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Home Prices Are Falling And The Inventory Of Homes Listed For Sale Has Grown

A report from Curbed San Francisco in California. “Earlier this month, UCLA’s Anderson School of Management and law firm Allen Matkins released their survey of California developers and found that those with a stake in building housing are feeling gun shy about the Bay Area. ‘In the last six months, Bay Area developers have pulled back on new development, and half of the panelists stated that they were not planning to start a new development in the next 12 months.'”

“The survey authors cite market fluctuations as one potential explanation for this caution: ‘Home prices are falling in the Bay Area and the inventory of homes listed for sale has grown.'”

From Curbed Boston in Massachusetts. “Boston-based developer Weiner Ventures has nixed plans to build a tower over the Massachusetts Turnpike. ‘A combination of factors led us to this decision,’ Weiner said in a statement. ‘While disappointing to have to make such a decision, we believe it is the correct one.'”

The Idaho Press. “The median home price in Ada County dropped in July — but only slightly. The median price was $349,900 in July, according to a news release from Boise Regional Realtors. That’s a 9.7% increase from July of last year, but it’s a 1.3% drop from June. ‘One reason we’re seeing month-to-month price fluctuations is changes to the ‘mix’ of existing home sales by price range,’ according to the release.”

“Every month since April, the housing market in Ada County has seen an increase in inventory. That trend continued in July.”

The Bangor Daily News in Maine. “After nearly two years on the market, a Gilded Age waterfront mansion in Bar Harbor located along a stretch of shoreline formerly known as ‘Millionaire’s Row’ is scheduled to be auctioned off next month. East of Eden, originally built in 1910, initially was listed for sale in late summer 2017 for $15 million but has since had its asking price reduced to $12.5 million.”

“The family decided to put the house up for auction rather than adjust the list price, according to Susan Ferrante-Collier, the listing agent for the estate. Similar to how fine art is sold, that’s becoming a more common practice for selling luxury properties, she said.”

From Fauquier Now in Virginia. “A well-known horse farm just south of Middleburg sold last week for $4.77 million. The 302-acre Hickory Tree Farm includes a four-bedroom manor house with pool, five barns, five other houses, a three-quarter-mile training track and historic Burrland Hall.
The property went on the market in May 2017 with an asking price of $8.95 million, according to Realtor.com. The list price dropped to $7.95 million in September 2017.”

From South Utah Now. “The housing market has rebounded. With the economy on the rise over the past two years it has clearly been a sellers’ market. But signs are beginning to show that as the economy stabilizes and the stock market begins to level out that the housing market will begin to favor buyers. Already home construction has been on the rise in southern Utah.”

“6. Don’t buy a house you can’t afford. House broke is a fun little term that describes the state buyers find themselves in when they buy a house at the peak of their pre-approved amount and now they can’t afford to furnish or heat it. If a bank approves the loan it must mean that the buyer can afford it thought, right?”

“Not necessarily. Banks have a very arbitrary view of a buyer’s financial situation. They determine how much a buyer can afford to pay a month by taking their income and subtracting their debt. Buyers should take the prerogative and determine how much they can comfortably pay toward a mortgage every month independent of a loan officer. ‘Just because you can doesn’t mean you should’, applies in this situation.”

The Wall Street Journal. “Karen Labatto waited years for this. Ms. Labatto, who bought a house in Southampton’s village area 10 years ago, has been looking for a larger, move-up house ever since. She found the property she wanted in the Estates neighborhood. Originally priced at $15 million, its price had been lowered to just under $11 million by 2017. Two years of negotiation ensued.”

“Then, things started to change, said Ms. Labatto’s agent, Erica Grossman of Douglas Elliman.New York’s Suffolk County, which includes the tony Hamptons, is today among the most dramatic luxury buyer’s markets in the country. Since the second quarter of 2018, inventory in the Hamptons is up 84.2%, according to a recent Elliman report.”

“That created opportunity for Ms. Labatto, who finally closed on her target property in October for $8 million.”

“The term ‘buyer’s market’ can be confusing: It refers to places where there is more supply than demand, but doesn’t necessarily mean places where property is cheap. On Maui, for example, there is an overhang of inventory over $1 million. In wealthy vacation-home markets, like Maui, the Florida Keys or the Hamptons, it can take a long time before a pile up in inventory starts leading to price reductions, because many homeowners paid cash and don’t feel pressure to sell, said Will Langley, principal broker at Berkshire Hathaway Keys Real Estate.”

“However, an aging buyer’s market should eventually lead to a downturn in prices. ‘In six months, you’re going to start to see price reductions,’ said Mr. MacLaughlin, in Maui, particularly in condos built in the 1970s and 1980s that need work—which is expensive on a Hawaiian island.”

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This Post Has 92 Comments

  1. ‘In the last six months, Bay Area developers have pulled back on new development, and half of the panelists stated that they were not planning to start a new development in the next 12 months’

    ‘The survey authors cite market fluctuations as one potential explanation for this caution: ‘Home prices are falling in the Bay Area’

    So the big lie that “we gotta build airboxes so prices will come down” has been exposed. The REIC has no interest in lower prices. They sold all the junk they could to the bay aryan suckers and it’s off to the beach while the foreclosures roll in.

    1. “The REIC has no intere$t in lower price$. They $old all the junk they could to the bay aryan $uckers and it’s off to the beach while the foreclo$ures roll in.”

      President Bush to Mr. Ben Jones: ” heh, heh, nailed it! “

      1. We are trying the ad change again now. Please let me know if you see anything amiss with comment log-ins.

    2. Isn’t Chris Thornberg an Anderson School guy? I wonder if he helped produce the study that shows Bay Area prices are cratering?

    3. How so? They are stopping building airboxes to try to keep the prices high. They are acting like they believe their story. You too are acting like you believe the story when you point to months of inventory building up as a precursor to price drops.

  2. ‘If a bank approves the loan it must mean that the buyer can afford it thought, right?’

    ‘Not necessarily. Banks have a very arbitrary view of a buyer’s financial situation’

    And this is from a UHS. Banks don’t even make half the loans these days. It’s guys in polyester pants working a rented phone.

      1. “… guys in polyester pants working a rented phone.” = Easy money.

        Talk is cheap because anyone can do it. Combine some persuasive cheap talk with a cheap, rented phone and – presto! – you have just created a money-generating machine.

        The money generated is better described as money diverted, money diverted from one bank account to another.

        This process would only work on a population to totally dumbed-down ignorant pukes, which is what we have. Hence these cheap-talking money-diverting machines make lots and lots of easy money.

    2. “If a bank approves the loan it must mean that the buyer can afford it though, right?”

      I like this line of thinking. It implies that the burden of deciding what is considered “affordable” by the buyer is placed on the banker rather than on the totally dumbed-down buyer.

      So the totally dumbed-down buyer relies on the banker to decide what is and what is not affordable and then he generously signs a bottom line or two that will commit him to send to the banker each and every month huge chunks of yet-to-be earned money for decades.

      Like it, love it, want some of it.

      Answer me this: If any of you guys were to walk onto a used car lot and ask the used car salesman the question “Should I buy this car?” what do you suppose his answer would be?

      1. My definition of affordable is this:

        1) A dwelling should be no more than 10% of one’s net worth.

        2) A vehicle should be no more than 5% of one’s net worth.

          1. Yeah, it’s extreme. It’s just what I go by. So a net worth of $1 million means a dwelling of $100k. I stole this rule of thumb from James Altucher, should have given credit. Basically the idea is that mobility is valuable in today’s economy and plunking down the vast majority of one’s investment in one house, one city, one state, one economy is a super risky proposition and bad risk management from a diversification point of view.

        2. Uhh, so I need $5 million in the bank to buy the smallest house in my neighborhood? Seems a bit off.

        4. I assume you mean the % of money invested/equity? So, I may buy a $500k house, but I should only put $50k down if my net worth is $500k?

          1. I mean that I would not buy until a house purchase (not payments or down payment) equals 10% of their net worth. So a $2 mil net worth would be a $200k house. I think housing is a terrible place to have the bulk of one’s assets because it is not liquid, it has large carrying costs, and his a highly concentrated risk. The benefit you do get is that you get imputed rents. But I’d rather have investments that cash flow and pay a lot more than a house.

            Again, this is just MY rule of thumb. It’s loosely based on ideas that I have come across about risk, finance, happiness, minimalism, etc.

          2. That’s a tough message in a world that thinks housing is the only way for the average person to generate any net worth in the first place. But it does make some sense.

    4. True dat, my first loan hurt. I concluded that the banks will lend you more money than you really should borrow. This was back in the day (S+L crisis) when you had to convince the bank you could pay it back.

  4. “Not necessarily. Banks have a very arbitrary view of a buyer’s financial situation. They determine how much a buyer can afford to pay a month by taking their income and subtracting their debt. Buyers should take the prerogative and determine how much they can comfortably pay toward a mortgage every month independent of a loan officer. ‘Just because you can doesn’t mean you should’, applies in this situation.”

    Airtight loan process ….

    1. those who look for problems find problems… you gotta roll with it, its a mix issue, vacations, weather, its different this time!

  5. “That created opportunity for Ms. Labatto, who finally closed on her target property in October for $8 million.”

    An “opportunity” to rush into your own personal financial Waterloo? No thanks.

      1. The wails and lamentations of the “victims” who overpaid will soon be reverberating off the ionosphere.

        1. What is wonderful about a market that, for extended periods of time, rewards buyers for “buying the dips” is it trains buyers to become knife catchers.

          Knife catchers are buyers who buy a dip in price that never comes back. The longer the extended period of time that dip buyers are rewarded for buying dips the more they are convinced that the final dip is just another dip.

          Add to this dip buying is the mentally of doubling down. If buying dips is deemed to be profitable then doubling down on a price dip must also be so. The farther down the price dip goes the greater grows the incentive to buy even more.

      4. And Uncle Sam is in the business of outfitting knifecatchers with sufficient rope to commit financial hari-kari, then later offer bailout assistance to resurrect those who took the fatal plunge.

    1. Now we are starting to see some real price discovery.

      Check out the video.

      Imagine trying to heat this monster in the winter and keep cool in 100% humid summers? BTW, Property tax is only $68,000!

      2. The inside of the house is all pale greige. It looks pretty good, but boring. And for that amount of money, there should be a pool and hot tub and outdoor kitchen. Nope, it’s just a house.

        The article mentions that this spec house was built on a plot of land taken from the James Gamble Rogers historic property. Now *that* is a house worth buying for $3.2M. The wine cellar/dungeon is straight out of a Poe story. (still needs a pool)

        1. James Gamble Rogers historic property

          1926. Remove the wallpaper and I’m ready to move in.

  7. MAGA = Make America Groan Again!

    Market$
    Volcker Rule Trading Overhaul $ought by Wall $treet Takes $hape

    By Jesse Hamilton and Benjamin Bain
    Bloomberg | August 20, 2019 | By Jesse Hamilton and Benjamin Bain

    Revamp has been a top goal of regulator$ appointed by Trump

    Wall Street watchdogs handpicked by President Donald Trump ea$ed the Volcker Rule’s controversial ban on banks making $peculative investment$, wrapping up a top deregulatory priority that’s long been sought by the financial industry.

    The changes, approved Tuesday by the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp., seek to provide lenders a much clearer picture of which trades are prohibited, giving them confidence to engage in transactions without fear of violating Volcker.

    But one Democratic FDIC board member warned the rollback could again endanger the financial system by allowing lenders to recklessly trade hundreds of billions of assets like they did before the 2008 financial crisis.

    With the bulk of Volcker out of the way, there are a number of other Wall Street rules awaiting attention — many of them being handled by the Fed. They include significant shifts in bank capital rules and leverage limits, plus fundamental changes to the Fed’s annual stress tests.

    “Drain.thee.$wap” $peeds on unaba$hed!

    1. “With the bulk of Volcker out of the way, there are a number of other Wall Street rules awaiting attention — many of them being handled by the Fed. They include significant shifts in bank capital rules and leverage limits, plus fundamental changes to the Fed’s annual stress tests.”

      This is called keeping the game going. This art of keeping the game going will be performed by any means necessary.

      1. The LONGER the price boom and the HIGHER the prices encountered during the price boom the CLOSER to the end of the price boom one gets. This fact should be a warning to investors and regulators but for some reason it isn’t; The closer to the end of the price boom as measured in both time and price the more cautions are thrown into the wind.

        1. They get tired of watching everyone but them get rich doing the “wrong” thing. So it must be right.

  8. Wow, if Ada county is dropping then the winds of change are upon us. It will be interesting to see what happens in the next few months.

    1. Future post:

      Boise, ID Housing Prices Tank 35% YOY As “Boise Boys” Reality TV Show Hosts Panhandle For Nickels Outside Local Albertsons Stores

    2. Boots…Several realtors confirm that August has been slow, they attribute to normal season slowdown from Spring. We shall see…

        1. Most are, mine went back this week. The amount of listings (all dream prices) in my local area have been piling up but surprisingly the knife catchers still pickup some of these. I really don’t feel like any substantial declines will happen until the election unless we have a natural disaster or a war. The tweeter economy is still roaring…

  11. “Average” property taxes in at $17K.

    Which means anything close to something decent in a decent school system is around $25k.

    #####

    Q: I live in Westchester County, New York, and I know the governor is trying to make the property tax cap permanent. If he doesn’t succeed, how much could property taxes go up?

    A: The New York State Legislature has just passed a bill to make a tax cap enacted in 2011 permanent, according to a spokesman from Senate Majority Leader Andrea Stewart-Cousins’ office.

    Before the cap was enacted, school taxes went up on average 5% a year, according to Mr. Cuomo’s office.

    Westchester County has some of the highest taxes in the U.S., according to ATTOM Data Solutions, a California-based company that analyzes real estate and property information.

    The average property tax bill in the county in 2017 was $17,178, with an effective property tax rate of 2.39%. Data for 2018 is not yet available.

    https://www.mansionglobal.com/articles/how-much-could-property-taxes-rise-in-westchester-new-york-if-the-cap-is-eliminated-119996?link=TD_barrons_new_articles.be66b4471cba19f6&utm_source=barrons_new_articles.be66b4471cba19f6&utm_campaign=circular&utm_medium=MANSIONGLOBAL

    3. Our best friends sold the Yonkers home for $625K last year taxes were over $1200 a month, then paid cash for a home in Tomball TX and are having a second honeymoon with all the pressure off of them

  12. Well, at least she is not “giving it away…”

    ####

    Mary J. Blige has had a tough time trying to sell her mansion in Saddle River, NJ. The singer has cut the price again, this time to $6.8 million, which is about half what she was asking when she first listed the home.

    The queen of hip-hop soul is now a motivated seller. Reports have emerged that the “No More Drama” singer owes $1 million in back taxes as well as other unpaid bills that she says were racked up by her estranged husband, Kendu Isaacs, whom she has called a “con artist.”

    Sitting on more than 4 gated, manicured acres, the stone and stucco residence resembles a French country manor. There are 18,250 square feet of living space, including large reception rooms for entertaining, a custom bar, a gourmet kitchen with double islands and custom cabinets, and an elevator.

    The influential diva had the mansion on the market in late 2015 for $13 million. Four years later, Blige has reduced her price by 48% in hopes of enticing a buyer.

    https://www.realtor.com/news/celebrity-real-estate/mary-j-blige-slashes-price-on-nj-mansion/?link=TD_barrons_new_articles.be66b4471cba19f6&utm_source=barrons_new_articles.be66b4471cba19f6&utm_campaign=circular&utm_medium=MOVE

  13. Four years later, Blige has reduced her price by 48% in hopes of enticing a buyer.

    Gosh, that’s getting perilously close to the 50% haircut that the REIC shills who oozed onto the HBB assured us was inconceivable.

  15. no one sees a recession?
    I still think it begins this year w 2020 being a screamer and when the biz taxes an regs come back,nuclear winter.

    1. Sounds likely to me. The RV sales, auto sales, Home Depot numbers, inverted yield curve make me think we are headed for a recession soon. Plus then you have the Fed doing “mid-cycle” rate cut, and DJT saying “no recession now for sure”, there’s probably something going on. Where there’s smoke, there’s fire.

  16. IegdoD94ani05ywH
    August 19, 2019 at 7:22 pm

    14 mile boot trek trying to catch some golden trout ??

    Nice…Ive been up that way once long ago…

    Mr. Cole is in his last yer of high school, might end up furtherin’ his “knowledge gathering” in the central coa$t, most likely $LO ??

    My son went there…What a great place to go to college…

    Hope you & yearns are healthy & doin’ good! ??

    Everything’s good here Hwy short of MIL in very frail condition but she’s 95 and has lived a good life……

    1. scdave, thanks for the update. Good to know the blessings your MIL has found in such a long life!

      Been a “regular” @ the Parkfield Bluegrass Festival in May, wonderful x3 day camping for awesome music & musician ‘s … Iffin’ you can roll the RV south, Bee great to sit around a campfire with you & yearns!

      Cheers!

    1. The Boise coastal-transplant LBGTQ community has been busy rocking on the balls of their feet as if they’re the new intelligentsia anointed to look-down on the local deplorables. It’ll be nice to see them lose their schitt and wail.

      2. Idaho Fish and Game has a no-limit open season on liberal coastal transplants. Invasive species rules of course.

    1. Yup. Mop up the mess and change the subject, now returning to your regularly scheduled episode of #ClownWorld.

    2. “Hedge funds, private equity and asset managers, recently including a fund managed by Pacific Investment Management Company (PIMCO), had been quicker to lend to less pristine borrowers in the aftermath of the housing crisis than major banks.”

      Wasn’t it Bill Gross (formerly of PIMCO) wailing about the fed has to build a floor under asset prices?

  21. Boy, does the tone and demeanor of news articles and facts coming out now sound different from 6 months ago? Anyone think the Yun and Olick show might start changing its act too? If so then you know the veil has been lifted.

    Will be an interesting next few months.

  22. U.S. Sen. Christopher Murphy’s residence on Paul Ney Road has sold, after having been on the market for a little more than a month.The sale price for the second-term senator’s now former home was $478,000, The original list price was $519,900
    According to town property records, Murphy and his wife, Catherine Holahan, had purchased the property in 2010 for $477,500.

    http://www.myrecordjournal.com/News/Cheshire-Citizen/Cheshire-News/Sen-Murphy-s-Cheshire-home-sold.html

  23. Cheap US energy leads BlueScope to $1b Ohio mill expansion
    https://www.afr.com/companies/manufacturing/cheap-us-energy-leads-bluescope-to-1b-ohio-mill-expansion-20190816-p52hxu

    (some snips)

    US energy prices just one-third of those in Australia, along with a robust manufacturing sector stoked by President Donald Trump’s policies, have prompted a $1 billion expansion of an Ohio steel mill by BlueScope.

    BlueScope chief executive Mr Vassella said the $1 billion expansion of the North Star mill, to be fully up and running by 2023, was the largest capital investment the steelmaker would likely ever make, and would deliver annual returns of 15 per cent-plus.

    He said the company had intimate knowledge of the mill because it helped build it in the first place in the mid-1990s in a joint venture with North American group Cargill, and had moved to full ownership in 2015.

    Mr Vassella lamented the state of Australian manufacturing as the sector battled high energy prices and said one of the main drivers of the North Star expansion, which will increase capacity by 40 per cent, was that energy costs in the United States were substantially lower.

    “That’s a tragedy quite frankly for Australian manufacturing,” Mr Vassella said.

    BlueScope also operates the Port Kembla steelworks in New South Wales, which underwent major cost-cutting and restructuring in 2015. Mr Vassella said he worried a lot about manufacturers in Australia who were BlueScope’s customers and were facing ”demand destruction” because their energy costs were too high.

    1. Can Australia bring its sky-high energy prices down to earth?
      https://www.power-technology.com/features/australia-energy-prices/

      (snip)

      Amid the wider debate around coal-fired power and Australia’s transition to low-carbon generation, high energy prices have at times been wielded as a political club. The move away from coal-fired power and towards greater adoption of intermittent renewables, argue coal lobbyists and some government figures including former Prime Minister Malcolm Turnbull, is driven more by ideology than economic sense. Moreover, consumers pay the price, both literally and in energy security, for the loss of baseload coal plants and the growing share in intermittent renewables.

      “We know what happens if you allow left-wing ideology and politics to drive your energy policy,” said Turnbull at last year’s Liberal National Party state conference in Brisbane. “You get unreliable and unaffordable power, and business is driven out of your state.”

      There is certainly some truth to these claims. High prices and power outages in South Australia, the country’s leading wind power-producing state, have been exacerbated by the increase of intermittent resources and the lack of dispatchable backup plants. Similarly, the relatively short-notice closures of large, heavily polluting coal-fired plants has driven wholesale prices up in some regions. In the state of Victoria, for example, last year’s closure of the 1.6GW Hazelwood coal power station prompted a price surge of 85% compared to 2016 prices, according to the Australian Energy Regulator (AER).

  24. Boston-based developer Weiner Ventures has nixed plans to build a tower over the Massachusetts Turnpike. ‘A combination of factors led us to this decision,’ Weiner said in a statement. ‘While disappointing to have to make such a decision, we believe it is the correct one.’

    There are already towers over the turnpike going up in the Fenway/Kenmore square area. The bones of structures are mostly in place. Looks like they will be not be completed before broad price declines are apparent. Will be interesting to see what happens with these projects. Probably part of the luxury student housing trend.

  25. Are you perplexed over the yield curve inversion?

    Business News
    August 20, 2019 / 4:22 AM / Updated 13 hours ago
    Inverted what? Searches for obscure financial term spike on Google
    Noel Randewich

    (Reuters) – Inverted what?

    Searches on Google for “inverted yield curve” have spiked after the unusual bond market phenomenon presented itself last week for the first time in over 12 years and helped tank Wall Street amid chatter that an economic downturn was imminent.

    Following a tweet from U.S. President Donald Trump referencing the “CRAZY INVERTED YIELD CURVE!”, the term made its way onto news websites and radio and television reports that rarely delve into financial topics. Even late-night TV star Stephen Colbert devoted a portion of his show trying to decipher what it means when the yield on 10-year U.S. Treasury notes falls below those for 2-year notes.
    …

  26. Are you ready for Treasurys to test the zero bound?

    Kyle Bass on where the global economy is headed: ‘This is insane’
    By Shawn Langlois
    Published: Aug 20, 2019 2:13 p.m. ET

    This is insane. The Japanese are going to keep going. The Chinese print money like it’s a national pastime today. Europe is going to restart QE.

    That’s Hayman Capital Management fund manager Kyle Bass talking on CNBC Tuesday about how monetary easing is catching fire around the world and will eventually bring U.S. interest rates all the way down to zero.

    “We’re the only country that has an integer in front of our bond yields,” he said. “We have 90% of the world’s investment-grade debt. We actually have rule of law and we have a decent economy. All the money is going to come here.”
    …

  27. Remember when everyone was freaking out over the prospect of China dumping U.S. Treasury bonds?

    It seems that the worm has turned.

    1. The Financial Times
      Chinese economy
      Investors pull $2.9bn from funds investing in China
      Outflows rise amid concerns about Chinese economic growth and trade war with US
      Donald Trump has threatened to slap tariffs on an additional $300bn in Chinese goods
      © Reuters
      Richard Henderson in New York yesterday

      Investors pulled $2.9bn from funds that invest in China’s stock market in the month ending last Wednesday, as concerns over economic growth and tariffs weighed on Chinese shares.

      The outflows from mutual funds and exchange traded funds that invest in China’s A-shares market were the sharpest since the start of 2017. Investors have now pulled $5.9bn from the funds since the start of the year, according to EPFR Global data.

      The spectre of fresh tariffs on Chinese goods, underwhelming economic data and a weaker renminbi have pressured Chinese stocks and compounded concerns about a global slowdown, triggering a rush to safe assets like US government bonds.
      …

    2. Stock-market volatility won’t go away ‘anytime soon,’ says CIO of U.S.’s third-largest pension fund
      By Mark DeCambre
      Published: Aug 21, 2019 1:39 a.m. ET
      Titarchuk became the head of the New York State Common Retirement Fund earlier this month

      Anastasia Titarchuk says a summer bout of stock-market volatility is likely here to stay unless there’s a resolution soon of the trade tussle between the U.S. and China.

      “That’s why it’s hard to see this volatility go away anytime soon,” Titarchuk, chief investment officer of the New York State Common Retirement Fund, told MarketWatch in a Friday interview.
      …

  28. RE: Utah

    Inlaws finally lopped $60K off asked price to sell their home. They still made a couple of $100K in equity gains over purchase price pre-2006, but also $300K or so below the bubble peak.

    And given a backdrop of economic strength, prices aren’t yet through correcting to normalcy.

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