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Any Slowdown Feels Like The Real Estate Market Is Imploding

A report from The M Report. “The U.S. Census Bureau’s New Residential Construction Survey found that while building permits grew in July by 8.4%, housing starts fell 4% in July to 1.91 million. Odeta Kushi, Chief Economist for First American Financial Corporation, added that homebuilders are ‘reluctant’ to start new projects in fear the economy may fall.”

“‘When there’s a shift in the market, new construction is always one of the first categories to take a hit,’ said San Jose, California, Redfin agent Kristen Nowack. ‘In the San Jose area, overall prices are falling and there are plenty of homes for sale right now, which means buyers may be less likely to pay a premium for new construction. And when one builder starts dropping prices in response to the market, competitors follow suit, which could lead to overall lower prices.'”

The Orange County Register in California. “Southern California builders sold 13% more homes in July than a year ago as prices fell 8%. As for cost comparisons, Southern California’s new homes had a median selling price of $554,000, down 8% over 12 months. Compare that with the median for all homes sold: $540,000.”

From KTLA in California. “Phil Spector’s infamous murder castle — where he shot actress Lana Clarkson to death in 2003 — just got a bit cheaper. After listing for $5.5 million earlier this year, the French Chateau-style mansion has returned to market at $4.995 million in Alhambra.”

“It was divided into apartments in the 1940s and remodeled by a Chinese investor in the ’80s before the troubled Spector shelled out $1.1 million for the place in 1998, calling it ‘a beautiful and enchanting castle in a hick town where there is no place to go that you shouldn’t go.'”

From Westword in Colorado. “The $2 million listing for the Castle Rock-area property owned by former Colorado Rockies manager Walt Weiss has been in the news again recently, but missing from reports is a far more interesting fact about the sale than the mere availability of the joint: Its price is half of what it was more than seven years ago.”

“This price drop is emblematic of a dirty little real estate secret: Luxury properties can be very difficult to sell in Colorado and beyond, even when there’s a celebrity connection. In November 2012, Weiss’s home was featured on a TopRealEstateDeals.com list of the best spreads available from former Major League Baseball players. At the time, the tag was $3.49 million, which already represented a major reduction. Six months earlier, the place had been going for $3.99 million, or just about twice as much as the current sale price.”

The Madison Park Times in Washington. “Reading the doom-and-gloom headlines about Seattle’s real estate market is an echo of what happened this exact time last year — it’s like wash, rinse, repeat. You have to look at the data and understand consumer behavior to know that right now we’re far from experiencing a housing crash.”

“While it’s true we’re no longer in an insanely hot market, that’s what most buyers and sellers have been used to. So any slowdown feels like the real estate market is imploding. But the data says differently — we’re still in a seller’s market. If you’re buying this late summer and fall, get ready. There will be more homes on the market, so you’ll be able to purchase with more protections than you might have been able to last spring (or maybe next spring, if trends continue). That means all contingencies, negotiable prices, and no bidding wars.”

From KOMO News in Washington. “Bidding wars for homes on the market in the Seattle area have plummeted in the past year, reflecting a national trend, according to Redfin. The report found that only 9.4 percent of offers from Seattle-area homebuyers faced a bidding war in August. That’s down from 37.8 percent in August 2018.”

“‘Competition in the Seattle area has certainly slowed down since the second half of 2018. Last year, five out of five offers I submitted faced competition; now, it’s one in five,’ said local Redfin agent Michelle Santos. Meanwhile, she said, ‘Average homes sit on the market for quite some time before they get any offers.'”

“The steep drop in bidding wars is just another sign that the housing market is cooling off in the Seattle area. Other studies have found that home sales prices here are dropping, and homes are remaining on the market longer before they are sold. Nationally, 10.4 percent of homebuyers faced bidding wars in August – the lowest rate in eight years – and down from a high of 59 percent in March 2018.”

From Smart Asset. “A good deal can make a significant difference for any purchase you make, but especially when you’re investing your hard-earned money in property like a home. As a result, it’s important not to overlook the fact that the asking price is negotiable – it could save you hundreds or thousands down the line.”

“Using Census divisions, we note that 14 of our top 25 cities are located in Southern states. Between July 2018 and June 2019, an average of 18.88% of home listings across those 14 cities had price reductions. Santa Rosa, California ranks as the second-best city to negotiate on a home, with comparable figures to the No. 1 city of Baltimore. Between July 2018 and June 2019, an average of 20.39% of home listings had price reductions.”

“Utah’s capital, Salt Lake City, has a particularly strong No. 14 for percentage of home listings with a price cut. Between July 2018 and June 2019, an average of 20.34% or one-fifth of home listings had price cuts. The median price reduction on homes tends to be a bit lower in Portland, Oregon than other cities in our top 10, but price reductions are frequent. Between July 2018 and June 2019, an average of about one-fifth of home listings had price cuts.”

“Dallas, Texas is the most populous city in our top 10, but despite the number of people vying for housing there, it’s still able to bargain on home price. According to Zillow, in the 12 months leading up to June 2019, an average of 20.29% of home listings had price cuts.”

“In gross terms, homebuyers in Seattle, Washington who successfully negotiate may have the most to gain relative to homebuyers in any other city in our top 10The median listing price for homes in Seattle, Washington is the highest of any city in our top 10. In June 2019, the median listing price for homes in the city was $699,000 according to Zillow. For homebuyers who are able to negotiate for the median price reduction month-over-month of 3.53%, they would save almost $25,000 on the median home listing.”

The Shawnee Mission Post in Kansas. “That’s right potential home buyers. It appears that your time is just around the corner, and by ‘your time’ I mean that we are shifting out of the seller’s market and into a market where you will have more leverage. The power shift has been a long time coming considering that we have been in a strong seller’s market since the first quarter of 2013. For the longest time, buyers have been competing for the same houses, paying over list price, and in many cases, accepting a home as-is versus being in a position to ask for repairs.”

“Median home prices in several areas of town are already down when compared to the same month last year. Therefore, home sellers must be focused on the most recent sold properties (last 90 days) when arriving at a fair list price. Depending on the location, if may make even more sense to focus on the active competition and any current homes under contract that have not closed yet. Actives and pendings are the most accurate representation of value in a shifting market. The long and the short of it is that today’s market requires that you price more competitively.”

“To me, the most important message for a seller in a shifting market is this- patience. You may have heard from your friends and neighbors that homes have been flying off the shelves and at crazy prices, but you must know that in most areas of town, that was the market of yesterday. And the market of today requires patience and understanding. It also requires very clear data about the current market conditions and competition.”

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This Post Has 107 Comments

  1. ‘You may have heard from your friends and neighbors that homes have been flying off the shelves and at crazy prices, but you must know that in most areas of town, that was the market of yesterday’

    Eeee-bola Johnson County! Where’s the troll saying it’s only luxury that’s falling?

      1. socaljames, who twists himself into a pretzel justifying why all real estate is “to the moon, Alice!”

        Or is it timbers, Ed, Broker Dan?

      1. boots

        In my zip code, more inventory is coming on the market.
        Three types of inventory:
        1. Reno-flip $40K overpriced IMO. Those are sitting.
        2. IMO Fairly priced (i.e. +3% yoy since 2012), 1970-1980s kitchen, livable but could use reno
        3. Trashed auction foreclosure. Underpriced maybe. The auction priced on these homes is slightly more than I paid for mine in 2012.

        One house sold recently for way below value but it was an empty zombie for 4-5 years. Needs ~$70K+ work.

  2. ‘When there’s a shift in the market, new construction is always one of the first categories to take a hit…In the San Jose area, overall prices are falling and there are plenty of homes for sale right now’

    Eat yer crowz Thornberg!

    ‘And when one builder starts dropping prices in response to the market, competitors follow suit, which could lead to overall lower prices’

    Speaking of:

    ‘Southern California builders sold 13% more homes in July than a year ago as prices fell 8%. As for cost comparisons, Southern California’s new homes had a median selling price of $554,000, down 8% over 12 months. Compare that with the median for all homes sold: $540,000’

    And that’s not including the pool they threw in, etc. So new is now lower than existing, meaning Southern California is well and truly FOOKED!

    1. Perhaps some of you have seen my posts over the past few months about new starts in housing’s developments. It is now starting to be reported on. It is perplexing to see the continued rise in housing equities. Must be a result of computerized trading. Cannot imagine anyone who is doing boots on street research consciously buying these equities. Also shows vulnerability to stock market due to algorithms

      2. Also shows vulnerability to stock market due to algorithms

        Do these algorithms factor in tweeters from our commander? Seems like they would given the state of our financial system and the tweeters that happen to show up given each day our stock market jumps for no reason.

  3. ‘Competition in the Seattle area has certainly slowed down since the second half of 2018. Last year, five out of five offers I submitted faced competition; now, it’s one in five,’ said local Redfin agent Michelle Santos. Meanwhile, she said, ‘Average homes sit on the market for quite some time before they get any offers’

    ‘The steep drop in bidding wars is just another sign that the housing market is cooling off in the Seattle area. Other studies have found that home sales prices here are dropping’

    But redfin said bidding wars up? Eat yer crowz too redfin, you shameless dogs!

    1. it worse than dead – people are not even attending open houses. An agent in our condo building had a open house 2 weekends ago on both Sat and Sun. They only 2 visitors were other agents.

      1. Seeing similar over here in SFH territory. I’m sure the cooler than average weather and back to school migration will be blamed.

        1. Just wait until the day after the Souper Bowl! LOLZ

          That tired, sad REALTOR meme has been pimped for years now as the kickoff (pun intended) of the Spring buying season.

          I eagerly await Real Journalists (whores, all of them) reviving the phrase “red hot” and other realtorbabble…

    2. Then there is the matter that das REIC seems to have defined a “bidding war” as “two offers or more”. The latter is not a bidding war. It is just two offers.

      It’s not a bidding war until more than two bidders engage in more than two rounds of bidding. In my book.

      1. I know of one very recent sale that was supposedly a “bidding” war. I believe there were crimes committed and I’m working with one party to follow through with it.

      2. This tactic / lie is one of many realturds use. I was watching a home that was on the market without any offers for 3 months and decided wth, i’ll put a offer 350k less than the list price. I had it wrote up and sent it off. A week later I was told they accepted someone elses offer. I cant wait for the record of the sale so i can go (covertly) stalk the new owner and see if they had any “fierce” competition (me lowballing).

    1. BTW, two weeks from today I’ll be waking up in Miami FL. I’ll report on the crater.

      Later today I’ll have a multi-family/CRE post you won’t want to miss. IMO the foreign CRE news yesterday was huge. We all remember the Japanese disaster in the 80’s. Well a much bigger bubble has burst.

      1. Recommend ‘Kill Your Idol’ as a good low key bar. https://sub-culture.org/kill-your-idol/ in south Miami Beach.

        We were visiting Delray Beach a few weeks back. It is still mega-bubbly.

        Tampa / Clearwater are still moving the decent multi-family homes. Beach homes in say Clearwater have a good number of homes that are overpriced and have been siting for a long time (> 6 months).

        jdog is probably watching as well.

      2. Are you going to bee able to do a day.trip to Abaco Island?

        $urely there must bee real.e$tate agent$ “who.don’t.lie”, still actively promoting $ales opportunitie$ available to $mart.inve$tors!

        As Cramer $ays: “Buy!, Buy!, Buy!”

        1. Did that once, never again. Learned my lesson. Was a total PITA to sell.

          Now I’m on the other side of the coin, and it feels fine.

        2. And the fewer potential buyers you have, especially if the greater fool Chinese investors are out of the market!

    1. I live in Southwest Florida and have been watching the market closely for over a year now. Some houses are still selling at prices that are at about 2003-2004 level but things have definitely slowed in my neighborhood.

      To me, it feels like the market peaked in late 2017 and has just been kind of teetering ever since. Looking at the closed sales paints this picture as well. It definitely feels like a correction is at hand but there seems to still be just enough buyers out there to keep things scraping along at this time.

  6. “To me, the most important message for a seller in a shifting market is this- patience. You may have heard from your friends and neighbors that homes have been flying off the shelves and at crazy prices, but you must know that in most areas of town, that was the market of yesterday. And the market of today requires patience and understanding. It also requires very clear data about the current market conditions and competition.”

    Yesterday bid winners, tomorrow FBers….

    1. There’s a lot of realtor created and NAR funded myths that defy logic and long established truth(which are lies by definition). Their top three fables are;

      -A depreciating asset is an investment at any price

      -Renting from the bank is the least costly means of acquiring shelter

      -Realtors are honest, ethical and represent the interests of the buyer

      There are many more but these three are the timeless fallacies that realtors audaciously defend and champion no matter how egregiously false these myths are and how appalling they make themselves appear.

      –

          1. the unfortunate truth these days

            I spent the weekend with friends, whose persuasions are left. One of them turned on the TV to see what the hurricane was up to. There was an unkempt Anderson Cooper reporting. They played a clip of the President saying something like “Wow Category 5, you never hear of that landing, it’s out there but you don’t hear of it.” Something like that. They spent 15 minutes at least mocking the Pres for saying such a thing. My friends were cheering like their team won the Stanley Cup. When I said it had been 15 minutes without a word on the Bahamas they all denied it.

            The power of Voices of Authority and repetition.

  8. So any slowdown feels like the real estate market is imploding. But the data says differently — we’re still in a seller’s market.

    We’re all sharks now and must keep moving forward at an ever fast rate. In a real buyers market we die.

      1. With negative yields on ultrasafe government bonds, the sky is the limit on risk asset valuations.

    2. “Gold spot 1558. Close above 1550? Dawning on folks that no yield is better than negative yield?”

      https://www.bloomberg.com/news/articles/2019-09-04/deutsche-bank-warns-of-grave-side-effects-from-more-ecb-cuts

      markets
      Deutsche Bank, UBS CEOs Criticize Impact of Negative Rates
      By Steven Arons
      and Nicholas Comfort
      September 4, 2019, 3:00 AM MDT | Updated on September 4, 2019, 9:22 AM MDT
      “In the long run, negative rates ruin the financial system,” Sewing said at the event, organized by the Handelsblatt newspaper. Another cut “may make refinancing cheaper for states, but has grave side effects.”

      “Banks’ interest margins are under pressure in this environment and that’s not going to change,” Commerzbank CEO Martin Zielke said at the same conference. “I don’t think it is a particularly sustainable or responsible policy.”

      On central bankers:

      “Oh, you can’t help that,’ said the cat. ‘We’re all mad here.” – Lewis Carroll, Alice in Wonderland

      “Where should I go?” -Alice. “That depends on where you want to end up.” – The Cheshire Cat.” – Lewis Carroll, Alice’s Adventures in Wonderland & Through the Looking-Glass

      “Alice laughed: “There’s no use trying,” she said; “one can’t believe impossible things.”
      “I daresay you haven’t had much practice,” said the Queen. “When I was younger, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.” – Lewis Carroll, Through The Looking Glass

      – Negative interest rates: More of the same from the Wile E Coyote geniuses at the Central Banks. Zero bound. Not problem. Need to keep the borrowing (debt) going. Only now, with negative rates. No problem (/sarc). This will destroy pensions, pensioners, savers, banks, insurance companies, entire economies. Central bankers are unelected and unaccountable. Does anyone have the cojones to say enough is enough?

      https://owlcation.com/humanities/EmperorsNewClothes
      “The Emperor’s New Clothes”: A Lesson for the 21st Century
      Updated on December 15, 2018

      On 7 April, 1837, the great Danish fairytale writer, Hans Christian Andersen, penned the third and final volume of his “Fairy Tales Told For Children.” The whole collection of tales included nine stories, but this third volume included just two. One was “The Little Mermaid.” The other, though very brief, was a story of great morality and highly perceptive commentary on the human condition. It was, of course, still a fairytale intended for children, but this fairytale had merits far beyond those of its humble origins. It was called “The Emperor’s New Clothes,” and it deserves to be recognized as one of the great works of 19th-century literature.

      On this page, I explain the story of “The Emperor’s New Clothes.” I explain how it came into being and how the messages in the story are still hugely relevant in the 21st-century.

      What’s the Story?

      Two weavers [think Central Bankers] are approached by a vain and pompous Emperor [think your favorite national leader] who desires the finest and most luxurious clothes in all the land. The clothes must be befitting of his supreme status. The two weavers promise him a set of clothes so fine and wonderful that only the great and good in society will be able to see it. They will be quite invisible to anyone who is stupid, incompetent or unworthy of their position in society. What’s more, the clothes will be made of a material so fine that they are said to be “as light as a spider web.” They will not weigh down the wearer. The wearer will not even be aware of them draped over his body. Such a set of clothes would be perfect for a great Emperor. They would suit his sense of self-importance, and their magical properties of invisibility, to the unworthy, would enable him to find out which of his ministers were unfit for their jobs. This is evident when the emperor says, “…and I could tell the wise men from the fools.”

      Of course, the weavers are nothing more than a pair of con-men, swindlers who have no intention of creating a fine set of clothes. They have heard of the Emperor’s vanity and they believe they can turn his failings to their own advantage. They decide to make the set of fine clothes. Of course, when the Emperor goes to visit the weavers at their place of work, they make a show of enthusing over the cloth and the clothes they are making. In fact, the Emperor cannot see anything at all. But he is too proud to admit that he cannot see the clothes. To do so, would be to label himself as stupid and unfit to be Emperor. And, of course, when his courtiers and ministers visit the weavers, they also cannot see these clothes, but they also pretend that they can. If they say anything different, they will be admitting their own incompetence and unworthiness. This is evident when they say, “Can it be that I’m a fool? It would never do to let on that I can’t see the cloth.” What’s more, if any of them did have their suspicions about the existence of the clothes, to voice their doubts would be to imply that the Emperor himself was stupid enough and gullible enough to be taken in by this foolery.

      When the Emperor finally walks out among his subjects in his non-existent finery, the crowds watch eagerly. They all want to see which of their friends or neighbours are so stupid that they cannot see the clothes. What actually happens, of course, is that none of them see any clothes. Still, no one says anything. Some are too embarrassed to tell the truth. They think that they must be too stupid to see the clothes. Perhaps others believe that to say anything derogatory would be to draw attention to the truth of the Emperor’s own stupidity. Perhaps others simply do not wish to be the first to speak out with a contrary voice. Only one small child, who is far too innocent of all this pretension and social convention, shouts out, “But he hasn’t got anything on!” At first, the little boy’s father tries to correct the boy, but gradually the news breaks out and everyone finally realises that they are not alone in their inability to see the clothes. Slowly, but surely, everybody finds that there is strength in numbers and they begin to admit there is nothing to see. Realizing how foolish they and the emperor have been, they begin to laugh. The Emperor cringes, but continues with the procession, because to turn back now would be to admit his own gullibility. Better to carry on thinking that he is the only one who has the wisdom to see the clothes than to admit ignorance. His courtiers, likewise, feel they have to continue to live the lie, so they dutifully follow their leader.

    1. ** The Shawnee Mission Post in Kansas. “That’s right potential home buyers. It appears that your time is just around the corner, and by ‘your time’ I mean that we are shifting out of the seller’s market and into a market where you will have more leverage. **

      . . blah blah blah . . . straw-hatted carnival barker snake oil salesman . . blah blah

      but until he says “folks” I wont believe him ’cause every huckster uses that down-to-earth-I’m-one-of-you-feel-good-word when it’s a serious snow job

        2. In my area, unless you want to live in an apartment, you don’t have much choice. Trying to find a decent house for rent in a good neighborhood and at a reasonable price isn’t easy. If you want to live in a house with Gulf access for a boat it’s even harder.

          That’s the main problem with renting in many places, there just isn’t much available if you want a lawn, garage, driveway, ect.

      2. “ran when parked”

        Love yer handle! … reminds me of the Andy Griffith Mayberry episode where the car is $old: $alesman; ” …runs fine!, A smooth running machine!, A beauty! ” … later on it’s revealed that he + added sawdust into the transmi$$ion!

        1. “sawdust in the transmission”

          scotty kilmer never talked about that one
          must not be a Toyota thing

    3. “…No “pent-up demand” for $500,000 starter homes..”

      The REIC would have you believe that understanding math is not a requirement for “sophisticated investors”.

      Think about the total cost of ownership of a $500K “starter” home including P&I, insurance, maintenance, HOA dues over 30 years.

      Then read this article:

      https://www.quora.com/How-much-money-does-the-average-American-make-in-their-lifetime

      So, REIC, where is all the cash money going to come from to pay for your “starter” homes? Is it going to fall out of the sky?

      1. “sophisticated investors”

        I’ve never claimed to be one. As of now I invest 50% in S&P 500 index fund, 25% in corporate and U.S. bonds, and 25% in money market cash.

        Spending less money than you earn is not that complicated.

      3. So, REIC, where is all the cash money going to come from to pay for your “starter” homes? Is it going to fall out of the sky?

        The way I see it, a starter home has become somewhat of a luxury good. There are households that can afford a $500k, but it just isn’t the way it used to. I picked my son up from pre-school and talked with a young anesthesiologist who was picking up his daughter. They have a live-in nanny that they pay $36k a year who is from Argentina (she speaks only Spanish to them). His wife also works, though I’m not sure what they do. They can easily afford a $500k to $1M house.

        1. ‘They have a live-in nanny that they pay $36k a year who is from Argentina (she speaks only Spanish to them). His wife also works, though I’m not sure what they do. They can easily afford a $500k to $1M house’

          You must be smoking crack.

          3. Well considering my kid is going in for a 1hr procedure and we have to pay the anesthesiologist consultant just under 2k, I wouldn’t be surprised if they could “afford” 500k-1m homes and through in the expense of a crack smoking habit. I have friends that have bought homes in this range making much less although I don’t believe they can actually “afford” them…

          4. Doesnt’ matter what they earn. If you’re dumb enough to pay that kind of money for a rapidly depreciating asset, you’ll always be broke.

          5. “you’re dumb enough to pay that kind of money for a rapidly depreciating asset“

            Guess it depends WHO is actually paying for it. If it’s borrowed money and the borrower has no intention to pay it back unless they make a profit and sell, then who’s the dummy. Specuvestor / Realtor 101.

          6. Doesnt’ matter what they earn. If you’re dumb enough to pay that kind of money for a rapidly depreciating asset, you’ll always be broke.

            Whether they should pay that much is a separate question entirely. We have over 300 units in both phases of our complex. I see the incomes of everyone who comes through on applications. This is in greater SLC. There are some who are barely scraping by. But there are others (mostly tech and software developers) who are making astounding amounts of money. I had a medical exec relocating from out of state stay in one of my Airbnbs for 6 months while he was looking for a house for his family. His base salary was $240k, but he had a $50k housing allowance relocation package and he had some really amazing stock options. When I read the offer letter, I think it was about $500k annually.

          1. “And why isn’t the $36K/yr nanny picking her up?”

            It must cost more than $36/k a year for an English speaking nanny with a drivers licence.

          2. must cost more

            In St. George, UT? Assuming she works 40 hrs/wk 52wks/yr, she’s making $17.30/hr not including room and board. For reference, my English speaking respite care provider with a driver’s license is paid $12/hr by the state of CA. That nanny’s got a sweet deal!

          4. That nanny’s got a sweet deal!

            They pay well because part of the deal is that she is teaching the girls Spanish (she is bilingual). Also, it’s not a 40-hour-work week. It’s basically all the time since she is a member of the household. I’m sure he gives her some time off and personal time, but it’s probably a lot more than 8 hrs/day.

    4. I’m not “fighting” for some piece of real estate no matter what the economic conditions are. Go shove that narrative up your ass, Prashant.

  12. Worth a read since this guy made a ton on the last housing bubble (yes, it’s still the same bubble; semantics):

    The Big Short’s Michael Burry Explains Why Index Funds Are Like Subprime CDOs
    Reed Stevenson
    Bloomberg
    9/4/2019

    “Central banks and Basel III have more or less removed price discovery from the credit markets, meaning risk does not have an accurate pricing mechanism in interest rates anymore. And now passive investing has removed price discovery from the equity markets. The simple theses and the models that get people into sectors, factors, indexes, or ETFs and mutual funds mimicking those strategies — these do not require the security-level analysis that is required for true price discovery.”

    “Like most bubbles, the longer it goes on, the worse the crash will be.”

    https://www.bloomberg.com/news/articles/2019-09-04/michael-burry-explains-why-index-funds-are-like-subprime-cdos

    1. “(yes, it’s still the same bubble; semantics)”

      Totally. And given the ongoing central banker support, it just may turn out to be the longest duration bubble in the history of finance.

  13. “The $2 million listing for the Castle Rock-area property owned by former Colorado Rockies manager Walt Weiss has been in the news again recently”

    Given how brief the tenures are for all those coaching types and how often they have to relocate, why do they always seem to buy trophy properties? There should always be a few they could lease.

    The article doesn’t say how much he paid for it, but I wouldn’t be surprised if he’s gonna take a 7 figure loss. A little google-fu shows that he now lives in Atlanta (as a coach, not manager), where he no doubt has another McMansion. His career earnings are pegged at $19M. No doubt the Fed and various states have already taken a big bite out of that. So for him to lose 1,000,000+ is a big deal.

  14. I see a lot of examples here of extremely expensive houses dropping in price. Homes in the millions of dollars.

    Are there any examples out there of houses in the $180,000-$350,000 range that are suffering the same fate currently?

    1. Odds are we aren’t seeing that… yet. at least in areas where there are higher priced homes nearby. It takes a bit of time for the price compression to hammer it’s way down.

      Now, out in BFE/Rust belt/etc, there are place I would think the $300k house is a top 20% home, and could be showing it already. (may be complicated by people feeling higher priced areas and coming there)

      Given time, it’ll be like a pandemic and spread outward from all the current infection spots.

      1. “Now, out in BFE/Rust belt/etc, there are place I would think the $300k house is a top 20% home, and could be showing it already.”

        Sydney, Nebraska comes to mind:

        https://www.omaha.com/money/loss-of-cabela-s-hq-reminds-sidney-of-closing-of/article_602e717c-7013-5c4e-bd7e-b86b0467fa6d.html

        “Fallout from losing the Cabela’s headquarters could rival what happened when the Pentagon phased out the local Sioux Army Depot in 1967. The sprawling munitions storage site employed more than 2,000 civilian workers.

        When the depot closed, Sidney’s population plummeted 20 percent by the end of the decade. Two hundred houses sat vacant. “Here we go again,” Arterburn said.”

        The nicer (and thus more expensive) houses, like the one in the photo, are going to take a major haircut. What else is there in Sydney besides motels and fast food places? The Cabela’s store itself won’t close, but those are mostly lower paying jobs.

        I suppose that retirees with a solid retirement income could handle it, but you’d have to be into wide open spaces, cold and windy winters and be willing to drive about 100 miles to Cheyenne to see a doctor.

        1. And that’s the problem with taking the mythical good job out in the sticks. They do exist on occasion. But when you lose them it’s so much worse than losing a job in the big city…not only do you have to move or become instantly poor, you may not get much for your house, either. This is the other big reason it’s hard to get techies to leave the bay area (the first being they’re tool cool to live anywhere else).

          1. And that’s the problem with taking the mythical good job out in the sticks.

            Let me cite a couple examples from the game industry.

            Cheyenne Mountain Entertainment, Mesa, AZ. Formed in 2005 with the license to Stargate Worlds (Stargate SG-1 and Stargate Atlantis) to make a MMORPG to take on World of Warcraft. They recruited a lot of top talent to come to a state with no other significant industry presence.

            5 years later… everyone was asking “what happened?” Lots of people bought houses there, sent their kids to school, etc.. and were SOL to find any comparable work.

            And then there was 38 Studios, formed by Curt Schilling in 2006, an located in Rhode Island to take advantage of state backed loans. In 2012, they were bankrupt and the state officials were rewriting history to say ‘they were conned’ (no they weren’t, but that’s another story). Lotsa of skilled folks, again SOL, and having to relocate out of state to try and stay solvent.

          3. @OneAgainstMany – thanks for the link, it was interesting.

            I know I’ve mentioned it before, but the clustering of jobs in King County was one of the larger contributing factors in choosing to purchase where we did. Since moving to the area 11 years ago, I’ve had 7 different ‘jobs’* and Mrs Spiffy has had 4 (with one being a consulting gig that had her on-site at locations from Redmond to SoDo to Kent). Being in the center of all that helped mitigate the pain of changing work locations.

            We both get pinged almost daily by head hunters/recruiters almost daily. Prior to committing to the long haul here, we’d automatically rule out even considering anything in a smaller metro area. That left mostly California, and neither the greater LA area nor the Bay area could write a check big enough to counter the relative downsides compared to where we were already. I turned down a lead position at Blizzard on Starcraft for that reason, and most people in the industry would/do think I was nuts for doing that. Austin might have been in the running, but it’s gotten a lot less enjoyable and affordable than it once was (I first started going there in the mid-80s)

          5. I think this is a pretty good explanation of why big cities thrive in our knowledge-worker economy:

            I think that Krugman underestimates the importance of agriculture. He talks like it wouldn’t matter if it all went away.

          6. Still freaks me out just reading it :-).

            Now why is that? 😉

            I knew many of the original team and they knew me. You could say I was directly responsible for the publicly documented ‘Oh Frak’ moment they had during original development.

          7. Now why is that?

            Because as stupid as it sounds that game (starting from the original in the 90s) had a huge affect on my whole family. Even contributed to one divorce in the extended family. My dad is a medically retired truck driver (mild stroke in his 50s, can still drive but no CDL) who hated computers. That game got him totally into computers. A brother in law is super high rated diamond league depending on how much he practices. He used to always practice with his brother…the guy who ended up divorced. So anyway, I think of all those things when you say that :-).

          8. Carl,
            Wow. I better not mention the games I have worked on then 🙂 (though you can probably guess). It sounds like it’s not all bad, but some excess none the less.

          9. I meant it all in a good way. If you ever want to connect IRL and I can introduce you to the diamond league BIL who is also a coder and hw engineer let me know :-).

        2. “Fallout from losing the Cabela’s headquarters could rival what happened when the Pentagon phased out the local Sioux Army Depot in 1967. The sprawling munitions storage site employed more than 2,000 civilian workers.

          I was living in DFW back in ’94 when Carswell Air Force Base was shut down. Within a couple years, despite the prosperity of the dot-com era, the west side of Ft Worth was devastated economically, and local real estate especially looked like it had been hit with a neutron bomb.

          1. A related story …

            “I was looking through my dad’s coin and currency collection with my mom. He had saved several $2 bills (consecutive years) from the mid 1950’s.

            “My mom said it was from his military pay. The local town was bitching about the airmen in their midst. To make a point, the base started paying the men in $2 bills. Within days that whole town was covered up in two dollar bills. Every merchant had them in their cash register. Very obvious, because cash drawers don’t have a slot for $2 bills. They must have done it for several years because dad had save a bill from each year. It was a reminder of what they base did for the local economy.”

            Is this story about the military paying in $2 bills true? – Straight Dope Message Board
            https://boards.straightdope.com/sdmb/showthread.php?t=728337

          2. Mr. banker, what matter$ such a $mall dollar$ denomination of $2 bill$? … Eye
            heard your holy.grail was “$ …_…_…_…_.. line$” (& $signatories youthful daughters) ?

            Are you lo$ing yer focu$?

  16. Damned Lilliputians!

    The Financial Times
    Brexit
    Boris Johnson loses bid to call snap election — latest news
    MPs have voted to stop no-deal Brexit in further blow to prime minister
    22 minutes ago
    …

    1. Brexit off? Better back up the truck to load up on stoxx!

      Opinion The FT View
      A humbled Boris Johnson has lost control of Brexit
      Government’s bullying tactics pushed MPs to reassert parliamentary sovereignty
      The editorial board
      Britain’s Prime Minister Boris Johnson leaves 10 Downing Street in central London on September 4, 2019, to take part in his first Prime Minister’s Questions (PMQs) at the House of Commons. – British Prime Minister Boris Johnson braced for another showdown in parliament on Wednesday after a humiliating defeat over his Brexit strategy, with MPs set to vote on a law aimed at blocking a no-deal departure. Johnson has said he will seek an early general election if MPs vote against him again, intensifying a dramatic political crisis ahead of his October 31 Brexit deadline.
      (Photo by DANIEL LEAL-OLIVAS / AFP)DANIEL LEAL-OLIVAS/AFP/Getty Images
      Like his predecessor Theresa May, Boris Johnson hemmed himself in with his own red lines
      © AFP
      The editorial board 4 hours ago

      Rarely has a UK prime minister’s strategy imploded so rapidly, and so spectacularly. In two days, Boris Johnson has become the first premier since the Earl of Rosebery in 1894 to lose his first parliament vote, and seen MPs back a bill to force him to take a course he has categorically ruled out. He has collapsed his own working majority from one to minus 43 — by backing himself into a position where he was forced to sack 21 rebels, including two former Conservative chancellors and the grandson of his political hero, Winston Churchill. He has led his party to the brink of a historic split. His plan to strike back with a snap election is hostage to his opponents’ agreement.

      The so-called Rebel Alliance of MPs who took control of parliament’s agenda and supported a law mandating Mr Johnson to seek an extension to Brexit beyond October 31 deserve high praise. The Conservatives among them put national interest ahead of their careers and loyalty to a party some had served for decades. Most important, MPs asserted parliamentary sovereignty and cut down to size a prime minister who, by suspending the House for five weeks, had sought to bypass it.

      They were impelled to act by a catalogue of prime ministerial mis-steps. Like his predecessor Theresa May, Mr Johnson hemmed himself in with his own red lines. History did indeed repeat itself — not as tragedy but as farce. He adopted his “do or die” pledge to leave the EU at Halloween with or without a deal. Then, by insisting the backstop designed to prevent a hard border in Ireland must be scrapped, he set the bar for renegotiations with Brussels so high that it cast doubt on his sincerity in wanting a deal. He has since brought no workable new proposals.
      …

      1. Boris Johnson has lost control of Brexit

        I keep watching this to see if the situation is different enough that the British people can get their way when the Greeks couldn’t. I knew they were up against the same people and the same tricks. If they fail you’ll know that TPTB in Europe are unstoppable without violence.

          1. “The Brits are not people…they’re $ubjects.”

            B.i.n.g.o!

            Wait, the Irish, the Scots, & The Welsh would like to pipe inn on that $entiment!

            (& The Australian ‘s, The Kiwi’s, Chinese, Canadians, Indians, etc., etc., etc., …)

            Where’$ the jewel$?

  17. PB Alert: If you’re at work, you might want to head home early. A storm is rolling in with lots of cool lightning and thunder!

    1. Thanks for the warning. I’m on the other side of the world, but have a couple of kids back in SD who are hopefully out of harm’s way.

    2. Mr. Banker, is most intere$ted in “trapped” home appreciation monie$ & the young daughters associated with it.

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