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If It Is Priced Too High, It’s Not Going To Sell, And You’ve Got To Take It Down

A report from the Wall Street Journal on New York. “A drop in sales of new Manhattan condominiums has been even steeper and broader than conventional sales measures indicate, according to a Wall Street Journal analysis of contract signings. Looking at contracts signed over the first seven months of 2019 indicates that sales were only one-third what they were than during a comparable period in 2015.”

“The steepest declines in both sales and prices weren’t in huge expensive apartments, but in studio and one-bedroom units and in apartments selling for less than $2 million. Developers have responded to the slowdown in sales and high inventory by offering a variety of concessions. But some of these concessions weren’t reflected in the reported sales prices.”

“Beth Fisher, a senior managing director at Corcoran Sunshine Marketing Group, said the current glut is the result of a one-time wave of building that began a few years ago, after the dramatic success and rising prices for the first wave of luxury buildings that came on the market after the financial crisis.”

“There is also increasing competition from new developments in Brooklyn and Queens, which offer luxury finishes, often at lower prices. There will be more than 9,000 unsold new condo units on the market in Manhattan at the end of 2019, a supply that could take nine years to sell out, according to an estimate by appraiser Jonathan Miller of Miller Samuel Inc.”

From Curbed Boston in Massachusetts. “The developer behind plans to replace two vacant lots and a commercial building at 1199-1203 Blue Hill Avenue in Mattapan with a mixed-use project has adjusted the proposal for the site. The previous proposal called for 21 condos in a four-story building stretching to nearly 55 feet. The new plans call for 32 rentals in a five-story building.”

The Columbus Dispatch in Ohio. “Former Columbus Blue Jackets goaltender Sergei Bobrovsky has dropped the asking price of his Arena District condominium. The four-bedroom, four-bath condo, with 5,474 square feet, is now listed at $2.95 million, down from $3.2 million.”

From Arlington Now in Virginia. “Question: I recently read an article by the Sun Gazette that median price per square foot was down since last year in Arlington and the rest of Northern Virginia. Is that what you’re seeing in the market, despite reports of prices going up?”

“Answer: I read that article as well and was equally confused by the statistic that $/sq. ft. was down 6.8% in Arlington in the first nine months of 2019 compared to the first nine months of 2018. While this data point may be technically correct, it doesn’t accurately represent what’s happening in the Arlington/Northern Virginia marketplace. Even without having access to the data behind it, does anybody believe that with all the news about the Amazon-effect on Arlington’s real estate market, that people are paying less per square foot in 2019?”

“The truth is that while the median $/sq. ft. did drop year-over-year in the first nine months of 2019, it was actually due to a shift in the type of inventory that sold, not because buyers are getting more for their money.”

The Union Tribune in California. “Home sales in San Diego County jumped 14.7 percent in September from the same time last year. At the same time, home prices dipped slightly. The median home price was $570,000 in September, down from $575,000 at the same time last year. It marks the second consecutive month of declining prices.”

“Gary Kent, a La Jolla-based real estate agent, said it is important to remember the housing market slowed dramatically in August last year. So, September’s numbers may be more a reflection of things returning to normal. Kent said prices are still catching up from the slowdown, and sellers are sometimes still eager to list homes higher than the market. He said tracking what homes recently sold for in the area, and what neighborhood homes are currently listed at, is a way to make sure homes are priced correctly.”

“‘If you price a house right, you will sell it in a few days or a few weeks, or maybe a month,’ he said. ‘But, if it is priced too high, it’s not going to sell, and you’ve got to take it down.'”

From OU Daily in Oklahoma. “Two bond ratings experts with Standard & Poor’s Global said the significant disagreements between OU and its Cross Village partners are ‘unprecedented’ and likely to lead to legal proceedings.
Cross opened in fall 2018 and saw low occupancy — and was marketed as a luxury housing option for upperclassmen, and the price of living at Cross matches or exceeds many other Norman luxury housing options. After OU did not renew the parking and commercial leases in June, Cross Village dining has not been available for residents, and the complex continues to see low occupancy.”

“‘Despite the lack of a legal obligation for OU to renew the lease and make the requisite payments,’ the MMA report said, ‘the institution was heavily involved in the transaction and knew that continuation of its leases was critical for debt service payments, particularly in the early years after capitalized interest ran out.'”

“In the original letter sent from a representative of Cross Village in September, the representative maintained that ‘major mutual funds, which aim to judiciously invest ordinary peoples’ valued savings and pension monies, lent $250 million based on trusting the promise of the university that it would honor its obligations,’ meaning that investors believed OU would renew the leases, though it did not have legal obligation to do so.”

“Bobbi Gajwani, S&P Global’s primary analyst rating on the Cross Village bonds, said the rating reflects that S&P Global expects Provident Oklahoma to default on the debt service payments. ‘The rating particularly reflects our expectation of default on the bonds, (our expectation) that they won’t pay the next debt service payment, which is due in February,’ Gajwani said.

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This Post Has 73 Comments

    1. Heading to bend next week. Can’t wait to see all the high-end luxury cars racing around town driven by very rude people. The traffic there is gotten so bad that is not fun to go between Redmond and bend anymore. It was be interesting meeting a friend there for dinner. I’ll keep my eyes open for poor fb homeowners talking about how much their house is worth.

      1. Even the few government employers around Bend are running on a shoestring. It’s gotta be the debt donkeys and equity locusts strutting with bling.

  2. ‘The steepest declines in both sales and prices weren’t in huge expensive apartments, but in studio and one-bedroom units and in apartments selling for less than $2 million. Developers have responded to the slowdown in sales and high inventory by offering a variety of concessions. But some of these concessions weren’t reflected in the reported sales prices’

    So they lie. This article gets to the gist of how the REIC lies over and over. Reporting sales signed years ago as if it reflects current conditions, when in fact it’s way worse. It’s the same everywhere.

    2. What they fail to mention is how many of these “lower end” units have $2000-4000 in HOA fees on top of the taxes and utilities. Outstanding value.

  3. ‘While this data point may be technically correct, it doesn’t accurately represent what’s happening in the Arlington/Northern Virginia marketplace. Even without having access to the data behind it, does anybody believe that with all the news about the Amazon-effect on Arlington’s real estate market, that people are paying less per square foot in 2019?’

    All the news. Getting high on your own supply is how you end up with your head firmly planted up your a$$.

    1. this is so awesome: ‘While this data point may be technically correct, it doesn’t accurately represent”

      does the person making the comment
      1. not understand math / logic
      2. understands the math/issues … but have to go on pretending
      3. been given talking points – and is clueless to understand that they are damaging their reputation

      what is the comedian saying – something like: better to shut your mouth and have people think you are dumb – or open it and confirm it

      1. Further, why do UHS and REIC economists only mention the mix when prices are down? It’s almost certainly applicable at all times, even when prices are supposedly up. So the whole thing is misleading.

        And how they forget median statistic is a lagging indicator (I’m talking to you San Diego). This has been demonstrated hundreds of times. Fact is, when a market rolls over, wealthier people may buy more shacks than less wealthy for a period and the median floats up. The median may appear to rise for a year or more when prices overall are slipping (or plunging). UHS never say this but it’s true.

        And what about the larger issue: that there was a time not so long ago that shacks maybe went up at the rate of inflation – everywhere. There was no rushing to the newspapers to read about vast pots of gold delivered by virtue of owing a bunch of money on a shack. There was hardly any mention of it actually. And is it a coincidence that this great double digit increase year over year (they don’t mention compounding either – see!) just so happened to occur at the exact same time as Mel Watt was going nuts with subprime, to the point the new FHFA chief tells the nation loans are crappier now than last decade and the GSE’s are one bad quarter from croaking.

        Gosh, there’s actually a whole bunch of stuff the REIC never brings up.

  4. ‘major mutual funds, which aim to judiciously invest ordinary peoples’ valued savings and pension monies, lent $250 million based on trusting the promise of the university that it would honor its obligations,’ meaning that investors believed OU would renew the leases, though it did not have legal obligation to do so’

    Wa? So major mutual funds didn’t read the contracts? And S&P graded bonds without reading the contracts?

    Sacré bleu!

  5. ‘the current glut is the result of a one-time wave of building that began a few years ago, after the dramatic success and rising prices for the first wave of luxury buildings that came on the market after the financial crisis’

    ‘There is also increasing competition from new developments in Brooklyn and Queens, which offer luxury finishes, often at lower prices. There will be more than 9,000 unsold new condo units on the market in Manhattan at the end of 2019, a supply that could take nine years to sell out’

    One would think that this single WSJ report would be enough for the MSM to actually question their REIC shortage horse-hockey, much less the thousands and thousands I’ve posted. After all, in one of the most expensive cities on the planet, there is an undeniable glut. So if it’s not market forces, something else is at work. Just a hint WSJ.

    1. One would think that this single WSJ report would be enough for the MSM to actually question their REIC shortage horse-hockey

      If someone is paying them to say there is a shortage, they’re going to say there is a shortage, even if “For Sale” signs pop up like dandelions in the spring.

  6. “The steepest declines in both sales and prices weren’t in huge expensive apartments, but in studio and one-bedroom units and in apartments selling for less than $2 million.”

    – Ridiculous pricing for 1 Bdr or studio. Declines at lower tier now and not just high end. No bubble here…

    1. “…Ridiculous pricing for 1 Bdr or studio….”

      Wonder what the $$/sqft works out to? $1K?, 2K?, 3K, or ?

      Who would possibly purchase such a unit?

      2. $1K?, 2K?, 3K, or ?

        But, but scdave assures us that’s the actual cost to throw up four walls and stack them to the sky.

  7. How can anyone say that the price drop is due to a change in the type of inventory sold, while simultaneously admitting that they do not have access to the underlying data. Amazon pays 15 bucks an hour. Why are we using the word “one bedroom apartment” in the same sentence as “$2 million”?

  8. “Gary Kent, a La Jolla-based real estate agent, said it is important to remember the housing market slowed dramatically in August last year.”

    So Gary WTF happened AUG 2018??

    “September’s numbers may be more a reflection of things returning to normal. Kent said prices are still catching up from the slowdown, and sellers are sometimes still eager to list homes higher than the market.”

    But Gary my neighbor sold there home last year for a billion dollars, i aint gonna GIVE away my home for any less!

    “He said tracking what homes recently sold for in the area, and what neighborhood homes are currently listed at, is a way to make sure homes are priced correctly.”

    Just drop the price FB, you want something now or do you want nothing later?! Ive said this before, the whole stawk market has been flat lining now for over a year, it goes up on a tweeter or news of IR dropping a measly quarter % then right back down to its flat line level. All these housing market attempts to keep it propped up are actually failing which is great news, imagine if they let it run its course and F’ing crash… Bubbles everywhere are ready to pop, yet temporary hair of the dog hang over cures keep them running in limbo land.

    1. Professional Investors Are Preparing For Negative U.S. Rates
      Oct. 31, 2019 8:43 AM ET
      Josh Ortner
      Owner of Ortner Capital, pension fund manager, registered investment advisor

      Summary

      – Traders are wagering on negative U.S. interest rates with very large amounts of call options being purchased on the Eurodollar futures.

      – $17 Trillion in negative yielding bonds around the world are signaling rates here could still trade much lower.

      – iShares 20+Year Treasury TLT would allow investors to follow this popular trade.
      …

    2. Chicago PMI slides to nearly four-year low in October
      By Greg Robb
      Published: Oct 31, 2019 12:28 p.m. ET
      Index drops to 43.2, lowest since December 2015
      Getty Images

      The numbers: A measure of factory activity in the Midwest weakened further in October.

      The Chicago Purchasing Management Index sank to 43.2 in October from 47.1 in the prior month. This is the lowest level since December 2015. Economists has expected a reading of 48.3, according to Econoday.

      Any reading below 50 indicates deteriorating conditions.

      What happened: New orders declined to 37, the lowest level since March 2009. Order backlogs saw the largest monthly decline.
      …

    1. Good for her, though O’Rourke has been falling behind for a while. She needs to focus on Senator Running Deer.

      1. “O’Rourke has been falling behind”

        I didn’t have any stickers on my Subaru I bought last year (used, obviously, because car payments are for loosers who can’t math) but after his comments at the 2nd D debate I put a NRA sticker on the upper left of my rear windshield.

        Transplants to Colorado, please interpret this as don’t vote to turn CO into the sh*thole you fled from.

        Or better yet, don’t move here.

  13. “…but in studio and one-bedroom units and in apartments selling for less than $2 million.”

    Do these have a fundamental value anywhere near $2 million?

    If these were primarily purchased to gamble on price appreciation, it could be a long way down from here.

  14. The median home price was $570,000 in September, down from $575,000 at the same time last year. It marks the second consecutive month of declining prices.”

    “Gary Kent, a La Jolla-based real estate agent, said it is important to remember the housing market slowed dramatically in August last year. So, September’s numbers may be more a reflection of things returning to normal.”

    If prices are already declining against a backdrop of record low unemployment and interest rates, what does this portend for when rates and employment revert to normal levels?

  15. Worth a read:

    I Accidentally Uncovered a Nationwide Scam on Airbnb
    Vice
    Allie Conti
    31 October 2019

    “The bad news, which went unstated, was that I had unknowingly stumbled into a nationwide web of deception that appeared to span eight cities and nearly 100 property listings—an undetected scam created by some person or organization that had figured out just how easy it is to exploit Airbnb’s poorly written rules in order to collect thousands of dollars through phony listings, fake reviews, and, when necessary, intimidation.”

    But will the victims stop using Airbnb? Probably not:

    ““If I had another choice, I would not use Airbnb again,” he told me. “I was very put off by getting scammed. But at this point, I feel like if I want to travel, there’s not really much else I can do.””

    “Even after a month of digging through public records, scouring the internet for clues, repeatedly calling Airbnb and confronting the man who called himself Patrick, I can’t say I’ll be leaving the platform, either. Dealing with Airbnb’s easily exploitable and occasionally crazy-making system is still just a bit cheaper than renting a hotel. In fact, after all that, I never even left Becky and Andrew a review.”

      1. “If I had another choice, I would not use Airbnb again,” he told me. “I was very put off by getting scammed. But at this point, I feel like if I want to travel, there’s not really much else I can do.”

        LOL. I’ll stay at the hotel, thanks.

        Idiots.

        1. Orinda: Four dead in Halloween party shooting
          Four others injured at short-term rental, according to police chief

          According to social-media posts, an “AirBNB mansion party” had been advertised for Thursday night. The flier was adorned with crime-scene tape and told attendees to “DM for location,” “BYOB” and “BYOW.” One post sharing the flier appeared to have a location of “Orinda, California” and said doors would open at 10 p.m.

  17. Gohmert on Impeachment: Dems ‘Coup’ Will ‘Push This Country to a Civil War’

    PAM KEY
    31 Oct 2019

    Gohmert said, “Never in the history of this country have we had such gross unfairness that one party would put armed guards h guns to prevent the duly authorized people from being able to hear the witnesses and see them for themselves. And then, oh, we hear from this resolution today, we’re going to send you the depositions after we get through doctoring and looking at and editing the transcripts, we’ll send you those, so you have the evidence you need. That’s not the kind of evidence that a coup should be based on. If we’re going to have what they’re trying to legalize as a coup, we ought to have a right to see each of those witnesses.”

    https://www.breitbart.com/clips/2019/10/31/gohmert-on-impeachment-dems-coup-will-push-this-country-to-a-civil-war/

    1. trying to legalize as a coup

      There should be nothing fair, honest and transparent about a coup. To overthrow a system of government you need to be swift, deadly, deceptive and secret. We’ve had the deceptive and secret (sort of) thing going on for several years. The other ingredients are lacking. Well, OK, some deadly has had a play, just not enough.

    2. Not to worry! The process is unlikely to succeed.

      POLITICS
      Published 1 day ago
      House Dem opposing impeachment inquiry slams ‘failed’ process
      By Vandana Rambaran | Fox
      House Democrats prepare impeachment resolution amid GOP criticism of process

      Trump defends Ukraine call as Democrats ramp up efforts; reaction and analysis from the ‘Special Report’ All-Stars.

      A Democratic lawmaker from New Jersey told Fox News on Wednesday that despite an impending vote on a House impeachment resolution, he doubts that formalizing the investigation into President Trump will do little more than result in a failed process.

      Rep. Jeff Van Drew, D-N.J., an outspoken critic of the impeachment probe being led by Democratic colleagues on three House committees, said he doubts he will vote in favor of the resolution introduced Tuesday. He further predicted that the attempt to remove Trump from office will be unsuccessful.
      …

  18. Halloween night, and per usual I’m handing out mixed Reeses peanut butter cups, Kit-Kats, and Hersey miniature chocolate bars, 3-4 per kid. Was floored by the number of kids who looked with delight into their bags and said, “He’s giving out the good stuff!” like this was a rare and precious gift. Are ‘Muricans so broke in our “greatest economy ever” that they can’t afford to give the kiddos decent Halloween candy?

    1. Lots of kidz are stopping by our place to augment their candy hoards. Luckily for them, we are renters, and consequently can afford to buy candy to share with them.

        1. OK Boomer…best of luck with finding a buyer from the shrinking, underpaid younger generation who is willing to twice as much as you did for your overpriced used home.

          October 24, 2019 – 04:26 PM EDT
          Census projects slower population growth, more diversity in coming decades
          By Reid Wilson

          America’s growing population will become significantly older and more diverse over the next several decades as women have fewer children and life expectancies grow.

          New projections from the Census Bureau show the U.S. population is expected to grow to more than 400 million by 2058, an increase of about 74 million from 2019. The median American age today is 38 years old; by 2060, the median age is expected to be 43.

          In a few decades, those 400 million people are likely to look much more diverse than the current population. As early as next year, the share of American children who are non-Hispanic white will fall below 50 percent for the first time, census figures show.

          Asian Americans, Hispanics and people who are of more than one race are the fastest-growing racial and ethnic groups in the country, according to new research unveiled at a demographers meeting in New Orleans this week.

          But population growth is slowing. In the next decade, America is likely to add about 2.3 million people per year. Between 2040 and 2060, that number is likely to fall to 1.6 million.

          A significant factor in that slowdown is what demographers call the Baby Bust, a plummeting fertility rate among women of child-bearing age. Women are having fewer children, and at a later age, than at any other point in American history.

          That trend accelerated in the wake of the Great Recession, said Ken Johnson, the senior demographer at the Carsey School of Public Policy at the University of New Hampshire. Fertility rates fell sharply after the 2007-2009 recession, as women and men entering the workforce struggled to attain the sorts of social benchmarks that usually lead to starting a family: getting married, buying a house and finding long-term professional employment.

          Had the fertility rate in the last decade been equal to what it was in 2007, just before the recession hit in December of that year, Johnson said there would have been 5.8 million more births in the last decade than there have been. The percentage of women in childbearing years has increased 3 percentage points since 2007 — but births have declined by 12 percentage points.
          …

          2. In the end Clevon of Idiocracy fame will win.

            It does appear that intelligence is self limiting when it comes to genetic success.

    2. I don’t know, because when I think back to when I was a child, that was the “good stuff” as well. Then there were those houses handing out that dreadful candy corn, or an apple, or Big Hunk, or Abba-Zaba…

      1. Yes all of those are in a Costco bag of candy. Along with more. The kids were happy that is what I was using.

  22. Technically, aren’t real estate and automotive purchases part of investment, not consumption spending?

    Associated Press
    China’s economy struggles as consumers cut back on spending
    By Associated Press
    Published: Oct 31, 2019 11:27 p.m. ET
    Consumer demand slipping, posing a bigger threat than U.S. tariffs
    Bloomberg News
    Pedestrians walk past a Prada store in Hong Kong.

    BEIJING — With home sales crashing, real estate agent Zhang Yonggang is tightening his belt, part of a plunge in Chinese consumer demand that is a bigger threat to economic growth than Beijing’s tariff war with Washington.

    Zhang, who works in the central city of Taiyuan, said his office sold no apartments last month after Beijing tightened lending controls in July to rein in housing costs and debt. Zhang, 42 and married with a teenage son, said his income has fallen by half from a year ago.

    “I have no money to buy a home and no plans to change cars,” Zhang said. “It is definitely the toughest time I’ve ever seen.”
    …

  23. https://skillednursingnews.com/2019/10/ensign-reveals-stats-behind-skilled-nursing-turnaround-success-plots-aggressive-growth-for-2020/

    ‘Chad Keetch, the operator’s chief investment officer, also predicted “an increasingly more attractive buyers’ market” in 2020, pointing to long-anticipated sales related to the Patient-Driven Payment Model (PDPM), as well as a continued supply of distressed properties run by operators in or nearing bankruptcy.’

  25. So strong jobs report and major revisions up in the number of people employed the previous two months. Wages now increasing at 3 percent. All great news for the Social Security trust fund. As Trump said the best way to save social security is a strong economy not as that RINO Paul Ryan wanted to do which was cut benefits. Of course if you make horrible trade deals and import millions of people who cannot even make enough to support themselves that is what you have to do. However that is the way of Obama and W and other globalists not Trump.

      1. It averaged 109,000 per month under Obama when the pool of unemployed was much higher. We were told that was good due to demographic changed. With the revisions we are averaging around 180000 per month with unemployment at a fifty year low. Trump does have a magic wand, it is good policies. When Boeing can crank up production again the economy will be firing on all cylinders.

  26. Does it seem like the MSM is in the dark about the Plunge Protection Team’s role in pumping up the US stock market?

    1. The Financial Times
      US equities
      US stock market‘s new high baffles investors
      Fed rate cuts and buybacks have provided support to equities
      A trader at the New York Stock Exchange in August
      Persistent stock buybacks have supported prices © AFP
      Richard Henderson and Jennifer Ablan in New York yesterday

      As Jared Woodard, a Bank of America investment strategist, steps into the elevator at work each morning in Midtown Manhattan, he already knows what investors will call to ask.

      Why has the US stock market hit record highs while investor confidence, reacting to a worsening economic outlook, has deteriorated?

      “It’s the most frequently asked question we’ve had this year,” Mr Woodard said. “Investors we speak to are incredibly cautious. They see the market rally but they don’t trust it.”

      US economic growth slowed in the third quarter as business investment continued to weaken, adding to concerns the global economy rests on a knife-edge.

      But the S&P 500 moved above its summer high this week, and set another record on Friday after the latest monthly jobs report. The US added 128,000 non-farm payrolls in October, a slowdown from 180,000 in September but better than expected and enough to send the equity market benchmark up 1 per cent, capping a 22 per cent rise this year.

      If this performance holds until the end of December, it would be the S&P 500’s second-best annual return of the decade.

      Other market indicators seem more responsive to the economic picture. The closely monitored yield curve of US government debt inverted earlier this year, a haunting sign that has foreshadowed recessions over the past five decades, and a capital squeeze in the market for overnight bank lending has caught the Federal Reserve off-guard, forcing it to inject billions of dollars of liquidity.

      Nervous investors have continued to rush to their favourite retreats, including cash and low-risk bonds, sending yields plummeting. This has swelled the universe of negatively yielding debt to $13.5tn. “It’s hard to think of a better measure of pessimism about global growth,” Mr Woodard said.

      Set against the gloomy economic picture, the US stock market’s meteoric rise is “a fantastic dichotomy”, said Mr Woodard.
      …

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