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If A Property Is Listed Too High Today, It Won’t Take Too Long To Sell, It Simply Won’t Sell At All

A report from Mansion Global on Massachusetts. “October ushered in a sales slowdown in the greater Boston housing market, with year-over-year sales volume of single-family homes hitting a 20-year low. The number of closed units fell 38.7% annually, compared to October of 2018. The condo market, similarly, saw a 31% drop in sales volume. It was the lowest October sales volume in seven years, since October 2010.”

“In the greater metro area, median sales prices for detached single-family homes declined on an annual basis for the first time in 32 months in October, decreasing 2.2% from the previous record-high median price of $603,000 in October 2018 to $590,000 last month.”

From Bloomberg on New York. “Extell Development gave Israeli investors a peek into how well its condos are selling in New York, and the message is clear: When trying to offload luxury apartments, throwing in concessions helps, but not enough to clear inventory in a market brimming with high-priced competition.”

“At One57, Extell is still selling units, offering discounts as it competes with some former buyers who are listing their apartments for resale. The developer sold four homes at the building in the first quarter and had 27 remaining as of Sept. 30, according to the Tel Aviv filing. There were two additional sales so far in the fourth quarter, according to StreetEasy. ‘We recognize that it is a buyers’ market and as such, we have been responsive by offering incentives and some price negotiability,’ said Sush Torgalkar, Extell’s chief executive officer.”

From The Independent on New York. “As a single data point, a week ago, 26 and 32 Windmill Lane, East Hampton, an oceanfront 6.7-acre estate, had its price cut $10 million, down to $45 million. The property had been listed at $60 million over the summer. Clearly the glorious days of 2014 are over.”

“Speaking of 2014 prices, in that autumn, an East Hampton property was put on the market for $13.9 million, which struck us as ambitious at the time. Now, five years later, it just sold for $6.825 million, which is almost exactly half the original asking price.”

“In a weak market like this one, prices are supposed to be more negotiable. Keep in mind, though, that an overpriced property has to drop even more than the listing discount to attract a sale. If a property is listed too high today (which would be the market value, plus the discount of 12 percent or so, plus a little more), it won’t take too long to sell. It simply won’t sell at all.”

From Palo Alto Weekly in California. “The annual Assessor’s Annual Report, recently published by the Office of Santa Clara County Assessor Larry Stone, includes a retrospective of the past 10 years. Business is still booming, but nonetheless, as the report notes, the growth rate for business personal property is ‘virtually the same amount as the prior year, 3.3 percent, another indication that our local economy is beginning to cool.'”

“‘I think we’re just at the beginning of what we call a ‘normal recession’ — not a meltdown like we had in 2008,’ he said, but emphasized that he sees indications of much greater stability compared to the last time Silicon Valley saw skyrocketing growth, the dot-com boom — and eventual bust.”

“‘We’re beginning to see a leveling-off; we are beginning to see kind of a normal market coming back,’ he said, noting that for the first time in four or five years, he’s seen ‘for lease’ signs outside of apartments and even some offices. ‘We’re seeing some office vacancies now. The office market is clearly showing signs of over building — again nothing serious.'”

The Midland Reporter Telegram in Texas. “The move to a ‘more normalized’ housing market continued in October, according to the Permian Basin Board of Realtors. The PBBOR reported more ‘price reductions’ led to a mixed market for sellers in Midland.”

“Buyers appear to benefit from a housing inventory of 569 at the end of the month, the most in 2019 and the most going back to October 2016. The average home sold in October stayed on the market 40 days, according to the PBBOR. That average ‘DOM’ was the highest going back to December 2017.”

From The Oregonian. “In another sign that Portland’s long real estate and construction boom is slowing, an ambitious plan to build more than 1,100 apartment units in the Lloyd District has quietly died. The lender to the project known as 1400 Multnomah pulled the plug in late October claiming that developers Bob Bisno and Dan Palmer’s operating company had stopped making payments on their loan.”

“The suit alleges that the Santa Monica-based developers blew through $31 million and never got a single apartment built. ‘Borrower is in default and appears to be insolvent,’ the lender claimed in a lawsuit filed in October. ‘The real property, plaintiff’s collateral, is adrift.'”

“Few predicted this kind of disaster when Bisno and Palmer first came to town in 2016. Oregon had boasted some of the best job growth in the country, which fueled a surge of new arrivals and a housing shortage. An unprecedented explosion of high-end apartment construction followed, reshaping Portland’s skyline.”

“In 2011, only 445 new apartments came to market in the entire Portland Metro area. Three years later, the number had jumped nearly ten-fold to 4,367, according to the CoStar Group. The frenzy peaked in 2018, when the number of new apartments reached 6,059. This year will not be far behind.”

“Until now, there’s been sufficient demand in the market to absorb the flood of new rentals. That may be changing, said Mark Barry, who for years has published a newsletter tracking the Portland apartment market. He pointed to predictions that the supply of new units will exceed demand for the next two years.”

“‘We’ve never seen this kind of boom before,’ he said. ‘Anybody betting against the Portland market has been wrong. But inevitably the pendulum is going to begin swinging back.'”

“By last spring, it was all over. The developers’ company defaulted on the Mosaic loan in April, the lender claimed. Bisno and Palmer tried to bail out gracefully. They hired CBRE Group’s Portland office to sell the land. Their asking price: $22 million. There were no takers.”

This Post Has 90 Comments
    1. As an anecdotal data point, I rent in an Avalon apartment complex on the South Shore of the Boston Harbor and got a lease renewal with $200/month increase ostensibly because the fixtures in the units were being refreshed/upgraded (hadn’t gotten around to mine yet).
      There is a brand new complex of about 300 “luxury” units not half a mile from where I’m at opening this month. Rents are comparable to my “upgrade” price along with a one months free move-in special.

      Lo and behold, the management called me up and said they were cancelling further upgrades and would be sending me an adjusted lease renewal.

      Supply and demand still works as there are many multi unit complexes still coming online around here. The pickings should get good as my lease is up at a very off season end of February.

  1. ‘Few predicted this kind of disaster when Bisno and Palmer first came to town in 2016’

    I’ll go ya way better Oregonian. I had figured out this was going to happen by the end of 2014. How? Motivation. The multi-family biz had by then turned into a greater fool market as evidenced by absurd or negative returns. Plus just the usual crazy talk from lenders and “owners”.

  2. ‘Clearly the glorious days of 2014 are over’

    There should never be glory days for shacks, especially white elephants like these.

    ‘Speaking of 2014 prices, in that autumn, an East Hampton property was put on the market for $13.9 million, which struck us as ambitious at the time. Now, five years later, it just sold for $6.825 million, which is almost exactly half the original asking price’

    Did someone say half? Why we were told these rich goobers don’t have to lower the price! They leave the AC on with the windows and doors open all winter while they fly around the Cara-bino!

      1. Poor Larry! Word is that he was shaken up by the recent death of his protege and friend, Mark Hurd. Larry’s 75 now and Hurd’s death (rumored to be from cancer) is a grim reminder to him that the reaper comes for everyone, even people worth $69 billion.

    1. The economist went on to say, “The U.S. stock market is more over-valued today than at any other time in history. Why own stocks when you can hold risk-free cash with a guaranteed 1.7% return. Buy stocks later after the crash for 70% less.”

    2. Bend, will repeat 2008. While visiting, I visited my friends new trophy home. The foreman was at the house working on the final few things to finish up. He said he bought 5 acres and was going to build houses to sell. He got a 5 acre lot, I said, so 5 acres about 7 houses?, no 38 houses! Then he goes on to tell me he was already had a sale price. First he thought 358K, but then he said no I think 387K would be the price. No building yet and he a price he thinks he going to get in what a year or two from now. Its total dreamland over there in central Oregon. The traffic is soooo bad in and around Bend. I find the people rude and always in a rush to sit in traffic. Best of luck.

      1. “Its total dreamland over there in central Oregon.”

        The only folks in Bend who can afford anything are California equity locusts who paid cash for their homes and receive a big city pension check each month. Look at all the brokerage offices in town; they’re clients are not the lawn mowing, snow plowing yokels. The real issue there is Bend has too few family supporting employers other than government jobs.

        1. I still think of Bend and Burns, Oregon as sister cities. Burns obviously never caught the equity locust/vacation town bug that Bend did.

  3. ‘Buyers appear to benefit from a housing inventory of 569 at the end of the month, the most in 2019 and the most going back to October 2016. The average home sold in October stayed on the market 40 days, according to the PBBOR. That average ‘DOM’ was the highest going back to December 2017’

    Yeah, I’m gonna cut my price because it doesn’t sell in 40 days. Not. These UHS are a lion. You’re going to regret these $300k loans Midland.

    1. One would think that in a city where Antifa roams the streets with impunity and can harass anyone they please while the police look the other way, that houses would already be worthless.

      1. I’ve had the personal theory that we have crap like Antifa, and bunch of the crazy left-progressive-woke crap in part because as a society we are collectively ‘rich enough’ to afford the luxury of letting our indoctrinated go off and stir the pot like that without actually needing to contribute to society, or be fully independent themselves.

        If things were to get really bad for people again; think going past the 2008 recession and more into the great depression territory for enough of the (formerly tax-paying/actually working) population, the amount of resistance to people like that would go through the roof.

        Unfortunately, the free govt benefit bandwagon, established after the great depression and through the great society and on, would blunt that change somewhat as those people and people affected would have a safety net to cling to, and not have to face any harsher immediate realities.

        Thoughts?

        1. I always thought if we didn’t have any government assistance during the Depression we would have seen an actual socialist movement in the USA.

          If times get bad, the socialists will have even more to whinge about.

          1. You have a strong point. I still though feel that we have all these movements in large part because we have a society that can afford to let them go off chasing (sic) social justice and whatnot

          2. Agree. In the US we’ve had the “have-somes” squished in between the “haves” and the “have-nots”. Increasingly we’re getting rid of the “have-somes”. When Ray Dalio, founder of one of the world’s largest and most successful investment firms, says that capitalism “basically isn’t working for the majority of people”, that should be a wake up call. I believe the reforms that Warren and Sanders and putting would preserve the system.

          3. Both of you are right. If we really got into a massive recession, for example worse than 2008, the socialism would get stronger but the identity politics would come to a dead stop. Within weeks the blue-haired feminists would drop their hear-me-roar act and then drop their panties for the patriarchy. And I mean that literally.

          4. In the 1930s a huge percentage of Americans still lived on farms and were self-sufficient in food production. To them the GD was not really a “thing” in the sense of needing handouts from .gov. They may have been cash poor but that was not a big deal. Today with almost everyone sourcing necessities of life through 3rd parties in the form of employers and Wal-Mart the situation is far different.

          5. From a labor perspective the industrial age meant specialization, i.e., pigeonholing , so when bad times arrive it is difficult to find employment, and adapting to a fresh role is arduous for the dull. Governments large and small added fuel to the fire during the depression with isolationist and protectionist policies, which exacerbated the economic downturn. The same thing will likely happen again as incumbent officials place re-election above all else.

        2. Maybe if Herbert Hoover had let the market correct, there never wouldn’t been a Great Depression (compare the 1929 recession to the 1920 recession).

          And maybe Hoover’s policies, and later FDR’s policies, needlessly extended the Great Depression, which really didn’t end until WWII. I believe that’s the argument Amity Schlaes makes in The Forgotten Man.

          And maybe the Great Recession was needlessly extended (with a pitifully weak recovery) by Obama’s policies of more regulation, more useless spending, and picking Wall Street over Main Street (foaming the runway, encourage high RE prices, etc)

          Common people did have faith that FDR (unlike Hoover), for all his faults, really cared about them and was doing his best. Something similar seems to be true for Bill “I feel your pain” Clinton and Trump.

          1. Considering the massive overcapacity of USA industry in the 1930s, exacerbated by financial speculation in the 1920s, I am not sure a long downturn was preventable. There was too much crap in the system, and like a hangover, it takes some time to get back to normalcy.

            China has the same problem today — it’s factories are humming, but not enough buyers. Inventories will mount, capital investment will fail, and that will cascade. Just ignoring the problem doesn’t solve it, but intervention also doesn’t solve it. You are set up to fail after so much malinvestment is enabled for so long.

          2. I agree there is a parallel between the USA in the 1920s and China now regarding mfg and markets. My concern is that China may end up putting all that excess mfg to work making weapons and hardware the way we did in WWII. If they start making a bunch of sealift capacity then I think Taiwan’s days of being an independent country are numbered. I think tech can probably be countered with 100+ million relatively smart guys with plenty of rifles and ammo and transportation. We survived Korea because they didn’t have much ammo but that won’t happen again.

          3. There was massive overcapacity of the wrong sort after both WWI and WWII; IIRC, both were followed by brief recessions. So overcapacity doesn’t have to be a killer; I think it helps when the government helps to clear out the deadwood (or dead companies) right away, UNLIKE what was done after the 2008 Recession, Japan’s crash, and what the Chinese government is doing now.

            BTW Carl, amphibious assaults are very difficult. Now add in anti-ship missiles, and they become even more difficult. Only the US still retains a (modest) amphibious assault capability, and I think even the US would have problems attacking a well defended target.

          4. http://www.heritage.org/research/commentary/2014/10/what-really-ended-the-great-depression
            What Really Ended the Great Depression?
            By Stephen Moore
            October 15, 2014
            “Here’s what happened: Government spending collapsed, from 41 percent of GDP in 1945 to 24 percent in 1946, then to under 15 percent by 1947. And there was no “new” New Deal. This was by far the biggest cut in government spending in U.S. history. Tax rates were cut, and wartime price controls were lifted. There was a very short eight-month recession, but then the private economy surged.”

            “Personal consumption grew by 6.2 percent in 1945 and 12.4 percent in 1946, even as government spending crashed. Private investment spending grew by 28.6 percent.”

            “The less the feds spent, the more people spent and invested. Keynesianism was turned on its head. Milton Friedman’s free-market advocacy was validated.”

            “In sum, it wasn’t government spending, but the shrinkage of government, that finally ended the Great Depression. That’s what should be, but isn’t, in every history book.”

            http://www.forbes.com/sites/peterferrara/2013/11/30/the-great-depression-was-ended-by-the-end-of-world-war-ii-not-the-start-of-it/#1a33d91461cb
            Opinion | Nov 30, 2013 @ 10:20 AM
            The Great Depression Was Ended by the End of World War II, Not the Start of It
            Peter Ferrara , Contributor
            “But increased government spending does nothing to create economic recovery, growth and prosperity. That is because the money to finance that increased government spending is drained from the private sector, either through increased taxes, or increased borrowing. That entire transaction involves a net drag on the economy. Increased taxes to finance the increased spending involve counterproductive incentives that reduce production and growth. Increased government borrowing drains investment capital from productive activities in the private sector and reallocates it to non-productive government consumption.”

            “But a drop in government spending after a war does not depress creativity; it unleashes it. Judging the public sector contribution by its cost is the great error of Keynesian economics….the Great Depression, which had continued through the war disguised by price controls and necessary defense spending, at last came to an end. Economic growth surged by 10 percent over two years and the civilian labor force expanded by seven million workers….”

            http://newsroom.ucla.edu/stories/misguided-government-policies-80595
            This story is from UCLA Today, a discontinued print and web publication.
            Misguided government policies prolonged Great Depression
            Lee E. Ohanian and Harold L. Cole | February 06, 2009
            “So what stopped a blockbuster recovery from ever starting? The New Deal.”

            “All told, these anti-market policies choked off powerful recovery forces that would have plausibly returned the economy back to trend by the mid-1930s.”

            “These codes distorted the economy by artificially raising wages and prices, restricting output, and reducing productive capacity by placing quotas on industry investment in new plants and equipment.”

            “The main lesson we have learned from the New Deal is that wholesale government intervention can — and does — deliver the most unintended of consequences. This was true in the 1930s, when artificially high wages and prices kept us depressed for more than a decade, and it was true in the 1970s when price controls were used to combat inflation but just produced shortages. It is true today, when poorly designed regulation produced a banking system that took on too much risk.”

          5. No story of the Great Depression is complete without knowing that the period was one of private debt deleveraging. By the end of the war, private debt to gdp stood at 27% of the peak level reached in 1933.

        3. The money is coming from student loans and boomer patents and teachers who respectively are subsidizing their loser kids and told them to follow their dreams without ever doing a simple ROI calculation. One law needs to change: make student loans default able again. And reinstate glass stegall.

    1. “…several generations of traders and investors who have grown up without price discovery will be shocked to discover just where “fair” market prices reside.”

    1. I like that the ads are in the same font and print size as regular comments. I still need to pause a moment to distinguish the two.

  4. “From Palo Alto Weekly in California. “The annual Assessor’s Annual Report, recently published by the Office of Santa Clara County Assessor Larry Stone, includes a retrospective of the past 10 years. Business is still booming, but nonetheless, as the report notes, the growth rate for business personal property is ‘virtually the same amount as the prior year, 3.3 percent, another indication that our local economy is beginning to cool.’”

    “‘I think we’re just at the beginning of what we call a ‘normal recession’ — not a meltdown like we had in 2008,’ he said, but emphasized that he sees indications of much greater stability compared to the last time Silicon Valley saw skyrocketing growth, the dot-com boom — and eventual‘ bust.”

    “ We’re beginning to see a leveling-off; we are beginning to see kind of a normal market coming back,’ he said, noting that for the first time in four or five years, he’s seen ‘for lease’ signs outside of apartments and even some offices. ‘We’re seeing some office vacancies now. The office market is clearly showing signs of over building — again nothing serious.’”

    – “Business is still booming, but…”

    – “ our local economy is beginning to cool.’”

    – “ I think we’re just at the beginning of what we call a ‘normal recession’ — not a meltdown like we had in 2008,’ he said,”

    – “ We’re beginning to see a leveling-off; we are beginning to see kind of a normal market coming back,’ he said,“

    – “ The office market is clearly showing signs of over building — again nothing serious.’”

    Me:
    – Things are slowing down, but Hakuna Matata! No worries!

    – The downturn is proportional to the excesses of the boom.

    – Things don’t correct by moving sideways. That’s not how markets work. Not now. Not ever. There are no “permanently high plateaus.” Valuations need to reconnect with reality. Price discovery must reassert itself, else we remain in Oz.

    1. she says sellers are going to sit on the sidelines as prices decline and that NOBODY WANTS TO CATCH A FALLING KNIFE… Wow! Sounds like sellers dont want to sell and buyers dont want to buy. Just wow to MSM housing news, its almost as up and down as trumps tweeters about the trade war

    1. “and when she died all that was left was the loan”

      She burn that shack down to the ground before she died? Be a good way to go out!

  5. Did somebody say Souper Bowl bounce? This piece of Realtorbabble courtesy of the Denver Metro Association of Realtors:

    “I think the spring market really starts right at the beginning of February,” she said. “I think people have recovered from eating and drinking and partying from the holiday season and by January, they’re recouped and ready to jump back into the market.”

    https://www.thedenverchannel.com/news/local-news/steep-drop-in-denver-area-home-listings-in-november

      1. “recovered from eating and drinking and partying”

        The problem is they never will. Debt is for degenerates, and degeneracy only begets more degeneracy.

        Enjoy your “social credit score” hellscape of humanity where you’re forever tethered to the Company Store Of Everything, and where people who don’t carry phones with them every hour of the day are considered sociotechnological lepers.

        Millennials are so apathetic they’ll not just let this happen, but they’ll vote for it in supporting who promises the most gibs.

  6. “The suit alleges that the Santa Monica-based developers blew through $31 million and never got a single apartment built. ‘Borrower is in default and appears to be insolvent,’ the lender claimed in a lawsuit filed in October. ‘The real property, plaintiff’s collateral, is adrift.’”

    31 million Yellen Bux raptured in a single fraudulent apartment scam. “Plaintiff’s collateral adrift.” No wonder banks aren’t accepting each others’ toxic waste collateral for interbank lending, forcing the Fed to pump $100 billion into the repo markets every morning.

  7. Like Screech, Kamala Harris was a terrible candidate who ran a terrible campaign. The failure of her campaign was as simple as that. Yet globalist media outlets and real journalists engage in mental contortions trying to rationalize why someone they so lionized was such a complete dud. All of the wasted ink and Real Journalist fawning could be summed up in two words: She sucked.

    https://www.vanityfair.com/news/2019/12/the-self-sabotaging-of-kamala-harris

        1. I despise women who use sex to advance their career. It makes it harder for those of us who don’t to be taken seriously. I speak from experience at two NYC law firms.

    1. ” (£64,000) for a two-year ‘jeonse’ contract, which is a large deposit paid at the start of a tenancy in place of a monthly rent, which is then returned when the lease expires.”

      But then later there’s this: “Renters are largely working people in their 20s and 30s who cannot afford expensive deposits.”

      Contradictions aside, this is very interesting. I’ll have to look for more articles.

      Maybe some of those guys could afford a better place if they didn’t spend so much on tattoos? :p

  8. A spokesman for the estate of Anne Sullivan, who taught Helen Keller to read and write, confirmed that her breakthrough moment in teaching the blind and deaf Ms. Keller to communicate was when she used her finger to write “Realtors are liars” on Helen’s palm.

    1. Paintings on cave walls from 10,000 BC have been revealed with the writing “realtors are liars”. We are born with this knowledge as it for our survival and part of our dna. Scientists have proven Realtors do not have this chromosome

      1. While scientists tell us that dinosaurs became extinct due to a huge meteor hitting the earth, the NAR is suppressing the real story: after purchasing overpriced shacks based on cavewoman Suzanne’s research, the dinosaurs actually welcomed that meteor hitting the earth and ending their misery. Fact, boys and girls.

    1. So far today the Plunge Protection Team is holding the line at zero. Keep the faith…the stock market always goes up!

      1. As usual, the algos are getting goosed by fictitious “trade deal progress” claims. The Chinese have made it clear that dropping tariffs is a precondition of any meaningful trade deal, which in any event they will never negotiate in good faith.

      2. I have a hunch that with the impeachment trial going to its next step, trump is going to give the PPT some vacation time. We are Going to be seeing more red than green this December

        1. He does seem fond of offering an occasional glimpse of what kind of havoc the disastrous economic policies of the Democrats could bring in case they took over in 2020.

    2. The problem with the dour 2020 market prediction is that it assumes the stock market cannot be endlessly rigged and manipulated.

      Why couldn’t it be?

      And speaking of rigged manipulation, that was quite the bungee jump Mr Market took early today before turning up.

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