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So Long As You’re Not The Last One Without A Seat When The Music Stops, You’ll Make Out OK

A report from Real Estate Weekly on New York. “The challenging market in Brooklyn has continued along a trend of gradual declines in prices and sales. Prices have fallen since this time last year across all unit types excluding co-ops, according to a report by Douglas Elliman. ‘Brooklyn has for 5-6 years been a success story, a global brand, but it still responds to supply and demand,’ said Jonathan Miller, real estate appraiser and CEO of Miller Samuel. ‘Buyers are plentiful, but they’re wary. It’s on sellers to come down to market conditions.'”

“Overall the rental market is robust and Citi Habitats President Gary Malin suspects it will stay that way as long as would-be buyers remain on the fence about their next moves. ‘People are feeling that now is not the best time to jump in and they want to time it perfectly,’ said Malin. But, he added, ‘That doesn’t really happen. You never really know when the market is about to bottom out and you may find that you missed out on a great opportunity because you waited too long.'”

From Bisnow. “Last year, there were a few rays of sunshine for New York City’s challenged hotel market. ‘We got in the second half of last year, and all of a sudden there was a little bit more optimism in the market,’ Newmark Knight Frank co-Head of Lodging Adam Etra said. ‘We came into the first quarter of this year and it was really ugly. The prevailing theme from late last year, early this year to today is people called the bottom way too early.'”

“The development pipeline remains bloated, and there is shadow inventory in the form of Airbnb and other home-sharing services. As a result, next year should continue to be soft from an operating perspective, sources said.”

The Real Deal on Florida. “The Miami luxury condo market remains in a rut due in part to sellers overpricing properties, according to top residential real estate brokers. ‘If you look at the market today, even though there has been an increase in prices, there is also an increase in days on the market,’ said Oren Alexander, co-founder of Douglas Elliman’s The Alexander Team. ‘That has a lot to do with bad prices. We have to make sure sellers really understand where pricing is.'”

“Phil Gutman, president of Brown Harris Stevens Miami said whenever he sees a media headline about a luxury condo selling for a 30 percent discount, he thinks, ‘It shouldn’t have been listed at that [high] price in the first place…you wonder what were they thinking? What were they smoking?'”

From ABC 7 News in California. “One of the most expensive homes in Silicon Valley just went through a massive price cut at now 55-percent less than it’s original $88-million asking price. Tucked privately away on eight-acres 27500 La Liva Real in Los Altos Hills is a 21,000 square foot estate that could easily be mistaken for a resort.”

“When the property first hit the market in 2015, the owner, the founder of a tech company, listed it at $88-million. Today the price is reduced 55-percent to just under $40-million. CEO of Deleon Realty, Michael Repka says while there is still a pool of buyers from the Bay Area many in the five-to-10 million dollar range are choosing to retire out of state.”

“‘The market has definitely softened up and with the tax changes in the state and local tax deductions has had quite an impact on Silicon Valley,’ Repka said.”

The Los Angeles Times in California. “Is another record in the cards for Casa Encantada? The Bel-Air home of financier Gary Winnick — a 40,000-square-foot 1930s-era trophy perched above the Bel-Air Country Club — has twice set the record for highest price of a residential real estate sale in the U.S. Now, the storied estate is listing for sale at $225 million, making it the most expensive home publicly listed in the United States.”

“But the estate, graced with ionic columns and formal gardens, arrives on the market in the midst of a downturn. After years of record trading, the high end has cooled this year. Single-family home sales on the Westside of Los Angeles are down about 16% year over year, while sales of $10 million and $20 million or more are down about 20% and 25%, respectively.”

“Overall, residential and multifamily sales across L.A. County have experienced an even greater dip. As of September, there were 968 transactions of $5 million or more this year, down from 1,204 transactions during the same period last year, a drop of 19.6%, according to Zillow. Sales of $20 million or more have declined by more than two-thirds (109 transactions as of September 2019 versus 352 transactions during the same period in 2018).”

“One of the growing problems on the Westside: a market flooded with contemporary mansions built on speculation, with new ones entering the market each day, and a buyer pool that has remained static. ‘It is not unusual to start seeing a glut of supply in any property type, mansions included, this late in an expansion cycle,’ UCLA real estate professor Paul Habibi said. ‘Oftentimes [developers] have a herd mentality about introducing more inventory into the market.'”

“‘The conventional wisdom is that so long as you’re not the last one without a seat when the music stops, you’ll make out OK,’ he said.”

This Post Has 51 Comments
  1. Economists identify an unseen force holding back affordable housing
    Washington Post
    Andrew Van Dam
    Octobe 17, 2019

    “When the smoke cleared after the Great Recession, the home builders who survived were in a surprisingly strong position. They had fewer competitors and more power in their local markets. They have since built on that advantage, consolidating until many markets are controlled by just a few builders. Their power has exacerbated the country’s affordable-housing crisis, some economists say.”

    “Consumers are shopping for homes in a narrowly defined town, suburb, neighborhood or other market, and the only competitors that matter are those within the same market, Quintero said.”

    “To understand the difference, consider the cardigan sweater. They are easy to ship, and — if we’re being honest — one wool sweater is about as good as the next. Consumers who could not afford something knitted in Virginia could still get an affordable sweater from a supplier in Alaska or Arkansas.”

    “But land is not like sweaters. It is harder to ship across state lines, for one thing. A beautiful shovel-ready plot in Alaska is useless to a federal worker who’s being priced out of the market in Northern Virginia. A wealth of competitors in Anchorage would do little to intimidate a developer in Arlington.”

    1. This article is excellent in my opinion. One of the best I have read in years. The comments in the article are also profound and hit on many of the reasons why affordable housing is not getting built, and is not likely to be built anytime soon with our current political climate.

      1. “NAHB estimates that from 2011 to 2016, regulatory costs rose 30 percent to $84,671 for a typical new U.S. single-family home. That is a high bar for smaller builders to clear.”

        That’s close to $500/month for 30-yrs just for paperwork!

        1. I suspect that these fees are related to subdividing land into individual lots. It’s a great hidden tax, as Joe SixPack has no awareness of it’s existence and therefore won’t oppose it.

      2. “Most of the ordinances and rules under which the county building and zoning departments operate are so convoluted and confusing that they don’t mean anything,” local developer and Washington Post columnist Justin Pierce wrote in April. “The entire system benefits the large developers who pay huge impact fees to the county and strike deals to get a project passed,” he added later.

        Corruption is why we win!
        https://www.youtube.com/watch?v=LuBstLZINco

        1. My experience tells me housing works like an escalator. You get on the first step, your house appreciates in value, you move up. On each step, you count on others to move up themselves, thus creating competition — higher prices — for homes on the market. If you put a chain on the escalator at the bottom and keep people from getting on, you will eventually lose those wanting to move up. When demand drops, so, usually, do prices.

          It’s not just theoretical. In my area there are few “starter homes,” leading to small homes being priced way above what teachers, police, even small business owners can afford. That has led to increasing stagnation in mid-tier housing (e.g., from 20 homes on the market to 50 in a given tier) and a horrid market for premium homes. We break American lower and middle class dreams at our peril.

          1. What is this BS about cops not being able to afford homes? In most metro areas they are well paid, and get overtime as well.

          2. What is this BS about cops not being able to afford homes? In most metro areas they are well paid, and get overtime as well

            Utah police pay is pretty low compared to national stats:

            https://www.abc4.com/news/local-news/utah-police-officer-salaries-below-the-national-average/

            If pay is $53k median price (starting is only $42k), that is not even close to what median house prices are here. There aren’t any decent homes at $100k to $150k in this area.

    2. “Economists identify an unseen force holding back affordable housing”

      Government affordable housing policy that inadvertently inflates housing prices out of reach for the common man?

      1. “Government affordable hou$ing policy”

        To help $olve this i$$ue , “follow.thee.monie$”, as in: “from whence did the monetary fund$ for over.priced $helter.$hacks come forthwith?”

    3. I don’t buy the premise. There is tremendous competition in the form of existing housing. New homes can only get some increment higher than existing homes. I don’t see how having more developers would drive down the cost of housing. You want more affordable housing, reduce the regulatory costs, which I’m guessing are much more than $85,000 a unit in California or make more land available for development.

      1. A lot of the comments in the article suggest that is a major part of the issue. Also mentioned is how taxation of roads and city improvements have largely shifted to new builds overtime.

      2. “You want more affordable housing, reduce the regulatory costs, which I’m guessing are much more than $85,000 a unit in California or make more land available for development.”

        What percentage of that $85k is “brown envelope” activity?

  2. ‘whenever he sees a media headline about a luxury condo selling for a 30 percent discount, he thinks, ‘It shouldn’t have been listed at that [high] price in the first place…you wonder what were they thinking? What were they smoking?’

    Yeah, the idea that it was to the moon Alice! is long gone when the SHTF.

  3. ‘The market has definitely softened up and with the tax changes in the state and local tax deductions has had quite an impact on Silicon Valley’

    Wa happened to the IPO?

  4. ‘That has a lot to do with bad prices. We have to make sure sellers really understand where pricing is.’”

    There are no “bad prices.” There are only greedy sellers who aren’t pricing their property to sell in the current market.

  5. Oh dear…despite ABQ Dan’s assurances to the contrary, China is experiencing a serious economic contraction that even its so-faux official statistics cannot conceal. I suspect Chinese embezzlers and money launderers will still be flowing out of China, but they won’t have the funds to come to the rescue of FBs in Vancouver or San Francisco who overpaid for their shacks.

    https://www.independent.co.uk/news/world/asia/china-economic-growth-asian-stock-markets-global-economy-a9161071.html

    1. Sorry I said five years ago that China was not imminently going to collapse when you under a different name was probably saying it was. When Trump was elected and implemented the policies I said were needed, my opinion on China changed. When the facts change my opinion changes. Not to do that means you are a liberal Democrat.

      1. “When the facts change my opinion changes. Not to do that means you are a liberal Democrat.”

        Eye think yer logic method has affected this fellow Republican aqdan:

        John Kasich Politics Impeachments Ohio Trump impeachment inquiry

        ‘Final straw’: GOP ex-Ohio Gov. Kasich supports impeachment
        By ALEXANDRA JAFFE | AP News

        1. And, as you can see Hwy, Adan goes silent on your post…The noose is tightening…Wheels are starting to come off Trump wagon…It starts with a few, then gains traction then the canary’s start to really sing…For me, impeachment is not enough…I want to see NYAG get the toad…

          1. I responded immediately but the post disappeared. Those are long term antitrumpers who are following their puppet masters orders. The PTB have determined that Trump is unlikely to be beat so they will vote to impeach for jaywalking.

  6. When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance.

    — Chuck Prince

    1. ‘It is not unusual to start seeing a glut of $upply in any property type, man$ions included, this late in an expan$ion cycle,’

      How does one keep & extend such a gloriou$ $tretch of deliciou$ $helter.$hack winning$?

      Does this help “enable” such a $cheme?:

      “Lower the Fed$ Fund$ to (0) Zero! Now damn it!” : dtRumpsis, Navarro, Kudlow, Ro$$, Ha$$ett & Co. llc.

      x2 cut$ .250 + .500 = (-0%) … (that shouldn’t take to long to accompli$h)

  7. “One of the most expensive homes in Silicon Valley just went through a massive price cut at now 55-percent less than it’s original $88-million asking price.”

    Let the 50% off sales begin!

    1. Did you see the ZEstimate for that house? It says $15.5 million. IOW, it needs a FURTHER 70% haircut – AFTER the price has been cut by 55%!

    2. Surely reports of 50% price drops are fake news. I have it on good authority – an REIC troll on the HBB who took it upon himself to inform Ben that it was utterly inconceivable that a drop of that magnitude could ever occur. I for one believe these real estate professionals, cuz their research is the gold standard when it comes to shack purchasing decisions. Suzanne’s former clients can attest to this, though contacting them at the homeless shelter might be problematic.

  8. “… many in the five-to-10 million dollar range are choosing to retire out of state.”

    If you are the sole winner of the SuperLotto today, you will take home about $8.76 million after taxes. Why in the world would you want to put about half of that in a house?

    So, the Bay Area would be an impractical place for you to retire – EVEN IF YOU WIN TODAY’S SUPER LOTTO!

    That’s how insane it has become.

    1. If you’re “little people” you’re supposed to be content with renting a bunk in some sort of “shared living” arrangement. That’s the price you have to pay to live in the Bat Area dystopia. And watch out when you’re out walking, or you might step on some human excrement or a used hypodermic needle.

    1. I wouldn’t get too excited about Gabbard. She’s a hard core socialist, her platform really isn’t all that different than Sanders. So she trash talks the Hildebeast and the other Dem candidates who have the same policies she does. Big whoop.

      1. She’s a hard core socialist

        We all know what Tulsi stands for. It’s nevertheless refreshing to see her say what many are thinking but afraid to say publicly for fear of being suicided.

        1. We all know what Tulsi stands for. It’s nevertheless refreshing to see her say what many are thinking but afraid to say publicly for fear of being suicided.

          +1000

          1. Come now. #ClintonBodyCount is a conspiracy theory. Who among us hasn’t had 56 friends and close associates who had dirt on us die under unnatural circumstances?

          1. The positions the Democrats have already taken is the reason the PTB need to impeach Trump. This is the cost of Medicare for all and an estimate of what Warren’s tax proposals will really raise: https://www.msn.com/en-us/money/healthcare/the-eye-popping-cost-of-medicare-for-all/ar-AAISFNC?li=BBnbfcN

            Now, if you look at what happened in Italy and is happening with Brexit, you can see you should not under estimate the power of the globalists. However, any Republican in the Senate who votes for conviction of Trump has ended his or her political career. The rank and file knows that the deep state had become so corrupt that Trump could not count on the FBI to investigate Biden’s and Obama’s role in Ukraine corruption and a deep state coup. Thus, a minor step across the line should not result in removal which causes real crime not be prosecuted.

          2. a minor step across the line should not result in removal

            Are you talking about illegal immigrants crossing the border?

    1. ‘We’ve spoken to the regulators and I think they’re quite bright and they’ll look at this. And they should do it before the crisis happens—because it will happen.’

      “What happened in the repo market is kind of instructive,” he said at Friday’s event. “The same issue will happen eventually in what I call the big liquidity thing, the $4 trillion,” he added. “If you’re locked up on the ability [to intermediate] because of a multitude of regulations, that might cause more consternation in the market, which you don’t want,” he said. “Banks hit that limit [in the repo market] and couldn’t deploy liquidity. The same issue will happen eventually in the big liquidity thing – the $4 trillion,” when markets become volatile.’

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