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Previously White-Hot Housing Markets Have Seen A Flood Of New Listings

A report from Mansion Global. “Home buyers in Los Angeles County, once one of the nation’s most competitive housing markets, are now gaining the upper hand. The city ranked No. 6 in the nation for top buyer’s markets in the U.S., according to new data analysis from realtor.com. Los Angeles, along with previously white-hot housing markets Dallas and Nashville, have all seen a flood of new listings, with the amount of available inventory spiking by around 23% to 25% compared to a year ago.”

“In Los Angeles, slowed economic momentum and runaway price growth have turned off would-be house hunters. Likewise, in Dallas and Nashville, home price growth ‘has reached unsustainable levels,’ according to the report.”

“The most dramatic example of that was New York’s upstate capital Albany (along with its neighboring cities Schenectady and Troy), which ranked No. 1 on the list. There’s now over six months worth of housing stock available in the Albany area, an increase of 31% compared to a year ago. Albany was followed by Greater Chicago and San Antonio, Texas, which ranked second and third, respectively.”

From Realtor.com. “In Chicago, Los Angeles, and Providence, the housing market slowdown can be traced to economic growth that’s fallen behind the rest of the country and pushed potential buyers to seek career options elsewhere. A similar pattern is occurring in Riverside, Tampa, and Jacksonville, where job growth has notably lagged the U.S. average.”

From Redfin. “Sale prices for newly built homes fell 1 percent year over year to a median of $363,900 in the first quarter, the first such drop in seven years, according to Redfin. Sales of new homes were down 3.1 percent year over year in the first quarter, the third consecutive quarter of declines. Supply of new homes was up 4.2 percent in the first quarter, the fourth consecutive period of increases.”

“Lowering prices is part of an effort to sell some of the new-home inventory that’s been piling up in Dallas (supply of new homes in the Dallas metro was up 14.7% in the first quarter). ‘The market for new homes is shifting. Builders are readjusting their pricing to be more competitive, both in low-end and high-end homes. Some of my clients have been able to buy new homes at prices we never could have negotiated a year ago,’ said Connie Durnal, a Redfin agent in Dallas.”

From Kitchen & Bath Design. “Domestic shipments of major home appliances, keyed by declines in nearly all major product categories, fell in March compared to the same month in 2018, according to the Association of Home Appliance Manufacturers. According to Lawrence Yun, the NAR was not surprised to see the recent retreat in existing-home sales, adding that a sustained, steady gain in home sales can occur only ‘when home price appreciation grows at roughly the same pace as wage growth.'”

From Builder Online. “The pent-up demand on the affordable end of the housing scale continues to represent an opportunity for builders as the number of closings exceeds housing inventory levels in the lower ranges starting at $150,000 and topping off at $400,000. On the opposite end of the spectrum, existing inventory for homes valued at $800,000 and above are more than double the amount of closings. Chief economist Mark Boud of Metrostudy cites price reductions and losses on sales as more evidence of a luxury glut.”

The Long Beach Business Journal in California. “‘We’re seeing a slowdown in the single-family for-sale market not just in Southern California but nationally,’ Robert Kleinhenz, economist for Beacon Economics, told the Business Journal. Home sales have been decreasing since early 2018, he noted. ‘The ostensible reason for that is what we saw happen with interest rates starting in 2017 and rolling through 2018, when we saw interest rates edge up,’ he explained.”

“When it comes to the local multi-family market, the headline stories in Long Beach continue to be rising rental rates and the ongoing development of more than 6,000 new units. Kleinhenz, however, believed that rental rates in Long Beach could soften a bit due to the number of new units coming online.”

“‘The increase in the number of units almost assuredly has to have some sort of softening effect on rents,’ he said, adding that most of them are located downtown. ‘We’re really offering one flavor right now with the new rental units that we’re bringing online,’ Kleinhenz said. ‘And we sure know that Long Beach is full of varied kinds of households. So it’s not clear at all that the housing needs for would-be renters, especially new arrivals, are going to match up with what’s being offered right now.'”

The Democrat and Chronicle in New York. “Robert Morgan’s embattled real estate empire has taken another hit: ESL Federal Credit Union on Monday began foreclosure proceedings against a property he owns in Henrietta. The move comes only a week after federal prosecutors accused Morgan of fraud and money-laundering, claiming that he and others in his company duped lenders with falsified information.”

“The U.S. Securities and Exchange Commission has also accused Morgan of fraud, and is seeking to freeze his assets. A court hearing is scheduled for Wednesday in Buffalo.”

“In February 2017, ESL loaned Morgan Rivers Run LLC, the entity created for the Henrietta project, a total of $17.8 million for the property and construction. According to court papers, Morgan has only paid $100,000 and has not made payments since February.”

“Morgan has a vast real estate portfolio, with tens of thousands of apartment units across multiple states. He also owes millions to the city of Rochester; last year the amount was around $17 million.”

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This Post Has 72 Comments

  1. ‘According to Lawrence Yun, the NAR was not surprised to see the recent retreat in existing-home sales, adding that a sustained, steady gain in home sales can occur only ‘when home price appreciation grows at roughly the same pace as wage growth’

    Say it ain’t so Larry! This has only been going on for a decade. I hear that sound when the trash truck backs up: beep beep beep.

    2. In light of the overwhelming evidence that the R/E market is correcting significantly downware, I had been wondering how Lawrence Yun was going to wiggle and spin himself out of the wormhole he has been digging for himself for years.

      Well, “not surprised” is the ultimate wussy capitulation.

      “Not surprised” is like saying “Yeah, us geniuses here at the NAR knew all along that the market was going to tank but we never said anything because it was so obvious. Nothing to see here, just move along…”

  2. ‘Chief economist Mark Boud of Metrostudy cites price reductions and losses on sales as more evidence of a luxury glut’

    Wa happened to my shortage Mark?

    ‘losses on sales’

    Oh dear…

  3. ‘‘The market for new homes is shifting. Builders are readjusting their pricing to be more competitive, both in low-end and high-end homes. Some of my clients have been able to buy new homes at prices we never could have negotiated a year ago,’ said Connie Durnal, a Redfin agent in Dallas’

    And minting slews of FB’s in the process Connie!

    1. Love the unintended consequences in that quote.

      “Buy now, or be priced out forever” indeed.

  4. “‘We’re seeing a slowdown in the single-family for-sale market not just in Southern California but nationally,’ Robert Kleinhenz, economist for Beacon Economics, told the Business Journal. Home sales have been decreasing since early 2018, he noted.”

    No mention of any price declines. I guess Beacon did tell the world that would be unpossible.

      1. It’s pretty interesting that Obama seemed happy to turn a blind eye to technology trusts, but not so much the current administration.

  5. – Prices too high leads to (in this order):
    1. Declining sales
    2. Rising inventory
    3. Falling prices
    4. Stamping of little feet. 🙂

    “Trees don’t grow to the sky.” -German proverb
    (aka real-world vs. central bank economics)

  6. Border at ‘Breaking Point’ as More Than 76,000 Unauthorized Migrants Cross in a Month

    By Caitlin Dickerson
    March 5, 2019

    https://www.nytimes.com/2019/03/05/us/border-crossing-increase.html

    United States epidemiology of hepatitis A: influenced by immigrants visiting friends and relatives in Mexico?

    Am J Med. 2005 Oct;118 Suppl 10A:50S-57S.

    Considering the expanded geographic distribution of Mexican immigrant settlement, the predicted increased diversity of pediatric populations in the United States over time, and the continued growth of VFR travel, a universal pediatric vaccine recommendation for hepatitis A immunization can help to prevent hepatitis A transmission in this country in the future.

    https://www.ncbi.nlm.nih.gov/pubmed/16271542

    Three new cases of hepatitis A confirmed in Palm Beach County

    Posted: 10:34 PM, May 01, 2019
    By: WPTV Webteam

    PALM BEACH COUNTY, Fla. — Three new cases of hepatitis A have been confirmed in Palm Beach County, according to health officials. That raises the total number to nine cases of hepatitis A reported this year in the county.

    Three deaths tied to the hepatitis A outbreak were reported in Martin County. Both Martin and Palm Beach counties have been declared as high risk zones for the virus.

    https://www.wptv.com/news/region-c-palm-beach-county/west-palm-beach/three-new-cases-of-hepatitis-a-confirmed-in-palm-beach-county

    1. The incidence of these diseases is compounded by anti-vaxers who buy into conspiracy theories and don’t get their children vaccinated. Hence the uptick of measles and other largely dormant infections which are now reappearing at an alarming rate.

      The biggest problem of Facebook is how quickly it allows fake information to spread. There are a couple of posters on this forum that I’m pretty sure are just Russian trolls because they appeared very suddenly and consistently put out an angle on certain topics.

  7. In February 2017, ESL loaned Morgan Rivers Run LLC, the entity created for the Henrietta project, a total of $17.8 million for the property and construction. According to court papers, Morgan has only paid $100,000 and has not made payments since February.”

    My hometown of Henrietta! Always making me proud! By the way, this is a blue collar suburb of Rochester, not some borough near NYC. $17.8 Million could probably buy up half the town.

    1. ‘Morgan has a vast real estate portfolio, with tens of thousands of apartment units across multiple states’

      Losing money, but making it up in volume.

      1. Ben, making up losses in volume is exactly what they’ve been doing. It’s disgusting the number of properties Morgan have been buying up. I swear they went directly to all local property managers and made them offers they couldn’t refuse, given how many properties they’ve purchased in the last couple years alone. There’s no way that many properties had been for sale, yet somehow they bought them anyway. Once they buy them they do nothing to maintain them. Did you see Morgan is suing the city of Rochester over the valuations on some properties, wanting them dropped by almost 70% to lower taxes paid? As if that would ever result in a lowering of rents too. They’re crooks who hopefully get exactly what they deserve. One has to wonder what it’s going to mean for all their property holdings though, especially locally. There are so many it’s really going to affect the Rochester area, whatever happens.

        1. If I were paranoid I would say that this Morgan character is setting up to establish a foreign colony here in the US.

    2. Sean, you wouldn’t believe how insane housing prices have gone in Henrietta over the last couple years. A 3/2 50s ranch we were interested in last year, worth no more than $170K, went for over $200K. There are 2/2 and 3/3 decades-old townhouses (townhouses!!) going for $210K and over. Costing more than houses even! All of them need work at those prices too. H1Bs and other foreign buyers are driving up Henrietta and Brighton housing prices to the sky. They’ve descended like locusts into the area and swarm every open house these last couple years. Middle class Americans are being priced out of affordable homes in nice areas. There’s literally nowhere else to go. No house should cost that much here. U of R is the largest employer but raises have been no more than 1-2% per year for at least the last decade or longer. Not to mention they pay nowhere near what their contemporaries would pay employees. The run up on housing prices is not sustainable but the constant influx of foreign buyers is causing it locally with no end in sight. Morgan has made things worse on the rent side of things thanks to having bought up the majority of rental properties all over Rochester. Be glad you don’t live here anymore.

      1. It’s got to be maddening! Just basic 3/2 houses off of Pinnacle and Calkins were going for insane prices last year.

        Also I wonder if DiMarco will be tied in with this at all. (Another big name contractor). He and Morgan were friends. I used to work at one of DiMarcos complexes years ago in college.

        1. Sean, that’s exactly where they were/where we were looking. It is maddening! The spouse and I have decided to give up and maybe we’ll consider it again if/when prices return to a rational level in a few years. Unfortunately we live at one of the Morgan properties that they purchased in the last couple years. We’re essentially being forced to move and pay a higher rent elsewhere in the meantime if we don’t want to live in a sh*thole. It’s Brighton so you’d think they’d care, but nope.

          I haven’t been hearing anything about DiMarco on the ground but, at this rate, nothing would surprise me.

      2. Those prices are an absolute bargain out west. Try $400k for a nasty tract home in a marginal neighborhood.

        1. Chinbabwe, no doubt. It’s all relative though. Wages in Rochester, NY are not very high. Especially with the closings of big companies like Kodak, Xerox, Bausch & Lomb. Med Centers and Universities are the biggest employers now and they don’t pay comparatively near what their contemporaries in other cities would. We’re not as economically depressed as Central or Northern NY, but in Western NY a typical middle class house should be under $200K.

          1. Wages are not high in the areas with $400k crappy tract homes, either. I’m talking areas of CA, NV, OR, WA where the median household income is $45k. Median prices are approaching 10x income. That’s sustainable, right?

          2. If you’re an economist at the federal reserve or a quant wall street investment banker then housing at 10x income is doable as long as the federal government is the guarantor.

          3. And don’t forget that prop NY taxes are insane. I keep hearing how taxes in MD are bad, but not nearly compared to NY. Or even the Midwest. (A friend of mine lives in the Midwest, and by pure %, is prop taxes are higher than mine.)

          4. NY taxes are insane.

            Well it wasn’t insane until the bubble. 3% of $25,000 is a lot better than 1% of $200,000.

          5. Best summer of my life spent interning at Kodak Park in the early 90s. Had a chance to visit in 2007-ish and the whole Park looked like a ghost town.

            Just thinking about it has me jonesing for a Nick Tahou garbage plate!

    1. My FB memories popped up that I was in Shanghai for the 25th anniversary. I remember wondering then if there would be any sign or discussion of it but there was nothing. Now I’m seeing the reports that if you ask the average Chinese person on the street 80% will claim to have never heard of it. i haven’t brought it up with my wife or her parents because I figure there’s no point.

  11. That rents for multi-family haven’t dropped in Long Beach despite 6000 units coming on line is the real puzzle. It was the same in OC where we just moved from. Thousands of apartments were built along a 5 mile stretch of I5, and rents kept increasing. All were higher end, multi-story complexes with rooftop pool kinds of amenities.

    A while back you could get an idea of the number of units available on zillow, over 1000 on that same stretch just in the places you could see. Now you can’t find that information for any complex very easily (or at all?). Since a lot of these complexes were being sold, I figured that games were being played with rent to make the return look better (2 months free at move in, etc.). Bubblebux looking for places to die. But this has been going on for years now. Doesn’t at least one complex have an incentive to cut rent to ensure they fill all their units? Are these units somehow all being rented out? To who?

    1. ‘2 months free at move in, etc’

      The have cut the rent.

      ‘a lot of these complexes were being sold’

      That’s why they built them, to flip.

      1. The economic opportunity zones from the 2017 TCJA created some interesting benefits for investors. 100% tax free capital gains if held for 10 years for a ground-up construction project or major renovation in specific areas. Also, 15% step-up in cost basis applied for 7 years. My point that the new tax law does seem to encourage owners/operators for holding long-term right now in multi-family.

        This is obviously not the case with HGTV flippers and mom and pop types who think they can make a quick buck. But qualified institutional money could make a good healthy profit if the deploy their capital correctly.

      1. It’s all a give to the wealthy. Unfortunately for the Fed, people have woken up to the reality of these shenanigans, which is that they’re financially destroying them rather than helping them. More than 50% of the US has zero exposure to stocks, and the other asset bubbles are not doing anything for the average person.

  13. Sen. Running Deer calls for “managing” the dollar. Say, Fauxahontus, isn’t that what the Fed’s supposed to be doing? Considering how this criminal private banking cartel’s “management” of our money issuance to date has led to the debasement of the currency and devastation of the middle class, maybe our self-proclaimed “Champion of the Middle Class” would support a real audit of the Fed?

    Didn’t think so.

    https://www.marketwatch.com/story/elizabeth-warren-calls-for-managing-the-dollar-and-a-new-agency-to-create-jobs-2019-06-04?mod=bnbh

  14. Here’s a new house in my neighborhood (formerly the whitest of white hot) where the spec developer is in a world of hurt. I just sent him a 450K cash offer 😉 I doubt I’ll hear back.

    Property Price
    Date Event Price Price/Sq Ft Source
    05/28/2019 Price Changed $599,000 $197 NTREIS
    04/01/2019 Price Changed $650,000 $214 NTREIS
    02/04/2019 Price Changed $685,000 $225 NTREIS
    11/30/2018 Price Changed $729,000 $240 NTREIS
    08/20/2018 Price Changed $759,000 $250 NTREIS
    07/03/2018 Listed $839,000 $1,084 NTREIS

          1. I’ve never heard that song, but the lyrics are SAVAGE. Musta been a helluva breakup.

            You can stare at the phone till your flesh turns to bone
            Till the water dries from the sea
            You can wait on your own for a call on the phone
            Though I promise, you’ll never see

            You can stare at the wall but I swear I’ll never call
            Till the mountains, fall in the sea
            You can weep you can moan
            But I won’t call you on the phone oh darlin’ I guarantee

  16. Are you brave enough to buy stocks in the current topsy-turvy market environment?

    ‘Buckle up!’ When oil and gold trade like this, it usually spells doom for the market
    Published: June 4, 2019 3:21 p.m. ET
    Watch those oil and gold prices!
    By Shawn Langlois
    Social-media editor

    Oil prices (CL.1, +0.56%) are hovering around bear-market levels amid concerns over slowing global growth and the potential for tariffs to sap energy demand.

    Gold (GC.1, +0.20%) meanwhile, has been heading in the other direction. Some of the same factors keeping pressure on oil have led gold to a five-session winning streak that’s propped up prices to levels not seen in more than a year.

    This combination of rising gold and falling crude — rare as to the extent of the divergence — has delivered to some nasty consequences for the broader market over the years, as you can see by this illustration…

    “Only three other times in history precious metals surged while oil plunged! All of them happened during severe bear markets and recessions,”
    …

  17. Has anyone noticed more homes falling out of escrow? I’m seeing an uptick of this in my suburb of Sacramento..

    2. This is fake news! Jingle just assured me that homes sell in seconds out there in Sacramento

      1. Haven’t heard from Jingle in a while, but he was in the process of unloading his properties and retiring to San Diego. I suspect he mostly got out before it all popped. And even if if not, he’s fine. He bought those properties in 2009-2010 and prices certainly haven’t dropped that far.

        1. Oxide, I think there are a few that use that handle. This is the post I was referring to:

          Jingles Male
          June 1, 2019 at 2:33 am
          The housing market in the Sacramento foothills is pretty solid for middle class housing. I listed a house on Zillow a couple of weeks ago. I received a good offer yesterday.

          It sold for $685,000 in 2006, I paid ReCon Trust $380,000 in late 2007 (caught a falling knife, as that model sold for $285,000 in 2012). Selling today for $540,000. I’ll net $500,000 after selling costs.

          It’s a beautiful house with premium features (view, big lot, 3-car garage, etc). It’s funny how all those features were flotsam and jetsam in the downturn, but add to sale value today.

  18. Boston area prices are starting to drop!

    Newton down 17% YOY
    https://www.movoto.com/newton-ma/market-trends/

    Waltham down 18% YOY
    https://www.movoto.com/waltham-ma/market-trends/

    Brookline down 11% YOY
    https://www.movoto.com/brookline-ma/market-trends/

    Hopkinton down 19% YOY
    https://www.movoto.com/hopkinton-ma/market-trends/

    Boston down 8% YOY
    https://www.movoto.com/boston-ma/market-trends/

    Guess people are starting to wise up to the fact that paying $1.2m for a 3BR in a triple-decker in the worst weather in America (that was low-income housing up until 10 years ago) is a bad idea.

    1. Heh, love the comment at the end. Boston is, IMO, the most overpriced market in the country, because what you get for your money is pathetic. At least the “Bay Area” has some redeeming qualities.

      What beats a 100+ year old, unmaintained building that hasn’t been updated in at least 50 years, full of lead paint, asbestos, and anceint plumbing/electrical for $1mm+? You also get awarded with horrendous weather and traffic, and being surrounded by the oddest cohort of annoying smug transplants or idiot townies.

  19. Stocks surged on Tuesday, climbing back from a big rout in the past month, after Federal Reserve Chairman Jerome Powell signaled the central bank was open to easing monetary policy to save the economy.

    “save?” I thought it was the greatest economy of all time?

    1. The Fed is trying to save the world’s economy. The US economy has slowed but is fine. However Europe and China is in the toilet since Trump has been promoting the US.

    2. Assuming this isn’t rhetorical question, red pill economics and Mike gave good summations in the previous thread.

  21. The housing market is so fragile that when it approached 5% everything went dead. Now it is under 4% and still no gold rush to buy.
    Folks if for any reason the bond market shifts and interest must rise in early 2020, get the bulldozers level all homes, and sell the land cheap?

    2. Did you catch the two articles about San Clemente that I posted for you a few weeks back?

        1. I didn’t save the links but highly advise that you do some research about the city’s issues with the homeless and short-term rentals. These two issues weren’t a concern, or as much of a concern, when you last lived there but will impact your every day quality of life. I don’t mean to be a downer. I’m a firm believer in making informed decisions after lots of due diligence.

          1. Oh boy. I see. I had forgotten about the homeless issue in CA. They were everywhere in San Diego when I lived there a long time ago. And the Airbnb thing. I’d go ballistic if I’d paid over $1.5M for a house and had those around me. There’s something wrong everywhere. Thanks for reminding me.

          2. Just trying to help narrow the gap between expectations and reality. Best of luck finding your last home!

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