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We Keep Hearing About Bidding Wars And Shortage, Is It An Illusion?

A report from Think Realty on Florida. “While flipping properties may not be the right strategy in the southern part of the state, in central Florida, Billy Ross is busy flipping and wholesaling properties in the greater Orlando metro area. If Ross sees any risk at all in his market, it’s in owning rentals. He does not believe now is the time to be buying a lot of rental properties in his market. ‘The market is correcting, not really crashing,’ he said.”

“Gabriel Garcia started wholesaling properties in south Florida on his own not long after the crash in 2013. Garcia sees south Florida as one of the riskiest markets in the country to flip properties. ‘If you bought five years ago, the market would work in your favor. But not today. It’s a combination of buyers not being able to get financing and inventory staying around longer,’ he noted.”

The Wall Street Journal on Florida. “Miami’s South Beach is on the outs. In the first quarter, South Beach condo prices tumbled 16.5% to $746,397 from the same period last year, while the number of sales dropped 11.6%, according to Miller Samuel. Restaurateur Lee Lyon closed last year on a two-bedroom condo at 300 Collins in South Beach, but moved with his wife and baby to a house in Coconut Grove. South Beach ‘has gotten a little rougher,’ he said. Mr. Lyon paid $1.475 million for his South Beach condo. He put it on the market in April for just under $2 million; So far, he’s gotten one lowball offer.”

From San Francisco Curbed in California. “Core Logic reported that the median home price in San Francisco is down year over year, dropping four percent in May. The year-over-year drop from CAR for the entire Bay Area was 5.7 percent, ebbing below $1 million down to $990,000. Beacon Economics’ regional outlook report for California homes, released this week, compared performances across the entire quarter. Their conclusion: Yes, prices are down in the long term as well: ‘Given the Bay Area’s healthy economy, it’s possible that even with all of the wealth being created in the region, the price points for homes have reached a level that households simply cannot afford.'”

The San Francisco Chronicle in California. “Today, ‘there is a sense of pause by buyers because they don’t know what’s next,’ said Selma Hepp, chief economist with the Compass real estate brokerage. ‘We are definitely seeing a lot of activity out there; buyers are coming to open houses. But for homes in imperfect condition, or imperfectly priced, they’re not willing to pull the trigger.'”

“Plotted on a graph, prices today look like a ‘tabletop,’ compared with the ‘mountaintop’ seen in the last cycle when prices plummeted after a steep run-up, she said.”

The Los Angeles Times in California. “Jim Buss, part-owner of the Lakers, has brought his L.A. Live condo back to market with a reduced price: $6.495 million. It’s his fourth relist in four years. Found in the Ritz-Carlton Residences, the home hit the market for $8.8 million in 2016 and was up for grabs at $6.75 million last year. He bought the property for $4.05 million in 2013, records show.”

The Real Deal on New York. “Tom Brokaw’s Pound Ridge home has taken a significant price chop, the New York Post reported. The veteran NBC News journalist and his wife, Meredith Auld, put their 56-acre estate on the market for $6.3 million last summer. They’ve reduced the ask for their home to $4.25 million — the same price they bought the property for back in 1998.”

From Vail Daily in Colorado. “Dear Joan: I think I am seeing an increasing number of homes for sale, and more homes languishing on the market in my neighborhood, judging from the signs in the yards. We keep hearing about homes flying off the shelf, and bidding wars, and shortage of homes on the market … and I cannot make sense of that in my neighborhood.” 

“Friends of mine have said they are seeing more signs going up and that those signs are staying longer in their neighborhoods, too. Is it an illusion that we are not seeing correctly, or are home sales slowing down? Should we be worried about the whole economy again if it’s true that there is another big housing slowdown? Tell me something good! — Watchful and Worried”

“Dear Watchful and Worried: I believe there is some merit in your observations, but I do not agree with the conclusion you fear. In the latest published market analysis for April, the Vail Board of Realtors showed that in 2018 the averages days on market for a home to sell was 115 days and in April of 2019 it took an average of 131 days for a home to sell.”

“We know that some homes do sell quickly after coming on the market, but the average days on market indicates that some of the homes actually do ‘languish’ before they sell, or at least go off the market in some fashion. I think the better question is, why do some homes sell so fast and some appear to take forever?”

“We used to say homes sold for three reasons: location, location and location. However, now it’s price, condition and location. I believe the increased days on the market can largely be attributed to price. Many homeowners have been waiting for a good market to sell, and it is here. However, Buyers are very savvy today and can compare homes on the market easily on the internet. So they are not fooled by someone overpricing their home for what the market is doing in their neighborhood.”

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This Post Has 75 Comments

  1. ‘The year-over-year drop from CAR for the entire Bay Area was 5.7 percent, ebbing below $1 million down to $990,000. Beacon Economics’ regional outlook report for California homes, released this week, compared performances across the entire quarter. Their conclusion: Yes, prices are down in the long term as well: ‘Given the Bay Area’s healthy economy, it’s possible that even with all of the wealth being created in the region, the price points for homes have reached a level that households simply cannot afford.’

    Wa? Thornberg, are you now serving up crowz to yourself?

    1. I don’t believe these days on the market statistics or the percentage of homes with price drops. I don’t know how they are calculated but just surveying Redfin and Realtor.com it appears these are gross underestimates based on manipulated data. I am constantly seeing properties that languished on the market for months with multiple price drops listed as “new” listings with the previous sales history deleted. A crude estimate based on my observations of the San Diego market would be that the days on market and percent price drops are 50-100% higher than reported.

        1. Lovin’ the little emoticons. I couldn’t find any cheetos for you, but I can make you a 🥪

      2. They pull listings and relist. So your house is on the market for 1yr, you change realtors he re-lists at a lower price and it sells in a few weeks, maybe with a bidding war. The REIC would report that as a “sale in a few weeks at over asking” when the reality is it took a year and a price drop to get it sold.

    2. Is Chris Thornberg destined to be the David Lereah of the second wave of Housing Bubble collapse?

  2. ‘Should we be worried about the whole economy again if it’s true that there is another big housing slowdown? Tell me something good!’

    Lower shack prices are good for everybody in the long run. Stop begging UHS for news that you got a wallop of cash for doing nothing. They peddle that horsesh$t to rope you in.

    1. Sphinxian riddle:
      Q: “What makes you poorer as it makes you wealthier?”
      A: “A house.”

      Because of the property tax. State and local pols love rising house prices because it’s a passive way to get more money, yet claim they haven’t raised taxes. A local county was interested in raising some tax and they claimed they’d not raised taxes in decades. A local talk show had a discussion on the issue and a caller said BS – he’d been paying more and more tax regularly due to property tax increases resulting from increased assessments.

      1. You are right. Property taxes are the first mortgage on every property, even if you pay cash. Local governments and real estate “professionals” find themselves guarding the gate together to keep house prices up.

  3. ‘Lee Lyon closed last year on a two-bedroom condo at 300 Collins in South Beach, but moved with his wife and baby to a house in Coconut Grove. South Beach ‘has gotten a little rougher,’ he said. Mr. Lyon paid $1.475 million for his South Beach condo. He put it on the market in April for just under $2 million; So far, he’s gotten one lowball offer’

    I’m not sure why the WSJ chose to write this up as “the party is too loud” but Miami Beach airboxes have been sinking like a turd in a well since 2015.

    1. but why is he asking for a 33% bump in price over what he paid – and then complaining about it

      1. Cuz he’s a speculator who still thinks the market is “to the moon, Alice!” Jeebus, there are years upon years of inventory sitting around in Miami Beach. This is how uninformed the public is about the situation.

    2. South Beach is especially horrid in the summer. With all of the concrete construction the heat is unbearable.

  4. After that report that a Chinese guy was running around new York buying buildings saying “I want that one”, I don’t see how anyone could say there wasn’t a bubble and that it had popped and only could pop.

    How many weeks and months of slashin’ and a sawin’ have to go on before the MSM gets a clue? Tens of thousands of unsold new shacks and airboxes. Mortgage fraud, Ponzi schemes involving thousands of shacks and apartments, foreclosures. What will it take?

    1. is NY State a recourse or non-recourse state?

      In the past, i was in favor of non-recourse – because i felt the banks should do their diligence. But i think now that the speculators need to feel the pain when they fail.

      1. so just looked it up – NYS is in the middle???

        One Action States
        In some states, lenders are only permitted a single lawsuit to collect mortgage debt. This plays out differently depending on the state’s laws. In New York, for example, a lender must choose between the actions of foreclosing on the property or suing to collect the debt. The following states have some type of one action statute:

        California
        Idaho
        Montana
        Nevada
        New York
        Utah

  5. On the global credit bubble, China seems uniquely vulnerable (replicating US credit conditions in 2007)

    excerpt:
    China’s Aggregate Financing (approx. non-government system Credit growth) jumped $1.60 TN during 2019’s first five months, 31% ahead of comparable 2018 Credit growth. So far this year, Aggregate Financing is expanding at better than 12% annualized. This is a rate of growth sufficient to sustain the economic Bubble (Beijing’s 6.5% growth target), apartment prices, corporate profits, stock prices and general market and economic confidence.

    […] Consumer (chiefly mortgage) borrowings have increased 17.2% over the past year (40% in two years!). Thousands of uneconomic businesses continue to pile on debt. Unprecedented over- and mal-investment runs unabated. Millions more apartments are constructed. The bloated Chinese banking system continues to inflate with loans of rapidly deteriorating quality.

    1. Interesting article but the question is always timing. The debt is supporting the 6.5 percent growth which even Knocking off one percent is still 5.5. when will the growth collapse? China is like the the Asian economies of the 90’s as long as the growth was fast enough the debt be could be serviced. Until the trade war China’s debt compared to GDP was actually fairly stable over the last few years.

      1. Agree, timing is the always the hairball.
        The point I found interesting was his comparison with the US in 2007, when credit growth was at its peak, stock AND bond markets were rising and the economy was humming at near 5% growth. China credit growth is surging, bond markets are rising, all while small and mid sized banks are struggling/failing. Could be the same setup as US in 2007

    2. If we have fake or distorted news in every realm, as well as the search engines tampering with freedom of speech, than it’s no different than a hostile take over of the USA.

      I have always felt the 10% elite would get in bed with the Communist for the purpose of rigging the deck. In each case the goal is the take over of the USA. The problem would be than the Communist would than need to kill the elite at some point.

      1. I have always felt the 1% are creating an oligarchy in which their system sells the illusion of hard work, capitalism and democracy. I see no difference between George, Charles, David, Bill or good old Warren.

        1. That Guy,

          Your right that the group you talk of got politicians to betray the balance of power in USA in favor of the fat cats. But, I include these people that stacked the deck in the 10%

    1. “Foul-smelling sargassum seaweed is washing up on South Florida’s shores, and is nearly as odious as the New Yorkers that retire there.”

      Has Bill de Blasio bought his retirement home there yet? He is far more odious.

  8. “Jim Buss, part-owner of the Lakers, has brought his L.A. Live condo back to market with a reduced price: $6.495 million. It’s his fourth relist in four years.

    Chase that market down, Greedhead Jim. Just remember to stop now and then to smell the roses and stamp your little feet.

  9. Should we be worried about the whole economy again if it’s true that there is another big housing slowdown? Tell me something good! — Watchful and Worried”

    Dear Watchful and Worried,

    Turning to an REIC shill for “advice” on where the housing market is always a fatal mistake. While they may tell you what you want to hear if you are a mortgage-payer (as opposed to a home-owner; you don’t own squat until the last mortgage payment clears), the fact is, REIC shills and the MSM parrots on their shoulder have a vested financial interest in denying the existence of a housing bubble, even as evidence abounds that said bubble is bursting. Nay, my fearful FB pearl-clutcher, if you want to know what’s REALLY happening in the housing market, you will need to turn to a scrappy little band of free thinkers who hang out on the Ben Jones Housing Bubble Blog, who have no qualms about rampaging through the NAR’s la-la land, turning their sacred cows into hamburger. So if you want the truth – and think you can handle it – c’mon in! Pull up a chair! There is no truth out there that we can’t handle in here.

    1. “..(as opposed to a home-owner; you don’t own squat until the last mortgage payment clears)…”

      At that point you only owe the state-sponsored property tax mortgage, the insurance company-sponsored homeowner’s insurance premium mortgage, and God’s maintenance and upkeep mortgage. The house payments never really end until death do the homeowner part.

    1. China’s Lehman Moment

      It may have already happened with that Mongolian bank that just went down?

  11. ‘I’ve received tens of thousands of letters and other communications from Trump supporters the past few years, some of which have sparked extended dialogues. Two I got after last week’s column struck me as pertinent to this moment, and they make insufficiently appreciated points.’

    ‘A gentleman of early middle age in Kansas City wrote to say he’d sat out the 2016 election because he was dissatisfied with both parties. But now he’s for Donald Trump, and the reason “runs deeper than politics.”

    ‘America’s elites in politics, media and the academy have grown oblivious to “the average Joe’s intense disgust” at being morally instructed and “preached to.”

    “Every day, Americans are told of the endless ways they are falling short. If we don’t show the ‘proper’ level of understanding according to a talking head, then we are surely racist. If we don’t embrace every sanitized PC talking point, then we must be heartless. If we have the audacity to speak our mind, then we are most definitely a bigot.”

    “We are jabbed like a boxer with no gloves on to defend us. And we are fed up. We are tired of being told we aren’t good enough.” He believes the American people are by nature kind and generous—“they would give you the shirt off their back if you were in trouble”—and that “in Donald Trump, voters found a massive sledgehammer that pulverizes the ridiculous notion that Americans aren’t good enough.”

    “It’s surely not about the man at this point. It stopped being about Trump long ago. It is about that counter-punch that has been missing from our culture for far too long.”

    ‘A reader who grew up upper-middle-class in the South writes on the politics of the situation. His second wife, also a Southerner, grew up poor. She is a former waitress and bartender whose politics he characterizes as “pragmatic liberal.” They watched Mr. Trump’s 2015 announcement together, and he said to her, “He doesn’t have a chance.” She looked at him “with complete conviction” and said, “He’s going to win.”

    ‘As the campaign progressed, she never wavered. At the end, with the polls saying Hillary, “I asked my wife how she could be so certain Trump was going to win.” He found her response “astute and telling.” “She told me, ‘He speaks my language, and there’s a lot more of me than there is of you.”

    ‘What Night One did was pick up the entire party and put it down outside the mainstream and apart from the center. This is what the candidates said: They are, functionally, in terms of the effects of their stands, for open borders.’

    ‘Every party plays to its base in the primaries and attempts to soften its stands in the general. But I’m wondering how the ultimate nominee thinks he or she will walk this all back. It is too extreme for America, and too extreme for the big parts of its old base that the Democrats forgot in 2016.’

    ‘It was as if they were saying, “Hi, middle-American people who used to be Democrats and voted for Trump, we intend to alienate you again. Go vote for that jerk, we don’t care.”

    ‘Elizabeth Warren was focused and energetic, and her call to break up concentrations of power, including big tech, was strong and timely. She made a terrible mistake in holding to her intention to do away with private health insurance. An estimated 180 million Americans have such policies. Why force potential supporters to choose between her and their family’s insurance? Who does she think is going to win that? Why put as the headline on your plan, “This is what I’m going to take away from you”? Why would she gamble a serious long-term candidacy on such a vow? It is insane.’

    ‘It was an odd evening in that it was lively, spirited, at moments even soulful, and yet so detached from reality.’

    https://www.wsj.com/articles/the-2020-democrats-lack-hindsight-11561741814

    2. ‘Elizabeth Warren was focused and energetic, and her call to break up concentrations of power, including big tech, was strong and timely. She made a terrible mistake in holding to her intention to do away with private health insurance.

      Fauxahontus, like the rest of the treasonous Democrat presidential contenders, raised her hand to indicate her support for proving free (taxpayer-funded) health care to illegals. Nobody who pays the bills is going to vote for this so-faux “champion of the middle class.”

      1. ‘Jen Gennai is the head of “Responsible Innovation” for Google, a sector that monitors and evaluates the responsible implementation of Artificial Intelligence (AI) technologies. In the video, Gennai says Google has been working diligently to “prevent” the results of the 2016 election from repeating in 2020:“We all got screwed over in 2016, again it wasn’t just us, it was, the people got screwed over, the news media got screwed over, like, everybody got screwed over so we’re rapidly been like, what happened there and how do we prevent it from happening again. We’re also training our algorithms, like, if 2016 happened again, would we have, would the outcome be different?”

        https://spectator.org/the-google-fascists/

        ‘We all got screwed over in 2016, again it wasn’t just us, it was, the people got screwed over’

        It wasn’t just “us”, it was the people.

        https://upload.wikimedia.org/wikipedia/commons/thumb/4/49/2016_Nationwide_US_presidential_county_map_shaded_by_vote_share.svg/1280px-2016_Nationwide_US_presidential_county_map_shaded_by_vote_share.svg.png

        2. The worker bee majority has been screwed over for a long time inch by inch.

          The election of Trump revealed the degree of takeover of USA was in the works based on the reaction.

          1. it was the people

            Humans that do not hold your echo chamber views do not have any value, they are not “people”.

      2. Nobody who pays the bills is going to vote for

        Sounds like you’re saying as soon as the bill payers fall below 49.9% of the electorate we’re finished.

    3. “morally instructed and “preached to.””

      I was morally instructed that if I didn’t vote for Hillary Clinton, then I needed to question my status as a women. Sexist much? Eff ’em.

  13. ‘We are definitely seeing a lot of activity out there; buyers are coming to open houses. But for homes in imperfect condition, or imperfectly priced, they’re not willing to pull the trigger.’”

    Seeing this on the below median price properties in my zip code now. For the last few years it didn’t matter if the house had a few ‘drawbacks’ – if it was cheap enough, it was snatched up. Now I’m seeing listings on the low end that are currently languishing to varying degrees, and nearly all have some sort of ‘ehh, not sure about that’ item… even with price cuts (granted most aren’t very big cuts). Where did all the not-very-picky buyers go?

    1. Where did all the not-very-picky buyers go?

      They are buying bitcoin, speculators have to speculate.

      1. Aren’t the Chinese buying bitcoin too? With their safety deposit airbox values in Berkeley/London/NYC/Lagos dropping and the gov preventing money any more from leaving the country, Bitcoin is the last refuge of the scoundrels.

        1. Don’t forget about religion. Oh wait, believing that Bitcon is real and valuable is religion!

          1. Matthew 6:19-20

            19: Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal:
            20: But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal:

    1. Zillow economist: Tampa Bay housing market is showing signs of …
      Tampa Bay Business Journal-Jun 28, 2019
      Home values in Tampa Bay and across the U.S. fell for the second straight month in May — and while the declines are slight, a Zillow economist says it could be …

  16. “Every revolution evaporates and leaves behind only the slime of a new bureaucracy.”
    ― Franz Kafka

      1. Of the two of them, what are the odds that the one who wanted to spend less will be the one to actually pay the most for it in the end?

    2. UK Daily Mail is reporting that she was a sugar baby and the perp was an Airbnb operator. Looks like she contributed to her own demise.

  19. I think the police stopped a serial killer or at least someone who intended to be one.

  20. “I have always felt the 10% elite would get in bed with the Communist for the purpose of rigging the deck. In each case the goal is the take over of the USA.”

    I consider the killing of the elite the silver lining to a bad situation. I would not consider the elite as being 10% of the population, however.

    1. I consider the killing of the elite the silver lining to a bad situation

      Teachers, poets, scientists and the like. Priceless.

  21. Teachers, poets, scientists and the like. Priceless.
    Reply

    No, in this context I am talking about the .1 percent who have put their own interests above the interests of the country. Traitors who will share a traitors fate.

    1. I assure that scientists are not the elite. Elite education and intelligence, maybe, but find try to find one buying a $40 hot dog at Davos.

      Nah, it’s all bankers, politicians, and high-end “journalists.”

      1. That said, I should add that there are probably thousands of useless engineers and scientists. They gave up doing any science or engineering and left it to postdocs. They are now professional conference-goers. They have PhDs in raiding the coffee and donuts during breaks. They flying around hotel to hotel, hobnobbing in the hallways, while the technical sessions present results that are years old. Most of it is just modeling now anyway. Apt 401 can probably tell you tales of similar folks when he was working with research/academia.

        This is one reason I do not support carbon taxes. That money is NOT going to go actually reducing carbon. It will go toward buying donuts and the Sheraton and Marriott.

        Besides, we already have a solution to carbon-based climate change: trees and birth control. That’s it. But then who would pay for their fancy modeling software?

  22. Somefing gotta give…

    June 28, 2019,12:43 pm
    How Should Investors Reconcile Bond Yields Dropping With The S&P 500 Surging?
    Adam Strauss, Contributor
    Investing
    Wall Street, Lower Manhattan, New York City, USA Getty

    As the S&P 500 Index tests all-time highs with an extraordinarily high valuation by most measures, how can the ten-year Treasury bond yields be declining towards a generational low? Usually, stocks go up when investors are increasingly bullish about the economy, and Treasury bond yields typically fall when investors are increasingly bearish about the economy, but these two effects are happening simultaneously today. The apparent contradiction is difficult to reconcile.

    It may well be that we are witnessing a temporary anomaly which occasionally surfaces in the financial markets. For example, oil prices skyrocketed to $144 per barrel in 2008 at the same time that the housing bust and financial crisis were starting to accelerate. How could oil prices have risen to record highs just as aggregate demand was falling off a cliff? That anomaly corrected a few months later when oil prices declined by more than 75% to $34 per barrel.

    Similar to the oil price surge in 2008, the conflicting signals in the stock and bond markets today may simply be a short-term anomaly. If so, then either the stock market is correct and the bond market is mistaken, in which case we should see yields increase soon, or the bond market is correct and the stock market is mistaken, in which case investors should be experiencing a sharp correction in the stock market soon.

    Let’s look at the stock market and the bond market individually to better understand why we have these seemingly conflicting signals.

    With the bond market, it’s important to remember that when bond prices increase, bond yields decline. Similarly, when bond prices fall, bond yields expand. This relationship is somewhat counter-intuitive but essential to understand. From November 2018 until June 2019, U.S. Treasury yields declined from 3.23% to 1.99%, which is the lowest yield for ten-year Treasuries since 2016, a year in which Treasury yields hit a new generational low of 1.36%. Why would the ten-year Treasury yield, already relatively low, decline so much during the past eight months?
    …

    1. “Usually, stocks go up when investors are increasingly bullish about the economy, and Treasury bond yields typically fall when investors are increasingly bearish about the economy, but these two effects are happening simultaneously today. The apparent contradiction is difficult to reconcile.”

      What an ignorant puke! When Treasury yields or any other type of yield falls money becomes easier to borrow. Easy borrowing makes it easy to “create wealth” via the increasing prices of assets.

  23. Tina is back what is there to reconcile? With bond yields so low the stock market is attractive. With so much money looking for a home you can have both low interest rates and high stock prices. Only when money is finite is there a conflict.

    1. “Only when money is finite is there a conflict.”

      The writer seems to have missed the memo that announced the Fed’s punchbowl removal plans have been indefinitely suspended.

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