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Sales Are Tumbling, Inventory Shot Back Up, And Sellers Are Cutting Their Prices

A report from the Review Journal on Nevada. “Las Vegas home prices continued to tap the brakes in March but still grew more than twice as fast as the national average, a new report shows. The downshift is one sign of Las Vegas’ housing pullback. Sales totals are tumbling as well, and the once-shrunken inventory of available listings has shot back up. Realty One Group agent Jillian Batchelor said Las Vegas is still a ‘strong seller’s market,’ but homes aren’t trading hands as fast as they used to, and sellers are cutting their prices.”

“She estimated that probably 30 percent of her clients have slashed their asking price in the past five to six months, up from maybe 10 percent of her clients a year ago. The biggest difference between now and then, Batchelor said, is that Las Vegas’ inventory of available houses has nearly doubled, while demand ‘has stayed similar.'”

“A total of 7,435 single-family homes were on the market without offers at the end of April, up almost 95 percent from a year earlier, according to the Greater Las Vegas Association of Realtors. ‘You can’t double inventory and keep your demand the same and expect the same level’ of price growth, Batchelor said.”

From KCRW in California. “The house has a name: ‘Opus.’ It sits in the Trousdale Estates section of Beverly Hills, on a cul-de-sac that realtors refer to as ‘billionaire’s elbow.’ Built from the ground up and completed about two years ago, ‘Opus’ looks like a sleek modernist palace with touches of Versailles.”

“It’s one of several so-called ‘giga-mansions’ for sale in L.A. County at a discount after sitting on the market for months or even years. ‘When this house was first finished,’ said Nile Niami, the project’s developer, ‘it was a different world in the marketplace.'”

“Originally, ‘Opus’ had an asking price of $100 million. That included not only the house but a gold-colored Rolls-Royce and matching Lamborghini. But now the party has ended. The property no longer includes the cars, and the price has been reduced to $59 million.”

“On a recent afternoon at the house, Niami laughed when asked what the vision for it was. ‘I don’t know, man,’ he said.”

“Despite the billions of dollars sloshing around the tippy top of the income pyramid, however, there are signs of a giga-mansion glut in Los Angeles. Of the 20 most expensive listings in Los Angeles County from this time last year, nine have sold, according to property records. The rest appear to have been taken off the market or reduced significantly in price.”

“Even when these kinds of properties do sell, there’s evidence that sellers at the top of the market might be overestimating their properties’ values. Of the roughly 40 sales above $30 million in LA County since 2010, none have gone for more than list price, according to Erin Kennelly, executive director of research for the real estate firm The Agency.”

“‘Everything in that part of the market…is going for under ask, and a lot under ask,’ said Kennelly. ‘There’s a lot of things that are 20 or 30% under.'”

The New York Post. “Welcome to the Twilight Zone of real estate, where everything and nothing is for sale all at once. Even though, largely speaking, New York’s real estate market has become a democratic free-for-all thanks to listing websites like StreetEasy, Trulia and Realtor.com, the city’s toniest addresses are increasingly unadvertised and inaccessible — even to mere millionaires.”

“Of the 43 New York homes that sold for more than $20 million in 2018, 21 were not formally on the market at the time of their sales, according to Compass data. There’s no way to count how many ‘whisper listings,’ or ‘pocket listings,’ exist in Manhattan at a given time.”

“Not all whisper sales, however, result in tidy sums. In fact, rather than reveal their addresses, many privacy-obsessed sellers would rather take a loss. In some cases, they overpaid and don’t want their friends and colleagues to know that they lost money on the sale. It drives some brokers crazy.”

“‘If you talk to anybody but the top-tier brokers, they’ll tell you that they hate whisper listings,’ because they take longer to sell and typically command lower prices, says Douglas Elliman broker Noble Black.”

This Post Has 56 Comments
  1. ‘The biggest difference between now and then, Batchelor said, is that Las Vegas’ inventory of available houses has nearly doubled…A total of 7,435 single-family homes were on the market without offers at the end of April, up almost 95 percent from a year earlier’

    It just keeps getting worser and worser. Wa happened to my shortage Las Vegas?

      1. Twofer Tuesday:

        “This is far and away the strongest global economy I’ve seen in my business lifetime” U.S. Treasury Secretary Henry Paulson, July 2007 (note the above W quote was October 2008, how quickly things can change, eh REALTOR?)

  2. Las Vegas home prices continued to tap the brakes

    Even after all these years reading Bens blog, im still amazed at the RE spinmeisters.

    1. “Cameron and Karie Herber have two incomes, good credit and successful careers. But the Riverside couple still can’t find a house they can afford to buy.”

      A year from now they’ll be glad they escaped California’s madness.

      1. “A year from now they’ll be glad they e$caped California’s madne$$.”

        Is avoidance of $helter.$hack True.Believer’$ $ellers price$ still taught for free online?

        google: “Long.Term” financial patience 101

      2. Their plan to relocate to Idaho might not just pan out the way they imagine. Things are nuts here as well. Of course, I suppose it may depend on where in the state they are looking…

        1. None of the growth in Idaho is justified. Look for a glut of new construction supply shortly followed by a 30% tumble.

      3. Lolz… There’s no escape from this madness, unless you leave the country for greener pastures.
        It’s Bubbled up Everywhere in the USA.

        1. “It’s Bubbled up Everywhere in the U$A.”

          Keen ob$ervation!

          Clint Eastwood’s sidekick in “every.which.way.but.loose”:

          “When eye see’$ a bubble … eye just $quish it!”

        2. The Rust Belt and Midwest isn’t all that bubbly. Evidently the Mississippi River protects the region from the western equity locusts.

          1. Midwest isn’t all that bubbly

            Actually, it is. Here in Western NY we are part of the Midwest. We’ve had the farmland bubble, the obsolete commercial conversion to luxury apartment bubble, the hotel building bubble, the luxury elder care bubble, the waterfront McMansion bubble, high density housing bubble and the just plain old SFR price bubble. May not look like it to you but we started from much much lower prices.

          2. 🤣🤣🤣 no one wants to live there, that’s why HA can by land for $1 and a house for $10!

        3. Even leaving the country may not help. Any other country worth moving to has probably been already bought up by the Chinese.

    2. If housing is affordable relative to today’s prices, that means we crashed hard, and most will be fearful of losing their job, or already lost it….so no, it will not be affordable in our lifetime again. Maybe 20 years from now once the dust settles

      1. Traditionally it has only taken five or so years for housing to bottom out, once a correction has reached critical mass.

    3. /Ranting Mode: ON

      This isn’t just SoCal and the other HCOl areas – It’s hit everywhere – I’m looking at the tiny rust-belt town I grew up in, and prices for existing old homes have gone whack with respect to incomes.

      I honestly think that the 2008 crash and the QE and Interest Rate policies that followed have set in motion a slow but steady transfer of ‘hard assets’ .. i.e. real property from the masses into the hands of the financial elite, and the more well to do individuals.

      Access to endless amounts of cheap money by the elite (and by this include not just individuals, but corporate entities) and a cratering of the rate of return on traditional ‘safe’ financial instruments/investments has set in motion a desire for hard assets that can produce better returns. It’s not limited to that of course – look at all the funny money used to prop up equities, etc. I included ‘well to do individuals’ above because if you happened to be in the top n% and had a nice thick portfolio of stocks, etc that you didn’t need to touch in the recession, you’ve enjoyed great paper gains from the inflation in the money supply that was directed into the financial markets (and not into the hands of regular people). Everyone from Blackstone corp to the young couple next door wants a steady income stream and good ROI that will stay equal to, or do better than the economy around them no matter what sort of fiscal shenanigans the FED/central bankers/Investment banks pulls. Being a landlord has gotten WAY more popular in the past decade. But there’s a limit in the system as to how many people can be landlords, and not be tenants themselves.

      And I said it’s a slow process – It takes time for enough people statistically to come to a point where they need/want to move and put their existing homes up for sale. And then have a percentage of those sales go from individual/families to investors/landlords/etc. And that’s way over simplified, leaving out things like foreign national using our housing (and farm land, etc) as a place to stash their (often ill-gotten) financial gains. Yes, there’s new construction, but the relly telling action is in the existing housing stock – often old homes smaller and simpler than anything that would or could be built new today… and the action in the smaller towns and places far away from the coasts and big cities and job centers. It doesn’t add up the way it used to.

      So yeah, who pays for it? Those who weren’t already on the merry-go round, which includes nearly all our children (unless born into such wealth and station in life). It also includes those people who were wiped out or otherwise fell on hard times and had to sell theirs homes and become renters, and those who just didn’t see it coming.

      ok, I need to go and unwind….

      1. “Being a landlord has gotten WAY more popular in the past decade.”

        You can blame the FIRE movement for that. Tons of young couples are working just long enough to buy a few properties and retire at age 35 on a combination of rent payments at the 4% rule. I think they’re going to fall flat on their faces and come begging for socialist $$ by the time they’re 55. When they’re 70… well I don’t care I’ll be dead.

        Eventually they’re going to run out of rentable properties to buy at a decent prices. And I can’t help but wonder how long the houses themselves can last, especially in the rust belt. You can’t make major repairs or renovations when you can only collect $700 in rents.

        1. ‘Tons of young couples are working just long enough to buy a few properties and retire at age 35’

          Got a link for that?

          Even a lot of apartment buyers are bleeding cash. I got a call recently from a guy who was itching to get into the rental business a few years ago. He asked me, “do you actually make money on your rentals?” Appreciation is what they are in it for. And who’s going to pay more for something that breaks even or loses money? Only a greater fool. A greater fool with a low/no paying property management job.

          1. “And who’s going to pay more for something that breaks even or loses money?”

            Depreciation is painful at $4 per square foot a year…. Year after money losing year.

          2. Unfortunately I couldn’t find any good source for the actual number of people pursing FIRE using the rental property route. I just know that it’s all over the news, probably overloaded with the same few anecdotal couples over and over again. But it only takes a few anecdotes to screw the comps in the Rust Belt.

          3. What prompted me to look into the multi-family bubble was people buying at what would be cash flow negative prices. That was 5 years ago, and it’s only gotten worse since.

            It’s irrational. Classic mania sign.

          4. I think what you are both seeing is valid. Lots of people stepping up to the ‘be a landlord’ table (heck, my next door neighbors are literally what oxide is describing) but like in Vegas, not everyone is a winner, or even truly understands the the game.

  3. “The housing sector, lifted now by the possibility of re-acceleration in prices, is shaping up to be a major positive of the 2019 economy and a possible offset to what perhaps is becoming a slowing year for consumer and business spending.”

    -Econoday
    https://us.econoday.com/byshoweventfull.asp?fid=499095&cust=us&year=2019&lid=0&prev=/byweek.asp#top

    How many hits at the crack pipe does it take to come up with a delusion like this? Enquiring minds would like to know.

    1. “Enquiring mind$ would like to know.”

      To $urvive, what adaptation$ does yer $pecies require?

      (“Enquiring mind$ would like to know.” )

    1. Love the red flag correction on this Marketwatch article. CORRECTION: rate of increase slowing, not values going down.

      Whoa, got to make sure you dont report that values are going down, that would be punishable by death sentence!

      Hate to say it but if YOY is decreasing then there has to be lowering prices. If these folks would actually publish monthly median price change there would be shock and awe. I wonder what their reporting standard will be once continuing price drops will take the YOY negative. Something like “CORRECTION: the decade over decade median price comparison is still showing .1% appreciation, we would never insinuate that prices are falling! Therefore all you 2018 and 2019 buyers can keep the Xanax in the bottle.

      Freakin rediculous! And about to end.

  4. “Not all whisper sales, however, result in tidy sums. In fact, rather than reveal their addresses, many privacy-obsessed sellers would rather take a loss. In some cases, they overpaid and don’t want their friends and colleagues to know that they lost money on the sale. It drives some brokers crazy.”

    There goes the comps! LOL

    1. “they overpaid and don’t want their friends and colleagues to know that they lost money”

      What’s the worst their friends and colleagues could say?

      Hey Donk, bought at the peak did ya?

      I had some cash I was going to have you invest for me but I figured I would wait until Bernie Madoff got out of jail and have him do it.

      I’ve got a timeshare that could put you right back in the Black.

  5. https://www.youtube.com/watch?v=Joo90ZWrUkU
    Tennessee Ernie Ford Sings 16 Tons

    https://lifehacker.com/now-you-can-get-a-loan-just-to-pay-your-rent-1835006070
    Housing
    Now You Can Get a Loan Just to Pay Your Rent
    Lisa Rowan | May 27th, 2019

    “From the department of the rent being too damn high comes this report from the Wall Street Journal: Loan companies are now marketing loans specifically to renters who need help making ends meet.”

    “One such program mentioned by the Wall Street Journal is by property management company Stay Tony, which allows tenants of its corporate rentals in Los Angeles and Atlanta to finance up to three months of rent over a 12 month period. You can get a loan through its partner vendor, Uplift, with no interest for the first six months, with an interest rate of 15%-17% afterward.”

    Not sure how this is different from payday loans or loansharking, but hey, at least I’m getting 15%-17% on my savings account balance… Wait a minute… Never mind.

  6. which allows tenants of its corporate rentals in Los Angeles and Atlanta to finance up to three months of rent over a 12 month period.

    I cannot think of a worse way to get stuck on the hamster wheel of debt that financing 3 month’s of rent over a one year period. That is a recipe for disaster. If you have to do this to make the rent, you’re better off sleeping in your car.

  7. Wither the Fed’s punchbowl removal plan?

    The Financial Times
    Global Economy
    Investors raise bets on Fed making two rate cuts
    Yield on 10-year Treasury retreats to lowest since 2017 on economic concerns
    Joe Rennison in New York yesterday

    Investors have increased bets that the Federal Reserve will cut US interest rates not once but twice this year, to counter concerns about slowing global economic growth that have been inflamed by the worsening US-China trade war.

    The probability that the central bank will cut rates two or more times by the end of 2019 rose above 40 per cent on Tuesday, according to futures prices, exceeding for the first time expectations of a single cut.

    The markets have been signalling a single rate cut this year for several months, even while the Fed has been keeping official policy on pause and maintained that its next move could be in either direction.

    1. The Wall Street Journal
      Credit Markets
      Global Bond Yields Fall Near Multiyear Lows
      Investors increasingly concerned the long postcrisis expansion could be nearing an end
      Why Investors Are Obsessed With the Inverted Yield Curve
      Why Investors Are Obsessed With the Inverted Yield Curve

      Amid a shaky marketplace, investors are eyeing the yield curve for signs of economic stability. History shows that when the yield curve inverts, a recession may soon follow. Photo Composite: Stephanie Swart for The Wall Street Journal.
      By Daniel Kruger and
      Sam Goldfarb
      Updated May 28, 2019 5:59 p.m. ET

      Investors around the world pushed government bond yields near multiyear lows Tuesday, reflecting growing concern that global economic growth is slowing.

      Bond yields, which fall as prices rise, have slid in recent weeks in response to a host of factors, including tepid economic data, geopolitical tensions and signs of caution from the Federal Reserve. While few see an imminent recession, many investors worry that economic growth could falter as the effects of Trump administration tax cuts fade, companies cut back on spending…
      To Read the Full Story
      Subscribe

    1. Trade war -check
      Gov shutdown -check
      Interest rates went up -check
      Interest rates went down -check
      Cold weather -check
      Hot weather -check
      Buyers on vacation from Jan-dec -check
      Foreign money laundering “investors” retraction from US markets -not hearing this one which I believe is the #1 reason

      1. Don’t forget “Buyer Fatigue”! They just need a rest and then BOOM pent-up demand and prices to the moon again!!!!

  8. Does the prospect of a long trade war have you dumping your stocks and putting your money under the mattress?

    Stocks could fall 10% if trade talks go south, warns Nordea strategist
    By Barbara Kollmeyer
    Published: May 29, 2019 9:32 a.m. ET
    Critical information for the U.S. trading day
    Getty Images
    Time to chill?

    Alarm bells were ringing across financial markets on Wednesday.

    Investors are backing away from equities and sending money elsewhere — bonds mostly — as concerns heat up about the global economy and chances of a long and drawn-out trade war.

    1. Thee Mega.Wanker.Banker$ are $trong! … The NON.bank$ are $acrificial lamb$ awaiting to bee $laughtered!

      $erving $oon: ta$ty impo$$ible lamb meatloaf!

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