few months. Glad he is gone he is a Bernie voter for sure.

      2. “If you’re not making a living wage,” he said, ”$20,000 in debt is devastating.”

        Clearly this guy should have been born an IG girl. The foodie dates, phuc vacations and keeping an eye on the number of followers and likes is way better than living in a cave.

  9. He put the house on the market in 2009, asking just under $2.7 million, and sold it almost six years later at a real estate auction for $1.47 million.”

    Weren’t going to give it away, ay, Phil?

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