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The Main Thing Is That Prices Are Too High

A report from the Marin Independent Journal in California. “Marin’s slump in sales was mirrored throughout the Bay Area. CoreLogic said. Across the Bay Area, sales fell 12.6% in June. The region’s median home price in June was $855,000, down 2.3% from $875,000 a year earlier. CoreLogic said the Bay Area home sales total was the lowest for a June in 11 years, and June 2018 was already weak.”

“Andrew LePage, a CoreLogic analyst added that ‘two Bay Area counties — Santa Clara and Sonoma — logged annual declines in their overall median sale prices in June. In both cases, this was the fifth consecutive month with a year-over-year decline. Five counties — Alameda, Marin, Napa, Santa Clara and Sonoma — experienced annual decreases in the median price paid specifically for resale detached houses.'”

The San Francisco Chronicle. “Peninsula Realtor Ken DeLeon noted that foreign buyers, especially from China, are still active in the $10 million-and-up range. However, their purchases of homes in the $2 million to $4 million range ‘has tapered off, almost to zero,’ The imposition of more stringent capital controls has made it hard for most people to get money out of China, unless you’re ‘uber wealthy,’ DeLeon said.”

The Bay Area Newsgroup. “Year-over-year sales dropped 14.6 percent in Santa Clara County, 21.6 percent in Contra Costa County, 14.9 percent in Alameda County, 8.9 percent in San Mateo County, and 21.7 percent in San Francisco County, according to a CoreLogic report. ‘Across the board, prices have hit a point where people have stopped responding,’ said CoreLogic analyst Andrew LePage. Despite lower interest rates and more homes for sale, transactions have become sluggish, he said.”

“Alan Wang, an agent based in Santa Clara, has seen buyers avoiding townhomes and condos in favor of single-family homes, even if they have to stretch their budgets and mow their own lawns. Homeowner association dues can add significant monthly costs to the properties, he said. Condo sales in the region fell 10 percent, and the median sale price dropped about 6 percent to $720,000, according to CoreLogic. ‘They’re not selling,’ Wang said.”

“Wang sold a two-bedroom townhome in Campbell last year for $915,000. This year, a neighbor in the townhome community asked him to sell a similar unit. Wang listed the property at $899,000 and had little interest for months, he said. Finally, they advertised the property at a below-market ‘teaser price’ of $499,000, designed to ignite a bidding war. The price drew plenty of interest, but only 2 of 18 offers came in over $700,000. The property sold for $722,000.”

From CNBC. “High prices are hitting the Southern California housing market hard, reversing the sales gains over the past few months. Sales have been falling on a year-over-year basis for 11 straight months. Sales of newly built Southern California homes in June were nearly 47% below their historical average for the month.”

From Fox Business. “New home sales in the Southern California counties notched their weakest June since 2014. Sales fell across homes of all prices, but were steepest for those with price tags of $1 million or more. Out of all the California counties listed, Los Angeles experienced the sharpest drop – at 12.1 percent year over year.”

The Los Angeles Times. “Richard Green, director of the USC Lusk Center for Real Estate, said today’s tight lending standards will provide a barrier against a wave of foreclosures similar to the one last decade that helped crash the market. Still, Green is more bearish than the Realtors. Citing a mismatch between incomes and prices, he expects the Southern California median to remain flat or perhaps decline 5% over the next two years.”

“‘The main thing,’ he said, ‘is that prices are too high.'”

The San Diego Union Tribune. “In a sign of a gradual cooling of the housing market, there were just 3,684 home sales in June, the lowest for that month in eight years. There were 7,066 homes for sale in June, said the Greater San Diego Association of Realtors. That’s more than the 6,413 for sale in June last year and 5,655 in June 2017.”

“Raylene Brundage, an agent with Coldwell Banker Residential Brokerage, said closing sales has been more of a challenge since the beginning of the year as potential buyers, many of them millennials, have been hesitant to pull the trigger on a purchase. ‘People are becoming, in my opinion, very careful about their money and what they’re getting,’ she said.”

“Brundage gave the example of a remodeled two-bedroom condo she recently sold in Hillcrest — considered by most agents an ideal location — after reducing the price. She said a relatively high homeowner association fee for the area, $579, turned off most buyers. After six months on the market, it sold for $475,000, down nearly $55,000, from the original asking price.”

The Orange County Register. “‘The market is in a correction,’ said Jamie Duran, Southern California president of Coldwell Banker Residential Brokerage. ‘We are coming off two of the slowest real estate market quarters in recent history.'”

“Market watcher Steve Thomas of Reports On Housing said that rate reprieve failed to resuscitate sales because too many buyers are priced out. ‘You’d think with interest rates dipping down into the threes that it would entice more buyers to get into the market,’ Thomas said. But, he said, ‘people feel that values must be topping out, and when enough people feel that way, it slows the market. That’s the sluggishness that we’re feeling right now.'”

“Nearly 16% of sellers in Los Angeles and Orange counties lowered their asking prices last month, compared with 13.5% a year ago and 11.7% two years earlier, Zillow figures show. In the Inland Empire, 16.6% of sellers dropped their prices last month, vs. 15.8% last year and 12% two years earlier. That’s a sign that sellers ‘are holding on to peak pricing, and we are past the peak,’ said Duran.”

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It’s Starting Now

A report from the Los Angeles Times in California. "The Southern California median home price…

This Post Has 81 Comments

  1. ‘even if they have to stretch their budgets and mow their own lawns’

    How the mighty have fallen.

    1. Bahahahahaha … perhaps mow their neighbor’s lawns as well. Maybe even get a paper route or deliver pizzas. They need to do whatever it takes to keep those payments shipped off each and every month to the lenders.

      Pukes work, lenders reap. God’s Plan.

    2. And this is one of the few times I’ve seen any of the real estate articles even mention condo fees. Some of those condo fees are upward of $400+/month. In some areas that’s half a mortgage payment.

      1. I remember walking by for sale listings for downtown San Diego condos in Fall of 2016… HOA fees were over $1k/mo. Good luck with that.

      2. My ex-gf’s friend got a “special assessment” for over $35k. They had to do major repairs to the building. F**k that noise.

  2. ‘two Bay Area counties — Santa Clara and Sonoma — logged annual declines in their overall median sale prices in June. In both cases, this was the fifth consecutive month with a year-over-year decline. Five counties — Alameda, Marin, Napa, Santa Clara and Sonoma — experienced annual decreases in the median price paid specifically for resale detached houses’

    I think I figured out why Thornberg isn’t eating his crowz (or even giving interviews). It’s cuz he has his head so far up his ass.

    1. Has he gone missing? Maybe hiding out in a basement somewhere trying to craft some carefully worded rebuttal?

    2. And the Tax Man keeps raising the prices as someone has to pay for all those asylum seekers….was it 80-100K people per month that have made it across the line for the past several months? I think I just saw on in the store on one of those wheeled carts you drive around it. She must have weighted 300lbs. The Banks are going to pay for it that’s fur sure, all the while, Banksters like Sun Trust are opposing ICE, Opposing that our government enforce Immigration laws and so on. Insanity.

      1. While I’m no fan of illegal immigrants, there are plenty of whites riding around in those carts too. But it’s not just the people on the carts or the illegal immigrants. Next time you’re in the store, take a look at the kids, especially those in the 10-15 age range. Fully half of them look like future diabetes cases.

        1. It is very sad. I am 60 and I think I can beat most of today’s teenagers in a mile run.

          1. I’ve been reading and watching a LOT lately about diet and obesity. I’m pretty sure they finally figured out how we all got fat starting in 1980. It’s not the lack of exercise. It’s the seed oils, the sugar, and the SNACKING. Teachers and parents need to cut the sugar and make real meals with real fat. Then they can stop the snacks every two hours without the kids whining with hunger. If the kids can fast 4 hours between meals and 12 hours overnight, they will slim right down and diabetes will drop like a rock.

            (we adults can do the same thing, but we need to cut carbs even more and fast longer, but it should still work.)

          2. Sugar is a huge problem. Not because it’s intrinsically evil per se, it just has a cr*pload of calories per gram. Fat can be just as bad if you are eating sticks of butter, but most of us don’t do that.

            I once lost 40 pounds in 4 months. People were so impressed and excited to ask me how I did it.

            My response: I at 1200 calories per day.

            They were far less jazzed to hear that!

            I just decided I would rather lose 10 pounds a month for 4 months than 2 pounds a month for 10…

  3. ‘People are becoming, in my opinion, very careful about their money and what they’re getting’

    First, it isn’t their money. They are borrowing it. So who were these lenders when they weren’t being careful? And what happened to the love letters? California your bubble has popped, over a year ago.

  4. ‘Sales of newly built Southern California homes in June were nearly 47% below their historical average for the month…Sales fell across homes of all prices, but were steepest for those with price tags of $1 million or more. Out of all the California counties listed, Los Angeles experienced the sharpest drop – at 12.1 percent year over year’

    Wa? Shortage!

    1. Where is Shorty these days?

      I guess with 25 million excess, empty and defaulted houses out there, 4 million of which are in CA, there won’t be any new starts for a while.

      San Jose, CA Sale Prices Crater 9% YOY As Desperate Sellers Take What They Can Get

      https://www.zillow.com/san-jose-ca/home-values/

      *You know the drill. The agonizing dropdown drill.

  5. From CNBC. “High prices are hitting the Southern California housing market hard, reversing the sales gains over the past few months. Sales have been falling on a year-over-year basis for 11 straight months. Sales of newly built Southern California homes in June were nearly 47% below their historical average for the month.”

    While the MSM will never acknowledge this, the sinking SoCal market isn’t just about affordability. From talking with recent California transplants in Colorado and Arizona, they were unanimous in blasting progressive malgovernance and open borders policies, and chronicled the steady decline in the quality of life and rising crime and vagrancy, as well as being fed up over increasingly extortionate measures California is resorting to to extract revenue and taxes from its productive population to fund the ever-growing entitlement voting bloc. The tipping point is fast approaching where some event will hasten the exodus of the productive, and then shack prices will plummet as the writing on the wall becomes clear to all but the most deluded progressives in their walled and guarded enclaves.

    1. The tipping point is fast approaching where some event will hasten the exodus ??

      Thats been my feeling for some time…I heard just yesterday that the number of renters that make $150K per year has tripled in the last two years…Other than a short term lease, these people are not rooted here…They can be light on their feet…What keeps them here is the job & money…Change that dynamic then things will change quickly…I hear this all the time from the 30-40 age group…

    2. That tipping point would have to include companies in the tech and biotech sectors leaving the state for greener pastures. It’s been slowly happening however there are still few geographic options if you work in pharma/biotech. The demise of California is certain. The time frame is all that’s left to debate.

      1. few geographic options if you work in pharma/biotech

        For biotech, Boston, San Francisco and San Diego are the only real options.

        1. Sounds like you have knowledge about biotech. What is your opinion about Ionis? I have owned it for a number of years and it has treated me well particularly since I have written calls on it. Of course, it was ISIS when I first bought it, unfortunately it had to change that name for obvious reasons.

          1. I’ve been somewhat out of the loop for a few years but I never seriously considered a position with them despite ample opportunity. A revolving door in the patent department is red flag and that’s what it was 10+ years ago. The fact that they haven’t been acquired in 30 years should tell you all you need to know.

        2. There’s RTP in NC too. Or, you know, biotech and pharma could start up a new mecca for companies instead of crowding into several cities. Wasn’t Pittsburgh trying to revive itself with meds and eds?

          1. I’m a second generation biotechnology professional. I’ve considered jobs up and down both coasts. Boston, San Francisco and San Diego have the most opportunities, which is crucial given the industry’s volatility.

  6. “The imposition of more stringent capital controls has made it hard for most people to get money out of China, unless you’re ‘uber wealthy,’ DeLeon said.”

    An uber connected to the communist party

    1. Yeah, but it was interesting that even one of their retired central bank honchos couldn’t get his money out, they said he was too old. You would think that guy would have all the connections he would need.

      1. From the article …

        “Most Chinese buyers purchasing high-priced homes in the Bay Area are doing it through their companies, he added.”

  7. It does not matter what market I look at, the entire west coast is overpriced to the extreme. Only rich people can actually afford a house. Heckuva job, Obama, heckuva job.

    1. “Only rich people can actually afford a house.”

      This fact is best kept secret in that we lenders do not want to ruin a good thing we have going for ourselves.

      1. It amuses me to no end to read of heavily indebted debt-slave pukes refer to themselves as “homeowners”.

  8. ‘today’s tight lending standards will provide a barrier against a wave of foreclosures’

    ‘a mismatch between incomes and prices’

    One of these things is not like the other. There’s a whole buncha people underwater in California right now.

    1. ‘today’s tight lending standards will provide a barrier against a wave of foreclosures’

      What an interesting statement. To me it makes no sense.

        1. (snip)

          “Congresswoman Maxine Waters (D-CA), chair of the House Committee on Financial Services, introduced legislation that would help prevent foreclosures for borrowers with Federal Housing Administration (FHA) mortgages by strengthening requirements for and increasing oversight of FHA mortgage servicers so that every homebuyer with an FHA mortgage is given a fair chance at avoiding foreclosure.”

          This article has nothing to do with tightening lending standards, it has to do with dealing with servicing the mortgages AFTER the money has already been loaned out.

        2. “strengthening requirements for and increasing oversight of FHA mortgage servicers so that every homebuyer with an FHA mortgage is given a fair chance at avoiding foreclosure.”

          They have a fair chance, just make the mortgage payments. However, it is just more evidence of what I have been saying, if the globalists take back the Presidency, they will prevent housing from going back to affordable prices. The blue states in particular cannot allow housing to fall since their economies are built on the home ATM.

      2. If lending standards are tightened then a lot of potential buyers will be shut out of the market.

        If potential buyers are shut out of the market then potential sellers will have to lower their prices in order to get their houses sold.

        If sellers sell their houses at lower prices then their neighbor’s houses – the comps – lose value.

        If the neighbor’s houses lose value then their mortgages tend to move in the direction of becoming underwater.

        Underwater mortgages act to increase the foreclosure rate.

    2. One of these things is not like the other. There’s a whole buncha people underwater in California right now.

      True, dat, but I have it on good authority – no less a real estate expert than CNBC’s Diana Olick – that bidding wars are heating up again, so I’m going to be racing out to California to put in a bid on a shack and get my loan locked in before prices start heading higher again. Added incentive: Mr. Banker’s free cup of coffee for signing on the line which is dotted.

      /sarc

      https://www.cnbc.com/2019/07/12/bidding-wars-are-heating-up-heres-how-to-win-your-dream-home.html

  9. Why is there never an honest conversation about housing in this country? Every time they talk about a “shortage of affordable housing,” no matter what market, they never talk about why that has occurred, and what steps need to be taken to rectify the situation.

    The problem is threefold. First, lending money to people who cannot afford to repay it has driven prices up. This was achieved by lowering all sorts of standards to qualify people. Next, mass speculation by people who were looking to make a quick buck and had no intention of living in the house long term put massive upward pressure on prices. Lastly, the Fed and their artificially low rates in conjunction with their purchases of MBS from shoddy banks was gasoline to a tanker fire.

    Until all of this is addressed, we will never have a housing market that’s “normal.” I have lost hope, quite frankly.

      1. “Better lock in a low rate now, before we’re off to the moon”

        We are heading to the moon to stay this time. I think with developers creating subdivisions and realtors telling everyone that they are not creating anymore moons. Maxine Waters is accusing Mr. Banker of redlining the dark side of the moon.

        1. She’ll soon enough be accusing lenders of saddling minority borrowers with subprime debt, just before new buyers all across the land find themselves holding underwater mortgages.

          1. People of privilege (skin color) will be taxed so those less “privileged” can afford housing. It’s coming….the squad is on their way!

      2. “We are heading to the moon to stay this time.”

        The future is the Flintstones, not the Jetsons.

        1. Unfortunately, I think it will be a dystopia. Thus, for the 1% it will be the Jetsons but for the 99% it will be the flintstones.

    2. And fourth… Moneylaundering, anonymously via residential and commercial real estate purchases, goosed the market, which started a fire under the speculators, which drove the desperate-to-own to bid more… and the snowball grew…

  10. Dear Mr. Banker, Have you seen this video about how smartphones are used to groom people to accept slavery, as they are doing in China, and what your role is going to be in FinTech’s Banking 4.0 or otherwise become obsolete? I imagine you will go along with the snakes who tell everyone the only way to survive is to help build this system when they say, “learn to code”. https://youtu.be/VbOv_ClA7j0

  12. I’m just shocked and dismayed over the fact that Hollywood just released a movie called “Once Upon A Time in Hollywood, ” and it’s racist.

    Can you believe the audacity the producer cast two white males as the lead stars in this flick. How insenestive can that be. I might notify Mrs Omar because she said in summary that white men are evil. We might need to impeach white males in Congress in accordance with this.

    It’s just really hard to believe that this could happen, and it’s a serious threat to our democracy.

    1. What you have experienced is a clever way of promoting a movie, of getting people to talk about the movie, to perhaps get interested enough to want to pay money to go see the movie.

      1. The MSM is always on the prowl looking for good stories to feed to their readers and viewers. A clever marketer will take advantage of this fact.

        1. Mr Banker,

          I could care less about the movie. Really, this is just the way the nut cakes on the left sound to me. It was a spoof on everything is a racist affront to somebody today, even the release of a movie.

          1. Mr Banker,
            OMG, why did i pick that movie. Whatever these vandals were trying to say I’m sure it’s some kind of political statement that isn’t clear. But given your prior post, maybe this was done to get attention on purpose to market a movie.

          2. Tarantino Billboards Hijacked in L.A. to Slam Epstein, Polanski and “Pedowood”

            “The artist behind the alterations goes by the name Sabo, and he says that the faux ads are meant to insult the entertainment industry for embracing Polanski, who plead guilty to sex with a minor four decades ago, and, to a lesser extent Epstein, who was arrested July 6 for sex trafficking of minors.”

            “He also noted that the backdrop of the movie is the 1969 Charles Manson murders, where the most high-profile victim was Sharon Tate, the actress who was married to Polanski at the time.”

          3. “…where the most high-profile victim was Sharon Tate, the actress who was married to Polanski at the time.”

            “At the time of her death, she was eight-and-a-half months pregnant with the couple’s son.” —wiki

  13. That realtor from the Marin article must be on some good drugs (Cohn is a name suited for a realturd spewing this babble):

    Even with a little slowing in the Marin market, Cohn said, “the sky is not falling.”

    “Many homes in Marin sell above the asking price, especially renovated homes in close proximity to amenities,” she added. “At the same time, many properties sell 3% to 5% under asking, often after price reductions. I’ve seen this part of the cycle several times before and it is always dicey when it happens.”

    She also said expected upcoming IPOs in tech or other sectors could help the Bay Area real estate by attracting more people for high-wage jobs.

    “The economy is strong, especially in the Bay Area,” she said. “And the unicorns that are expected to go public will only strengthen our real estate market.”

    2. Posted that connection weeks ago but I don’t think it made it thru moderation. There are a few other cozy connections to California politicians and their spouses at the federal level.

      Have you wondered why Nervous Nancy got remarkably quiet in the last 30 days?

      1. “Have you wondered why Nervous Nancy got remarkably quiet in the last 30 days?”

        Phuc yeah, bring it on dawg!

      1. Crazy Bernie has character and an innate ability to appeal to and capture the young vote. He seems “real,” not like a one-percenter, even if he does have 3 houses or whatever. Biden comes off as just another smooth-talking pol, and he has absolutely no rapport with young people.

        If the Dems would not have railroaded Bernie, I think he would have beaten Trump. I was talking to a neighbor around election time who was fuming because all of his lib friends (Seattle) who were Bernie supporters told him they’d die before they’d vote for Shrillary. They stayed true to their word and that’s a big reason she lost.

        1. PS- I do realize that WA state went to Clinton, but I believe that, nationwide, there was severe fallout among Dems because of the Bernie situation, and it was enough to turn some people to either not voting or voting for Trump. There were tons of “Never Clintons” out there.

    2. Yes, but pre-Trump the Democrats were able to cover up their failures by screaming racism. Trump is immune at this point and the Democrats have to admit their failures.

  18. “Wang sold a two-bedroom townhome in Campbell last year for $915,000. This year, a neighbor in the townhome community asked him to sell a similar unit. Wang listed the property at $899,000 and had little interest for months, he said. Finally, they advertised the property at a below-market ‘teaser price’ of $499,000, designed to ignite a bidding war. The price drew plenty of interest, but only 2 of 18 offers came in over $700,000. The property sold for $722,000.”

    Sum Tin Wang

  19. “The region’s median home price in June was $855,000, down 2.3% from $875,000 a year earlier.”

    A $20,000 home equity loss is nothing to a wealthy Bay Arean.

    2. Forgot since the house is over $750,000, the amount of mortgage interest that can be deducted is reduced too.

  21. It can happen here: Interest rates set to fall despite soaring stocks, low unemployment
    By Jeffry Bartash
    Published: July 27, 2019 10:30 a.m. ET
    Fed readies rate cut on growing worries about health of economy
    Getty Images
    Worried about the economy? The Federal Reserve is worried enough to cut interest rates even with stocks at record highs and unemployment at 50-year lows.

    The monthly tab on how many new jobs are created in the U.S. is rarely shunted to the undercard, but another headliner is hogging all the attention.

    The Federal Reserve is widely expected this week to cut a key interest rate that influences the borrowing costs for businesses and consumers. And the Fed is going to do so even with stock markets hitting fresh record highs and unemployment sitting near a 50-year low — an almost unheard-of combination.

    Welcome to the 21st century economy.

    The central bank isn’t worried about how the economy is actually doing. The U.S. grew at a moderate 2.1% pace in the second quarter after a 3.1% growth in the first three months of the year.

    What the Fed is worried about is an uncertain future: uncertainty tied to festering U.S. trade disputes with China and other nations. These fights have led to tariffs and retaliatory tariffs, disrupted global supply chains and sapped the strength of the global economy.

    The Fed’s pending rate cut is being seen by Wall Street as an insurance policy of sorts, or an immunization shot, in case the turbulence gets worse.
    …

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