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The Market Has Just Tanked

A report from the Longmont Times-Call in Colorado. “Even as data shows Boulder and its surroundings are experiencing a ‘much-needed’ housing market correction, the city last week for the fifth straight year landed atop a national finance researcher’s list of top residential real estate environments for stability and growth. Dustin Sagrillo, a Realtor with Re/Max of Boulder, cautioned buyers against exploring publicly financed loans aimed at expanding Boulder’s affordability that come with limits on how much an owner can earn when it comes time to sell.”

“‘The whole reason you buy property is to capitalize on the appreciation,’ Sagrillo said.”

“He added buyers are gaining power, calling the current market ‘hyper local,’ meaning driven by nitty-gritty property nuances such as traffic counts on adjacent roads. ‘Houses that back into busy streets or intersections are standing on the market much longer,’ Sagrillo said. ‘Buyers in the marketplace are going, ‘Well, let me see if something better is coming along.’ As a result, it’s having price adjustments that’s giving you that impression that things are coming down, but really things are just stabilizing.'”

From Mansion Global. “Home buyers are looking to flee expensive coastal cities more than any other metro areas for more affordable alternatives, according to a Redfin report on U.S. migration. New York City saw the largest number of residents looking to jump ship. San Francisco followed with a net outflow of 28,190, compared to 27,332 in 2018.”

“‘People are increasingly looking to leave expensive coastal metros like New York, San Francisco and Los Angeles,’ Daryl Fairweather, Redfin chief economist, said in the report. ‘The homebuyers who are heading out of town in search of affordability don’t just want to save a few hundred dollars per month, they want to save thousands of dollars per month, and the only way to achieve that kind of cost savings is to move somewhere more affordable.'”

From Broker Pulse on New York. “As many properties go ‘on sale’ once listed, few are lowering prices enough to attract buyers. Although sellers are willing to make small price cuts, these are not enough and often too late to generate a significant new buyer interest. Thus, NYC homes are lingering longer on the market and fewer homes are finding buyers.”

“Although many sellers are tempted to list their properties aggressively at first, by relying on price cuts to draw interest if the buyers fail to come through only weakens the listing. Even at negotiation, few sellers are willing to make the concessions needed to make the deal. With many new homes coming to the market on a regular basis, modest price cuts are not enticing enough to draw new interest, nor deep enough to lead the few willing to make a deal.”

“But let’s cut to the chase. Price cuts signal a willingness to negotiate. This is an opportunity for buyers to make a deal due to the compliance with the seller. And with these price cuts buyers are saving quite a bit. The median total discount from first listing price to closing price was 10.5%, according to StreetEasy. Ultimately, this is just another reminder that buyers hold the power. Those tempted by price cuts should feel empowered to negotiate, particularly on homes that have already has a price cut.”

From My Northwest on Washington. “Affordability has long been an issue for buyers and renters alike in Seattle. It’s the latter category, though, where things have gotten especially tough, with census data showing Seattle rent as the fourth most expensive the country.”

“This comes as the market continues to relax for home-buyers, with King County’s median residential home prices dropped almost 3 percent year-over-year in June. Seattle’s prices have cooled even more, dropping 5 percent year-over-year, and with Zillow predicting another 3.9 percent drop within the next year.”

“Even so, the median price for homes sold in Seattle isn’t cheap by any means, with that number sitting at a whopping $712,300, after peaking at $752,000 in 2018.”

The Sacramento Bee in California. “California’s wildfires have found yet another way of doing serious harm to rural California — by hammering its housing market. The refusal of insurance companies to cover homes in fire-prone areas is prompting home buyers to cancel purchases and look elsewhere.”

“Meanwhile, the inventory of unsold housing is piling up in the foothills. Janice Wechsler, an agent with Coldwell Banker Residential Brokerage in the rugged Foresthill area of Placer County, said the problem is worsening as homeowners, irate over rising insurance premiums, seek to get out. She’s hearing of longtime residents of the area looking at moving to Nevada, Oregon and Idaho. ‘They’re being canceled, they’re watching their rates tripling or quadrupling,’ Wechsler said. ‘It becomes the proverbial straw. They say, ‘I’ve had enough of this.'”

“Selling has gotten tougher, however. In Placer County, the unsold inventory index — the estimated time it would take to sell off all the homes listed — rose to 2.7 months in June. That was up 12 percent from a year ago, according to the California Association of Realtors. In Nevada County, the index has jumped by more than a third in the past year, to 5.4 months. In Tuolumne County, it’s soared by two-thirds, to 7.9 months.”

“Cathy Mudge, a legislative staffer at the Capitol, wants to relocate to Sacramento from Foresthill in the Placer foothills northeast of Auburn. Her home, listed for $535,000, has been on the market since March, and it’s taken far longer than she ever imagined to find a buyer.”

“The steps she’s taken to improve the marketability — like uprooting 15 trees on her property to reduce wildfire risks — haven’t helped move the property. ‘The market has just tanked,’ she said.”

“The real estate market in fire-prone areas of Southern California areas is experiencing similar problems, but the costs can be greater in coastal communities where property values are higher than in the Sierra foothills, said Pat Potter, managing partner of Bob Gabriel Co. Insurance in Santa Monica. He described a homeowner in Santa Monica suddenly seeing his $8,600 a year plan he’d had for 25 years canceled. Replacement coverage ranged as high as $25,000 a year. Potter said a deal on a client’s $4.5 million home in Bel Air fell through because the buyer couldn’t find insurance other than the FAIR plan, which only covers a maximum of $1.5 million in potential losses.”

“‘There isn’t a county that I can think of that has not been affected by this,’ Potter said. ‘We’re talking about Riverside, San Bernardino, San Diego, Ventura. You go up and down this state, and I don’t know an area that hasn’t been impacted.'”

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This Post Has 73 Comments

  1. Just provided to me by Aaron Layman. I love that guy.

    Updated Trends stats for closed DFW sales in June:
    =500: Down 8.2%

  2. ‘Even so, the median price for homes sold in Seattle isn’t cheap by any means’

    Got it, wait for more crater.

    ‘Her home, listed for $535,000, has been on the market since March, and it’s taken far longer than she ever imagined to find a buyer..‘The market has just tanked’

    Well, it was cheaper than renting Cathy.

  4. ‘Meanwhile, the inventory of unsold housing is piling up in the foothills. Janice Wechsler, an agent with Coldwell Banker Residential Brokerage in the rugged Foresthill area of Placer County, said the problem is worsening as homeowners, irate over rising insurance premiums, seek to get out. She’s hearing of longtime residents of the area looking at moving to Nevada, Oregon and Idaho. ‘They’re being canceled, they’re watching their rates tripling or quadrupling,’ Wechsler said. ‘It becomes the proverbial straw. They say, ‘I’ve had enough of this’

    But weather? Love letters? Shortage!

    Note that this insurance thing is being blamed when all the so called “hot” markets are sinking like a turd in a well.

    1. “the problem is worsening as homeowners, irate over rising insurance premiums, seek to get out”

      geez, it just keeps getting worser and worser for us poor entitled bay araens

      1. insurance is the small stuff
        repairs etc
        everyone skips that expense
        if you’re 100 diy 1%
        other 2%

    2. All of them getting screwed by the environmental extremists who all have their heads irreversibly stuffed up their nether regions and refuse to deal with the root cause of the problem.

    3. Don’t forget buyers like me are on vacation all summer!!! No time to buy, on vacation at Disney 🙂

  5. ‘But let’s cut to the chase. Price cuts signal a willingness to negotiate. This is an opportunity for buyers to make a deal due to the compliance with the seller. And with these price cuts buyers are saving quite a bit. The median total discount from first listing price to closing price was 10.5%, according to StreetEasy. Ultimately, this is just another reminder that buyers hold the power. Those tempted by price cuts should feel empowered to negotiate, particularly on homes that have already has a price cut’

    So now the UHS encourage buyers to strangle sellers.

      2. With a 50% haircut the median is still far about construction cost…… even for a used house.

    3. “The Market Has Just Tanked”

      That turned out to be prophetic for today’s stock market action!

  8. What happens in Boulder if the sale prices on those publicly-assisted houses go underwater?

  9. ‘Buyers in the marketplace are going, ‘Well, let me see if something better is coming along.’ As a result, it’s having price adjustments that’s giving you that impression that things are coming down, but really things are just stabilizing.’”

    “… things are just stabilizing.”

    Lol. Here’s an extreme example of “just stablizing” …

    https://images.app.goo.gl/cGm7sZ6jAX3j1ho28

  10. “‘The whole reason you buy property is to capitalize on the appreciation,’ Sagrillo said.”

    And here I was thinking the whole reason was to have a place to live.

    1. That was in the bad old days of 6% mortgages, 20% down, job verification and when bankers went to jail.

      “And here I was thinking the whole reason was to have a place to live.”

  11. The non-famous couple are racist for not allowing Smollet to make a profit on some sweet equity.

    ######

    Jussie Smollett Loses on Secret Sale in Studio City

    Jussie Smollett has sold his San Fernando Valley view home in the foothills above Studio City, Calif., to a non-famous couple in a clandestine off-market deal valued at $1.655 million. Unfortunately for the legally beleaguered former “Empire” star, fired in the wake of a controversially dismissed, 16-count felony indictment brought for allegedly staging a fake hate crime with him as the victim, didn’t have much luck on the real estate merry-go-round. Not counting carrying costs, improvement expenses and real estate fees, Smollett took a $30,000 loss on the hillside contemporary bungalow that, as was sussed out by the Blast, he scooped up during better professional days, a bit more than two years ago, for $1.687 million.

    https://variety.com/2019/dirt/real-estalker/jussie-smollett-studio-city-house-empire-1203285527/

  12. This is a heck of an expense – just for fire insurance!

    Prediction – prices lower enough and become affordable so that people can pay cash (no mortgage with an insurance requirement). Then “self insure” by making homes as fire-proof as possible.

    ###

    “He described a homeowner in Santa Monica suddenly seeing his $8,600 a year plan he’d had for 25 years canceled. Replacement coverage ranged as high as $25,000 a year. “

    1. ‘Replacement coverage ranged as high as $25,000 a year’

      Give me an F, give me an O…’

    2. “…Prediction – prices lower enough and become affordable so that people can pay cash (no mortgage with an insurance requirement). Then “self insure” by making homes as fire-proof as possible….”

      It’s going to happen.

      Just wait until the ‘big one’ hits.

      Along with utilities raising rates because their own liability insurance increases.

      So, at the end of the day, to fireproof, earthquake proof, and get off the grid, might as well build a Nike Missile Silo.

      But hey, its all about location, right?

      And don’t forget those status seeking zip and telephone area codes.

    3. In spite of what I said further up, this could very well be intentional on their part, to drive people out of living in these areas by making it too expensive.

      It dovetails perfectly with also taking away the ability to control where people can travel to, using autonomous vehicles.

      You will live where you’re told, and will travel only to where you are allowed. That’s their vision of the future.

    4. What happens if you put the house in a LLC? or can you under this plan? and go BK after the fire hits.

      buyer couldn’t find insurance other than the FAIR plan, which only covers a maximum of $1.5 million in potential losses.”

      1. The LLC only gives the owner liability protection that is contained within the subject property…Insurance premium is predicated on the risk associated with the property…You don’t BK a LLC…You just roll it up and it goes away…I think I got it right…I

        Ibotts may have something to say about this if he’s around…

  14. I live in California, so rising insurance costs is just one more thing that’s going to affect the real estate prices here, how couldn’t it?

    Yesterday they had a fire in the the SF Valley, California, and it was started by a camp of homeless.

    The homeless start fires a lot more than people realize. Along with the trash, needles, poop and rats, they commit a lot of crimes. It’s a real big drug addiction problem for 75 to 80% of them.

    Just putting them in housing without addressing the drug problem and their inability to be good workers won’t work. These people are offered free medical services all the time .

    Im just saying that California is going downhill in a lot of places. I’m lucky because we don’t have a lot of homeless in the City I live in. I use to volunteer for working with the homeless in the last City I lived in , so I known alot about what is going on.

    1. Would it be ok just to give them all they want so they dont have leave the camp and commit crimes? they want to die anyway…

      It’s a real big drug addiction problem for 75 to 80% of them.

        1. If I may, I would like to say, if anyone has had a close friend or family member that they loved that was a addict, then you understand what a scourge it is…Without serious intervention and help, they are helpless to do anything on their own…

        2. scdave ,

          I don’t know what they are going to do. It’s a deep problem, but the numbers are growing and the health and safety concerns are growing.

          Maybe they could move them to a bunch of small trailers like they do with hurricane victims. Require that they engage in rehab. I don’t really know the success rate with that. I really don’t know.

          1. I really don’t know ??

            As I have mentioned previously, I think their “only” chance is losing some of their civil rights until they are stabilized…Maybe we could pull a few billion out of the military budget each year to give them another shot for a decent life…

        3. No but if they want to do it to themselves its ok by me. When i get too old to wipe my butt and have to pay people to do it, maybe its my time to go and i dont want the government to stop me.

  15. “But let’s cut to the chase. Price cuts signal a willingness to negotiate. This is an opportunity for buyers to make a deal due to the compliance with the seller. And with these price cuts buyers are saving quite a bit. The median total discount from first listing price to closing price was 10.5%, according to StreetEasy. Ultimately, this is just another reminder that buyers hold the power. Those tempted by price cuts should feel empowered to negotiate, particularly on homes that have already has a price cut.”

    Translation: Lets cut to the chase. You Buyers better buy soon. I’m tired of eating Ramen noodles every night cause I can’t make a sell for months. My Benz will be repo’ed soon!!!! Please buy !!!!!

    – Local Starving Realtor

  16. “He described a homeowner in Santa Monica suddenly seeing his $8,600 a year plan he’d had for 25 years canceled. Replacement coverage ranged as high as $25,000 a year. Potter said a deal on a client’s $4.5 million home in Bel Air fell through because the buyer couldn’t find insurance other than the FAIR plan, which only covers a maximum of $1.5 million in potential losses.”

    It’s still cheaper than renting….just wait until the BIG earthquake hits LOL

    1. Wow , another risk that people don’t think about is that when you buy a house they can raise the fire insurance on you.

      There are so many areas in Southern California that are fire areas.

      This is what I don’t like about insurance companies, that they collect billions for years when there isn’t any fires, than a bad one and they gouge to make up for it.

      Insurance Companies don’t want any risk. It reminds me of the way they were with seniors that caused them to enact Medicare.

      What good are they if they can’t even take a bad year.

      Another area in life where people are paying to much.

      1. Insurance Companies don’t want any risk.

        Nobody does. The market should force them to accept the appropriate amount of risk at a reasonable average rate of return over time if we could prevent them from capturing Congress. So how do we do that?

        2. The market should force them to accept the appropriate amount of risk at a reasonable average rate of return over time

          And who determines the appropriate amount of risk and the reasonable average rate of return over time? Someone(s) not assuming any risk? More importantly, force is contrary to basic contract law principles and can render a contract unenforceable.

          1. You may have misunderstood me. I didn’t mean the market literally forces anything on anyone. But it can provide very specific feedback that they are required to pay attention to if they want to succeed. In a way that benefits everyone.

      2. “This is what I don’t like about insurance companies, that they collect billions for years when there isn’t any fires, than a bad one and they gouge to make up for it.”

        In SE Region IV you can take out “fires” and insert hurricanes and your paragraph still works perfectly.

    5. Meanwhile, there are entire swaths of the East that are nearly unpopulated, plenty rain and water, no major earthquakes or hurricanes. But NO, Google has to pack all their employees into ONE campus, no mobile work…

      1. “But NO, Google has to pack all their employees into ONE campus, no mobile work…”

        It is interesting that companies whose products are designed for teleworking want all of their employees nearby so they can brow-beat them.

        1. It’s not always browbeating. But it’s interesting that the data is in, and the average employee now can work successfully remotely, and the technology is already in place to allow it. There are major benefits to allowing it. But the average manager can’t manage remotely. So they blame it on other things.

          As a side note, I suspect that the personality type most likely to be able to successfully manage remotely is also less likely to be given a management position in the first place. As a culture we like to promote people who love and need and are driven by that personal interaction.

          1. “As a side note, I suspect that the personality type most likely to be able to successfully manage remotely is also less likely to be given a management position in the first place.”

            That’s a good point.

    1. Stamp those tiny feet Trump…Stamp Them !!

      Trump, who’s relentlessly attacked the Fed, called on Tuesday for a “large” reduction and tweeted after Powell spoke. He said the market wanted to hear the Fed was beginning “a lengthy and aggressive rate-cutting cycle which would keep pace with China, The European Union and other countries.”
      “As usual, Powell let us down,” Trump said.

  18. As a result, it’s having price adjustments that’s giving you that impression that things are coming down, but really things are just stabilizing.’”

    Right. It’s a mix market. Plummeting sales and prices are merely an illusion of a bursting housing bubble, but really, it’s all good.

  19. ‘They’re being canceled, they’re watching their rates tripling or quadrupling,’ Wechsler said. ‘It becomes the proverbial straw. They say, ‘I’ve had enough of this.’”

    It’s gonna take some serious sawin’ and slashin’ to offset those soaring premiums, greedheads. I’m going to need some compelling incentives iff’n you want me to take yer shack problem off yer hands.

  20. “‘The whole reason you buy property is to capitalize on the appreciation,’ Sagrillo said.”

    Well, after a decade plus of low interest rates which pulled forward consumption into the present we now must wait for wages to catch up with current inflated prices.

    I’m glad the geniuses in charge have a good handle on the situation.

    1. The obvious solution is we have to start pulling even more consumption forward. And then later even more. Just keep turning the crank, it will all work out.

      1. It’s even better. Over the last 60 years, real wages for 70% of employed Americans are flat (up 4%). But real per capita expenditures (including shelter and healthcare) have tripled.

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