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Some People Fear They Bought At The Height Of The Market

A report from Bloomberg on Washington. “The housing market in Seattle can’t seem to make up its mind. For years, the story behind the real-estate market here was this: Californians looking for cheaper property would migrate north and push up prices indefinitely. But about a year ago, Seattle started seeing signs of outward migration, meaning more people were looking for homes elsewhere than there were people looking to move in. It signaled a tipping point for one of the nation’s hottest housing markets.”

“I caught up with Redfin CEO Glenn Kelman yesterday to chat about the volatile housing market in Microsoft and Amazon’s home town. ‘People said if Amazon can’t afford it here, how can I?’ he said. The median home in the city fetches about $700,000.”

“Even Silicon Valley, which has seen home prices climb relentlessly, is seeing some similar cooling trends. Some people there are listing homes they recently purchased because they fear they bought at the height of the market and want to unload before a big drop, according to Redfin.”

“But in Seattle, the outward migration pattern reversed in the spring. Rising mortgage interest rates are slowing the pace of appreciation to about 6 percent per year from 15 percent. Homes are lingering on the market, so buyers don’t have to rush. Sellers are dropping prices.”

“‘Seattle right now is an extremely volatile market,’ Kelman said. “There are markets where everyone knows what to expect, and in Seattle that’s not the case. Every month is something new.'”

The San Francisco Business Times. “September saw yet another high watermark for the number of San Francisco homes on the market, though an increasing number of active listings underwent price cuts. San Francisco had 950 homes actively listed for sale last month, up 6.6 percent from August and hitting a seven-year high, Socketsite reports. That’s 30 percent higher year over year and 41 percent above 2015 levels, which saw 680 homes on the market.”

“San Francisco condominium inventory is up 24 percent year over year, and that’s not including the bulk of newly constructed condos for sale, according to Socketsite. Meanwhile, almost a quarter of the city’s home listings see at least one price cut, up from 18 percent to 22 percent in September 2018.”

“‘Inventory levels have likely peaked for the year and should start to decline though the end of December while the percentage of listings with a price cut should continue to increase,’ Socketsite reports.”

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This Post Has 62 Comments

  1. ‘Californians looking for cheaper property would migrate north and push up prices indefinitely’

    Ah, remember those days? So much optimism. They had found a money tree and it was all theirs!

    ‘San Francisco had 950 homes actively listed for sale last month, up 6.6 percent from August and hitting a seven-year high…30 percent higher year over year and 41 percent above 2015 levels’

    Where’s my shortage!

    1. Be afraid, FBs and speculators. Be very afraid.

      Sorry you missed the boat, greedheads. See you on the other side of the Great Reset.

  4. “Even Silicon Valley, which has seen home prices climb relentlessly, is seeing some similar cooling trends. Some people there are listing homes they recently purchased because they fear they bought at the height of the market and want to unload before a big drop, according to Redfin.”

    “But in Seattle, the outward migration pattern reversed in the spring. Rising mortgage interest rates are slowing the pace of appreciation to about 6 percent per year from 15 percent. Homes are lingering on the market, so buyers don’t have to rush. Sellers are dropping prices.”

    “‘Seattle right now is an extremely volatile market,’ Kelman said. “There are markets where everyone knows what to expect, and in Seattle that’s not the case. Every month is something new.’”

    Kelman-boy, stop “lion”. It’s not like we didnt watch this movie before. We all know whats going to happen next. Thats why the smart buyers aint buying. Only the soon to be knife catchers.

    1. San Jose and Seattle have crazy high property values and terrible traffic, but Seattle’s winters are at least five months of short days and rainy overcast skies. Many people who come from the southwest leave after a year or two.

  5. “‘Inventory levels have likely peaked for the year and should start to decline though the end of December while the percentage of listings with a price cut should continue to increase,’ Socketsite reports.”

    Oh no, shortage coming soon BEN!!!!!

    1. ‘San Francisco condominium inventory is up 24 percent year over year, and that’s not including the bulk of newly constructed condos for sale’

      There’s over 30,000 apartments and condos on the way out there.

      1. What ever happened to all that “pent up demand” that the REIC was recently frothing at the mouth about? REIC catching Ebola maybe?

  6. Some people there are listing homes they recently purchased because they fear they bought at the height of the market and want to unload before a big drop, according to Redfin.”

    To speculators and FBs who drove up housing prices to such ridiculous levels: it could be that the sole purpose of your existence is to serve as an instructive object lesson to others of the price to be paid for unchecked recklessness and greed.

    You are not victims. You purely and simply deserve everything that’s coming to you as Housing Bubble 2.0 craters.

    1. “Some people there are listing homes they recently purchased because they fear they bought at the height of the market and want to unload before a big drop, according to Redfin.”

      I’m guessing the vast majority must be speculators and flippers, with the rest people who lost their jobs/moving.. I would hope anyway.

      What sort of regular person would buy a house to serve as primary residence and then almost immediately panic at the sight of the market cooling to the point of selling?

      1. Another telltale sign: Out of all the major asset classes, only gold is up.

        Dow 25,888.66 -541.91 -2.05%
        S&P 500 2,818.55 -61.79 -2.15%
        Nasdaq 7,528.49 -209.53 -2.71%
        GlobalDow 3,028.13 -38.28 -1.25%
        Gold 1,196.00 4.50 0.38%
        Oil 73.16 -1.80 -2.40%

      2. It seems a race to the exits out of long-term bonds is underway.
        Is $900bn alot?
        ———————————————————————————————–
        The Financial Times
        Exchange traded funds
        Biggest bond ETF suffers record withdrawals
        BlackRock flagship has outflow of almost $2bn in single day after market ructions
        Robin Wigglesworth in New York 2 hours ago

        The biggest exchange-traded bond fund has suffered a record one-day withdrawal, after the global fixed-income market saw more than $900bn evaporate in last week’s Treasury-led bond rout.

        BlackRock’s flagship debt ETF, the $53bn iShares Core US Aggregate Bond ETF (or AGG for short) recorded outflows of almost $2bn on Tuesday, according to Bloomberg data — the biggest one-day withdrawal since its launch in 2003.
        …
        The Bloomberg Barclays Multiverse index, a broad gauge of the global bond market, lost more than $900bn in value last week as a Treasury sell-off triggered by expectations of further rate rises on the basis of strong economic data reverberated throughout Europe and the developing world — and reinforced the case of bond bears calling the end to a three-decade bull run for fixed income.

        “It was not a good week,” said John Vail, chief global strategist at Nikko Asset Management. “It felt like a breakout from the long downward trend in bond yields we’ve had over the past 30 years.”
        …

    2. I’m wondering, too. Is this the beginning of the carnage, the event we’ve all been waiting for?

      I hear people discussing something called a “Re-Set”. What does that mean, exactly?

  9. “Some people there are listing homes they recently purchased because they fear they bought at the height of the market and want to unload before a big drop…”

    Gee, you mean they were speculators, and didn’t buy those homes to live in?

    1. Gee, you mean they were speculators, and didn’t buy those homes to live in?

      They wanted to live in it for free WHILE it made them rich. Paying for housing is for chumps.

  10. Current headline:

    “Stocks Selloff Deepens, Dow Sheds 500 Points”

    Real situation.

    “Stock Prices Sky High, Buying At This Level Guarantees Low To Negative Future Return for a Decades or More”

  11. Houston market update….TIMBERRRRRRRRRR…

    “September sales of all property types totaled 7,842, a 4.4-percent decrease over the same month last year. Total active listings, or the total number of available properties, climbed 5.7 percent to 41,560.”

  13. “‘Inventory levels have likely peaked for the year and should start to decline though the end of December”

    Sounds reasonable. . .NOT!

  15. Things are pretty grim up in the Panhandle of Florida, is what I’m hearing. Worse than expected. The hurricane was like 2 mph shy of a Cat 5 when it made landfall.

    1. We were fortunate here in Sarasota way down the Gulf Coast from the panhandle. Neat waves earlier on the beach here and kind of windy. Hope the best for those in the panhandle. Went through Irma last year and that was scarry enough. Did seem to go through really fast so exposure period was short. We had 5 to 6 hours of peak exposure with Irma last year. Makes a big difference.

    1. Years — up to seven. Recent buyers cannot or will not sell at market if they bought for more, because it won’t cover the mortgage, and older people are counting on younger people living in permanent house poverty to finance their retirement.

      Millennials will have to wait for Baby Boomers to die and leave behind trashed houses. Senior housing firms will find their potential market is trapped in those homes by their own unwillingness to sell at what poorer generations can afford in order to downsize.

      2. +1

        This is one of the most astute observations I’ve read in a long time. You hit the nail on the head. Interestingly enough, Fannie Mae and Freddie Mac came up with a report that highlights the exact scenario you are describing. When the boomers start to pass on en masse, then the real sell-off will occur. This is probably still 10 years away.

        1. According to Fannie Mae’s report, as baby boomers exit their owner-occupied homes there could be a glut of new homes and steep decline in price– returning to historic, pre-globalization levels.

          Government Solutions to prevent a return to home affordability includes Mass Immigration, which spurred the dramatic price surge in housing booms 1 and 2.

          Adjust immigration policy to create more potential homeowners, to keep hyperinflated prices afloat.
          Advocates for this tactic suggest that creating more legal households would increase the number of potential owner-occupants in the market.

          https://thinkrealty.com/generational-housing-bubble-forming/

    1. 831 down, Spiff. It’s a beautiful thing.

      No PPT intervention. Something tells me Jerome Powell is having it out with POTUS and Mnuchin right about now.

      1. Just wait until tommorrow a.m…

        Big natural disasters always depress stocks. (Until at least insurance losses can be tallied).

        For the endless riches Florida speculators, the term “underwater” is taking on a whole new dimension.

      2. El-Erian: “Tis a mere flesh wound.”
        ————————————————————————————
        Investing
        Mohamed El-Erian: Stock market sell-off won’t stop the Fed from hiking rates
        – Investors just have to get used to the fact that the market will be based on fundamentals and not Fed policy, says Mohamed El-Erian.
        – “It’s not an easy transition. It’s going to be volatile but over the long term it’s better for the health and robustness of markets,” he says.
        – However, El-Erian expects the pullback to be temporary because of strong U.S. economic growth.
        Michelle Fox
        Published 3 Hours Ago
        CNBC.com

        The stock market drop isn’t going to stop the Federal Reserve from normalizing interest rates, noted economist Mohamed El-Erian told CNBC on Wednesday.

        And that’s a good thing, he said.

        “I don’t think this derails the Fed in any way and I think we just have to get used to the fact that we have to stand on the basis of fundamentals and not on the basis of central banks,” the chief economic advisor for Allianz said on “Closing Bell.”

        “It’s not an easy transition. It’s going to be volatile but over the long term it’s better for the health and robustness of markets.”

        https://www.cnbc.com/2018/10/10/mohamed-el-erian-market-selloff-wont-stop-the-fed-rate-hikes.html

        1. <em“It’s not an easy transition. It’s going to be volatile but over the long term it’s better for the health and robustness of markets.”

          Sounds like the top hats and umbrella hoop dresses have successfully rowed their life boat far enough away to escape the hydraulic undertow.

          2. Sounds like the top hats and umbrella hoop dresses have successfully rowed their life boat far enough away to escape the hydraulic undertow.

            Or at least they think they have. And that’s what counts.

        2. I hope the Fed keeps raising. I’m really disappointed in Trump’s comments. He of the “big nasty bubble” has changed his tune. I thought he’d want an end to the cheap money.

  18. Goat yoga, lazy rivers, in-house chefs: Denver apartment complexes …
    The Denver Post-8 hours ago
    Goat yoga, lazy rivers, in-house chefs: Denver apartment complexes pull out all the … Many of the real estate moguls racing to supply housing during a notable …

  20. That moment when the Fed finally does something of which you approve, and your head resembles a clapper in a bell being rung at top speed.

  21. Trump — Fed has gone crazy.

    Things he said during the 2016 campaign made me think he understood the stock market was overpriced in a bubble at the time, which would make it even more overpriced now, but Trump says one thing one day and the opposite thing the next day.

    1. I thought he appointed Powell for exactly this reason, to raise rates and pop the big. fat. ugly. bubble.

      But, once you start taking credit for the big. fat. ugly. bubble. there’s no turning back.

      1. “I thought he appointed Powell for exactly this reason,…”

        Perhaps, but no CIC wants to take credit for a market swoon.

      2. Powell, unlike “Zimbabwe Ben” Bernanke and Yellen the Felon, seems intent on acting like a responsible central banker instead of a Goldman Sachs toady. After the Keynesian lunacy of the past ten years, prudent fiscal and monetary policies are long overdue, even if it means bursting the artificially inflated Bernanke-Yellen Ponzi markets and asset bubbles and wiping out a bunch of speculators.

        1. It’s painful to watch, but necessary to fix markets whose risk allocation function would otherwise remain permanently impaired by too much market intervention to make the most reckless and wasteful gambles look smart. For one example of many, just wait the dust settles on the luxury airbox craze. Nobody will be able to fathom through the lens of history how we ended up with so many luxury housing units in excess of luxury buyers who can afford them.

      3. We’ll know what he meant by what he does. If he fires Powell, he didn’t mean it. If he keeps Powell on as FedHead, he meant it; the piblic blame on an INDEPENDENT FRB is Trump’s CYA.

      4. Could it be Trump possibly wants to pop the bubble but blame the crash on the Fed? An angered public would be perfect fuel to open an audit of the Fed and possibly the elimination of the organization.

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