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Signs Of A Global House Price Downturn Are Already Visible

A report from Market Watch. “The S&P CoreLogic Case-Shiller 20-city index was unchanged in April compared to March on a seasonally adjusted basis, and was 2.5% higher compared to a year ago. That was the 13th straight month in which annual growth slowed, and the lowest pace of annual price gains since August 2012.”

“A slower pace of price gains should help attract buyers, particularly those who have been frustrated by a competitive and pricey housing market. But at a certain point, would-be buyers will shy away from pulling the trigger at the “top” of the market, if they believe prices are likely to start falling.”

“‘A combined slump in house prices and housing investment in the major economies could cut world growth to a 10-year low of 2.2% by 2020 – and to below 2% if it also triggered a tightening in global credit conditions,’ said economists at Oxford Economics in a Monday note. ‘Signs of a global house price downturn are already visible, with around a third of our sample of economies seeing falling prices and world residential investment starting to decline.'”

The South Florida Sun Sentinel. “Fed up with the high taxes and regulation back home in New York, retired officer Thomas Maloney and his wife, real estate agent Theresa Hart, are looking to offload a home in Long Island — quickly. ‘It’s been a thorn in my side for the past seven years,’ Maloney said. Between regulations that favor tenants and rising city and state taxes, they say they’re ‘just not comfortable’ being landlords in New York.”

“Theresa Hart, who works for Florida Premier Realty, said she thinks Palm Beach County ‘is the next hot spot for out-of-state investors.'”

The Tampa Bay Times in Florida. “It has been more than two years since Tampa Bay Buccaneers quarterback Vinny Testaverde put his $3.95 million Odessa mansion on the market. And yet he just cannot find a buyer. The house first hit the market in June 2017, listed at just below $5 million. After almost two years with no buyer, the Testaverdes decided to up their asking price to $6 million.”

“But only a month later, the couple put their house up for auction, with no success. So they’ve now re-listed the house and dropped the price by about $2 million to its current listing of $3.95 million.”

From Tap Into Summit on New Jersey. “Prominent Property Sotheby’s International Realty’s regional Summit office provides a inside look into the Summit real estate market, utilizing Garden State Multiple Listing Service statistics illustrating the numbers and trends that tell the story.”

“April (compared to April, 2018) Active Listings: 145 compared to 105 / +38.10%. Under Contract: 64 compared to 49 / -23.44%. Average List Price: $917,519 compared to $1,033,396 / -11.22%. Average Price Closed: $1,009,620 compared to $110,064 / -9.05%.
Takeaway: Significant buyers market with considerable inventory.”

From Crain’s Chicago Business in Illinois. “A decade ago, the home was listed for $25 million. After years of price cuts, a foreclosure and a 6 million-gallon flood, the investors who own it are cutting the price to $6 million, which their agent says is less than they have spent on it.”

“A decade after it first went on the market at $25 million, a Moorish mansion in Burr Ridge is getting a million-dollar price cut, to $6 million. That’s less than one-quarter the original asking price.”

“The palatial home on County Line Road is now owned by investors who bought it after a foreclosure and rehabbed the damage from a six-million-gallon flood inside. The investors, who are not identified in public records, paid $3.1 million for the property in 2012 after the original owner, Husam Aldairi, lost it in foreclosure. The investors’ total spending on the purchase, plus the extensive rehab after the flood (which happened during Aldairi’s ownership) and other improvements, ‘is more than they’re asking for it now’ at $6 million, said Lisa Petrik, of Jameson Sotheby’s International Realty.”

“When she listed it at $7 million in November, Petrik said the asking price was break-even for the investors. To come down a full million now, she said, ‘is disappointing.’ Prior to her, another agent had it listed at almost $11 million from January 2016 through August 2018.”

From Variety on California. “After an epic $50 million price cut, the legendary Los Angeles estate of late billionaire Jerry Perenchio, in the tony heart of Bel Air and known as Chartwell, is now listed at $195 million. Astronomically high as it may be, the drastically reduced new asking price pushes up on half of the preposterously optimistic $350 million the property was privately shopped at before it was officially set out for sale on the open market last fall (2018) with an apparently still too titanic $245 million price tag.”

“Even at the drastically reduced $195 million price, Chartwell is still the highest priced house available on the open market in Los Angeles, well ahead of both Villa Firenze, the extravagant, ‘Italian village’ style spread in the Beverly Park enclave that billionaire couple Steven and Christine Udvar-Házy have had up for sale for nearly two years with no takers at $165 million, and The Manor, Petra Ecclestone’s 56,000 square foot high-glam behemoth in Holmby Hills that’s now priced at $160 million price after it was first saddled with an unrealistic $200 million price tag.”

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This Post Has 48 Comments

  1. ‘‘Signs of a global house price downturn are already visible, with around a third of our sample of economies seeing falling prices and world residential investment starting to decline’

    You are only behind the HBB by about 2 and a half years Oxford.

    1. How can you have a global downturn if all real estate is local? Was there a global housing phenomenon prior to this downturn?

      1. “….How can you have a global downturn if all real estate is local? …”

        The REIC will invent a disease to fit the diagnosis.

  2. ‘A decade after it first went on the market at $25 million, a Moorish mansion in Burr Ridge is getting a million-dollar price cut, to $6 million. That’s less than one-quarter the original asking price’

    But we were told even half off is unrealistic!

  4. ‘After an epic $50 million price cut, the legendary Los Angeles estate of late billionaire Jerry Perenchio, in the tony heart of Bel Air and known as Chartwell, is now listed at $195 million’

    The MSM still hasn’t grasped that the super lux bubble popped years ago and that these shacks are:

    white el·e·phant
    /ˌ(h)wīd ˈeləfənt/
    noun
    noun: white elephant; plural noun: white elephants

    -a possession that is useless or troublesome, especially one that is expensive to maintain or difficult to dispose of.

    “a huge white elephant of a house that needed ten thousand spent on it”

    1. White elephant luxury properties are the place to be when prices are going up at double-digit annual percentage rates. Not so much when prices are falling.

      1. “…White elephant luxury properties are the place to be when prices are going up at double-digit annual percentage rates….”

        In other words, the knife cuts both ways….eh?

        I just cannot wrap my head around the type of person who would own such a place, even if they really had the money. (Wouldn’t be a bit surprised of many of these characters are leveraged all the way up to their Gucci underwear.)

        Sure would like to meet one of these folks someday, they must have egos bigger than the great pyramids.

        1. “I just cannot wrap my head around the type of person who would own such a place, even if they really had the money. (Wouldn’t be a bit surprised of many of these characters are leveraged all the way up to their Gucci underwear.)
          Sure would like to meet one of these folks someday, they must have egos bigger than the great pyramids.”

          Here, read this …

          https://en.wikipedia.org/wiki/Hearst_Castle

          1. Mr. Banker

            Thanx for link..Interesting read.

            Here is cut from article that pretty well sums it up:

            Charles Foster Kane’s palace Xanadu is said to contain, “paintings, pictures, statues, the very stones of many another palace – a collection of everything so big it can never be cataloged or appraised; enough for ten museums; the loot of the world”.

            A mentality that I think I will never fully understand. But, if that’s what floats your boat, go for it, I guess.

            Reminds me of some insects whose sole purpose in life is to lay eggs. At least they give the worker bees (I will include myself) something to do (and a paycheck).

          2. “A mentality that I think I will never fully understand.”

            This is because you are truly free. Those possessed by this mentality aren’t.

  5. This must be the mix – because there should be a drop in prices in many cities

    “The S&P CoreLogic Case-Shiller 20-city index was unchanged in April compared to March on a seasonally adjusted basis, and was 2.5% higher compared to a year ago. That was the 13th straight month in which annual growth slowed, and the lowest pace of annual price gains since August 2012.”

    2. Agree
      How can the total M-O-M return be flat (0%) but most of the individual M-O-M numbers are positive and there aren’t negative cities. Should there not be a few negative cities to drive the positive cities to a flat total?

  6. Diana still twisting herself into a pretzel trying to entice buyers to jump in after the market peak.

  7. By: Michael Pento

    ‘Today’s version of insolvent NASDAQ startups and defaulting Liar Loans can be found in the corporate bond market, which is the nucleus of the current gargantuan pile of zombified debt (zombie companies are those that need to issue new debt just to pay interest on existing obligations).’

    ‘Nearly one-quarter of the companies in the Russell 2000 have now found themselves in this precarious position—praying that junk bond yields don’t rise and that the economy never slows down. There is about $5.4 trillion worth of Leveraged Loans and corporate debt that is rated BBB or less. Compare that to the relatively minuscule amount of $1.5 trillion of subprime mortgage debt that eventually brought the entire global financial system to its knees.’

    ‘Much like the prior two bubbles, companies have used a great portion of this new debt in a non-productive manner. That is, to buy back their own shares and pay special dividends, both of which have inflated stock prices to a record high as a percentage of the phony and fragile GDP.’

    ‘Ironically, signaling investors have learned nothing from Pets.com, the recent IPO of another online pet supply company called Chewy ended its first day of trading with a valuation of nearly $15 billion, but posted a net loss of $267.9 million for the fiscal year ending February 2019.’

    ‘Of course, if you cannot understand or acknowledge that a bubble exists you will not be able to recognize the ersatz nature of GDP. Hence, back in 1999 and 2007, we often heard about the healthy level of consumption and the robust consumer who was effusing confidence. A low unemployment rate, booming asset prices, robust earnings growth, and peak margins always mark the top of every economic cycle.’

    ‘What else do these bubbles have in common? They all stem from the same culprit: artificially-low interest rates that engendered yet more debt and pushed asset prices much higher than what the underlying economic activity could support.’

    http://www.marketoracle.co.uk/Article65171.html

    1. +1
      Like Pento and his analysis. $5.4T in “Leveraged Loans and corporate debt that is rated BBB or less.” That’s a lotta cheese.
      I remember watching on TV, his propensity to interrupt everyone, all the time got him banned from CNBC

    2. “There is about $5.4 trillion worth of Leveraged Loans and corporate debt that is rated BBB or less. Compare that to the relatively minuscule amount of $1.5 trillion of subprime mortgage debt that eventually brought the entire global financial system to its knees.”

      This corporate debt pile is what halted Powell’s rate increases.

      1. corporate debt pile

        The Fed is a landlord. Killing off the renters isn’t good for the revenue stream.

  10. This entire eCONomic situation has turned into a sick joke. The Fed has been exposed as a one-trick pony. They can come up with a plethora of different names for these “programs” they invent, but they are all the same thing – the Fed carrying the entire eCONomy.

    Perhaps the most troubling thing to me is that I hear no chatter about how derelict the Fed has been in its duties, no calls to audit their balance sheet, neuter their power, etc. This is why they continue on, unabated. The wealth transfer which has already taken place is jaw-dropping. What’s coming, I’m afraid, will make that look like child’s play.

  11. Maloney said. Between regulations that favor tenants and rising city and state taxes, they say they’re ‘just not comfortable’ being landlords in New York.”

    POOR BABY

    “Theresa Hart, who works for Florida Premier Realty, said she thinks Palm Beach County ‘is the next hot spot for out-of-state investors.’”

    YOU ARE 7 YEARS TOO LATE

  12. A few weeks ago in my new neighborhood there was an estate sale at a house down the street and now there’s a big Open Door for-sale sign on the lawn. The interesting thing is that it says you can use an app to unlock the door any time between 6am and 9pm to get in and look at it. Hmmmm.

    So the upside is that it might be the start of bypassing agents for things that agents really don’t need to be involved in. But the downside…wow. We’ve seen how many shenanigans agents can get into with empty houses, just think what will happen when we open that up to anybody with a cell phone?

    1. ” … it says you can use an app to unlock the door any time between 6am and 9pm”

      What happens @ 9:01 p.m. Iffin’ a previous visitor left a window unlocked?

      Eye’m knot a crook! … R. Nixon

      1. “Eye’m knot a crook! … R. Nixon”

        “I didn’t lie…I was less than accurate.” G. Gordon Liddy

  14. Not sure this will happen but it could, many ultra luxury homes just left abandon and rot away like many in Europe.
    Just tours left to show the avg. Joe what the rich and famous once lived and today it is a overgrown, termite ridden, rooms after rooms of decay and mold.
    Sounds like my screenname Doom, but maybe coming sooner than later?

    1. but maybe coming sooner than later?

      Remember how huge abandoned crumbling Victorian “haunted” houses used to be a real thing? What were the economic conditions that lead to that?

    2. Some of the more modest of the wealthy places might be divided up into apartments, offices or ? I lived in what was once a wealthy familys’ house from the last century in San Diego that had been divided up overlooking the bay and downtown.

      On a side note, I just learned some high schools are offering AP Art. Are you kidding me – college credit for finger painting? Idiocracy in full effect.

      1. I just learned some high schools are offering AP Art

        This isn’t new. High schools have been offering a wide variety of AP classes. There was AP art, history, calculus, biology, literature, computer science, etc. when I was in high school over 20 years ago.

        1. a wide variety of AP classes

          A way to get Dad to start paying for college while his kids are still in High School.

          1. The AP tests are expensive, but the I think I started my freshman year with about 12 credits, so almost an entire semester. It was cheaper to test out of AP classes than pay undergraduate tuition.

            Having said that, I think the smart seniors and juniors in our local high school are taking concurrent enrollment. This basically allows them to enroll in community college courses during high school without paying tuition. Some of these kids can take classes during the summer and they even graduate with their associate’s degree by the time they are done with high school. I think it is a smart move to both limit college expenses and get your son/daughter closer to jumping right into their major courses.

          2. graduate with their associate’s degree by the time they are done with high school

            Have two years of education been removed in the guise of advancement?

          3. Have two years of education been removed in the guise of advancement?

            Quality vs. quantity. A running buddy of mine had his son do this. He graduated with a 4-year degree in CS at 20 and was making $80k after being hired by the company he did a capstone project with.

          4. Quality vs. quantity

            There’s got to be some substance missing.

            graduated with a 4-year degree in CS at 20 and was making $80k after being hired by the company he did a capstone project with

            Tech bubble job?

          5. graduated with a 4-year degree in CS at 20 and was making $80k after being hired by the company he did a capstone project with

            Tech bubble job?

            If he already worked with them and was a top 1% code guy that’s not out of line. It’s the 200k+ new grads at FaceGoogle that I don’t get…

          6. Tech bubble job?

            I don’t think so. The family is Russian/Ukranian in origin. They are total math and computer whizzes. Lots of high paying tech jobs over here at “Silicon Slopes”.

    3. Doom, yer name is quite apropos for this article:

      https://survivalcondo.com/overview/

      $urvival Condo

      WELCOME TO SURVIVAL CONDO
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      Missile $ilo turned into Luxury Survival Condo$.
      Survival Bunker $ecurity / Full Luxury Re$ort Living.
      We are now taking contract$ on our second Survival Condo Facilitie$.

      We have ALL floor plans available:
      * Penthouse Unit$
      – approximately 3600 sq. ft. on two levels starting at $4,5 Million USD
      * Full-Floor Unit$
      – approximately 1,840 sq. ft. on one level starting at $3.0 Million USD
      * Half-Floor Unit$
      – approximately 920 sq. ft. on one level starting at $1.5 Million U$D.

      We also have the capability to cu$tomize an entire silo complex for a single buyer. A finished complex can have anywhere from 50,000 sq. ft. up to 300,000 sq. ft. Contact us for available locations and pricing.

  15. Shocked today to see on CNBC a report regarding reduced new home sales and on a month over month basis. Not the typical confusing “seasonally adjusted annualized” etc.

    It also addresses new home inventory. By the time they are stating clear facts, you know something is happening. See major housing stocks today to. Some down over 5%.

    1. The transition from the denial stage of the housing bubble stages of grief to the anger stage must be underway.

  17. “The investors’ total spending on the purchase … ‘is more than they’re asking for it now’ at $6 million,”

    Wait, doesn’t this mean that they’re giving it away? Or more accurately, paying someone to take it?

    I don’t buy this Realtor’s claim that they’re “disappointed”. Such generosity usually brings much happiness to the donors.

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