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More Would-Be Buyers Believe Prices Will Start To Come Down Soon

A press release from the California used house salespeople. “The California housing market posted its largest year-over-year sales decline since March 2014 and remained below the 400,000-level sales benchmark for the second consecutive month in September, indicating that the market is slowing as many potential buyers put their homeownership plans on hold, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.”

“‘The housing market continued to deteriorate and the decline in sales worsened as interest rates remained on an upward trend. More would-be buyers are self-sidelining as they believe home prices will start to come down soon, making housing more affordable despite rising interest rates,’ said C.A.R. President Steve White. ‘Tax reform, which increases the cost of homeownership, also is contributing to the decline, especially in high-cost areas such as the San Francisco Bay Area and Orange County.'”

“The statewide median home price dropped to $578,850 in September. The September statewide median price was down 2.9 percent from $596,410 in August but up 4.2 percent from a revised $555,400 in September 2017.”

“‘Price appreciations have slowed in the last few months and inventory has risen considerably since June when the statewide median price hit a new peak,’ said C.A.R. Chief Economist Leslie Appleton-Young. ‘Buyers are becoming increasingly concerned about market developments and are reluctant to purchase at the prevailing market price. As such, the deceleration in price growth will likely continue in coming months.'”

“On a regionwide, non-seasonally adjusted basis, the Southern California region led the state’s sales decline, falling 17.3 percent from a year ago. Los Angeles County experienced the largest drop in the region at 22 percent, while Orange County declined 21.8 percent.”

“Sales in the Bay Area declined 16.4 percent from September 2017, the largest decline since October 2010. Santa Clara posted the largest drop at 22.6 percent, while Marin experienced the lowest decline at 1.1 percent. Alameda (-10.4 percent), Contra Costa (-17.3 percent), Napa (-14.2 percent), San Francisco (-11.5 percent), San Mateo (-14.6 percent), Solano (-19.3 percent), and Sonoma (-19.4 percent) counties all posted double-digit declines.”

“Statewide active listings rose for the sixth consecutive month following 33 straight months of declines, increasing 20.4 percent from the previous year. September’s listings increase was the biggest in nearly four years.”

“At the regional level, the San Francisco Bay Area increased the most in active listings, with a surge of 44 percent year over year. The increase was most obvious in Santa Clara, as the county’s active listings more than doubled (+113 percent) from last September. The Southern California region and the Central Valley region also had substantial gains in active listings, with year-over-year increases of 23 percent and 13 percent, respectively.”

“The Unsold Inventory Index, which is a ratio of inventory over sales, rose again in September from 3.3 months in September 2017 to 4.2 months in September 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.”

“C.A.R.’s statewide sales price-to-list price ratio* hit the lowest level in 20 months but was down from a year ago at 98.5 percent in September 2018 compared with 99.1 percent in September 2017. The decline indicates that buyers may have more negotiation power in the current market than a year ago.”

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This Post Has 49 Comments

  1. ‘inventory has risen considerably since June when the statewide median price hit a new peak’

    Peak, in June? But it’s October. Sounds like would-be buyers already know shack prices are down Leslie.

  2. ‘The Unsold Inventory Index, which is a ratio of inventory over sales, rose again in September from 3.3 months in September 2017 to 4.2 months in September 2018’

    There are tables at the bottom of the link.

    Ventura is 6.3 months.

    DONG!

  4. The statewide median home price dropped to $578,850 in September. The September statewide median price was down 2.9 percent from $596,410 in August but up 4.2 percent from a revised $555,400 in September 2017.

    As a future FB, I have no intention of buying in this over inflated market that is showing declines and projecting even more. Odd that we can read the chief economist of the NAR drop a report stating 2019 will cool down and project a 2-3% increase and then this lady at the CAR say the opposite, all in the same day… Yun is a puppet and only saying what he is paid to say. This Leslie lady has some balls to speak the truth

      1. Ah, I got sidetracked while commenting but was thinking the same thing and wondering why was it revised??

  5. Second and third order derivatives at work here. By the time everyone realizes buyers are changing their mindset to ‘wait and get it for less’ (now), the change in direction will have actually been underway for a while. And almost no one in the media or with a vested interest in RE will realize that, or be willing to admit it.

    1. I think housing bubble 2.0 will rapidly blow up much quicker than 1.0. People still remembered and most are probably trying to time the market. Of course, this doesnt end well for most.

      1. You are quite right and I have been trumpeting the same with folks I know locally. Anyone who went through pain in the last debacle or who were close to others who did, have the memory seered into them. Once suspension of disbelief is acheived, it will unravel in a hurry.

    2. I wonder what economic entities will crash as a result to bring the stock market down this time. Maybe none? The government holds most of the mortgages.

      1. How about those that have borrowed on the cheap to buy back their own stock, to make the principles rich. Debt is a lie and a deception which will eventually be exposed.

      2. Yes, but investments banks will hold lots of mbs and various derivatives. There will,be pain again for lending entities. Although my guess is that they are catching the scent early this time and unloading

      3. I wonder what economic entities will crash as a result to bring the stock market down this time.”

        Government bonds as interest rates trend up

  8. ‘Sales in the Bay Area declined 16.4 percent from September 2017, the largest decline since October 2010. Santa Clara posted the largest drop at 22.6 percent…The increase was most obvious in Santa Clara, as the county’s active listings more than doubled (+113 percent) from last September’

    Shazam, that’s a lotta shacks! Where did they come from? And just when no one wants to buy them. Where is Santa Clara anyway? Isn’t it on the way to Chinchilla?

      1. And yet we don’t hear about thenahortage of foreign investors, we only hear that interest rates have risen, talking about interest rates increases that would add a few hundred a month to the mortgage on a million dollar home. I would think that if someone can afford that kind of mortgage payment, a few hundred more would be a drop in the bucket for em but yeah it’s the rate hikes for sure…

        1. It has nothing to do with the payment and what they could afford. It is about the manic expectation of unearned gains to the moon. You can’t really pay off a loan 10 x gross income. One would only sign up for it if they expected it to make them rich. Guess what, bubbles don’t last a lifetime, not even the biggest one in history.

    2. Like rats on a sinking ship, they are bailing…and listed their investment properties. This is what speculators do!

  9. Santa Barbara leads the way with the first significant YOY price decline…I would have expected orange county

  11. “The Unsold Inventory Index, which is a ratio of inventory over sales, rose again in September from 3.3 months in September 2017 to 4.2 months in September 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.”

    I think they used a 12-month average sale number, to take out seasonal adjustments. Otherwise, the supply of months will explode. In a few months though, they can’t hide this forever.

    1. Yep…I have read a few studies that say 4 months is balanced market (due to technology) vs the old days of 6 months. So its even worse than it appears

      1. Word is that they are going to revise that number to 8 months, making it a clear sellers market once again. Once buyers hear this, they will jump back in and actualize this!

  12. “The statewide median home price dropped to $578,850 in September. The September statewide median price was down 2.9 percent from $596,410 in August but up 4.2 percent from a revised $555,400 in September 2017.”

    I recall seeing these sort of numbers for Bitcoin for quite a while after the peak was reached, up until the point when the year-on-year numbers were no longer up.

    1. It seems like interest in Bitcoin is dying.

      Alternative ETFs
      Bitcoin Hits New Yearly Low Volume
      By Brenton Garenon
      October 22, 2018

      Bitcoin prices traded modestly lower Monday with the largest digital currency by market value residing just under $6,500. While bitcoin’s Monday declines were tolerable, what was more noticeable was slumping volume in the cryptocurrency.

      Bitcoin, by far the largest digital currency, is not starved for attention, but that does not mean trading volume in the cryptocurrency is always robust.

      In fact, some data points suggest that when the price of the digital currency falls, so does its volume.

      “Over the past 24 hours, Bitcoin has achieved a new yearly low volume, demonstrating a lack of momentum and strength to recover to the higher region of $6,000,” reports CCN. “On Coinmarketcap, the volume of Bitcoin fell to $3.1 billion while it fell to $1.91 billion on CoinCap. The previous yearly low point of the Bitcoin volume was $3.2 billion on Coinmarketcap and $2 billion on CoinCap.”

      https://www.etftrends.com/bitcoin-hits-new-yearly-low-volume/

  13. San Diego residents are doomed to have to continue competing with illegal hoteliers for living space.

    Government Vacation Rentals
    The Vacation Rental Dilemma, Briefly Solved, Is Back Again
    The City Council voted Monday to rescind strict rules passed in July that limited vacation rentals to a homeowner’s primary residence. Here’s what we know about what led up to that decision and what may be next.
    Lisa Halverstadt
    2 hours ago
    Vacation rental opponents hold up signs during a City Council meeting. / Photo by Adriana Heldiz

    Regulations that would have sharply curtailed vacation rentals citywide are now off the books – which means city leaders must once again tackle an issue that has evaded solutions for years.

    The City Council voted Monday to rescind strict rules passed in July that limited vacation rentals to a homeowner’s primary residence. Opponents of the rules qualified a referendum to overturn them. Faced with a decision to let the referendum move forward and let the issue go unresolved for as long as two years until it went before voters, or to axe its own rules after several failed tries to create regulations, the Council chose the latter.

    “We don’t want to be in limbo for two years,” said City Council Pro Tem Barbara Bry, who earlier this year led the effort to enact the controversial rules.
    …

    1. What I don’t get is why people come here for vacation. It’s the most generic place on the west coast.

  16. Even though the purchase market is softening in SoCal, with outright price declines already reportedly underway, the USC real estate prediction peops are predicting another 10% increase in rents over the next two years.

    SoCal rents always go up, they say.

    1. Business
      Southern California to see smaller rent hikes over the next two years, forecast says
      (AP Photo/Paul Sakuma)
      By Jeff Collins | Orange County Register
      PUBLISHED: October 17, 2018 at 2:40 pm | UPDATED: October 17, 2018 at 2:45 pm

      Southern California rents will keep rising over the next two years, but at a slower pace as vacancy rates rise slightly in Los Angeles and Orange Counties, according to USC’s Casden Multifamily Forecast released Wednesday, Oct. 17.
      …
      San Diego County tenants face the biggest rent increases. Rents there are projected to rise 10.6 percent there over the next two years to an average of $2,187 a month in 2020.
      …

        1. I agree that wages are stagnant.

          Higher rents could reflect the mass effects of households downsizing their living spaces. For instance, suppose lots of Baby Boomers are transitioning from their child rearing years to empty nester years. If such households sell a single family home in order to start renting, it could free up cash flow to fund higher rental payments than the last tenant paid.

  17. Watch out for ‘dead cat bounce’ in stocks because there’s more pain ahead: Morgan Stanley’s Wilson
    By Sue Chang
    Published: Oct 22, 2018 5:21 p.m. ET

    Analyst casts doubt on whether Santa rally will materialize
    Terrance Horan/MarketWatch
    Is it a rebound or a dead cat bounce?

    October is living up to its infamous reputation as a volatile month for stocks with major indexes down sharply and there is likely more pain ahead for investors, according to one prominent Wall Street analyst.

    The recent rebound “was a dead cat bounce,” said Michael Wilson, an equity strategist at Morgan Stanley, in a report. “We look for confirmation with a definitive break of the S&P 500 through its 200-day moving average.”
    …

  18. Oh no…not another 300+ point drop in the DOW futures! They said that the stock market always goes up. They said to buy the dip.

  19. Dow futures falls about 350 points as China rally stumbles
    By Barbara Kollmeyer and Mark DeCambre
    Published: Oct 23, 2018 5:34 a.m. ET
    A quintet of Dow components are set to report quarterly results, including Caterpillar and McDonald’s
    Bloomberg News

    Stock futures pointed to a punishing session Tuesday as a two-day rally for China’s stock market began to unravel, reviving questions about economic growth in the second-largest economy and the implications for the U.S.
    …

    1. In the past didn’t everyone else trigger on us? This could be big if our market is now getting triggered by China’s.

      1. This is why we’ve been talking about China for years. The enormous pile of debt spreads instability all around the world.

  20. “As such, the deceleration in price growth will likely continue in coming months.”

    Hey, as long as the word “growth” is in there …

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