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Prices Have Come Down Because There Is More Supply Than Demand

A report from the Wall Street Journal on New York. “The urgent inquiries for office space from companies aiming to do business with Amazon have long ceased. The near-constant flurry of calls from would-be investors in commercial buildings and condominiums has eased. Asking rents for office space dipped 7.5% to $40.65 a square foot in the third quarter, the third straight quarter of decreases, according to Cushman.”

“‘Prices have come down because there is a lot of space on the market,’ said Neil Dolgin co-president at the real-estate firm Kalmon Dolgin Affiliates Inc. ‘There is more supply than demand.'”

From Real Estate Weekly on New York. “Aleksandra Scepanovic, managing director of Ideal Properties Group: America’s macro political stage, strongly shaded by the news of the trade war with China, impacts New York City’s softening housing market both directly and indirectly. Directly, by further diminishing the interest of Chinese real estate investors in their once so loved spurious offspring. Indirectly, the impact is reflected in the Chinese investors adding their properties to the city’s queue of inventory awaiting to be sold. The absence of Chinese investors is most intensely impacting the city’s luxury sales market, decelerating the trading pace. And of course, as a consequence of extended days the properties spend on the market, their price points are also negatively affected.”

From Forbes on California. “Drum roll for the most expensive ZIP code in the Los Angeles area which is number 10 on ApartmentGuide’s list. No, it’s not even in Beverly Hills. Head south and west to Marina Del Rey in the 90292 zone. Even at the current price of $3,170 per month for a one-bedroom that’s down over 15% from a year ago when that number was $3,745. Over the last several years, there’s been a number of large luxury ‘apartment homes’ as developers call them being built in the Marina. So, signs of a possible glut on the market? It certainly appears so.”

From Salon on California. “For three decades, the Santa Clara Valley has been subject to one of the highest increases in housing prices in human history. Yet most curiously, some of the biggest dips in median home prices are in Santa Clara County. In many of the subregions there, housing prices dropped 10 to 15 percent in a year span. In a housing market where a 3-bedroom single family home is often in the million-dollar-plus range, that means some homes dropped in price more than $100,000.”

“Patrick Kallerman, a Research Director at the Bay Area Council Economic Institute, pointed out to Salon that while the Chronicle’s report may be slightly exaggerated because the estimates are based on Zillow data — rather than median sale price — much of the Bay Area is certainly experiencing a slump home prices. ‘We have seen some softening in prices in Mountain View — that 7 percent decrease is real,’ Kallerman said.”

The Chicago Tribune in Illinois. “Chicago Bulls executive vice president of basketball operations John Paxson and his wife, on Nov. 15 sold their five-bedroom, 5,199-square-foot house in Lake Bluff for $725,000 — which was 33 percent lower than their original asking price in December 2018.”

“The Paxsons first had listed the house in December for just under $1.08 million They then cut their asking price to just under $1 million in May and then to $979,000 at the end of May. They took another $100,000 off their asking price in June, reduced it further to $829,000 in July and made their final price cut in August, to $799,000. Records show that the Paxsons paid $650,000 in 1991 for the house.”

The Springfield News Leader on Missouri. “Over the years, hundreds of people have submitted complaints accusing landlords of leaving vacant buildings open to vagrants, not keeping on top of problem tenants, allowing trash to pile up and lawns to get overgrown. Some have gone before City Council, imploring leaders to intervene.”

“In 2018, the city received 682 complaints about dangerous buildings, 2,207 complaints about trash and 2,038 complaints about weeds and overgrowth. Several were about 417 Rentals properties, which were part of the more than 500-property portfolio owned by local landlord Chris Gatley. Banks have foreclosed on many of those homes and are slowly auctioning them off after a federal judge dismissed Gatley’s second attempt at bankruptcy earlier this year.”

“‘It’s an investment, and the people who own them are benefiting from it, but most of them are absent. Then they’re shocked when their house is falling in, but they haven’t been there in two, three years. Of course it’s falling in,’ said Amy Blansit, a co-founder of the Drew Lewis Foundation, which works to help families in the city’s northwest side. ‘We have a lot of people who don’t know how to be landlords who are buying up houses and seeing it as a profit. They see the money and the potential in what a house is going to be without really understanding the work it takes.'”

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This Post Has 99 Comments

  1. ‘Over the last several years, there’s been a number of large luxury ‘apartment homes’ as developers call them being built in the Marina. So, signs of a possible glut on the market? It certainly appears so’

    It’s groundhog day for the clueless MSM. “Oh gosh, have we been wrong about a shortage all along! Horrors!!”

    The bubble popped a long time ago you freaking fools. Get ready for the foreclosures.

  2. ‘America’s macro political stage, strongly shaded by the news of the trade war with China, impacts New York City’s softening housing market both directly and indirectly. Directly, by further diminishing the interest of Chinese real estate investors in their once so loved spurious offspring. Indirectly, the impact is reflected in the Chinese investors adding their properties to the city’s queue of inventory awaiting to be sold. The absence of Chinese investors is most intensely impacting the city’s luxury sales market, decelerating the trading pace. And of course, as a consequence of extended days the properties spend on the market, their price points are also negatively affected’

    Yeah yeah. It’s almost never “well prices got too high and fall down.”

    I said years ago, this Chinese money would go away eventually.

    1. Guess my foot is in my mouth now ;). I have often thought that when the MSM finally starts reporting on the foreign impact on US RE, it will cause some major disruption. It will take time but this info is surely to accelerate the pop of our ongoing inflated bubble

    1. Its not only the funny money propping up the stock market it is the fact that the impeachment efforts are failing politically. Trump is back up to 50% support he is actually higher that Obama at the same point in the presidency. Will not seen it in Bloomberg’s polls or other MSM polls for the obvious reason that they use polls to push opinion not to measure it, at least the publicly released polls, but Wall Street knows and has access to what the polls are really saying:
      http://www.rasmussenreports.com/public_content/politics/trump_administration/prez_track_nov15

  4. “The Paxsons first had listed the house in December for just under $1.08 million They then cut their asking price to just under $1 million in May and then to $979,000 at the end of May. They took another $100,000 off their asking price in June, reduced it further to $829,000 in July and made their final price cut in August, to $799,000. Records show that the Paxsons paid $650,000 in 1991 for the house.”

    Chase that market down, greedheads. Don’t wanna give that shack away.

    1. Records show that the Paxsons paid $650,000 in 1991 for the house.”

      Oh, and remember when I said I’ll buy when prices hit early 1990s levels? “Inconceivable!” the HBB’s REIC trolls shouted with trembling indignation. Well, on second thought, I do believe early ’80s prices are more to my liking. I’ll be blasting the Buggles’ “Video Killed the Radio Star” to drown out the greedhead sobs at the foreclosure auction.

  6. ‘Elizabeth Warren, during the Democratic debate last month, said she was “really shocked at the notion that anyone thinks I’m punitive. Look, I don’t have a beef with billionaires.” This week Ms. Warren’s campaign began selling a $25 coffee mug emblazoned with the words: “Billionaire Tears.”

    ‘This is demagoguery 101: Target a specific person or group. Denigrate the mark. Cast yourself as the underdog fighting for justice. With Ms. Warren and Bernie Sanders, the villain is any American who has become wealthy. These people haven’t merely been successful, they’ve “sucked out” profits in a “rigged system,” or they’ve put the economy in a “stranglehold.”

    ‘Voting correctly or espousing the right views on social justice won’t be protection. Mr. Blankfein is a Democrat who backed Hillary Clinton. Mr. Cooperman seems open to a “Buffett rule” for a high minimum tax, and he doesn’t mind paying 50% of his income in combined taxes. None of this matters. In a Warren or Sanders Presidency, no one with money will be safe from demonization—or worse.’

    https://www.wsj.com/articles/warren-loves-billionaire-tears-11573861873

    1. In the meantime California Government has banned the purchase of any gas cars by the Ca. Government .

      2. Not just gas cars, they’ve banned the purchase of cars from automakers that are opposing their clean air standards opposed by DJT’s EPA.

        So that means Toyota, GM, Mazda, and FCA are ineligible. But Ford, Honda, BMW, and Tesla will be eligible.

        CA can flex their muscles and this will reverberate.

        1. CA can flex their muscles and this will reverberate.

          It’s no wonder California is the poorest state in the union.

          1. While it certainly has many flaws, especially when it comes to housing policy, its GDP is far higher than any other state. It’s not even close.

          3. This scale is more relevant than total state GDP. Turns out DC is number 1 on this scale…not even close!

            I don’t think so. Many of those states are skewed because of small population sizes and large concentrated money (e.g. Alaska, Wyoming, Delaware, D.C.). Ca is significant because it has a huge GDP and still has one of the larger GDP per capita. It does have the highest poverty rate when adjusted for housing, but it is also the wealthiest state. In other words, stark inequality.

          1. If you think CAs actions won’t have an impact I think you will be surprised. Marginal buyers matter a lot, as we know in housing markets whether those be flippers, foreigners, of just knife catchers.

            What CA does ripples outward, which is why their clean air standards are being fought by the fossil fuel lobby.

        3. In reality, California is being left in the dust with increasing speed.

          Seventy years of “prevailing wisdom” in Washington, DC, is also rapidly disappearing in the rearview mirror.

          California and DC are exemplars of what NOT to do, of what no longer works.

          2. If One wants to ignore per capita than what California really leads in is unfunded pension liability.

            Except that CA doesn’t lead. Even the chart you posted says that Alaska is far worse. Also about as bad are Connecticut, Arkansas, and Ohio. While we’re at it we ought to also talk about SS being underfunded.

      3. so you can have a slow car chase and escape after 80 miles?
        A guy w a Leaf told me on one cold day the meter said he could only go 13 miles.

  11. I believe this bears repeating as much as possible. This is the fraudulent eCONomy we’re in.

    “Santander Consumer USA Holdings Inc., one of the biggest U.S. subprime auto finance companies, verified income on less than 3% of borrowers whose loans it bundled into more than $1 billion of bonds it sold this year, according to Moody’s Investors Service.”

    1. PS – this is the exact same model that brought the last financial meltdown. I’m sure these subprime auto loan bonds were rated AAA, too. Because they’re, you know, great and stuff.

    1. Pensions are the real big ponzi schemes. If the economy does not collapse due to pensions collapsing as the boomers retire it will when the millennials retire.

    1. in ‘no holds barred’ interview with BBC

      The same BBC that covered up Jimmy Savile’s depraved proclivities.

        1. And for those who don’t know, Mark Thomspon, who covered for Jimmy Savile at BBC, is now the New York Times CEO.

          3. Anthropologists seldom admit that the human animal is a capable predator given the opportunity, not for survival but for sport.

    2. At first glance I thought these lyrics from the Shaggy / Prince Andrew song was the transcript from the Prince Andrew ‘no holds barred’ BBC interview where he says he doesn’t remember meeting accuser.

      To be a true player you have to know how to play
      If she say a night, convince her say a day
      Never admit to a word when she say
      And if she claim, ah, you tell her, “Baby, no way”

      But she caught me on the counter (It wasn’t me)
      Saw me bangin’ on the sofa (It wasn’t me)
      I even had her in the shower (It wasn’t me)
      She even caught me on camera (It wasn’t me)

      She saw the marks on my shoulder (It wasn’t me)
      Heard the words that I told her (It wasn’t me)
      Heard the scream get louder (It wasn’t me)
      She stayed until it was over

      1. In Earl’s Court? That’s in London, not a suburb. What were they going to do, bulldoze several blocks flat?

  14. https://www.thetimes.co.uk/article/capital-counties-walks-away-at-earls-court-cfl0vcd2x

    ‘Capital & Counties Properties has agreed to sell a huge development site in west London after the site’s value more than halved in four years. It formed part of the developer’s £12 billion masterplan to create 7,500 new homes in Earls Court.’

    ‘The site is co-owned with Transport for London. The value of Capco’s 63 per cent interest in the project fell from £803 million in 2015 to £389 million in June this year. The project has been hampered by a sharp decline in London’s luxury housing market and by political wrangling.’

    ‘Delancey, the property group run by Jamie Ritblat, and APG, a Dutch pension manager, have agreed to buy Capco’s interest in the site and other assets around Earls Court for £425 million, down 16 per cent from the June book value.’

    Poof!

    1. It seems gas prices were the impetus. I wonder what Americans would do in the face of crushing fuel prices.

      1. “I wonder what Americans would do in the face of crushing fuel prices.”

        Already in debt up to their proverbial eye-teeth…not much.

        I remember the fuel siphoning theft back in the 70s, and many drivers installed these spiral cone shaped springs in the car’s gasoline filler neck to block a siphon hose from being inserted. The thieves got around those by simply driving a steel punch through the bottom of the fuel tank draining its contents into several drain pans.

        1. “The thieves got around those by simply driving a steel punch through the bottom of the fuel tank draining its contents into several drain pans.”

          Brazen. That would make one heck of a mess, and you’d have to have a pickup truck right next to the target vehicle with some sort of tank to pour the drain pan contents into – quite a production.

          Reminds me of the tweakers sawing off catalytic converters under cars in broad daylight. Every so often they’d find themselves getting stomped by the vehicle owner to the point of hospitalization.

          1. “…quite a production.”

            The punched drain hole isn’t a gusher. A couple of 5-gallon gas cans and a large funnel, and ‘yo in business. If there’s more gas than storage let it drain on the street, curb, storm drain, watershed, etc., I suppose.

      2. “I wonder what Americans would do in the face of crushing fuel prices.”

        Stop buying SUVs and huge pickups?

        IIRC, they didn’t do much else during the last gas price surge 10 or so years ago.

        1. I think gas prices are more psychological than anything since it is the only price that you see over and over again wherever you go on every gas station. But housing and medical have more of an impact on the US consumer. But gas price hikes do ripple through the supply chain and affect consumer goods prices prices due to increased transport costs. My guess is that you’d get reduced consumption and an uptick in consumers/businesses changing over to EVs on the margins.

          1. gas price hikes…changing over to EVs

            Some people respond to high energy prices by conserving, but there will always be those that think they can save energy by using more of it.

          2. If we have a recession the first thing to go will be expensive impractical virtual signaling vehicles in a word the products of Tesla. You can never save enough gasoline with a Tesla to justify the difference in price.

          3. You can never save enough gasoline with a Tesla to justify the difference in price.

            The thing about Tesla is that people aren’t buying them because they are an EV. They are buying them because of the face-melting acceleration, AutoPilot, less maintenance (no oil changes, transmission, exhaust systems, etc.). I don’t see many virtue-signaling types at the supercharging stations. Just guys who like fast cars. Granted, there are a few Leaf/Bolt/Civic/Corolla trade-ups.

        2. I recall that so many wanted to trade in their gas guzzlers that some dealers stopped accepting pickups for trade ins.

  18. Why boomers, not millennials, are fueling the urban apartment surge
    Curbed
    Patrick Sisson
    Nov 12, 2019

    “While the new glass high-rises sprouting up in emerging downtown neighborhoods may be marketed to millennials, many of the units may actually end up being occupied by their parents.”

    ““Developers have always focused on consumers with money,” says real estate consultant John Burns. “Even though some of these new developments are in areas people think are cool for millennials, those who can afford them are often in their late 50s and early 60s.””

    “A downtown apartment represents a more active take on senior living. McLean and others have observed that renting can make more financial sense than holding on to a large suburban home. And, if it’s in the budget, apartment living can be so much easier. Many of the qualities and amenities considered attractive to millennials—transit access and proximity to retail and restaurants—are the exact same things drawing in older renters (who, thinking about the potential for decreased mobility, also like the ease of building staff, easier maintenance, and elevators).”

  19. No “pent-up demand” for $500,000 starter homes happening here:

    “Among young families, households headed by someone under the age of 35 in 2016 had an average net worth of $10,900, roughly half the level from 1995.

    Much of this disparity stems from the Great Recession. Those who entered the workforce in its aftermath came in with low wages, leaving them at a career disadvantage. Many are also struggling with the $1.4 trillion-plus pile of student loan debt that has been accumulated by American students. For many, student debt payments make building wealth and buying homes unthinkable.”

    https://www.zerohedge.com/markets/millennials-earn-20-less-baby-boomers-even-better-education-study-finds

    Unthinkable. Got that, REALTOR? Nobody’s buying your shacks 🙁

    1. Imagine what the Fed’s housing bubbles and Ponzi markets would look like if Janet Powell wasn’t pumping in at least $120 billion a day to the Fed’s primary dealer banks to cover their gambling losses.

      1. $120 billion a day

        Is it a new $120B every day, lost forever, or is it an overnight thing that gets recycled every day?

        You may have answered it before, but I didn’t see.

    2. Keep voting for globalists millennials and the resulting outsourcing will keep your wages down. Did you not learn that in your gender studies class? As soon as you figure out which bathroom to use please read something about a supply and demand from a non-Marxist economics professor. MMT is not going to save you. I cannot tell you to stay off my grass because I have a xeriscape lawn but you can take you ok boomer meme and use it for toilet paper when you figure out which bathroom to use.

        1. I do most of my driving in a standard transmission Chevy Cruze which gets 45 miles to the gallon. I just do not want government to mandate it. I am really peeved at GM for discontinuing the Cruze .

          1. Good thing you got one with a manual transmission. Have heard that the slushboxes on the Cruze are garbage and die well before their time.

            As for the Cruze being discontinued, well, Americans want SUVs, not cars.

  20. Banker & Tradesman
    Is Greater Boston in a Real Estate Bubble?
    No, We’re not in a Bubble. While all the above is true, demand for housing remains strong as locals are displaced by an influx of highly compensated …
    2 hours ago

    1. Yep, that’s the word on the street here in Boston, Cambridge/Somerville and greater Boston – no bubble, it’s pure “supply and demand”, and this area is immune from a housing downturn.

    1. Stockbridge, MA is a nice, bucolic place but it’s a 2 hour drive from Boston on the Mass Pike…so different housing market.

  22. Interesting development. In my experience, practitioners don’t usually run lab tests for no reason. Would be interesting see what the actual suspected reason for tests are.

    Trump’s health ‘very good’ after unscheduled physical exam
    BBC
    17 Nov 2019

    “The White House confirmed he underwent an exam and some laboratory tests on Saturday at Walter Reed Medical Center in Washington.”

    “The visit was not in the president’s public schedule, and no details of the tests have been released.”

        1. Yes, I hope he received a Hep A vaccine shot so if it happens again he will be protected. Also, he should not allow Nancy back into the White House who knows what diseases she may bring back from San Francisco.

      1. I do think something is physical wrong with the president. I am completely agnostic to whether he gets re-elected or not. I noticed that something was wrong with Sanders too. The symptoms seem similar. You could Sander’s problems visibly in his debate performance and his hacking cough before his heart attack. When you take care of enough stroke/heart attack patients you start to see visible signs. Obama aged tremendously during his tenure and I would say that DJT is really aging right now.

          1. Not sure I understand the comment Blue. Everyone on this blog knows I support Warren 1st, Sanders 2nd. I disagree with far more of DJT’s stances than those that I agree with, but there are a few of his actions I have voiced support for. My life won’t change meaningfully one way or the other if he is re-elected.

      1. President Trump’s former personal physician claims that Trump dictated the 2015 letter he wrote praising the then-presidential candidate’s health.

        “He dictated that whole letter. I didn’t write that letter,” Dr. Harold Bornstein told CNN. “I just made it up as I went along.”

        His physical strength and stamina are extraordinary,” read the letter, which Bornstein had initially said he wrote himself. “If elected, Mr. Trump, I can state unequivocally, will be the healthiest individual ever elected to the presidency.”

    1. The bankruptcies are real but the cause cited is fake news. The chart shows the tale. In the crop most impacted by the trade war the big price collapse occurred prior to the trade war and even prior to Trump taking office. The easy money in the prior administration caused crop prices to spike and many farmers bought additional land based on those prices. Those prices plunged prior to Trump and had nothing to do with a trade war. The price decline after the trade war begin is just a small percentage of the fall from the peak prices which occurred earlier. It is $14 soybean prices which set up these high bankruptcies rates.

      https://www.macrotrends.net/2531/soybean-prices-historical-chart-data

      1. $14 soybean prices

        Biggest credit expansion in history and it was global. Land prices, iron mines, ghost cities, windmills and EVs, Unicorns and tractors. The bust was baked in the cake.

      2. The bankruptcies are real but the cause cited is fake news.

        Citizen! There is one cause of all the ills in America, and that is Orange Man Bad! Please refrain from getting your news and information from non-Narrative compliant media sources, as this gives rise to BadThink.

    2. Eastern Washington farmers have struggled with farm labor shortages since the recent border issues leading to higher than usual wages.

        1. “You mean enforcement of immigration laws???”

          +1 Indeed.

          Realize that the border (was, is, will be) porous allowing foreign manual-labor for industries unable to employ the indigenous. Latino labor enables the harvest just like we rely on bees to pollinate.

    3. From the article:

      “The U.S. Department of Agriculture projects farm income in 2019 to reach $88 billion – the highest net farm income since 2014’s $92 billion, but still 29% below 2013’s record high.”

      “Growers are becoming increasingly dependent on trade aid and other federal programs for income, according to figures in a report by the American Farm Bureau Federation, the nation’s largest general farm organization.”

      “Nearly 40% of that income – some $33 billion in total — is related to the federal governments trade assistance, disaster assistance, the farm bill subsidies, and insurance indemnities and has yet to be fully received by farmers and ranchers”

      Do I have that right? That would mean that 36% of Farmer income is transfer payments ($33B / $88B). Wow, that is jaw-dropping. If that isn’t wealth redistribution/socialism, I don’t know what is.

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