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More Are Slashing Prices In A Bid To Exit The Market

It’s Friday desk clearing time for this blogger. “Home sales in the Charlotte metro area plunged in September, compared to a year ago. Buyers could soon see relief as the Charlotte area housing market moves to a more equal footing for buyers as well as sellers, Jason Gentry, president of the Charlotte Regional Realtor Association, told the Observer. ‘We’re heading in that direction now.'”

“The Fredericksburg-area housing market posted disappointing year-over-year decreases in total sold dollar volume and units sold. Leading the loss in sales were Fredericksburg and King George County, with 58 percent and 54 percent fewer units sold in September 2018 than September 2017. ‘Rising interest rates and lack of inventory have also affected the market, but from all signs next year will most likely be more balanced and continue on a slow, but steady, course,’ said Sandy Pearce, a FAAR board of directors member.”

“Whip out your wallets, homebuyers: Atlanta sellers are slicing prices! Redfin research shows that, around August, more than a quarter of home sellers nationwide had to drop their asking prices. And in Atlanta, that number is even higher. Nearly 28 percent of homes listed in Atlanta experienced a price drop in the four weeks ending September 16—up 9 percentage points from last year.”

“After a break-neck run that led to record production, pricing and sales highs in 2017, all those numbers have continued to soften in 2018 as the Manhattan housing market slides into a normalization. ‘What we are seeing is another glimpse moving forward to recovery of the residential real estate market,’ said Douglas Elliman CEO Steven James. ‘Clearly, sellers are getting the message that they have to get realistic about pricing.'”

“Across Vancouver Island, sales of single-family homes in September dropped by 32 percent from one year ago and 25 percent from August 2018. Royal LePage realtor Kevin Reid said a year ago, a house would enter the market priced at $500,000 and there would be a bidding war between four buyers and it would sell for $525,000.”

“The trend has reversed, he noted: ‘Now that same house is coming on for $500,000, is waiting two, three weeks, and a buyer is coming in at 490 (thousand dollars).'”

“Average prices of both new and used homes fell in Norway last month, another sign that the country’s once-red-hot residential real estate market has cooled off. Mari Mamre of the Oslo firm Ny Anaylse noted prices for new, unsold housing units were being reduced.”

“Price reductions have amounted to around a half-million kroner per unit. ‘In order to boost sales, the developers lower prices,’ Mamre added. There’s been a ‘correction’ in the market for used homes, she said, ‘now it can be that new housing prices are following after. When inventory isn’t bought, it’s expensive to sit on unsold homes.'”

“Signs of a deepening slowdown are beginning to emerge in Hong Kong’s property market, with anecdotal evidence showing more homeowners and office space owners are slashing prices in a bid to exit the market. A homeowner lost more than HK$2.6 million after holding a 1,725 sq ft unit at The Legend in Jardine’s Lookout for 11 years. The unit was bought in 2007 for HK$48.6 million and sold on October 9 for HK$46 million, nearly 12 per cent lower than the owner’s original asking price.”

“Ricacorp Properties said that 78 home sale transactions in the third quarter were either losing money or just breaking even. ‘Buyers who are worried about a further plunge of the market rushed to sell their units and continue to lower their asking prices,’ said Derek Chan, head of research.”

“Add real-estate agency workers to the list of people aggrieved by China’s cooling housing market. Centaline Group has slashed bonuses for middle and back-office employees in its Shanghai office by 20 percent, according to an internal letter posted on Chinese social media sites. Allowances for mobile phones, transportation, perfect attendance or simply being a long-term employee were reduced or abolished.”

“‘I don’t expect this survival crisis will pass as quickly as the 2008 financial crisis did,’ Lu Cheng, the general manager of the Shanghai office, wrote in the letter. ‘We are all lining up against a fate of death, and the only question is who is left standing. It’s now a knockout competition.'”

“More than a few people in Sydney and Melbourne are discovering the danger of buying an apartment off the plan at the peak of a housing boom. According to CoreLogic, a massive 30% of newly-completed apartments in Sydney, and 28% in Melbourne, settled with a valuation less than their original contract price in September.”

“And given there was huge pipeline of new apartment stock being built at the end of the June quarter, Tim Lawless, Head of Research at CoreLogic says other off the plan buyers in Sydney and Melbourne may soon be in a similar position. Lawless says the combination of record new apartment supply and falling prices means that settlement risk is now ‘heightened.'”

“‘Off-the-plan buyers who find their valuation comes in lower than the contract price at the time of settlement could be in for a rude shock,’ he says.”

This Post Has 38 Comments
  1. ‘A homeowner lost more than HK$2.6 million after holding a 1,725 sq ft unit…for 11 years’

    Eleven years?

    DONG!

  2. ‘a massive 30% of newly-completed apartments in Sydney, and 28% in Melbourne, settled with a valuation less than their original contract price in Septembe…Lawless says the combination of record new apartment supply and falling prices means that settlement risk is now ‘heightened.’

    This was always how this was going to turn out Tim. These pre-construction condo manias always blow up.

  3. ‘I don’t expect this survival crisis will pass as quickly as the 2008 financial crisis did,’ Lu Cheng, the general manager of the Shanghai office, wrote in the letter. ‘We are all lining up against a fate of death, and the only question is who is left standing. It’s now a knockout competition.’

    So I guess another multi-trillion QE/commodity bubble isn’t in the cards?

    1. There wont be a third bubble. I think people are getting smart to know that these things only provide short-term benefits to the 0.01% while creating long term destruction to the masses.

      1. I think people are getting smart…

        I suspect that is not exactly how manias end. It takes a crash and burn.

    2. ‘We are all lining up against a fate of death, and the only question is who is left standing. It’s now a knockout competition.’

      “Second prize is a set of steak knives. Third prize is, you’re fired.” (“Always be closing” motivational speech from Glengarrey Glen Ross).

      https://www.youtube.com/watch?v=UtDIijmFbqw

  4. Leading the loss in sales were Fredericksburg and King George County, with 58 percent and 54 percent fewer units sold in September 2018 than September 2017. ‘Rising interest rates and lack of inventory have also affected the market, but from all signs next year will most likely be more balanced and continue on a slow, but steady, course,’ said Sandy Pearce, a FAAR board of directors member.”

    Sandy Sandy Sandy. We are know whats going to happen next years. All signs were same from 2007. The bubble is crashing and we are still in the early phase. Lets hope you saved all your commission checks from the last 5 years as you will need that money to eat!

  5. CA prop 10 rent control allowed on all properties. I bet Black rock doesn’t like this one.

    “Repeals state law that currently restricts the scope of rent control policies that cities and other local jurisdictions may impose on residential property. Fiscal Impact: Potential net reduction in state and local revenues of tens of millions of dollars per year in the long term. Depending on actions by local communities, revenue losses could be less or considerably more.”

    1. What they really need to do is fix that disaster which is Prop 13. I understand a repeal would never fly, so the next best thing is to LOWER every other person’s taxes to what the lowest in the neighborhood is paying. It is absolutely outrageous that one person can be paying 3x the taxes for the same house than their neighbor.

      1. Its a policy to protect people who have lived in California for decades at the expense of the come-latelies.

  6. “Price reductions have amounted to around a half-million kroner per unit. ‘In order to boost sales, the developers lower prices,’ Mamre added. There’s been a ‘correction’ in the market for used homes, she said, ‘now it can be that new housing prices are following after. When inventory isn’t bought, it’s expensive to sit on unsold homes.’”

    Lets hope no one paid full price last year…Ooops

  7. https://www.cnbc.com/2018/10/12/thousands-line-up-for-zero-down-payment-subprime-mortgages.html

    Thousands line up for zero-down-payment, subprime mortgages

    •Borrowers can have low credit scores, but have to go through an education session about the program, submit all necessary documents, from income statements to phone bills.
    •They must go through counseling to understand their monthly budget and ensure they can afford the mortgage payment.
    •The loans are 15 or 30 year fixed with interest rates below market, about 4.5 percent

    1. “Critics of the program argue that with no down payment, no skin in the game, these borrowers have no reason not to walk away should their homes lose value. That’s what happened during the financial crisis. The difference in this program is that the borrowers cannot be investors. In order to get the loan, they have to live in the home.

      People have skin in the game in a real way, ” said Marks.”

      What’s to stop them from walking away and renting? The hassle of moving? Especially once they realize that owning a home costs more than simply the mortgage payment, and even more so if rents start to fall as well …

    2. Great! More fuel for the fire of the upcoming fire sales on foreclosure homes from FBs that knew they couldn’t afford or meet the obligations to pay there mortgages. No financial risk on the buyers end to simply toss the keys and walk away. I’m sure part of there “counciling” touched base on how RE always goes up. until it goes down….

  8. ‘Rising interest rates and lack of inventory have also affected the market, but from all signs next year will most likely be more balanced and continue on a slow, but steady, course,’ said Sandy Pearce, a FAAR board of directors member.”

    Right, Sandy. From all signs, except the ones you and your fellow REIC shills have willfully overlooked that indicate this bursting bubble is going to lead to a precipitous plunge in shack prices and sales, just like what happened when Housing Bubble 1.0 burst. There will be nothing slow and steady about what’s coming. A deluge of shacks will hit the market as desperate FBs panic, then sit as sales and prices both plunge.

  9. “The trend has reversed, he noted: ‘Now that same house is coming on for $500,000, is waiting two, three weeks, and a buyer is coming in at 490 (thousand dollars).’”

    You stick with that story, Kevin. For surely it would be inconceivable for the only bid to be a lowball offer at least $100K under the greedhead wish price.

  10. Flippers are still active on the lower end, paying nosebleed prices for trashed out houses. Most of them are going to get buried. Flipping houses in a declining market is financial suicide.

  11. “…more homeowners and office space owners are slashing prices in a bid to exit the market.”

    I like it. I love it. I want more of it.

    Reversing to a fundamentals-based market equilibrium will make us collectively better off.

    1. PB, you reprehensible human being, rejoicing in the misery of others. Don’t you realize that everyone who overpaid is a victim, deserving of our empathy and bailouts?

  12. ‘Buyers who are worried about a further plunge of the market rushed to sell their units and continue to lower their asking prices,’

    It’s quite wonderful to see this development, as it is a sign of hope for the younger generation who might have felt as though they would be priced out forever. It’s also very kind of older homeowners to offer massive price cuts for new entrants to the housing market to be able to afford a purchase.

      1. Date Event Price $/sqft
        10/12/2018 Price change $699,000 -21.4% $590
        9/30/2018 Price change $889,000 -1.1% $751
        9/10/2018 Listed for sale $899,000 +23.2% $759
        6/14/2018 Sold $730,000 -6% $617
        4/5/2018 Pending sale $777,000 — $656
        3/20/2018 Listed for sale $777,000 — $656

        1. https://thunderbirdrealestate.com/IDX/1715-Lotman-DR-SANTA-CRUZ-CA-95062/81697120_REIL/0005604

          Pictures of the shack pre flip. The loss on this one has to hurt! Locally we have a new rent control measure that is putting all the greed heads in a selling frenzy along with the current landlords that are panicking that it may pass. It’s a bit over the top IMO but it will be great for pushing the market down further and faster.

          https://www.santacruztogether.com/measure-m-summary/

  13. Not sure if this has been posted.

    https://www.msn.com/en-us/money/realestate/thousands-line-up-for-zero-down-subprime-mortgages/ar-BBOio4h

    “It’s a national disgrace about the low amount of homeownership, mortgages for low and moderate income people and for minority home buyers,” said Bruce Marks, CEO of NACA.”

    “NACA receives a $3000 commission on each loan”

    The disgrace is getting paid $3K to create 1000s of FBs.

    But then again it is hard to feel bad for people with nuggets like this.

    “Magdalene Altidor lost her home to foreclosure during the subprime mortgage crisis, but this week she was first in line at a four-day event in Miami where borrowers with poor credit were offered no-down payment, low interest rate loans.”

    1. It was posted above but from a different MSM source. I think it’s worth the attention of being posted 2x tho ;). Resulting back to this kinda of reckless lending shows how bad the market is getting

  14. octal77
    October 12, 2018 at 8:05 am

    “So what happened to all that “pent up demand” you guys were banging on the trash can lid about?”

    I love this phrase, it’s the greatest Realtor lie ever told.

    “Pent up demand” never existed, you sad, sorry liars.

  15. Are you prepared for the next global financial meltdown?

    Why Italy Could be the Epicenter of the Next Financial Crisis
    The Italian government’s populist spending plans — a proposal is due to Brussels on Monday — have bond investors worried about the potential for another debt crisis.
    Credit
    Nadia Shira Cohen for The New York Times
    By Jack Ewing and Jason Horowitz
    Oct. 12, 2018

    History suggests that the world is about due for another financial crisis. One of the places it might start, according to a growing number of indicators, is Italy.

    Many of the ingredients are there. A pile of questionable debt. Weak banks. An erratic government. And a sizable economy able to inflict collateral damage outside Italian borders.

    Bond investors, always good for a coldblooded appraisal of a country’s solvency, have been sounding the alarm. The Rome government’s populist spending plans, widely regarded in financial circles as reckless, have caused market interest rates on Italian debt to spike, threatening to create a so-called doom loop that would ripple through the struggling economy.

    The proposed budget has exposed the seams in Italy’s governing coalition, where one party favors small-business-friendly tax cuts and the other enormously expensive welfare programs. More broadly, it has divided the populist government, which has vowed to press ahead with a budget it views as a political imperative, and the Italian financial establishment, which fears what the spending will do to the country’s economy and its credibility and relationship with Europe.

    You don’t have to be Italian to be worried about the repercussions.

    Financial crises tend to arrive every decade or so, and Italy is near the top of a list of flash points that could touch off the next one, alongside Turkey’s economic and political turmoil, President Trump’s trade war, Britain’s exit from the European Union and a broad slowdown in global growth.

    But in contrast to the financial crisis that began in 2008, central banks may not be able to come to the rescue this time, said Richard Portes, a professor of economics at London Business School. They used up much of their crisis fighting tools coping with the last meltdown.

    1. Markets
      Stock Market Meltdowns Have Become Frighteningly Common
      By Elena Popina, Sarah Ponczek, and Vildana Hajric
      October 12, 2018, 2:00 PM PDT
      Updated on October 12, 2018, 2:08 PM PDT
      – S&P has posted 3 days of 3% drops this year, most since 2011
      – S&P’s 6-day losing streak is the longest since 2016 election
      – Position Clearouts to Blame for This Week’s Sharp Selloff, Bespoke’s Pearkes Says

      You could write it off as a fluke in February. When it happened again in March, people got concerned. Now stocks are tumbling a third time in 2018, and investors are starting to sense something has changed.

      A smattering of 3 percent plunges may not make a bear market, but it sure is a break from the past, which saw only three such ruptures over six years. Selloffs are getting more common — though no easier to withstand. Tech has been bleeding red, Trump is railing at the Fed, and stocks that sat comfortably at record highs just three weeks ago have had just one up day in seven sessions.

      For Donald Selkin, chief market strategist at Newbridge Securities in New York, it’s meant four times as many client calls and a bunch of frayed nerves. As one awful session followed another, the range of people asking questions went from clients to friends to family.

  16. Did your bond bets get torched last week?

    Markets
    Week That Spooked Bond Markets Sent Traders Scrambling for Exits
    By Edward Bolingbroke
    October 12, 2018, 9:09 AM PDT
    – Big wagers on higher yields and flatter curve challenged
    – Futures and options positions abandoned after souring
    – Pimco Says Equities Are Set for a `Tougher Time’

    Volatility in the U.S. Treasury market appears to have forced traders out of what just a week ago appeared to be surefire wagers on higher yields and a flatter curve.

    Flight-to-quality as U.S. stocks slumped pulled the 10-year note’s yield from a four-year high of 3.259 percent on Tuesday to as low as 3.124 percent on Thursday. Apparently that was enough for one trader to abandon a $2.5 million wager targeting a move to 3.60 percent by December. Placed last week, the bet took a loss of close to $1 million.

    Specifically, a block trade of 18,000 put options on the 10-year futures contract, expiring in January 2019, was bought for 9 ticks on Oct. 4. Thursday, an identical-sized block was sold at 5 ticks, and CME data suggest it was liquidation — open interest in the strike declined by 17,999.

    The Treasury curve also put positions to the test, as the spread between 5- and 30-year yields briefly topped its 200-day moving average on Oct. 9 for the first time in more than a year. Morgan Stanley abandoned long-held (and previously profitable) flattener calls, and a derivatives trader appears to have also thrown in the towel.

    Wednesday, a pair of large block trades in 2- and 10-year Treasury futures appeared consistent with a partial unwind of a flattener initiated in August after a $13 million hit. To be sure, the remaining position may yet pan out. Flattening bets still enjoy broad sponsorship, based on the outlook for Fed rate increases and subdued growth and inflation.

    In the meantime, the wound-licking can commence.

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