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Some Sellers Have Been Burned

A report from the Tennessean. “Unsustainable home-price growth and an inventory surplus helped move Nashville into the top 10 markets for home buyers in the United States, according to a new report that provides further evidence of cooling demand in the area.  Realtor.com, ranks Nashville ninth among the top 10 markets for home buyers in the U.S., along with Albany, N.Y.; Chicago; San Antonio; Jacksonville, Fla., Riverside, Calif.; Los Angeles; Providence, R.I.; Dallas; and Tampa, Fla.”

“”Slowing sales and growing inventories have caused months supply to increase in many markets across the country,’ Danielle Hale, realtor.com®’s chief economist said in an Associated Press report. ‘These buyer-friendly markets are areas where inventory already outpaces sales relative to other large markets and they are continuing to move in a buyer-friendly direction, but they’re not the only areas trending this way.'”

“The Tennessean previously reported that the number of unsold Nashville homes as of March was 11,510, which is the largest since January 2015.”

From Queens News in New York. “A new report takes a look at which neighborhoods in New York City experienced a decline in real estate listing prices throughout the month of May. RealtyHop recently released an interactive map that tracks the number of price drops throughout the five boroughs. According to their findings, Cambria Heights had the highest median price drop in Queens with a 10.4 percent decrease, with the price drops averaging at a $52,000 decrease.”

“The second highest median price drop was found in the Hammels-Arverne-Edgemere area, which experienced an 8.14 percent decrease, with price drops averaging $59,000. The Briarwood-Jamaica area of Queens is the third highest in the borough, with a 6.35 percent decrease and price drops averaging at a $44,500 decrease.”

The Denver Post in Colorado. “What sets Board apart from traditional loan originators? It turns every offer into an all-cash offer by using a stockpile of backer cash to buy homes on behalf of approved borrowers. Board buys the home, then closes the loan — usually within two weeks, according to the company’s marketing materials — and transfers ownership to new owners for the exact same price.”

“After setting records for lowest inventory and fewest days on the market in recent years, the Denver-metro area’s housing market finally appears to be cooling in 2019. Jill Schafer, chairwoman of the Denver Metro Association of Realtors, said that she advises her clients who are selling to weigh their options carefully.”

“‘I think some sellers have been burned’ by accepting the first all-cash offer they receive, she said. ‘I think as agents, we’re all getting savvier and understand that we have to look at every aspect of an offer beyond if its just cash or not to make sure it works for clients.'”

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  2. This company should be worth billions more like Lyft or Uber!

    https://www.forbes.com/sites/nathanvardi/2019/06/04/nasdaq-delists-chinese-company-based-in-manhattan-apartment/#7efc18bb2982

    Yangtze River’s stock had soared on Nasdaq at different points in 2017 and 2018, valuing the company at more than $2 billion and making it the hottest stock during certain periods on the technology-laden exchange. The company claimed to be developing a port logistics center in China and capitalizing on China’s enormous “One Belt, One Road” initiative, but Yangtze River hadn’t generated any revenue and accumulated liabilities of $191 million.

    1. QT you have a good eye for successful companies! Have you ever considered money management?

  3. “Board buys the home, then closes the loan — usually within two weeks, according to the company’s marketing materials”

    What could possibly go wrong?

    In Dumver?

    Unpossible…

  4. Posting title is fitting today as I jumped on to do a Boots report :
    Dentist chair today in Vancouver WA. Visiting with the dentist whos a family friend. She commented on the real estate market “booming” since she knows I have a close relative Realtor friend. She went on to say: “but I have some close friends who’re finding they can’t sell their house.” I ask price point and where located which is overlooking Columbia River on the WA side, so Southern end of city of Vancouver. In the 500k range she said. Then “but I’m not sure exactly because they’ve dropped the price 3 times. I think the problem is that they listed the house in October so now it’s 6 months on market… It’s just uncanny because their house is impeccable I mean I’ve never seen people put so much money into a house. Also they bought a different house already on the meantime and I really hope it all works out because the stress is starting to show in their faces”
    Me: I follow the market very closely, tell them to cut that price and get it gone.
    Her reply: “well they’re thinking if it doesn’t sell then they’ll just put the house they just bought back up for sale because that area is selling like hot cakes” (I’m not specifying that area by name but within a 20 min drive)

    1. Me: I follow the market very closely, tell them to cut that price and get it gone.

      That’s a hard pill for many people to swallow, but it may well be the medicine that cures the sickness…

      I mentioned before that I found Ben’s blog back in 2007-2008 when it filled in the missing puzzle piece for me. I don’t know that I ever told the full sorid story with details though.

      I had a too big house in Texas (4000+ sq ft) and a nasty divorce on the horizon. I had bought the thing for $299k in ’03 with 10% down, and despite having made good progress (100k) on paydown in just 5 years, I had to open a HELOC on it due to the situation with the Soon-to-be-Ex-“SAHM”-from-hell. (I wasn’t dumb enough to open it for the typical frivolous things, but at this point my back was against the wall after the stuff she did had cost us a couple hundred grand we had in brokerage accounts – long, long story).

      Anyway, the stuff I was seeing ‘on the ground’ trying to get interest in selling it was not matching up to the news or what the realtors were telling me. After looking deeper, and finding the original blog, I instituted a directive: cut the price $5K a week until it sells.

      It sold for ~245K, and I had to bring a check for $7k to closing. I had to borrow that money as well… but was it worth it? Absolutely yes – it was part of my getting myself free of a very bad situation. The new buyer was an exec of some sort with Dell, and I guess his job was lost in the recession. Looking at zillow, I see:

      11/25/2013 Sold $200,100

      Yes it cost me, but It was far better to cut my losses early, and rebuild my life than to stick it out with a sunk-cost fallacy. Not having a spouse that discharges her .38 revolver inside the house because she’s pissed at me helps too…

          1. IIRC: Your stories are from MI and TX. BlueSky’s are from NY. Carl’s and Boo’s are from CO.

        2. Yes, some people here make me appreciate my quiet, albeit unconventional, life. 🙂

          1. Heck, I haven’t even gotten to the ‘what do I do for a living?’ and ‘where do you hide the bodies?’ parts yet…

          3. ‘what do I do for a living’

            Were you the one that mentioned population modeling at some point?

          4. Anonymity appears to enable an openness with life’s travails.

            It certainly makes it much easier to tell of some of the more unusual or interesting stories and reveal personal details. I think even more the fact that this board and it’s regulars are just a tiny little corner of the internet helps. It’s like a favorite pub where you go down and have a drink and unwind with some other regulars and the stories don’t really leave the building.

            Were you the one that mentioned population modeling at some point?

            Oh yeah, that was in high school in the early ’80s. I’ll back up and tell you that I’ve been writing software for over 40 years now. When I was 16-17 I picked up a couple of programming jobs for consultants to Oakland and Macomb County, MI. This was before Lotus 1-2-3. I wrote software for one guy that would take inputs of expected people moving into and out of the area by year, and model the number of people in each age band as the years progressed. It was by city or other definable area starting out with Census data. That let the consultant present a bunch of models to the city and county governments – and say things “based on projections if you go through with expanding here and it brings X# of new jobs over the next 10 years, we predict that by 1995 there will be an increase of Y# of children elementatry school aged, and you will need to build Z# of schools” and so on and on for various scenarios.

            That went over so well, his main competitor hired me to write him the exact same program a few months later Back in 1983, it was big deal to be making $20/hr sitting at a computer in an air-conditioned office, when my friends were pulling down $3.35/hr at McDonalds.

            The Mrs and I are both “software developers” – though we do vastly different stuff. I remember now that someone here did guess a prior employer of mine (fairly high profile).

          5. Back in 1983, it was big deal to be making $20/hr sitting at a computer in an air-conditioned office, when my friends were pulling down $3.35/hr at McDonalds.

            Yeah I’d have killed for that as a student in 1983. But in Wyoming there was no way no how. So I was washing pots and pans that summer. Still have the electric bass that I bought brand new with the money though.

          6. It’s like a favorite pub where you go down and have a drink and unwind with some other regulars and the stories don’t really leave the building.

            Definitely

          7. Still have the electric bass that I bought brand new with the money though.

            Still play it? Mrs Spiffy plays a mean bass when she has the time. She got me a Yahama Pacifica and Rocksmith to join her this summer and learn how to play with her. She’s going to need to be patient.

          8. Still play it?

            Yeah. Used it during my time in the Army band system, put it away for a few years after that. Have been playing more regularly since coming back from China and getting back into a more stable lifestyle again. Doing more guitar than bass lately though. You can now get really good backing tracks for most common songs and it’s kind of nice doing the one-man-band thing on guitar and lead vocals with all the rest coming automagically from your phone through the PA. I’ve never been a front guy but it’s kind of fun to try it out.

  5. You have to buy right in medium size markets especially. They usually suffer first and recover last?

  6. I just got this email:

    Priced to Sell | Best Deal in the Hills | Bring Offers

    1271 ST. IVES PLACE, SUNSET STRIP, CA | $6,295,000

    1. From Google street view…look at all those garbage cans. That place must be subdivided into flats!

  7. These buyer-friendly markets are areas where inventory already outpaces sales relative to other large markets and they are continuing to move in a buyer-friendly direction, but they’re not the only areas trending this way.’”

    Sounds to me like the FBs who feel for your “buy now or be priced out forever!” schtick are getting schlonged, Danielle. And I’m not seeing that rising inventory getting snapped up like you assured us it would be if only it would appear.

  8. “The second highest median price drop was found in the Hammels-Arverne-Edgemere area, which experienced an 8.14 percent decrease, with price drops averaging $59,000.

    Gosh, $59K would cover years of rent.

      2. Easily 3 years of rent in most places. And things are just getting started. Pretty soon the losses will cover more than 10 years of rent, and that does not even count maintenance and repair, or the interest paid on the note. The math looks really, really bad.

  10. My apologies if this has already been posted.

    Number of Homeless People Jumps 12% Across L.A. County to Nearly 59,000

    POSTED 10:40 AM, JUNE 4, 2019
    BY ASSOCIATED PRESS AND CHRIS WOLFE

    “We’re seeing folks who are working, have jobs and are homeless. They can’t afford the rent. They can’t afford to live in the communities in which they’ve grown up their entire life. And they’re being displaced,” said Assemblywoman Buffy Wicks, a Democrat from Oakland, where a countywide survey this year found a 43% increase in the homeless population over the last several years.

    https://ktla.com/2019/06/04/l-a-county-to-release-results-of-homeless-count-on-tuesday/

    1. ““We’re seeing folks who are working, have jobs and are homeless. ”

      I wonder if there’s a breakdown of the just how many of those 59,000 people have jobs and are homeless, and how many of them are the drug-addled pooping up the sidewalks.

      1. how many of those 59,000 people have jobs and are homeless, and how many of them are the drug-addled pooping up the sidewalks.

        From couch surfing to sidewalk sleeping, just different stations on the same road. Hooverville was only 80 years ago.

    2. honest working folks who are just getting by + housing bubble = homeless. Take a victory lap Janet & Ben!

      1. Ah yes, old helicopter Ben! Of course, the money was only dropped to certain people.

  11. All part of the typical unraveling as we get to late cycle.

    Not sure why it seems to be pure anathema with the REIC to suggest that a normal cyclic process is at work. It was at work when they we all thumbs up and its logical progression is currently in process. At least that’s the view from my chair. I may be all wrong, of course.

  14. Sounds like Powell is taking the gloves off….he said the unconventional will become conventional. So what will the new unconventional policies be once QE-x is deemed standard policy?

    1. Seems like he just blew a dog whistle for more extreme monetary intervention than merely lowering interest rates, as bond traders were already pricing in two rate cuts by year’s end. It stretches the imagination to guess what additional wrenches they might throw into the market’s gears, given that the punchbowl never was fully removed following the 2007-2009 financial crisis response.

      1. Federal Reserve
        Jay Powell says Fed is ready to act if trade wars hit economy
        US central bank chairman puts tariffs on list of concerns that could lead to looser policy
        Jay Powell, the Federal Reserve chairman, said the central bank will be ‘closely monitoring’ the fallout from trade wars on the US economy © AP
        Brendan Greeley in Chicago yesterday

        Jay Powell, chairman of the Federal Reserve, signalled the central bank stood ready to cut interest rates, saying it would “act as appropriate to sustain the expansion” amid the economic impact of escalating trade wars.

        “We do not know how or when these issues will be resolved,” he said, in remarks that helped stoke a powerful rally on Wall Street. “We are closely monitoring the implications of these developments for the US economic outlook.”
        …

        2. “act as appropriate to sustain the expansion” =

          Federal Re$erve fund$ ADDICTION$

          “… amid the economic impact of escalating trade wars.”

          dtRumpsis tantrumosis chaotica = “trade war$ are ea$y!”

      2. listen for the whoosh whoosh whoosh of the helicopters.

        Some politician will mount a pulpit and ask an adoring crowd “Who wants candy?” After being be met with thunderous applause, they will be elected and the helicopters will be loaded with green paper

        Unless my crystal ball is broken

    2. the unconventional will become conventional

      Hence the reason I say they will eventually own virtually everything. It’s the only way to set the price of everything.

  15. I like it, I’m loving it, I want some more of it.

    Avi Gilburt
    Today’s Market
    Market Outlook
    Sentiment Speaks: Bonds Show Us The Power Of The Dark Side
    Jun. 4, 2019 8:00 AM ET
    Summary
    – The common mantra that you cannot fight the Fed is just wrong.
    – Bonds have proven again that the market controls even the Fed.
    – We are approaching out first major target we set back in November.
    – This idea was discussed in more depth with members of my private investing community, The Market Pinball Wizard.
    …

  16. I am seeing price drops galore in the Roseville-Rocklin area (near Sacramento). Drops of just 5K or 10K are quite common. I noticed a drop of 33K i.e. about 8% in one case.

      1. Well over a 100 reduced price listings when I query a search around rocklin. Multiply x4 in the Bay Area.

    2. A 33K drop is capitulation from a loser. I’d much rather buy my house from a real man, that stands his ground at 5K max.

  18. Bullsh!t can only get you so far in life before you get stucco.

    Opinion: Stock bulls are telling themselves a lot of lies about this market
    By Mark Hulbert
    Published: June 4, 2019 4:57 p.m. ET
    U.S. market is extremely overvalued now by almost any measure
    Courtesy Everett Collection

    The U.S. stock market is overvalued now, period.

    That would be worth keeping in mind at any time, of course, but especially now with the major market averages significantly off their late-April peaks. If current valuations were reasonable, then we could count on them to provide a safety net below this market.

    Unfortunately we can’t. Yet many stock-market bulls contend that such a safety net does exist. Some are arguing that the stock market correction in late 2018 worked off many previous valuation excesses. One adviser I monitor contended that “valuation metrics [in late April] for the S&P (SPX, +2.14%) [were] much lower than where they were last year.”

    I disagree. Though valuations did improve between the market’s late-September and late-April peaks, the improvement was so slight as to barely improve equities’ outlook. Consider perhaps the most popular valuation measure: The price/earnings ratio. At the S&P 500’s late-September peak, the P/E ratio based on trailing 12 months as-reported earnings stood at 22.5. At its late-April peak, in contrast, it stood at 21.9 — less than 3% lower.
    …

    1. Economic reality threatens to catch up with Wall Street’s punch-drunk bovine herd.

      The corporate-bond market is firing a ‘warning shot’ for stock investors
      Carmen Reinicke
      Jun. 5, 2019, 06:06 AM

      Widening spreads in the credit market, especially with regard to high-yield debt, are a “warning shot now being fired,” according to Lisa Shalett of Morgan Stanley Wealth Management.

      The widening of credit spreads comes amid an ongoing debate about how serious the most recent inversion between the 10-year and 3-month US Treasury yield curve is for markets. During the last inversion in March, many argued that the five-day episode was not cause for concern because of strong economic data.

      But when the yield curve inverted in March, credit spreads remained tight. In the last few weeks, however, credit spreads have widened out. Investment grade option-adjusted spreads are now the widest they’ve been this year, up 20 basis points. High yield option-adjusted spreads are up 70 basis points in the same time period.

      “The backdrop is much different,” Shalett told Markets Insider. Weak retail sales, durable goods orders and purchasing managers reports have darkened the outlook in the last eight weeks and have the potential to drive negative surprises, she said. “Those as part of a mosaic don’t paint a very positive picture.”
      …

  19. Nashville? Other than than possibly the core downtown the rest of Nashville is a mess. Dark unlit streets, the roads are dilapidated and Tennessee politics is stuck in the civil war.

  20. So all the hipsters that went into Brooklyn to fix up townhouses like on HGTV – what went wrong.

    BTW: Little Italy in the 90’s was a fun part of town – especially the street fairs. The modernizers wreked this

    ———-
    Top 5 Neighborhoods With the Highest Median Dollar Price Drops
    Neighborhood Borough Median $ Price Drops
    1 Sunset Park East Brooklyn -$201,498 (-16.3%)
    2 SoHo-TriBeCa-Civic Center-Little Italy Manhattan -$141,871 (-4.6%)

  21. Wake me up when the majority middle class worker bees rule the USA instead of the current market makers.

    1. Better get comfortable! I’m afraid you’ll be sleeping for quite a while. Will the masses ever figure out what’s actually happening to them?

    2. Misrepresentation of the problem actually. Manufacturing jobs have declined, but America still has a healthy manufacturing sector. It just uses more robots and less people. The chart uses % of GDP on the left hand side. Declining manufacturing as a percentage isn’t necessarily a bad thing if an economy is becoming more diversified. An example: an economy that has % of GDP from oil revenues will show a downward trend as it diversifies.

      1. To clarify, yes there is too much FIRE activity. Definitely. But the cause and effect here is not shown. Look at FRED Industrial Production Index to see a clearer picture of actual US manufacturing activity, which is amazingly strong and getting stronger.

          1. US economy is much stronger than the rest of the world. Not sure what magic want you are talking about.

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