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The Narrative Is That Prices Are Down And Inventory Is Up

A report from the Denver Post in Colorado. “Autumn’s chill has come early again to metro Denver’s housing market, with the pace of sales in September down sharply from August and median prices gliding gently lower. Jill Schafer, chair of the DMAR Market Trends Committee said the market last month was the most competitive that sellers have seen in a September since 2013. ‘There have been changes, but we have not shifted to a buyer’s market. Let me repeat that. We have not shifted to a buyer’s market,’ Schafer said in an opinion included with the report.”

“What are some of the changes? Home are taking longer to sell, price reductions have become more common, and sellers are having to make more concessions.”

The New York Post. ” The median sale price of a Manhattan home dipped below $1 million during the past three months, according to a market analysis. Appraiser Jonathan Miller, who prepared a quarterly market analysis for Douglas Elliman Real Estate, said his data showed the median sales price for a Manhattan townhouse fell a staggering 45.8%, to $3.5 million.”

“In addition, just 36 deals closed, down 33.3% from last year’s third quarter, Miller said. ‘The narrative is that prices are down and inventory is up,’ he said.”

“Leading broker Dolly Lenz said: ‘Everyone who planned on buying already bought. But people who are freaking out about the mansion tax should calm down. It will be baked into costs in a few months,’ she added.”

The Midland Reporter Telegram in Texas. “The number of homes on the market inside Midland County at the end of August rose to 618, according to the Texas A&M Real Estate Center. Kerry Payne, associated broker with Victoria Printz Realtors, said there is double the inventory inside the city of Midland and the Greenwood area compared to the beginning of the year.”

“There have been nearly 300 extra homes listed year over year from January through September — 2,956 this year compared to 2,665 last year, she said. More homes translates to a decrease in price, fewer multiple offer situations and a longer number of days that a home stays on the market, Payne said.”

From KGW 8 on Oregon. “The U.S. housing market rebounded in August with a surge in existing home sales and building permits to add new inventory. Too bad the acceleration stopped just short of America’s wealthiest neighborhoods. That includes Oregon’s uppermost-crust locale, which appears in the state-by-state slideshow here .”

“The August resurgence largely bypassed the market’s upper ranks — some 409 neighborhoods where median home values range above $1 million. In those locations, two out of every three neighborhoods absorbed a value decline from the year-ago period, and among the nation’s 100 most expensive markets, 72 saw value declines over the same span, according to Zillow.”

“Zillow housing economist Matthew Speakman called the high-end hiatus a ‘temporary pause’ brought on by a ‘self-reinforcing cycle’ of buyers outbidding one another and driving up prices in exclusive neighborhoods. He said such trends eventually lose momentum as the pool of wealthy buyers who are desperate enough to engage in such tactics dwindles.”

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This Post Has 57 Comments

  1. ‘Appraiser Jonathan Miller…said his data showed the median sales price for a Manhattan townhouse fell a staggering 45.8%’

    Are we there yet?

    1. Almost…just 4.2% away from 50% off sale time. And it may take awhile for eee-bola to spread westward from Manhattan to California.

  2. ‘There have been changes, but we have not shifted to a buyer’s market. Let me repeat that. We have not shifted to a buyer’s market’

    Stamp yer little feet Jill.

    2. Jill Schafer says

      “…Home[s] are taking longer to sell, price reductions have become more common, and sellers are having to make more concessions.”

      Scratchin’ my head trying to figure out what Jill Schafer thinks a buyers market actually is.

      Maybe Jill thinks a buyers market is when a clown hands out balloons on the front lawn of an open house?

      1. It’s a buyers’ market when they have to put a Wacky Waving Inflatable Tube Man on the front lawn. A carefully crafted love letter from the seller to buyer is also recommended.

      2. Open houses 7 days a week, price reductions, longer DOM, is all a give away it’s a buyers market but Jill repeated that’s it’s not a buyers market so we must concede to her wisdom of what is or what’s not. All hail the garbage can fire queen Jill!

    3. Jill Schafer – How about explaining this one away?

      https://www.marketwatch.com/story/this-widening-crack-in-the-mortgage-market-could-sink-us-home-prices-2019-10-03

      Opinion: This widening crack in the mortgage market could sink U.S. home prices

      By Keith Jurow
      Published: Oct 3, 2019 5:20 a.m. ET

      More than 3 million loans guaranteed by the Federal Housing Administration (FHA) that were in Ginnie Mae pools had been modified between 2008 and 2013. A 2014 report found that they had performed badly. Roughly 57% of these modified loans had re-defaulted by 2013.

      1. “Roughly 57% of these modified loans had re-defaulted by 2013.”

        Nobody could have seen it coming!

      2. “More than 3 million loans guaranteed by the Federal Housing Administration (FHA) that were in Ginnie Mae pools had been modified between 2008 and 2013. A 2014 report found that they had performed badly.”

        – I’m so old I remember when the Resolution Trust Corporation (RTC) actually disposed of zombie S&Ls, foreclosed houses, etc. They might get 10 cents on the dollar, but the dead wood was cleared out, which allowed a fresh start without the distressed assets hanging over the economy like an albatross around someone’s neck.

        – albatross (a)round (one’s) neck –
        A heavy burden that prevents one from achieving success. The phrase refers to Samuel Taylor Coleridge’s poem The Rime of the Ancient Mariner, in which the narrator kills an albatross—a large white bird deemed an omen of good fortune. This act is thought to curse his ship, so he must then wear the albatross around his neck.

        – Now we just keep ’em on the books, ’cause no more “mark-to-market” accounting, but rather “mark-to-myth”. This has spread to zombie companies as well; kept alive by ultra-low interest rates and friends in high places.

        – I wonder how many zombie houses there are still out there? Not living, not dead, just the walking dead.

        – We don’t “resolve” anything anymore, just “kick the can” down the road until the next political hack takes over and does the same.

        – A nation of zombies. Hellova way to run an economy, if you ask me.

  3. ‘some 409 neighborhoods where median home values range above $1 million. In those locations, two out of every three neighborhoods absorbed a value decline from the year-ago period, and among the nation’s 100 most expensive markets, 72 saw value declines over the same span’

    Eeee-bola!

  5. Zillow housing economist Matthew Speakman called the high-end hiatus a ‘temporary pause

    Then It must be a great time for Zillow to increase its portfolio of luxury properties Matthew. Time to go all in!

    1. ‘temporary pause’

      Well we’ve heard that before – a thousand times. Does this sound like an impartial dispenser of statistics? Or Jill’s “Now Hear This” horse-hockey? Cuz if they aren’t impartial, what are they? The numbers are subject to statistical deception. But they never point that out until prices fall. (Like with the mix!) But the fact is the median is a lagging statistic. If it’s showing down prices have been falling for months or years.

      This is one reason anecdotal reports are valuable. And now that statistics about price cuts have made it into the REIC world, it’s harder to hide what’s really happening.

      1. Don’t know. But that Open Door house on my block is still sitting there forlornly after the first offer fell through. It’s been several months now.

  6. ‘There have been changes, but we have not shifted to a buyer’s market. Let me repeat that. We have not shifted to a buyer’s market,’ Schafer said in an opinion included with the report.” It’s as if a Buyer’s Market is a bad thing. Such prejudice amongst the Realtor group. All these decades of touting “buyer’s agency” and lip service to representing the interests of their client when they acting as a buyer’s rep. Disheartening. It is like they are only in it for the money.

    1. Real estate agents are often compared to car salesmen, but do any car buyers ever bring an agent with them to the dealership? It’s understood that car salesmen only represent the seller, while the buyer is on his own. A buyer’s agent in real estate has every incentive to deceive his client and collude with the seller. In that sense car sales is the more honest and transparent business.

  7. I’ve been renting in Denver for almost 10 years, and will not be buying a used house in Denver anytime soon.

    I want to buy land in the mountains and build a cabin, while keeping my apartment as a primary residence.

    None of this will involve paying interest to banks or commissions to REALTOR.

    1. “I want to buy land in the mountains and build a cabin, while keeping my apartment as a primary residence.”

      “None of this will involve paying interest to banks or commissions to REALTOR.”

      That is a great plan.

      I know a dude here in SE Region IV who pulled that plan off.

      Well sorta.

      He bought a boom time Bubble House in Port St. Lucie for $400K + in 2005, stopped paying the mortgage (like everybody) when his Neg – Am loan adjusted to a 30 year fixed he stopped paying and bought a lot, lived in the PSL McMansion for years rent and mortgage free while taking that money and building his house with the cash.

      By the time they foreclosed and kicked him out he had built his new house and had no mortgage.

  8. Thanks for the time & effort in Miami Ben…That was a very enlightening video…My initial take is the developers & development investors are just as corrupt as the dirty money that bought the finished units…

    “What are some of the changes? Home are taking longer to sell, price reductions have become more common, and sellers are having to make more concessions.” ??

    Well, this just happened this morning…A 30% & 40% price reduction…I think they missed the mark expecting the IPO market to give them what ever they thought they could squeeze out of the market…

    https://www.zillow.com/homedetails/445-Manzanita-Way-Woodside-CA-94062/15597264_zpid/

    https://www.zillow.com/homedetails/87-Patricia-Dr-Atherton-CA-94027/15577985_zpid/

  9. Another day, another nail in the expansion’s coffin…

    The Financial Times
    US retail
    US shopping mall vacancies hit 8-year high
    Bankruptcies and lower footfall pose serious challenges for retailers
    – Global fast-fashion retailer Forever 21 said it was filing for voluntary bankruptcy Sunday, the latest US brick-and-mortar chain to embark on restructuring as shoppers migrate online.
    (Photo by Frederic J. BROWN / AFP)FREDERIC J. BROWN/AFP/Getty Images
    Mall landlords are bracing for a wave of store closures following the bankruptcy of Forever 21 © AFP
    Alistair Gray in New York
    14 hours ago

    Vacancies in US shopping malls have hit an eight-year high but new data show that some areas are coping with the retail upheaval far better than others and the gap is widening.

    The proportion of units lying empty in some cities, including Indianapolis and Birmingham, Alabama, is about four times higher than the economic hotspot of San Francisco, according to new data from Reis, part of Moody’s Analytics.

    The signs of difficulty in local retail property markets come as landlords brace for a wave of store closures following the bankruptcy of Forever 21 this week. The fast-fashion retailer, which has 32,800 employees globally, has earmarked 178 locations for closure across the US.
    …

    1. “…Bankruptcies and lower footfall pose serious challenges…”

      Another issue I don’t see discussed in MSM (probably to as to not offend major advertisers) is that the American psyche is changing with respect to personal safety in shopping malls.

      Once the American public decides someone or something is no longer “cool”, its over baby.

    2. The mall phenomenon is a puzzle. They just keep building them regardless of how many retail stores close. I wish I understood the dynamics of it better. There must be an interesting story behind it. Is it people speculating in CRE because they don’t know what else to do with idle money?

      1. “Is it people speculating in CRE because they don’t know what else to do with idle money?”

        Public pension funds are where the wolves wearing suits and ties turn to when the easy money dries-up.

  10. American psyche is changing with respect to personal safety in shopping malls ??

    I agree…I don’t think security at the malls are prepared for this…

    1. Ha! Me too.

      Seems like you avoid most of the trouble makers and idiots that way.

      No crowds.

      Plus, most shelves are restocked at night.

    2. “I only shop at Walmart between 6-6:30am.”

      Amen! If I urgently need something later in the day, I go to the supermarket or some other store, not Walmart.

  12. ‘There have been changes, but we have not shifted to a buyer’s market. Let me repeat that. We have not shifted to a buyer’s market,’ Schafer said in an opinion included with the report.”

    And let me repeat this: realtors are liars.

  13. “Zillow housing economist Matthew Speakman called the high-end hiatus a ‘temporary pause’ brought on by a ‘self-reinforcing cycle’ of buyers outbidding one another and driving up prices in exclusive neighborhoods.

    I’ll agree it’s a temporary pause, Matt. Kind of like when the rocket reaches apogee after the sustainer fuel burns out. And what comes next? Terminal velocity straight into a smoking crater as a little something called gravity kicks in.

    Better start updating your resume, Matt. And pick up some books on coding while you’re at it.

  15. The Financial Times
    Global Economy
    Fears for global economy over trade tensions and dismal data
    Traders’ worries stoke government bond rally as market jitters persist
    Trade’s share of global output has fallen, the research showed
    There are growing signs that the manufacturing slowdown is spreading into other parts of the global economy © AP
    Robin Wigglesworth in Oslo and Colby Smith in New York 5 hours ago

    Fears over the health of the global economy deepened on Thursday with the publication of a raft of dismal data, pouring fuel on the government bond rally and spurring traders to ratchet up bets on further interest rate cuts by the US Federal Reserve.
    …
    Rising concerns over a potential global recession in the coming year — and the prospect of more monetary stimulus as a result — have sent many investors scrambling for the relative safety of highly rated government debt.

    Stock markets around the world dipped after the publication of the data, with the S&P 500 index falling by more than 1 per cent before paring back its losses and turning positive for the day. The moves came a day after a sharp selloff; the FTSE All-World index has shed just over 2 per cent of its value over the course of this week.

    Yields on safer government bonds have fallen back to near record lows. The 10-year Treasury yield dipped 6.5 basis points to trade at 1.53 per cent on Thursday, back to near a record low, while the comparable benchmark bond yields of the UK and Germany fell to 0.47 per cent and minus 0.59 per cent respectively.
    …

    1. I was just thinking that I haven’t heard anything about AOC recently. I see she’s back with a bang!

      1. “I was just thinking that I haven’t heard anything about AOC recently.”

        She had her 15-minutes.

  18. A recession is coming? Nobody told housing stocks
    By Chris Matthews
    Published: Oct 3, 2019 1:50 p.m. ET
    Housing market indicators point to smooth sailing
    Bloomberg News/Landov

    The last U.S. recession in 2008 was triggered by imbalances in the U.S. housing sector, but if there is another downturn in the near future, it may happen in spite of the market for residential real estate.

    Equity investors have been spooked by a series of bearish reports on the U.S. economy in October, including surveys from the Institute for Supply Management that show the American manufacturing sector contracting and the services sector slowing significantly, helping send Dow Jones Industrial Average (DJIA, +0.47%) down 2.9%, the S&P 500 index (SPX, +0.80%) 2.4% and the Nasdaq 1.8% (COMP, +1.12%) month-to-date.

    But data on the housing market has been trending in the opposite direction, with new home construction rising to the fastest pace since 2007 in August, and pending home sales trending up as interest rates fall, improving affordability.

    “Unlike some of the previous manufacturing slowdowns we’ve seen during recessions, U.S. housing is doing quite well,” wrote Keith Lerner, chief market strategist at SunTrust Advisory Services, in a Wednesday note to clients. “In fact, the NAHB Home Builders Index has climbed to the highest level of the year. Similarly, housing starts recently rose to a cycle high. This is important as this indicator has peaked almost two years ahead of recessions, on average.”
    …

    1. “Now, Fannie Mae, Freddie Mac and the Federal Housing Administration guarantee almost $7 trillion in mortgage-related debt, 33 percent more than before the housing crisis, according to company and government data.”

      Plunder the country!

      1. I thought Wall Street liked unemployment among the people who don’t own stocks in order to keep labor prices down?

  21. This is going to add a new wrinkled: Polish FBs who borrowed Swiss francs for their mortgages were getting schlonged as the franc soared against the Polish zloty – but now a court has decided they can pay their mortgages with cheaper zlotys, forcing the Swiss banks that made the loans to eat the difference. Turkish borrowers whose euro-denominated loans funded a speculative building spree, and whose loans have gotten more costly as real estate tanked and the Turkish lira sank against the euro, can now go the same route and stick it to the Eurozone banks.

    Oh my. This is starting to get interesting.

    https://www.bbc.com/news/world-europe-49918910

    1. This news should send negative yields on highly rated Eurozone sovereign bonds down a few more basis points.

      1. Negative yields find their way into U.S. investor portfolios
        Some bond index funds have no choice but to maintain large weightings in bonds with negative yields
        Sep 30, 2019
        By Jeff Benjamin

        A migration toward a globally diversified bond allocation could be exposing fixed-income investors to the world’s unprecedented $15 trillion worth of negative-yielding government debt.

        Last week, the $23 billion Vanguard Total International Bond ETF (BNDX) led all exchange-traded funds with $2.3 billion in net inflows, perhaps in response to the current geopolitical environment or just regular quarter-end rebalancing.

        What investors and financial advisers might not fully appreciate is that the ETF tracks an international bond index that is heavily weighted in government bonds offering negative yields, which means investors are paying for the privilege of owning the security.

        According to Vanguard, as of June 30, the fund’s top three country allocations — Japan, France and Germany — combined to make up 40.7% of the fund. The yields on the government bonds issued by all three of those countries are negative.

        BNDX, which has a year-to-date total return of 9.35%, has a 30-day SEC yield of just 37 basis points, reflecting the drag created by negative-yielding bonds.

        “The income component that investors tend to look for with international bond strategies is not being offered in the current environment,” said Todd Rosenbluth, director of mutual fund and ETF research at CFRA.
        …

  22. Watch out, AlbuquerqueDan, the Californians are coming!

    This 57-year-old said ‘screw this’ to San Francisco — and retired to ‘delightful’ Albuquerque, where she slashed her expenses by 70%
    By Catey Hill
    Published: Oct 4, 2019 10:33 a.m. ET
    The pros and cons of retiring to the setting of ‘Breaking Bad’
    Peter Bedford
    Roberta Reinstein at her home in Albuquerque

    When Roberta Reinstein moved to the Bay Area roughly 30 years ago to go to law school, it felt to her like a different place than it does now.

    “It was possible for a student to live there…it was filled with artists,” she says. But Reinstein, 57, watched as real-estate prices skyrocketed (in just the past decade or so, home values have nearly doubled, according to Zillow) and many artists and less wealthy people had to move out. Nowadays, “San Francisco is only for the wealthy — the super wealthy — unless you’re willing to live with five roommates,” she jokes.

    As she was watching San Francisco become a hub for the rich, she had a financial setback of her own: a divorce, in which she and her spouse had to split up their assets. And the divorce necessitated she move out of the family home, so she was spending $4,000 a month on a tiny pad to share with her daughter, Eva, she says.

    “When Eva was in high school I started to think, do I really need to be here? There are lots of other places I can go.” And the more she thought about it, the more she realized: “Screw this, I gotta get out of here,” Reinstein says with a laugh. “I was ready for a break from the high cost, crowds and Google-fueled insanity of the Bay Area.”
    …

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