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It Was Very Much A Buyer’s Market Based On The Drastic Median Price Decline

A report from Forbes. “Knock’s ‘top ten markets with the most current listings predicted to sell below original list prices’ include in descending order Miami, Chicago, Hartford, Houston, New Orleans, Tampa, Pittsburgh, New York, Jacksonville, and St. Louis. In Miami, a 2,050 square feet condominium on Brickell Key Drive was recently reduced by $125,000 to $1,100,000.”

“Take a look at a 1,394 square-foot Long Island City condo in May listed at $1,350,000. Since then there have been two price cuts. Current listing price—$1,195,000. ‘The biggest shift we are seeing is from a sellers’ to a buyers’ market over the last couple of quarters. More homes are selling for less than list price. It’s a balancing of the market where previously the market was getting ahead of itself and buyers stopped running after it,’ notes Sean Black, Knock CEO.”

The Press of Atlantic City in New Jersey. “‘It’s only money,’ an auctioneer said between bid calling Thursday morning at a foreclosure auction in the city. When the bids stalled, he coaxed them by saying, ‘You came all this way.’ Within 20 minutes, bidders spent close to $300,000 on real estate that had become the city’s property after falling into foreclosure.”

“The auction, hosted by Max Spann Real Estate and Auction Company, of Hunterdon County, featured 35 properties — including commercial, multifamily, row and single-family homes — located all across the city, including one on the water.”

“The starting bid on some of the homes was as low as $5,000. The auctioneer called it ‘cheaper than a car’ after starting higher but decreasing the amount until he found a bidder who bit. When a former bar on South Virginia Avenue went up on the block, he said ‘there might still be a bottle of vodka in there’ to entice buyers.”

“Will Erb, president of the Sea Breeze Condo Association, went to the auction with a friend and neighbor who purchased a unit in the condo for $27,000 for his family, he said. He called it ‘a steal’ since condos were going for around $47,000 last year and have jumped to $50,000 since.”

The Houston Chronicle in Texas. “Once listed at $16 million, the price for this 297-acre sprawling country estate in Brookshire was cut to $10.45 million. Three tracts of land span the estate; one tract houses the Brookshire Polo Club; a second is home to polo club and equestrian fields, a newly built Texas hill country house, stables and pecan orchards; and the third consists of mainly pastures that could be developed into a high-end country resort with build-to-suit homes.”

The Los Angeles Daily News in California. “A gated and walled Tarzana home once owned by singer Carnie Wilson is on the market at $1.899 million. Property records show Wilson and her husband purchased the Tarzana home in 2006. But, according to foreclosure documents filed in the L.A. County Recorder’s Office, the couple had defaulted on their mortgage payments. The home was sold as a short sale in 2011 for $1 million, records show.”

The San Mateo Daily Journal in California. “The home was listed for $1.2 million less than the median sales price in San Mateo. And it lasted less than two weeks on the market. ‘It was a totally unique, one-off situation,’ said San Mateo Housing Manager Sandy Council, regarding the single-family home in downtown San Mateo listed to sell for $499,000.”

“A sale is pending for the small property once acquired by the city to convert into a park, and real estate experts agreed it is unlikely the historically-expensive market will see another home for such a low price any time soon. Realtor Ray Marino suggested any home listed for several hundreds of thousands of dollars will likely come with a few warts on it.”

“Realtor Katie Gerhardt balanced that perspective by noting it is growing increasingly common for listings to drop lower than $1 million, as the market cools marginally and sellers seek to set a price inviting buyers to bid the sales cost higher. Regarding the current market slowdown she observed, Gerhardt suggested prices could be dropping temporarily as families head out of town for summer vacation. But she also maintained uncertainty over whether prices could stay as high as they have over nearly the past decade.”

“‘Everyone is kind of wondering when is it going to end,’ she said. ‘And when will it take a downturn?'”

The Auburn Examiner on Washington. “The general rule of thumb is that a balanced market is somewhere between 4 and 6 months of inventory.  However, we all know every city is different, and I’m beginning to think that this is just one more way Seattle (and King County) differ from the norm.  Let’s check out the data from the NWMLS for King County since January 2018.”

“Obviously King County’s ‘Balanced Market’ is not somewhere between 4 and 6 months. As we can see in the chart above, the median price in King County fell from $650,000 in June of 2018, to $565,000 in January of 2019.  The average months of inventory during that time period was 2.0475 months, with the highest month of inventory in September of 2018, at 2.83 months. Thus, at just an average of 2 months of inventory, it was very much a buyer’s market based on the drastic median price decline.”

“We have a dataset above that shows drastically declining AND increasing median prices when inventory is right around 2 months.  Further, we have a dataset above that shows a higher percentage increase in median price with inventory at 1.938 months in the first half of 2019, than when inventory was at .9966 months during the first half of 2018. Are you confused, because I’m confused. Months of Inventory is not the stat to reference when discussing what Puget Sound’s balanced market is.”

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This Post Has 92 Comments

  1. ‘Months of Inventory is not the stat to reference when discussing what Puget Sound’s balanced market is’

    Or anywhere else. Been saying that for years.

    1. People continue to cling to the 6 months mark, which is an absolute relic of the past. The internet has drastically changed the game, turnaround time on home sales is much faster. A balanced market should either be a lower number, or a different metric altogether.

  2. ‘purchased a unit in the condo for $27,000 for his family, he said. He called it ‘a steal’ since condos were going for around $47,000 last year and have jumped to $50,000 since’

    Will, you just knocked the comp down to $27k.

    1. Wait until the condo association starts levying special assessments to cover structural defects from shoddy bubble-era construction, and to cover the shortfalls for deadbeat residents who have stopped paying their monthly dues. Won’t seem like such a “steal” when you’re pouring funds into a money pit.

    2. I’m sure the area is sketchy, but a $27,000 condo just might make sense if the dues aren’t outrageous. That’s cheaper than most new cars, and seems like it would cash flow very easily. Further, while nobody likes to throw away $27k, it’s a small enough amount where you really don’t have to worry about falling prices. As compared to the $290,000 rotting mobile homes around here, it seems like a no-brainer.

  3. ‘Regarding the current market slowdown she observed, Gerhardt suggested prices could be dropping temporarily as families head out of town for summer vacation. But she also maintained uncertainty over whether prices could stay as high as they have over nearly the past decade’

    ‘Everyone is kind of wondering when is it going to end’

    It was over months ago Kate. BTW, they mention foreclosures in this article.

    1. “… prices could be dropping temporarily as families head out of town for summer vacation.”

      ?

      1. The buyers are exhausted, and need a vacation. They’ll come back re-energized…ready and willing to BTFD.

        1. Especially because they haven’t had the time to take a vacation for the last 7 or 8 years. They’ve been busy all summer in the previous years, buying homes all the time! 😀

          Hilarious. Maybe some realtors are thinking of stand-up comedy as their next gig!

          1. Same spew from them last summer. Guess they have so much money that they did a year long vacation. They will be back -realtor

  4. ‘Property records show Wilson and her husband purchased the Tarzana home in 2006. But, according to foreclosure documents filed in the L.A. County Recorder’s Office, the couple had defaulted on their mortgage payments. The home was sold as a short sale in 2011 for $1 million’

    They could have paid. Why didn’t they? Good money after bad, just walk away.

  5. ‘It was a totally unique, one-off situation,’ said San Mateo Housing Manager Sandy Council, regarding the single-family home in downtown San Mateo listed to sell for $499,000.”

    Not for long, Sandy. These “one-off situations” are starting to multiply, in case you failed to notice. Just like the “outliers” started spreading like an ebola outbreak.

  7. “As we can see in the chart above, the median price in King County fell from $650,000 in June of 2018, to $565,000 in January of 2019.”

    Unfortunately that was a head-fake for us bears, because price ran all the way back up to $650,000 again.

    1. Demand collapsed.

      It goes back to the wise adage, “you can ask $50k for your 10 year old Chevy truck but where is the buyer at that price?”

      So it is with all depreciating assets like houses and cars.

  8. Tons of flippers are still buying and rehabbing as I type. I’m not sure what it will take to end this scourge once and for all. Anything cheap on the low end which needs a full renovation goes pending immediately. The only ones which may take and extended ride on the mls have serious structural problems or have a failed septic, etc.

    1. Was reading an article this morning about the BoJ owning fully 40% of all ETFs in Japan. Makes you wonder what else these Central Bank crooks are fully backstopping with outright purchases.

  9. Looking at small acreage prices in podunkville, in most instances the lot price alone is 4x to 5x median income. You don’t even get into the real costs until you start building, so you’re looking at like 12x median income if you want to build a house on 5 acres. That’s normal, right?

    1. In the new gig economy, yes this is completely normal. We actually have a little more room to run 😀

    2. What do you mean by podunkville?

      In Oil City PA, you can get 5 acres with an old but livable house for under $150K
      In Bakersfield CA you can buy 4 raw acres of sand for $100K (after $25K price drop)
      Outside of Lakeland, FL, 5 acres is $50K.

      I don’t know if these prices reasonable, but they don’t look like multiples of HH income. I suppose land prices are what define “podunk” anyway.

        1. Lived in Bakersfield 1962-1966, best place to live at that time. 1400 sf, $15,000 air condition with all built in. Good schools, good old country folk,safe
          Hot, cold in winter, but very livable,

    1. The Financial Times
      Opinion Monetary policy
      ECB purchases of equity would be a dangerous step
      BlackRock proposal is anti-free markets and based on naked self-interest
      Merryn Somerset Webb
      July 26, 2019

      Earlier this week BlackRock executive Rick Rieder urged the European Central Bank to stimulate the eurozone economy by printing money and using it to buy equities.

      This idea has attracted rather less comment than it should have, even though it’s not a new idea. The Bank of Japan has been buying domestic equities for years: it owns about 75 per cent of the country’s exchange traded fund market and is a top 10 shareholder in 40 per cent of Japan’s listed companies.

      The ECB has also long been incredibly dovish: it has provided more than €2tn of quantitative easing, negative interest rates, endless cheap loans and lots of forward guidance making it clear that this will go on and on and on.

      The market has become used to the idea that it somehow makes sense to pay 0.3 per cent or more a year to lend money to the German government for a decade. Thursday’s ECB meeting told us that interest rates are expected to remain “at their present or lower levels” at least through the first half of 2020. The language also suggested that a new package of measures is coming — with discussion under way about “options for the size and composition of potential new net asset purchases.”

      Investors expect more rate cuts and a bit more QE to come in September. But everyone also knows that further QE isn’t as simple as it looks. Germany is running out of Bunds, thanks to running a budget surplus, and ECB buying has to be proportional to the size of its constituent countries. So Germany needs to run a deficit to sell Bunds to the ECB or allow the development of eurobonds guaranteed by Germany. If it won’t, the ECB has to get seriously creative.
      …

      1. Central banks have typically been regarded as the “lender of last resort”. Now it looks like their role is being moved into the realm of “buyer of last resort” of overpriced equities.

  12. I was thinking about moving to Baltimore but Bernie says it’s like a ‘Third World’ country.

    Bernie Sanders likens West Baltimore to ‘Third World’ country

    By JOHN FRITZE
    THE BALTIMORE SUN |
    DEC 08, 2015

    Hoping to reach African-American voters nationally in his bid for the Democratic presidential nomination, Sen. Bernie Sanders on Tuesday toured the West Baltimore neighborhood where Freddie Gray was arrested — and likened the poverty he observed to that of the Third World.

    The independent senator, who describes himself as a democratic socialist, walked the streets of Sandtown-Winchester for about 20 minutes, joined by community leaders and a swarm of cameras that mostly blocked his view of boarded rowhomes and crumbling marble steps.

    https://www.baltimoresun.com/politics/bs-md-sanders-baltimore-20151207-story.html

    1. ‘boarded rowhomes and crumbling marble steps’

      I spent about 24 hours there 9 years ago. I walked around and took a lot of photos. Third world countries never had marble steps. This area had been really something at one time. The architecture was what stuck me the most. One intersection had a Times Square like triangle block.

      But everywhere were boarded up row-houses. And the smell of urine was pervasive. I think there were a lot of squatters then, without running water. At night it was sketchy.

      1. the smell of urine was pervasive

        Ah, the smell of urine during the hot, humid days of summer in NYC. And the unforgettable bum passed out with his pants down at the entrance to the subway. And that was during Giuliani’s time as mayor.

    3. I feel like if you are going to criticize a place, you should also offer up solutions and the merits of such solutions can be debated. Criticism without offering solutions seems like taking cheap shots.

      1. When you are in a hole the first suggestion is to stop digging. I think that is Trump’s implicit criticism. Stop electing people to Congress who seem to be more interested in open borders than finding solutions to Baltimore’s problems. Something even pro Globalists agree upon is the most negatively impacted people are low skilled blue collar workers. Thus their advice to.learn how to code. Well Baltimore is an example of the negative impacts of globalism. So why is its congressional Representative promoting it.

      3. You first, OAM. Anyone who lectures people to “offer solutions” better have a few solutions of his own, ready to propose.

        So, how would *you* fix Baltimore?

        1. Well, I didn’t criticize Baltimore. I have yet to visit there and am not intimately acquainted with their problems, so I wouldn’t presume to prescribe. If crime is the issue, then I would lean towards predictive policing and applying big data, more cameras, and tighter surveillance a la Singapore.

          1. Ok, at least those are suggestions. But one man’s predictive policing is another man’s racial profiling, good luck with that. Locking away criminals is just going to create hordes of single mothers (like there aren’t enough already). Schools get trashed, affordable housing turns into burnt out projects…

          2. I have been to Baltimore and never gave it a thought, 5 years later I still don’t give it a thought?

          3. predictive policing and applying big data, more cameras, and tighter surveillance

            Last I checked, US citizens are still protected by the Fourth Amendment.

      4. if you are going to criticize a place, you should also offer up solutions and the merits of such solutions can be debated

        This is an extension of Trump’s “What Do You Have to Lose” argument from the 2016 election. His policies over the last 2.5 years are the proposed solution with undeniable results thus far. If you read anything other the globalist propaganda, you’d see that.

    4. “Bernie Sanders likens West Baltimore to ‘Third World’ country”

      When I think of Baltimore I think of Bethlehem Steel. De-industrialization thoroughly destroyed many areas economically, and I don’t think college grants and the “learn to code” meme will inspire people in those areas.

      When the east crumbled Germany decided that anyone over 32 was likely too unskilled and not sharp enough for retraining, so welfare budgets were to be scaled-up to prevent blight and crime.

      1. Hmmm, the German option sounds like a selective UBI. Did it work? The problem is that handing out money is a dicey proposition. Sure, some people use the money wisely, but how many others will spend the money on rims or drugs or similar?

        1. “Did it work?”

          I’m not sure, but at least it curbs anything not bolted to the ground from being stolen. The U.S. ignores these kinds of problems relegating them to the church while flag-waving.

  13. Eye wonders if “Carefree Highway$” still plays in the jukebox @ The Oak Creek Tavern?

    ‘They killed our city’: Locals feel helpless as vacation rentals overrun Sedona, Arizona
    LORRAINE LONGHI | ARIZONA REPUBLIC | July 27, 2019

    A sea of red dots on city map shows vacation rentals
    The law, dubbed “the Airbnb bill,” was sponsored by now-Congresswoman Debbie Lesko, a Peoria Republican, in 2016 and enthusiastically signed by Gov. Doug Ducey.

    Thorpe said that the bill was described to lawmakers as a way for homeowners to make extra money renting spare bedrooms in their homes.

    The move comes as residents of the tourist hotspot grapple with the consequences of a two-year-old state law that restricts how cities and towns can regulate short-term home rentals advertised on websites such as Airbnb or VRBO.

    On Wednesday, more than 150 people attended a city meeting. The Sedona residents grilled state Rep. Bob Thorpe, R-Flagstaff, about how the state plans to address the law’s consequences.

    He called Thorpe a hypocrite, comparing the law to the federal government handing down unwanted mandates to the state.

    “It’s the only state in the union that has done this to its cities, and it’s a state that doesn’t like the federal government.”

    Property is the pursuit of happiness. That’s why I’m here today,” said Thorpe, whose legislative district includes Sedona. “I believe this is not a political issue, it’s a quality of life issue.”

    Gov. Doug Ducey, in a statement accompanying his signing of the bill, said he would take corrective action if the new restrictions were applied too broadly.

    “In Arizona, we respect the right to do what we want with our property without undue government interference,” Ducey wrote.

    1. The situation with short-term rentals feels eerily similar to that of free trade policies where the benefits are touted and the cons are minimized. The losers from free trade were large swaths of Americans and communities that lost jobs in a “race to the bottom” of the wage scale. These investors who are buying up single family houses with the intent to rent them out as short-term rentals might be making money, but they are forcing the locals to become losers since they don’t have the capital to compete with these outside speculators/investors.

      It seems as if people of all political persuasions are learning the value of regulation.

      1. Even if the houses are long-term rentals, the locals are losers because they can’t compete for purchase. They are beholden to rent increases because all of the houses are owned by someone not willing to sell.

        Renting sounds great until it’s time to retire. Few people can afford rent on retirement or SS income. Certainly not anywhere near medical services grandchildren.

        1. “They are beholden to rent increases because all of the houses are owned by someone not willing to sell.”

          Real estate, including rent, always goes up.

    1. “Thorpe said that the bill was described to lawmakers as a way for homeowners to make extra money renting spare bedrooms in their homes.

      “‘We never anticipated that somebody would go into a neighborhood, purchase a home and turn it into a mini-hotel,’ Thorpe said.”

      Yeah? Well that tells me you don’t think thing through.

      “‘I’m certainly a person that believes in the free market’ Thorpe told The Republic after the meeting.”

      Uh, oh, stand by for a “however” …

      “‘That map though is kind of disturbing.'”

      (snip)

      “The median wage in Sedona is approximately $13 an hour, and the median income for a family of four is $56,000, …”

      Yikes!

      2. Median family income of $56k – hey, that’s pretty good. We have small towns around here with median income of barely $40k with median house prices of $300k. Over 7x income – that’s normal, right?

      3. “Several homeowners supported the recent law that allowed vacation rentals to flourish in Arizona. They spoke about how the short-term rentals made it possible for them to pay their mortgages.”

        Easy answer: limit AirBnB to primary home. And then designate certain “tourist zones” (on the beach, near the ski lift, lakefront, etc) where a homeowner may AirBnB a second home provided they submit to the same regulations and inspections as any hotel. Put all the tourists on one block and let them out-party each other.

        2. I agree with this form of regulation. Ultimately though you have to go after the platform because they actively will skirt local Airbnb restrictions.

          Part of the solution is that there needs to be geo-tagged zones that are not able to be posted as listings to the site if local ordinances prohibit their listing.

          Right now it is easy to hide a listing that violates local ordinances. There is also no registry of addresses for local officials to cross reference. If you really clamped down and fined Airbnb substantially for allowing illegal listings that contravene established local/state laws, you’d see Airbnb start to self-police. As it stands now they pretty much turn a blind eye to to the problem.

    1. That chart is absolute garbage. I don’t know where they’re getting their data but it is flat wrong.

    1. Markets
      IRS Sending Warning Letters to More Than 10,000 Cryptocurrency Holders

      ‘Taxpayers should take these letters very seriously,’ IRS Commissioner Chuck Rettig said

      By Laura Saunders and
      Britton O’Daly
      Updated July 26, 2019 6:39 pm ET

      The Internal Revenue Service has begun sending letters to more than 10,000 cryptocurrency holders, warning they may have broken federal tax laws.

      The agency wasn’t specific about the possible violations it was reviewing, but those who hold digital currencies could be subject to a variety of taxes, especially on capital gains.

      To Read the Full Story
      Subscribe

      https://www.wsj.com/articles/irs-sending-warning-letters-to-more-than-10-000-cryptocurrency-holders-11564159523

  20. San Diego update/observations

    Went to an open house today in my hood. Yet another flip. Can’t believe flippers are still this active at this point in the cycle.

    Seeing more and more listing in the zip codes I follow being posted with no property history for houses that were built 40-50 years ago. Must be at least 30% of the listings are posted with no property history beyond 2019. I suspected this is a ploy to hide from prospective buyers how much they are being ripped off by flippers.

    Here is an interesting case :
    https://www.redfin.com/CA/San-Diego/3265-Jappa-Ave-92117/home/4950239
    Was purchased in 2016, put back on the market as a flip and sold in 2017 after a price drop. Then it went back on the market again as a double flip.

    Here are more ‘no bubble’ 2019 prices compared to ‘peak insanity bubble’ of 2005-2007

    https://www.redfin.com/CA/San-Diego/10168-Zapata-Ave-92126/home/4542196
    Listed for 705k sold for 475k 2007

    https://www.redfin.com/CA/San-Diego/4445-Cather-Ave-92122/home/4899802
    listed for 949k sold 735k 2005.

    It’s become impossible to do this kind of analysis anymore because so few listings provide a proper property history. As my grandfather used to say ‘if you don’t know and you can’t find out, then there is something wrong.’

    This bubble is definitely crazier than the last one. Especially so because it’s the bubble of which no one can speak in newspapers or on television or radio.

        1. Why doesn’t Amazon just deliver to one of the locker locations in Whole Foods and Kohl’s, and the van dweller can just pick up there?

          But on a practical note, just how much STUFF can an RV dweller buy? (maybe I shouldn’t ask)

      2. I would love to see anyone who paid off their or their kids student loans with the Heloc $$$ before defaulting.

    2. It’s way worser this time John, that’s why it’s different this time! When I see these types of listings I laugh because it’s pure insanity but by definition, and by observation, it’s working in the shady greedbag favor. For how much longer is the unknown…

    4. Zillow still has the 10-year chart, which identifies sales and prices from the graph. And Zillow still has a link to the county tax assessor site, which also lists prior transactions. But now I’ve noticed just how bad county tax assessor websites are. I couldn’t find the house on Jappa Avenue.

  23. “Knock’s ‘top ten markets with the most current listings predicted to sell below original list prices’ include in descending order Miami, Chicago, Hartford, Houston, New Orleans, Tampa, Pittsburgh, New York, Jacksonville, and St. Louis.”

    None of them in California…go figure!

    1. The Financial Times
      Markets Briefing Equities
      Stocks fall as attention turns to Fed and trade talks
      Siddarth Shrikanth in Hong Kong and Michael Hunter in London 3 hours ago

      Global stocks made a cautious start to the week ahead of the hotly anticipated US monetary policy meeting on Tuesday, as hopes of a larger-than-usual 50 basis point cut from the Federal Reserve appeared faint.

      The Europe-wide Stoxx 600 slipped 0.2 per cent in opening trade, as did Frankfurt’s Xetra Dax 30, while London’s FTSE 100 rose 0.1 per cent. The UK index was helped by a renewed two-year low for the pound, which drifted down by a further 0.2 per cent to its weakest level since April 2017 at $1.2352 as investors continued to track political developments over Brexit.

      Attention was turning to Tuesday’s Federal Reserve meeting, with markets now pricing in a more than 80 per cent chance of a 25 basis point rate cut according to Bloomberg. Expectations had bounced around in previous weeks as some held out hope that worrying global growth and stubbornly low inflation might prompt a sharper half-point cut and boost equities, but that view appeared to be losing ground in the run-up to the meeting.
      …

  25. Markets
    The Home of Ultra-Low Rates Has a Warning for the World
    By Min Jeong Lee
    and Masaki Kondo
    July 28, 2019, 8:01 AM PDT
    Updated on July 29, 2019, 2:09 AM PDT
    – It’s created an aggressive breed of yield-hunting investor
    – Interviews reveal the strategies they are using to survive

    As the world sinks into an era of ever-lower interest rates and a chasm of negative-yielding bonds, Japan’s experience offers investors an invaluable precedent.

    It’s two decades since the nation pioneered zero rates and more than six years into central bank chief Haruhiko Kuroda’s record stimulus. The money managers who’ve witnessed it all provide unique insights into strategies to survive such a regime.
    …

      1. LOL, rms….. You got me laughing this morning after I was depressed over another mass shooting in California. California is the State I live in.

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