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Everybody Is Concerned About Saying This Time Is Different

A report from WTOP on Virginia. “The number of homes sold in Northern Virginia in September was down almost 12 percent from a year earlier, according to the Northern Virginia Association of Realtors. ‘If a home is not in tip-top shape, it is sitting,’ said Gary Lange with Weichert Realty in Vienna. ‘Sellers are trying to get top spring market prices and that just isn’t going to happen in fall and winter months.'”

“Lange said he’s seen instances of buyers keeping a home on their radar, and then pounce on it with other potential buyers when the seller decides to lower the price. A price reduction often triggers multiple offers and can actually benefit the seller in the end.”

From the Wall Street Journal. “The U.S. housing market is running out of steam, but its slowdown looks nothing like the historic collapse that took down the whole economy in 2007. The good news is compared to a decade ago the housing market doesn’t have far to fall.”

“As frenzied as the market has felt in recent years, with bidding wars and double-digit price increases, it never came close to the level of the last boom by most measures. That positions it for a much gentler slowdown, economists say.”

“‘Everybody, including me, is concerned about saying this time is different,’ said Fannie Mae Chief Economist Doug Duncan.”

“Unlike the last downturn, average home prices don’t usually fall nationally, even during recessions. The next slowdown is likely to mark a return to that historical pattern.”

The Denver Post in Colorado. “Signs that the housing markets along the northern Front Range are cooling may leave some buyers fearful of buying at the top and getting stuck with price declines.”

“Location Inc. offers some advice for the next five years based on its Scout Vision computer model: Stay away from Boulder, expect to take a hit on prices of around 10 percent in Fort Collins and metro Denver, and if appreciation matters, buy in Greeley.”

“We still predict that the market will go down, more in some markets than in others,’ said Andrew Schiller, CEO of the Connecticut-based analytics firm.”

“The model looks at dozens of variables, but one of the most important is affordability –- to what degree can incomes support home values. Along the Front Range, homes prices have never been more misaligned with incomes, Schiller said.”

“So far, migration has delayed the day of reckoning, Schiller said. People have moved here from more expensive markets, helping push up prices. But that will taper off, especially as the economy contracts.”

“‘You need enough earned income in a market to support the costs of houses,’ Schiller said. ‘You can’t always support it from people carrying a black bag of money from other places.'”

From the Oklahoman. “The Oklahoma City Metro Association of Realtors and other Realtor groups across the country sent this out this week: ‘Some economy observers are pointing to 2018 as the final period in a long string of sentences touting several happy years of buyer demand and sales excitement for the housing industry. Although residential real estate should continue along a mostly positive line for the rest of the year, rising prices and interest rates coupled with salary stagnation and a generational trend toward home purchase delay or even disinterest could create an environment of declining sales.'”

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This Post Has 25 Comments

  1. ‘Unlike the last downturn, average home prices don’t usually fall nationally, even during recessions. The next slowdown is likely to mark a return to that historical pattern’

    Prices are sinking like a turd in a well, all across this country and the globe. I asked the other day, if it’s fundamentals supporting these markets, what’s the chance of fundamentals falling apart in almost every market at the exact same time?

      1. Hey PB,
        Signed a lease in La Jolla UTC. Very happy to be making San Diego my home soon.

        Also happy to be spending <12% of our base salary income on rent.

        Will be piling up savings instead of hoping for equity.

    2. ISTM that the lower end (generally the under $300K) market is being supported by fundamentals, while it’s luxury dropping like a rock. Not sure how prices trend with recessions because recessions are so tied up with interest rates, which affects house prices.

  2. ‘The Oklahoma City Metro Association of Realtors and other Realtor groups across the country sent this out this week: ‘Some economy observers are pointing to 2018 as the final period in a long string of sentences touting several happy years of buyer demand and sales excitement for the housing industry’

    These people really do know how to pile it up high.

  4. ‘As frenzied as the market has felt in recent years, with bidding wars and double-digit price increases’

    Note that this occurred for years. Remember the rules of percentages compounding from grade school? There should never be a “frenzy” for shacks.

    ‘it never came close to the level of the last boom by most measures. That positions it for a much gentler slowdown, economists say’

    That’s subjective stuff pulled out of ones a$$.

    ‘Everybody, including me, is concerned about saying this time is different’

    Come on Doug, grow a pair. I’m not concerned one bit. This was your big chance Doug, trillions of Yellen bucks at stake, interview in the WSJ, on housing no less! And you milk toasted the heck out of it.

  6. “‘You need enough earned income in a market to support the costs of houses,’ Schiller said. ‘You can’t always support it from people carrying a black bag of money from other places.’”

    This is an important point. I wonder how many people will sell and move back “home” when the market they left comes back to earth. They may be willing to take a $40k loss in Podunk on their new house if they one they really want back home is $100k cheaper.

    1. It’s gonna take more than a minor $40k-$100k price decline to get back to long term historical trend. Alot more.

  8. No, There’s Not An Apartment Glut In Denver. There’s A Renter Shortage
    Colorado Public Radio-3 hours ago
    People stop filling units immediately. Vacancy spikes and rents fall. This could be a disaster scenario especially now, since Denver developers are building tens …

    Jeebus…

  10. “Lange said he’s seen instances of buyers keeping a home on their radar, and then pounce on it with other potential buyers when the seller decides to lower the price. A price reduction often triggers multiple offers and can actually benefit the seller in the end.”

    Why not, as a buyer, just put in a low offer and see what happens? Why wait for a small $5k-type reduction? If your Realtor balks at that, get a new Realtor!

    1. HAHAHAHA …. but that would screw the recently buyers as it set lower comps. But I guess they dont care as long as they still get the commission checks

  11. ‘Poop map’ creator has a message: Stop crapping on San Francisco’

    ‘Wong transposed years worth of 311 reports of human filth onto an interactive map of San Francisco. Interactive maps and lighthearted commentary about human filth on the streets of San Francisco were, in 2014, considered novel. Even humorous.’

    ‘That was avant le déluge. In 2018, nobody is laughing. Least of all Wong. Lurid descriptions and/or photos of this city’s grimy streets, especially in put-upon areas like SoMa, the Tenderloin, and the Mission, have become de rigueur in both reputable and disreputable publications; Human Misery Safari is now a genre of San Francisco story.’

  12. “‘You need enough earned income in a market to support the costs of houses,’ Schiller said. ‘You can’t always support it from people carrying a black bag of money from other places.’”

    Equity locusts and specuvestors have distorted the markets in podunkville as bad or worse than the big cities. We now have a situation where prices are up to 10x median incomes in rural Oregon, Washington, Idaho, NV, etc.

    The decision by the PTB to bail out the banks and blow another massive credit bubble was beyond foolish, it was reckless and sadistic.

  13. The good news is compared to a decade ago the housing market doesn’t have far to fall.

    I always enjoy a nice laugh on a Monday morning.

  14. The WSJ article saying this downturn is not going to be like the last one is based on the assumption that home builders didn’t overbuild.

    So if that assumption is wrong and home builders did over build, does that mean it will be worse?

    1. They are also ignoring the penetration of financial and foreign investors in a market traditionally driven by owner-occupants. We won’t know how much this development drove up prices, or its reversal will drive them down, until the short-term speculators are all trying to cash out ahead of a downturn.

  15. “‘Everybody, including me, is concerned about saying this time is different,’ said Fannie Mae Chief Economist Doug Duncan.”

    I, for one, am unconcerned. 🙂

    “The four most dangerous words in investing are: ‘this time it’s different.'” – Sir John Templeton

    I’ll go as far as this, but no farther. 🙂

    “History doesn’t repeat itself, but it does rhyme.” – Mark Twain

  16. “The good news is compared to a decade ago the housing market doesn’t have far to fall.”

    How about to 2009 levels? Not that far? He must be living in a weed legal state and in more than just one way.

    This is the same rhetoric I used to hear back around 2005 to 2006. History can indeed repeat itself. Strange that about a month ago you just heard realtor sideways talk when it came to changing market. How quickly the tone of the talk has changed. Now it is an acknowledgement but with a disclaimer like the quote above. Does this seem to be progressing rapidly? How about in a month from now? Popcorn please.

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