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Wait — Inventory Is Up And Sales Are Less, It’s Not A Shortage

A report from the New York Times. “A year ago, many housing markets were in a ‘frenzy,’ with multiple buyers competing for properties, said Lawrence Yun, chief economist for the Realtors association. But the inventory of homes for sale has notched upward this spring, tilting the balance of power away from sellers, especially for higher-priced homes.”

“‘The upper end of the market is very soft,’ Mr. Yun said, and buyers of those properties have better advantage over sellers.”

From Twin Cities Business in Minnesota. “Construction of new single-family homes in the Twin Cities continued a downward trend in May. For homes costing more than $1 million, there’s enough supply to last more than 10 months. ‘Our market is oversupplied overall, but not across every price point,’ says David Arbit, director of research and economics at the Minneapolis Area Association of Realtors.”

The Mountain Democrat in California. “The Great Recession has been credited with the slow start for millennials but that’s way behind us. It’s time they step up, take the field and buy a home. Their absence is evident by a national housing funk. Real estate economists can’t explain why spring sales are disappointing despite falling mortgage rates and a robust economy. U.S. home sales have been declining over the last 14 months, according to the National Association of Realtors.”

“In El Dorado County April home sales were 25 percent under April of last year and this May is running 10 percent fewer sales. A year ago, my reasoning for the slow spring was a shortage of  homes for sale.”

“But wait — inventory is up 30 percent from a year ago and home sales are less than last year. It’s not an inventory shortage. We are experiencing a millennial shortage.”

The Daily News in California. “Realtors have been keen to watching a market with diverging forces pushing and pulling on it, with a sprinkling of good news for buyers trying to buy the most affordable home possible. That good news is that after home sales hit a low in February, some home sellers have realized that prices had been rising too fast and needed to loosen up a bit on prices if they wanted to unload their home.”

“‘A slowly increasing inventory, lower interest rates, and sellers willing to negotiate all contributed to the April increase in sales,’ said Dan Tresierras, president of the association. ‘The fourth consecutive month of lower interest rates bolstered buyer confidence in the market, convincing them that they have greater negotiating leverage today than just a short while ago.'”

The Review Journal in Nevada. “Some people may think the zombie homes of five or 10 years ago are a thing of the past. But a drive down Kasper Avenue is a stark reminder that, though things are looking up, a house can still get boarded up and barbecued.”

“Las Vegas hasn’t washed its hands of foreclosures. Case in point: the boarded-up house at 600 Kasper Ave., off D Street and Lake Mead Boulevard. The one-story home, built in 1960, sold in 2007 for $207,500 and was foreclosed on last June, according to county records. It’s now on the market for $65,000. ‘INVESTORS!! Full fixer upper,’ the listing says.”

From Soap Dirt. “Sister Wives news reveals Christine Brown‘s Las Vegas home has been withdrawn from the market and relisted. So, it almost goes without saying that the refreshed listing comes with a significant price cut – just over $100K. Clearly, the polygamist family is getting desperate. A price reduction usually signals the seller’s motivation. However, most buyers take that as a sign to offer even less.”

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This Post Has 68 Comments

  1. ‘A year ago, my reasoning for the slow spring was a shortage of homes for sale’

    As Tony said, don’t get high on your own supply.

        1. ‘that have 4 or more bedrooms’

          Mormon country?

          Lol, that’s pretty good Ben!

      2. I don’t recall hearing 4 bedroom rentals become a sought after commodity, I think your search would show pretty low an many areas and years…

        1. Probably, with variation depending on the area.

          3 Bedrooms should be rather common though – that’s typically the minimum a family needs once they start having kids. Even if they only have one so far, they want to hedge against a second being the opposite gender from the first.

          I’ve noticed a lot of new construction listings, some that were posted here and especially in CA, that had 4 or more bedrooms in what seemed like a smaller than average (for the bedroom count) total size. Taking just 500 sq ft and making 4 approx 10×10′ rooms + closets. Perhaps a reaction to market changes – lots of families can’t afford anything bigger, or for the AirBnB crowd.

        2. Sorry, I track this type of property (4 bedroom houses) for business. Offer the years there are usually 20-30 listings. Today there are 6. It seems like a tight market.

          There are a lot of good comments including wondering if Craigslist is even relevant.

      3. Same search on hotpads shows 15 homes with 4+ bedrooms. Does anyone still use Craigslist with all the fraudulent listings?

        Three years ago it was awful trying to find a house to rent. Had to write love letters, sign a contract site unseen, etc. A couple months ago, the opposite experience. The places that take poor credit still draw big crowds for open houses, but if credit matters they sit for a month or two, and go through a couple of price cuts. Agents also mentioned they were getting a lot of offers for terms less than 1 year. Our current place was being subleased for Airbnb by the previous tenants before they were kicked out — maybe if that is your plan you just try to lease it for the season?

        Our rent is below what the monthly expense pencils out at, not including paying any principal. It is also probably worth less now than when it was built (2017). Housing is still ridiculous, but it helps that there are others willing to subsidize it for you.

      4. I call that a pretty tight inventory, based on a Craigslist search.

        Yeah, I know, and just think how hard it is to get one that’s nice and allows pets. I just snagged one a few weeks ago. It was a pain to have to watch the market that closely just to get in front of all the Intel people trying to throw money at them to jump to the front of the line.

    2. “Real estate economists can’t explain why spring sales are disappointing despite falling mortgage rates and a robust economy.”

      🙂

  2. ‘A year ago, many housing markets were in a ‘frenzy,’ with multiple buyers competing for properties, said Lawrence Yun, chief economist for the Realtors association. But the inventory of homes for sale has notched upward this spring, tilting the balance of power away from sellers’

    A sharp swing from frenzy to crater is indicative of a bubble popping Larry.

    1. “tilting the balance of power away from sellers“

      Oh the horror! Sellers may have to adjust their greedy expectations. Not gonna give it away right seller!

      1. 7.7% to be exact 😂. I’m sure in real estate math rounding down is normal though.

  4. ‘Some people may think the zombie homes of five or 10 years ago are a thing of the past’

    I have found abandoned shacks all over the place for years, including Las Vegas.

    1. I keep finding them too. It is amazing how long the effect is from the 2007 housing bubble.

      So much mortgage fraud that the “reset” is taking over a decade!

  6. Snip from the el dorado article:

    If millennials don’t get in the game soon, there will be a surplus of large, mostly older homes, primarily located in the suburbs, and unsuitable for the lifestyle of millennials looking for smaller space, modern design and located in metro areas.

    PLEASE MILLENNIALS BUY HOMES SO WE CAN EAT!!!

    1. This is that unusual period when the REIC can still recall their horsesh!t language from the recent past. So we’re treated to “it was a frenzy just a few months ago, Wa happened?” Yeah, and the media didn’t have anything to do with that frenzy. How can it go from shortage to surplus in a year? It can’t. There never was a shortage and there never will be. I said that all along and lying Larry insisted otherwise. And who does the NYT turn to when it blows up in their faces?

      It’s all fun and games til someone loses an eye. Lots of foreclosures coming.

      1. When prices were artificially stimulated by deliberate Fed intervention to increase at historically unprecedented double-digit rates over a period of many years, soon after crony capitalists were summarily handed out trillions in Yellen bux bailout monies, it was a logical consequence for speculators to snap up every available home for sale, in order to ride up the tsunami wave of appreciation. Of course this piling in of speculators artificially reduced the number of homes on the market below where fundamental demand for shelter would have taken it, driving prices and the rate of appreciation much higher than end-user demand could have driven them. This resulted in a ginormous echo bubble to replace the one that had begun collapsing over the 2007-2012 period, before the onset of the Fed’s QE housing bubble reflation initiative. A perceived inventory shortage naturally resulted from the stimulus-driven investing craze.

        Now that the QE tsunami tide is receding and home price appreciation is slowing, the perceived inventory shortage is rapidly evolving into a glut of homes sitting on the market with asking prices held above where they would sell. Soon enough, the naked swimmers left stranded on the beach will come into plain view.

        1. Mega Wanker.Banker$ $trong! … NON.bank$ $craficial lamb$ awaiting $laughter.

          No Lehmann Brother$ in HB.B ll. $ad.

    2. What “gAme” should millennials get in?! Getting tied to too-big too-expensive to heat/cool/electrify/maintain old houses in areas they don’t want to live in or commute to and from?! The misery game?! They saw their parents do that. They’ll wAit til the boomers who have ruined everything for everyone who has been unlucky enough to come after their hypocrisy and greed to die and pick up homes then, thank you.

      1. The waiting game. It’s the waiting game they should get good at. Not the “catch a falling knife game” or succumb to impatience of a spouse who wants the idealized vision of homeowner ship hawked by HGTV propaganda. Stick to the waiting game. House prices down nationally month-over-month for first time in 7 years and interest rates are still at record lows. Fed may cut and they could go lower still. But that won’t change the demographic trends of a ton of supply coming on the market in the next 10 years. Demographics is destiny.

        2. With rates already super low, the Fed doesn’t have much room to cut in order to once again put a floor under housing. I also don’t get the impression that Jay Powell is so much into experimental monetary policy voodoo as Ben Bernanke was.

          1. The upshot is that with home prices already plateauing and beginning to fall against a backdrop of historically low unemployment and interest rates, they may have a lot farther to fall from current levels to restore fundamenal balance in the housing market, where home prices align with willingness- and ability-to-pay as supported by end-user household incomes rather than speculative mania demand.

    3. Not as young as most think. Anyone born between 1981 and 1996 (ages 23 to 38 in 2019) is considered a Millennial.

  7. From the NYT article:

    “The old rule of 10 to 20 percent down is no longer ironclad. Both Freddie Mac and Fannie Mae, the quasi-governmental mortgage finance companies that back most home loans in the United States, have been offering programs requiring just 3 percent down for several years. In the first three months of this year, 80 percent of first-time home buyers used some form of mortgage with a low down payment, according to a report from Genworth Mortgage Insurance.”

    1. It seems like new buyers’ finances are in excellent condition. I’m sure all these credit-worthy buyers will be just fine if house prices drop 30%. /s

  8. “A price reduction usually signals the seller’s motivation. However, most buyers take that as a sign to offer even less.”

    Blood in the water…

    1. Those who are unwilling to lower their offer price to market value will find themselves unable to sell. It’s that simple.

  9. McSpiffy if you see this: can we chat?
    I inherited an oceanfront property on 8 acres in Canada back in 1989 and have sold it. You all know what a bubble Canada was. So I have “found” money to buy something where I want, that being the Cali coast or the Seattle area. I’m getting pretty frustrated with Cali and I would like to ask questions about the Seattle market. It seems to be a bit more reasonable.

    1. I would counsel patience, as a market top in California housing has traditionally led to half a decade of price declines that “nobody could have seen coming.” But if you don’t mind leaving a few $100Ks in price discounts off current levels on the table, then by all means dive right in today.

    3. What could Spiffy possibly help you with? He’s a transplant and bought at the apex. I was born in Seattle. What kind of information do you need?

      1. it’s probably just that my location is mentioned more often – we need to have a ‘housing bubble blog’ get together one of these days 😀

    4. txchick,
      I’m happy to share my thoughts on the area, but Chinbabwe, b, redmondjp and others who make up the regular crew know this area as well or even better than I do. I think together we make an ok ‘hive-mind’

      I can throw this out to start with, and I’d like the other guys to chime in with their take:

      Living in the Seattle Metro area, the ‘exactly where you live’ matters a lot more than in many other place(s). You want to be close(r) to where you work, shop, do activities, etc. There’s also more variety in the type and characteristics of a property which you might own.

      This is most due to the geography and terrain of the region.

      To elaborate: When I lived in North Texas, over they I lived in: Willow Park, Ft. Worth, Irvine, Las Colinas, Carrolton, Plano, Garland and Rockwall. It didn’t matter so much how far away I was from the places I worked and went to, like the Stockyards, Ballpark, Deep Ellum, etc. It was nice to be close but since there were roads and highways everywhere (820, 635, 35, etc) and everything was flat, you just drove and got there. As things grew, they just kept building more. Houses were way too similar and it’s mostly subdivision after subdivision. The yards/lots were all pretty much the same – flat, limestone that made basements impractical, stunted trees and limited vegetation, etc.

      The King Country metro area is very different in character.

      Seattle is on a Peninsula, in a larger valley trailing down from the mountains. Getting around to the places you want and need to go is much more difficult and subject to choke points and limited options. Access to public transit matters. The ability to increase capacity is severely constrained, and a lot more premium is placed on proximity. There are lots of waterfront and even on-the-water homes. Homes on flat lots aren’t as common as flat buildable land is at premium. People protect their trees. Many homes have great views, Many also have 100’+ trees (Chinese neighbors with blocked views might pay you to cut them down, which the city will deny you a permit to, and then they’ll poison your trees – wish I was making this bit up). Lots of elevation changes.

      1. I really like Mercer Island and Bainbridge Island. Needless to say they are quite expensive, but I can afford. How did they fare in the last downturn? Is it worth waiting? I assume much of the money there is Microsoft and Boeing millionaires.

        1. Both took a hit in the last downturn.

          I tracked Mercer Island a bit back in 2011-2012 before moving here along with some other areas, but not Bainbridge Island. Mercer Island prices were down by the 30% range around late 2011, but rebounded by 2014. Even Waterfront houses too the hit. As there really aren’t ‘subdivisions’ in typical sense that you’d find around DFW, etc, individual houses and the prices were more ‘quirkier’ for lack of a better description, and you’d see a number of outliers and not all the sale prices moved in sync.

          One of the big differences between the two areas is access to Seattle / Eastside. From Bainbridge, coming to/from Seattle requires taking a ferry across the sound, unless of course you take 305 to 3 and down to the Tacoma Narrows Bridge – a 3+ hour drive. Mercer Island has bridges across I-90 direct to Seattle and Bellevue and when it’s not peak traffic, you can get wherever in 15-30 minutes by car or bus (and in 2023, light rail).

          If you’re serious, I’d recommend booking a scouting trip up here and staying in different AirBnBs for 3-4 days at a time and seeing what each area is like. Not just Mercer and Bainbridge, but spend a days living in or driving to and through places like Queen Anne, Woodeinville, Sammamish, East Renton, Kent, Leschi, Kirkland, Dash Point, Lynnwood, etc Heck, even do a weekend getaway to Whidbey or Camano Island – it’d give you a real good mental model of the layout of the area.

          As for the money – Microsoft money in the 90s on really exploded on the east side, but there’s always been a lot of money – in the 90s there was some big telecom., etc and today we got Amazon, Facebook, Google and a lot of the other SF/SV companies. Boeing didn’t make as many millionaires, but it has provided solid employment for a few generations of people in the area.

      1. War on Amazon

        And Facebook.

        From the linked article: “We feel it’s no exaggeration to say that this is only the beginning of what could become an epoch-defining story arch.”

          1. Indeed. Last year’s exposure of privacy violations was a prelude to antitrust action. Expecting the latter, I took it as a sell signal.

          2. Agree 100%. Even Warren has proposed breaking up these tech monopolies. The problem is being recognized by both right and left.

        2. I prefer the free market approach, if you don’t like FB or AMAZON, don’t use it. I dont want more gov and more spending.

          1. I prefer the free market approach

            As do I, but we have is not a free market.

    1. From the the Mercury News the other day:

      One commenter said, “We don’t have a shortage of housing, we have a surplus of people. CA is full!”

  13. Got permanently high plateau?

    May 30, 2019,10:58 am
    Real House Prices Fell In These 5 Cities Over The Last 12 Months
    John Wake, Contributor
    Real Estate
    I write about real estate economics, home buying and house selling.

    The stock market bounced back from its December lows but house price increases continued to shrink and real, inflation-adjusted prices actually fell (slightly) over the last 12 months in five of the 20 major metro areas covered by Case-Shiller data.

    That’s what I found when I applied the Consumer Price Index (CPI-U) to the S&P CoreLogic Case-Shiller Home Price Index for March (released this week) and compared it to the March 2018 numbers. Be aware the March numbers are really January-March averages so Case-Shiller data doesn’t jump around a lot month to month.

    Looking at nominal house prices instead of inflation-adjusted prices for those five cities we can see all five have appreciated less than the 1.9% inflation rate from March 2018 to March 2019.
    …

  14. Hey Jingle Male:

    In El Dorado County April home sales were 25 percent under April of last year and this May is running 10 percent fewer sales.

    Bet you glad you dumped that shack recently! Sacramento and surrounding areas gonna tank just like it did B1

    1. You might be right, but every recession is different.

      I will miss the house I am selling. We lived in it for 3 years before renting it. It was a great place to live. Mostly, I’ll miss the cash flow.

  16. “The Great Recession has been credited with the slow start for millennials but that’s way behind us. It’s time they step up, take the field and buy a home. Their absence is evident by a national housing funk.”

    How about screw you. Some older millennials are just starting to get on their feet financially, and while they COULD buy homes, they probably don’t want to throw it all away to the most spoiled / easily rich generation (boomers) at unjustified inflated prices… when most reasonable people know a downturn is around the corner.

    1. From my perspective as a Gen X-er, I’m noticing a millennials vs. boomers trend across platforms these days.

      1. Well I’m barely a millennial. Some would say I’m not and would say I’m gen x. I’m sort of in that disagreed upon cusp. I don’t feel “vs boomers” towards any particular individuals. As a generation though, they did have a lot handed to them in terms of easy to grab financial prosperity. And good for them. The problem is so many of them shit all over millennials and sometimes X’ers too because these groups have faced financial difficulties that the boomer generation just frankly never faced.

        Some boomers are very reasonable and readily acknowledge the cake walk they had (speaking generally, of course) financially. Some though just feel a never-ending need to pretend the generations following them must just be pieces of shit and that must be why they’ve struggled financially. It hurts their pride too much to come down off their high horse admit how much of it is circumstantial luck…. ESPECIALLY when it comes to real estate (and education costs).

        They also (generally speaking) haven’t historically had the right respect for the couple generations preceding them. They don’t respect or acknowledge the fact that a golden path of roses was laid out for them by their predecessors.

        1. a golden path of roses

          I’m a boomer. I live a low impact lifestyle not taking the casino debt gamble. I led a charmed life and had lots of good paying jobs. Lost most of them saying no to the corporate culture of corruption though. I’m not cashing in on younger people and not disrespecting my older neighbors. I think my parents and grandparents made huge sacrifices and tried to live the honest life. My father and grandfather fought in wars supposed to save our liberty and that of others. Now, two generations later, those who enslave us are within and we’re not putting up such a good fight. You younger folks have a lot of decisions to make. May you choose wisely.

          1. You younger folks have a lot of decisions to make. May you choose wisely.

            According to NYT, I’m an “old millennial” which basically means I’m right on the cusp of being Gen X or millennial. It’s almost it’s own separate category. I love all the boomers in my life, but I what I can’t stomach is when a boomer starts lecturing about life choices that may or may not lead to good outcomes. Case in point: it probably did make good sense for boomers to buy a house when it was reasonably priced. Then it appreciated massively and they cashed out and could fund their retirement. But when they peddle the “you just need to get on the property ladder” nonsense, it is not only misguided but it is dangerous.

            Same goes for college and higher ed. It might have been a good way to get ahead for boomers and it is still is depending on where you go (but more importantly, what you study), but many boomers recommend college without any reservations. I am generalizing, but many boomers see things through their own lens.

          2. You younger folks have a lot of decisions to make. May you choose wisely.

            Maybe the most important decision millennials have to make is to not buy a boomer’s overpriced house. It may be the only inter-generational justice they can exercise if they go on a buyers’ strike.

          3. Woody Allen: “More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.”

  17. Anger should be at the investment bankers, the Globalists, and the political monkies that sold the USA out piece by piece.

    The baby boomers were just dumb to not see what was happening by the power brokers.

    I have hope everyday that this Nation returns to it’s former economic advantages and freedoms that I enjoyed growing up, being a baby boomer. I can’t stand how crazy it is for the generations younger than myself.

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