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A Glut Of Supply, With More To Come

A report from the Denver Post in Colorado. “Home sales aren’t just slumping big in metro Denver, they are dropping across much of Colorado and in what were some of the hottest markets in the country. Year-over-year single-family home sales in September were down 15.8 percent in Adams County, 17.8 percent in Arapahoe County, 10.3 percent in Boulder County, 11.9 percent in Denver, 16.4 percent in Douglas County and 25.6 percent in Jefferson County, according to the CAR report.”

“But the state’s other metro areas weren’t immune. Single-family home sales fell 26.7 percent in Pueblo County, 17.2 percent in El Paso County and 18.8 percent in Mesa County. Fort Collins and Greeley held up better, with a smaller 4.4-percent drop in Larimer County and 7-percent drop in Weld County.”

“‘A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases,’ Lawrence Yun, chief economist, said in the report.”

From My Edmonds News in Washington. “In Seattle, inventory has increased 101 percent compared to the third-quarter of 2017, the report notes. Michelle Van Tassell, principal managing broker for Coldwell Banker Bain’s Edmonds and Lynnwood offices, said that while Snohomish County hasn’t experienced the same jump in inventory as its neighbors in King County, it did post double-digit percentage inventory increases over the same quarter last year.”

“These included a 31 percent rise in inventory in Everett, 67 percent in Edmonds, and 75 percent in Lynnwood. Marysville inventory, by comparison, decreased 1.7 percent. ‘We are encouraging sellers to be realistic about pricing considerations and proactive in preparing their homes for market. Our buyers who may have been priced out just a few months ago are finding they can take a bit more time to explore housing options, while still structuring strong offers for a competitive field,’ said Van Tassell.”

“According to the report, the average selling price for a home in Edmonds in third quarter 2018 was $712,000. That’s a slight decrease from the $737,000 average sales price reported in second quarter 2018. In Lynnwood, the average sales price was $544,000, also a decrease from the $581,000 average price in the second quarter.”

“Overall, inventory in Snohomish County was 38 percent higher in third quarter 2018 compared to the same time in 2017, the report said. Both of those were above the third-quarter average sales price of $528,000 reported across Snohomish County.”

From MarketWatch. “Existing-home sales ran at a seasonally adjusted annual rate of 5.15 million in September, the National Association of Realtors said Friday. That was a 3.4% decline for the month, and the lowest pace of sales since November 2015.”

“The Realtors blamed another stagnant month in the housing market on rising mortgage rates, higher prices and the supply stranglehold. But it’s also likely that many would-be buyers are dropping out of a market that’s become too competitive, expensive and unsatisfying, especially as conditions in the rental market ease up. The national median rent declined compared to a year ago in September, Zillow said Thursday. That was the first yearly decline since 2012, and reflects a glut of supply, with more to come.”

“‘Recent sluggishness seems increasingly driven by softer demand from would-be home buyers in the face of two emerging trends: falling rents and rising mortgage interest rates,’ said Zillow Senior Economist Aaron Terrazas. ‘It all adds up to a situation in which supply-side factors are becoming less critical in driving home sales as they give way to softening demand. There’s still a lot of energy left in the housing market, but the rapid rise of the past few years has clearly begun to level off.'”

This Post Has 42 Comments
  1. ‘But the state’s other metro areas weren’t immune. Single-family home sales fell 26.7 percent in Pueblo County, 17.2 percent in El Paso County and 18.8 percent in Mesa County’

    ‘the average selling price for a home in Edmonds in third quarter 2018 was $712,000. That’s a slight decrease from the $737,000 average sales price reported in second quarter 2018. In Lynnwood, the average sales price was $544,000, also a decrease from the $581,000 average price in the second quarter’

    What are the chances that the “fundamentals” in so many towns and cities would deteriorate at the exact same time?

    1. “According to the report, the average selling price for a home in Edmonds in third quarter 2018 was $712,000. That’s a slight decrease from the $737,000 average sales price reported in second quarter 2018.”

      WOW. I had no idea Edmonds was such a sinner. The median HOUSEHOLD income in Edmonds is $72k. 10X income in Edmonds. This pig is going down.

    2. Housing is slowing nationally, and has been for a while now. Many/most metros in bubble territory, including outlier regions. I’m in El Paso County, CO, just one of many “bubblicious” parts of the State (and nation). Again, the trends are national, and global.

      1) The easy money policies from the Fed (US) are unwinding; QE is now QT, at -$50B/mo. starting this mo. Interest rates are rising, and will continue to do so until “something breaks”. We’re now on the downside of the third asset bubble of the 21st century; Bull markets are more fun than bear markets. Asset bubbles don’t end well, and just like in ’08-’09, the Fed can’t prevent the ultimate collapse. This time it’s the “everything bubble”. Of course the Fed “never saw this coming.”

      “We are in a big, fat, ugly bubble. And we better be awfully careful. And we have a Fed that’s doing political things. This Janet Yellen of the Fed. The Fed is doing political — by keeping the interest rates at this level. And believe me: The day Obama goes off, and he leaves, and goes out to the golf course for the rest of his life to play golf, when they raise interest rates, you’re going to see some very bad things happen, because the Fed is not doing their job. The Fed is being more political than Secretary Clinton.” – Donald Trump – 9/26/16

      2) https://blog.knowledgeleaderscapital.com/?p=15818
      More Evidence of a Slowing Housing Market, and its Implications
      October 19, 2018 by Bryce Coward, CFA
      – “The slowdown in home sales is likely to put pressure on prices”
      – “Existing sales lead the selling price by eight months,…”
      – “inventory levels rose in September, a phenomenon that hasn’t occurred since 2007 because the seasonal trend is for home listings to peak in the summer and fall off into the winter.”
      – “the slowdown [in] housing activity leads overall economic activity by eighteen months. Housing, being one the most cyclically sensitive sectors of the economy, often feels the impact of higher rates well before other areas.”

      3) BTO: “You Ain’t Seen Nothin’ Yet” (1974)
      https://www.youtube.com/watch?v=4cia_v4vxfE
      I met a devil woman
      She took my heart away
      She said I had it coming to me
      But I wanted it that way

      I think that any lovin’s good lovin’
      So I took what I could get, mmm ooh ooh
      She looked at me with big brown eyes
      And said

      You ain’t seen nothing yet
      B-b-b-baby you just ain’t seen n-n-n-nothin’ yet
      Here’s somethin’ that you’re never gonna forget
      B-b-b-baby you just ain’t seen n-n-n-nothing yet

      1. Interest rates are rising, and will continue to do so until “something breaks”.

        As David Lee Roth once said…”one break, coming up…”.

  2. ‘A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases,’ Lawrence Yun’

    Translation: It suxs to be you Larry.

    1. This is only the first 1.5% bump from a low of around 3.40%. We have at least another 3% to go to get to anywhere close to historical rates. We are told the economy is doing great and we have the lowest unemployment in decades, yet if the Fed keeps slowly allowing rates to reach a normal economic equilibrium we will implode. Isn’t that precisely why we have to raise them, so that have a cushion when the economy falters and to let air out of this nasty bubble? The rising housing inventory is just more evidence that raising rates is the cure and not the problem. Even the biased “experts” admit inventory is still well below historical averages and that rising rates are helping us get back to normal. Consumer shouldn’t be making “quick decisions” when it comes to buying over-priced assets and Yun knows it. I love how Trump is trying to blame the Feds when the tax cuts for the rich necessitated they take action to curtail out of control inflation caused by his reckless and unethical actions.

        1. I prefaced that saying “we have been told.” I believe there are many people that have dropped out or have accepted jobs that pay less money than they previously made. We have not been seeing much wage increases.

          1. In real terms, wages have been stagnant since the 1970s, while the Fed’s debasement of the currency has relentlessly eroded the purchasing power of those wages. In addition, the Bernanke-Yellen asset bubbles have made shelter increasingly unaffordable for anyone earning the median income or less.

        1. If standing up to corrupt politicians, and making decisions based on facts and sound analysis thereof, makes one a snowflake, I am a freaking blizzard.

          1. “I love how Trump is trying to blame the Feds when the tax cuts for the rich necessitated they take action to curtail out of control inflation caused by his reckless and unethical actions..”

            “If standing up to corrupt politicians, and making decisions based on facts and sound analysis thereof, makes one a snowflake, I am a freaking blizzard.”

            Wow. You’re blaming Trump for the bubble? That is the most absurd claim yet. This is entirely on Bush, Obama and the Fed. Trump had ZERO to do with the bubble.

          2. Not once have I blamed Trump for the bubble. I blame him for his hypocrisy and self dealing. Obviously corporate tax cuts and efforts to eliminate bank regulations designed to make sure banks had more skin in the game are inflationary and pro-bubble regardless of the bubble’s origination. He is on record many times saying that the Fed kept rates too low for too long. He only changed his story when the stock market started tanking prior to mid-term elections, and needed someone to blame. Personally, I believe the Fed should have been raising rates since 2012 once it was obvious that bubbles were being created again. The complexity with economics is understanding the impact of multiple variables occurring over long-time periods.

      1. necessitated they [the Fed] take action to curtail out of control inflation caused by his [Trump’s] reckless and unethical actions…

        Wow Tim. We had the Big Inflation for the past 40 years. You’re going to see something else now. Trump indeed.

    2. It suxs to be you Larry.

      Not really. Much like the former Iraqi Information Minister, Baghdad Bob, Yun is well compensated regardless of how demonstrably false and brazen his lies and propaganda are.

    1. The link is that there is that a disturbingly high level of those suffering from AIDS face homelessness. It is a chronic disease that often impacts those that have not been able to succeed financially because of discrimination in the workplace, family and church, coupled with chronic disease. I think part of your confusion is reading stories from media outlets such as Breitbart that are primarily responsible for the “fake news” epidemic.

      That said I don’t think Prop 10 is the right solution. Rent control is its own form of discrimination. What is less discriminatory is allowing market forces to reach an equilibrium. The government has never succeeded well in interfering with housing. Id rather let the markets freely push down real estate prices, and allow people to give to whom they want.

        1. Also, for some reason when I edit my comments before posting on this blog I get locked into a mode in which my edits write over my text rather than allowing me to do insertions. This results in a fair amount of scrambling of the text. Is there a key to go in and out of insertion v overwrite mode?

        2. While I disagree that we should all avoid any news sources other than CNN, you should be aware that the appropriate response to Albuquerque Dumb is to mock him. He still hasn’t eaten his three-course crow dinner that he is due.

      1. Tim…fyi AlbuquerqueDan is a Republican troll who constantly tries to divert the discussion to politics. Don’t take the troll bait.

        1. Hated Bush just as much as I hated Obama. I have consistently for the entire ten years plus I have posted been an anti-globalists. You were a major Obama supporter while he pursued policies which were ensuring that housing prices would never come down and you would never get the bargain you wanted. Smart.

      2. So you believe that federal funds should be used to lobby for political positions? Providing housing directly may be justified but using funds for lobbying is grossly inappropriate.

      1. I can’t help but wonder if we are entering a historic period of declining housing prices on a global level. Given the international scope of the Housing Bubble, I guess it isn’t that surprising.

        1. I can’t help but wonder if we are entering a historic period of declining housing prices on a global level.

          I believe we will soon. But I expected TPTB to try to spin the wheel another time or two if they think they can pull it off. It seems to be the method of choice for pumping printed money to stave off deflation.

  3. “But it’s also likely that many would-be buyers are dropping out of a market that’s become too competitive, expensive and unsatisfying, especially as conditions in the rental market ease up. The national median rent declined compared to a year ago in September, Zillow said Thursday. That was the first yearly decline since 2012, and reflects a glut of supply, with more to come.”

    It’s encouraging that rents are falling already at the peak of a long economic boom. Once the boom softens a bit, and fly-by-night investors dump a lot more inventory into the purchase market, rents should drop considerably, as no landlord wants to hold on to empty units during a period of falling prices.

  4. I find it interesting that realtoRs seem to be admitting that something is actually happening this time. They denied it till the bitter end last time. Maybe they learned?

  5. Walked through a Boise flip yesterday on our walk. They had a sheet listing $20-30k worth of stuff done during flip: new electric ($18k), floors ($6.5k), new furnace, finish top bedroom, etc. This house is in a very nice neighborhood, and this area has been epicenter of bidding wars. Seems to me they bought at very peak and are now could very well chase the market down below their costs. I love it.

    Sold in July. Original listing: https://www.berkshirehathawayhs.com/homes-for-sale/1611-N-7th-St-Boise-ID-83702-246533921

    Listed in October. New listing:
    https://www.redfin.com/ID/Boise/1611-N-7th-St-83702/home/106669829

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