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Price Reductions Are Now The Norm

A press release from Zillow. “It has been widely acknowledged that the aggressive pace of home value growth over the past several years was unsustainable. Buyers simply couldn’t keep up, and home prices are correcting. Inventory was up year-over-year in roughly two thirds (23/35) of the nation’s largest metro markets. For-sale inventory grew the most in Las Vegas (up 41.8% year-over-year), San Jose (40.6%), Denver (25%), Seattle (23.9%) and San Francisco (21.4%).”

From Komo News in Washington. “Home prices in the Seattle metro area fell last month, according to a new report. The number of homes for sale is also up dramatically in the Seattle area. There are now 2,370 more homes on the market than at the same point last year – an increase of 24 percent.”

“‘The current slowdown in home value appreciation is expected and comforting,’ said Skylar Olsen, Zillow’s director of economic research. ‘While the slowdown has been arguably abrupt, the soft declines over the past two months should not cause too much alarm. The aggressive pace of home values over the past several years was known to be unsustainable. Buyers simply couldn’t afford it, so prices are correcting.'”

From Globe St. “‘Historically, a slowdown in luxury homes sales is typically viewed as a precursor to a slowdown in the housing market as a whole,’ Yin Ho, an associate in the real estate team of international law firm Withers, tells GlobeSt.com. ‘The housing market through 2019 has already cooled measurably, but this could have been attributed to the rising interest rates in the early part of the year—which have since lowered—the effects of the Tax Cuts and Jobs Act of 2017, and general skepticism surrounding economic growth.'”

“In addition, housing sales have slowed for luxury home in particular, and Ho reports a surplus of mansions on the market. ‘Luxury home sales represent only a small portion of the housing market, and the surplus issue in Los Angeles is so unique, that I would caution how this impact bears on the rest of the market,’ he adds.”

“Overdevelopment has also contributed to the luxury home surplus on the market. Developers under construction on active projects are now rushing to finish quickly. ‘For developers who have already financed their projects and have started construction, they have little option but to finish as fast as possible and bring their project to the market,’ says Ho. ‘Experienced developers who forecasted and priced their projects conservatively and accurately are more likely to absorb the effects of a slowing market, or price reductions, which are now the norm. More speculative developers who entered the market after the peak or without sufficient experience are at a greater risk.'”

“‘The pool of buyers looking to purchase luxury homes in Los Angeles has not changed, except that buyers are now in a superior bargaining position because of the surplus and cool or neutral status of the housing market,’ he says. ‘I think we will continue to see the volume of luxury sales occur at slightly less as the previous year, but that gross sales will decrease due to unrealistic asking prices. The difference between sophisticated developers and inexperienced or speculative developers will be apparent and this competition will inevitably force the latter to reduce asking prices. I don’t see the surplus landscape changing anytime soon.'”

From Mansion Global on Illinois. “An Illinois mansion that has appeared in the TV series ‘Empire’ and has been on a long-term hunt for a buyer has returned to the market with a price cut. The Barrington Hills estate—about 40 miles from Chicago—listed with a freshly discounted price of $9.5 million on Friday, $3 million less than the $12.5 million it asked when it was last on the market in May 2018.”

“Listing records show the 17,597-square-foot home has been on and off the market since 2015, when it had an asking price of $13 million.”

The Real Deal on New York. “A waterfront home on a 1.8-acre property sold for $10 million amid a quartet of sales in Bridgehampton, according to 27east. The 3,500-square-foot home at 422 Dune Road had initially hit the market for $16.5 million in 2016, but late last year saw its ask cut down to $12.95 million, according to Trulia.”

The Business Journal in Ohio. “The Home Builders and Remodelers Association of the Mahoning Valley reports 162 new houses were built in Mahoning County in 2018, the most since the recession. In Trumbull County, 102 new houses were built, also the most since the recession.”

“An obstacle facing new developments is the cost. Because house values in the Mahoning Valley remain low, buyers often find the cost of a new lot and construction exceeds the appraisal value. It’s a situation Mark Ramunno Sr., owner of Custom Design Homes by Mark Ramunno says is becoming more common.”

“‘A lot of our contracts are for more than the appraisal value of the home, so some people are in the negative the day they build their house,’ he says.”

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It Feels Like 2006

A report from the Seattle Times in Washington. "Since the local market peaked last spring,…

This Post Has 54 Comments

    1. Many buyers have walked away from substantial down payments. Ben finds and posts ’em here regularly.

    2. Was expecting a massive gold smash ahead of options expiry…but are we looking at big short squeeze instead?

  3. “The difference between sophisticated developers and inexperienced or speculative developers”

    Is this to say that sophisticated developers are never speculative?

  4. ‘For-sale inventory grew the most in Las Vegas (up 41.8% year-over-year), San Jose (40.6%), Denver (25%), Seattle (23.9%) and San Francisco (21.4%)’

    Weren’t these the hottest of the hot? And now that’s where shacks are piling up faster than anywhere else? Wa happened to my shortage?

    1. 3 for sale signs visible from my house in Phoenix. Just sitting. Haven’t seen that the entire time I’ve lived here for the last 3 years.

      1. I met another local school teacher on eBay (CA) looking cash out and move to Boise. He said his neighbor is in the process too.
        I bought a 70yr old 9′ bamboo fly rod from him.

        1. Seems like coastal California refugees have their eye on Boise where they can fly their rainbow flag proudly and influence the local politics.

          1. That’s odd to me that Boise would be so attractive to coastal types. To me it’s more of a place to have a tech career for those willing to earn a little less in return for being able to get away from the coastal types. Kind of like Colorado.

            Anybody know what the big attraction is? Closest city to the coastal states that’s not in a coastal state and not a gambling town? Closest relatively conservative city to the west coast?

  5. “It has been widely acknowledged that the aggressive pace of home value growth over the past several years was unsustainable.

    Wow, Zillow serves up some revisionist history. As the REIC shills know full well, all of the “experts” were unanimous in explaining how a) we weren’t in a housing bubble; and b) it was different this time. So now these crap weasels are claiming they were echoing the HBB all along? Nice try, dissemblers, but the Internet never forgets.

    1. the Internet never forgets

      That may be true but the voters never seem to pay attention for long.

    2. Not to mention that their previous thesis was that declines in price could not happen, but only that the rate of appreciation would only “normalize”, whatever that means.

      1. Even though median price has gone down the past two months, it’s nothing to panic about. Really, don’t panic:

        “But their magnitude is fairly minor at this point, and monthly home value growth may be better described as “flattening” rather than meaningfully declining.”

        Just a flattening. Soft-landing.

    4. Going to be interesting to see how Zillow walks this tightrope between reality and how much they promised Wall Street they would earn flipping houses.

  6. “‘The current slowdown in home value appreciation is expected and comforting,’ said Skylar Olsen, Zillow’s director of economic research. ‘While the slowdown has been arguably abrupt, the soft declines over the past two months should not cause too much alarm.

    Such cooing assurances from REIC shills are belied by the hard data. What we’re seeing isn’t a “soft decline,” it’s an incipient housing bubble implosion that is gathering force. When FBs start walking away from their underwater shacks in droves and the defaults start snowballing, would that maybe be the time to get alarmed, Skylar?

  7. “‘A lot of our contracts are for more than the appraisal value of the home, so some people are in the negative the day they build their house,’ he says.”

    So it probably makes more sense to wait until they go into foreclosure to even think about putting in an offer, right, Mark?

  8. Is this the same Skylar Olsen that told us the housing market cooldown was temporary and it would soon “take off again” due to something something demographics?

    1. The current slowdown in home value appreciation is expected and comforting,’ said Skylar Olsen

      Apparently only “expected and comforting” after the fact. Cute name Skylar, even if you are a Lyar.

      1. Comforting? More like panic inducing for anyone who bought in Seattle in the last 5 years.

  9. Price cut $37.5K on 6/14:

    https://www.zillow.com/homedetails/1425-S-Logan-St-Denver-CO-80210/13368935_zpid/

    Price cut $10K on 6/19:

    https://www.zillow.com/homedetails/2391-S-Sherman-St-Denver-CO-80210/13379029_zpid/

    Price cut $10K on 6/6:

    https://www.zillow.com/homedetails/2077-S-Corona-St-Denver-CO-80210/13376442_zpid/

    Price cut $25K on 6/20:

    https://www.zillow.com/homedetails/1411-S-Marion-St-Denver-CO-80210/13370929_zpid/

    Price cut $124K to $975K on 6/10:

    https://www.zillow.com/homedetails/3187-S-Dallas-Ct-Denver-CO-80210/13388459_zpid/

    Guess what? You’re not a millionaire. You’re gonna be a .975onaire, if you get lucky.

    There are used heroin needles and human feces in your children’s playground and on the sidewalks all around your .975onaire used house, looser.

    I’m LMFAO at all of you 😉

    3. All of these biatches are trying to pocket 300K-400K cash for being lucky and buying in 2012-2013… welll fvxck all of you.

      I am NEVER buying a house from a flipper or someone who wants to pocket 3-400K for owing for 3-4 years… just cause they painted and put granite.

  11. At Mimi’s…Applebees competitor. Wait time is 0. Either it’s a slow Monday, a slow economy, or a slow restaurant.

  12. So long as the music keeps playing, you have to get up and dance.

    — Chuck Prince

    The Financial Times
    High yield bonds
    US ‘junk’ groups rush to sell bonds as borrowing costs fall
    – Expected rate cut by Federal Reserve eases growth concerns and props up risky debt
    – The hope is that a cut in interest rates will extend the current economic expansion © EPA
    Joe Rennison in New York
    6 hours ago

    Lowly rated “junk” companies flocked to sell bonds as borrowing costs fell after the Federal Reserve opened the door to a potential cut in interest rates.

    More than 10 US high-yield bonds were expected to be sold this week, including a $500m bond from packaged food company Post Holdings, a $300m deal from housebuilder William Lyon Homes and a $450m deal from recently bankrupt chemical company Hexion, according to people familiar with the deals.

    That would surpass the nine deals snapped up last week, according to data from Dealogic, resulting in the fastest pace of weekly issuance since early May, just before trade tensions between the US and China raised fears of slowing global growth.
    …

    1. Got sh!tty junk?

      The Financial Times
      Market dashboard High yield bonds
      Tale of two markets: riskiest bonds hit by trade worries
      Debt rated triple C have fallen 1.5% since May, underperforming triple B
      Joe Rennison in New York yesterday

      Heavy hints of further monetary easing from the Federal Reserve have boosted almost all corners of the debt markets, from sovereign bonds to corporate credit. But there is one part of the market that has stubbornly sat out the rally: triple-C bonds, one of the lowest rungs on the ratings ladder.

      Bonds rated triple C and below have fallen 1.5 per cent since trade tensions escalated at the beginning of May, compared with gains of 1.7 per cent for higher-rated, double-B bonds. Typically, the lowest rated bonds offer investors higher returns because of the increased risk of lending to struggling companies.

      Both the Fed and European Central Bank opened the door to potential interest rate cuts last week, providing some reprieve for riskier assets such as “junk” bonds (rated triple B and below). But concerns over slowing global growth, further trade disputes and weak inflation mean that investors are continuing to steer clear of the most precarious borrowers.
      …

  13. A Nobel Prize-winning economist and Yale professor explains why buying a big house is a waste of money
    Business Insider
    Tanza Loudenback
    6/2/4/2019

    “Having a big house is a symbol of success, and people want to look successful,” Shiller said. But controlling your housing costs has a huge influence on your future wealth, regardless of income.“

    1. “But controlling your housing costs has a huge influence on your future wealth, regardless of income.“

      Spot on. In particular, buying a house at a bubble peak could result in lasting damage to a household’s permanent income.

    1. Project Veritas video targeting Google pulled by YouTube after privacy complaints
      Valerie Richardson
      The Washington Times
      Tuesday, June 25, 2019

      ““We have strong privacy guidelines in place, including the ability to file a complaint if someone feels their privacy has been violated,” a YouTube spokesperson said in a statement. “When complaints are received, we may also provide the uploader a chance to remove or edit private information in their video.””

      “Meanwhile, Jen Gennai, the Google executive shown in the footage, posted a response saying that Project Veritas “selectively edited and spliced the video to distort my words and the actions of my employer, and published it widely online.””

      ““I was having a casual chat with someone at a restaurant and used some imprecise language,” Ms. Gennai said in a post on Medium. “Project Veritas got me. Well done.””

      “In the video, Ms. Gennai was shown saying that breaking up Google would “make it worse” because smaller companies “will be charged with preventing the next Trump situation,” but she said later that she was referring to foreign interference in the 2016 election.”

      ““Project Veritas has edited the video to make it seem that I am a powerful executive who was confirming that Google is working to alter the 2020 election,” she said in her post. “On both counts, this is absolute, unadulterated nonsense, of course.””

  15. CNN’s Trump Derangement Syndrome means they’ve abandoned all pretense of journalistic objectivity or integrity. In the #MeToo era, any female nutcase can fabricate an alleged decades-old sexual assault by any male political figure or celebrity, and in the current “guilty until proven innocent” witch-hunt environment the baying feminist lynch mobs and their MSM accomplices will go all-out the destroy that man’s reputation and career.

    https://www.zerohedge.com/news/2019-06-24/stunned-anderson-cooper-cuts-cnn-interview-after-trump-accuser-calls-rape-sexy

    1. “guilty until proven innocent”

      Unless he’s a democrat (e.g., VA Lt. Gov. Justin Fairfax).

    2. He had no legitimate reputation to speak of. He has, and has always been a con man and a sexual predator. His legacy of lies and financial failure go back decades. You, and your cronies on this blog are MAGA apologists. So, women who’ve accused him of rape, in your mind, are “guilty until proven innocent” as far as speaking out about an experience they’d rather forget. Feminist lynch mobs, witch hunts, female nutcase? Wow, just wow.

      1. ‘You, and your cronies on this blog are MAGA apologists’

        So now we see this blog attacked instead of addressing the substance of the video. Interesting. Some of you may remember I had all my blogs deleted by someone at google in 2005. They wouldn’t reply to emails for almost a week. And if a LA Times reporter, who had a interview in the can, hadn’t intervened, I never would have got those blogs back. So I am of the opinion (remember those?) that the power of a near monopoly in data bent on manipulating an election just might be a big deal.

        As for allegations, gather evidence and indict. Cuz if you ain’t got the proof, you know where you stand.

        1. “Some of you may remember I had all my blogs deleted by someone at google in 2005.”

          Wow, I didn’t realize that the HBB and the 1st amendment were under assault; housing really [is] big. I suppose these blue-eye’d thieves looting the country expect us to lay-down passively like cut-dogs?

      2. women who’ve accused

        An accuser without proof or witnesses is not to be considered factual. It is a very old principle that people with an agenda sometimes ignore.

        1. About 25-yrs ago in San Luis Obispo, CA, a couple of teen-aged girls accused some feckless guy driving past of flashing them. He immediately lost his job and sat in jail for weeks while the police worked the story. The investigators noted that one of the teen-aged girl’s family was very religious, so they handed the young girl the family’s bible prior to questioning. She broke-down and confessed to the fabrication. I remember the case sent bit of a cold-chill through the young men around CalPoly and Cuesta.

      4. He has, and has always been a con man and a sexual predator.

        And you base this on what, exactly? The standard of justice in this country is, or used to be, innocent until proven guilty in a court of law, not in the court of public opinion.

        You, and your cronies on this blog are MAGA apologists.

        Wrong again. I’ve repeatedly criticized Trump in here for lacking class and character. More importantly, I’ve criticised him for running as an economic nationalist, but who by and large has failed to make good on his campaign rhetoric. His one redeeming virtue: the alternative was a one-woman crime spree named Crooked Hillary. The prosecution rests.

        So, women who’ve accused him of rape, in your mind, are “guilty until proven innocent” as far as speaking out about an experience they’d rather forget.

        Try reading for comprehension, Trixie, and stop twisting my words. I clearly stated that men subjected to unsubstantiated allegations of sexual assault that took place years or decades ago, and who have no way to prove their innocence in a he-said/she-said scenario, are treated as guilty by the media and the feminist Lynch mobs.

        female nutcase? Wow, just wow.

        Did you watch the video of this latest “accuser”? Eyes as crazy as a sh*thouse rat, and admits to rape fantasies. Yeah, she’s credible. Who knows if she’s being truthful or not, but if she was raped, she failed to report it, and now she’s chasing the media spotlight instead of filing a police report. Wow, just wow is right.

    1. “If this is what the housing market can produce in a good economy, what will happen to home building if we fall into a recession? A report from the Kansas City Federal Reserve Bank found that during the last 10 years of economic expansion the annual rate of single-family home starts was 25 percent below ’90s levels. The current rate of construction relative to the number of households is at its lowest levels since the ’50s, the earliest date at which this kind of reliable nationwide data is available.”

      I’m going to go out on a limb and surmise that the rate of construction in the luxury segment is to the moon, though.

  17. What do plunging long-term Treasury yields portend?


    10-year Treasury yield records biggest daily decline in three weeks
    By Sunny Oh
    Published: June 24, 2019 3:36 p.m. ET

    …
    What are Treasurys doing?

    The 10-year Treasury note yield (TMUBMUSD10Y, -0.34%) slipped 4.5 basis points to 2.021% marking its biggest daily drop in three weeks, while the 2-year note rate (TMUBMUSD02Y, +0.68%) also fell 4.5 basis points to 1.737%. The 30-year bond yield (TMUBMUSD30Y, -0.20%) tumbled 3.9 basis points to 2.552%.
    …

    1. Is it typical for the Fed chair to make a speech the week following an FOMC meeting?

      10-year Treasury yield dips below 2% as Iran jitters and trade frictions spur haven demand
      By Sunny Oh
      Published: June 25, 2019 8:08 a.m. ET
      Fed Chairman Jerome Powell is set to speak at 1 p.m. Eastern time

      Treasury yields traded modestly lower on Tuesday as investors monitored the U.S.’s intensifying spat with Iran over recent sanctions and signs that a trade deal may not be reached at the upcoming meeting of U.S. President Donald Trump and Chinese leader Xi Jinping.
      …

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