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We Know We’re At The Top Because It’s Behind Us

A report from the Press Democrat in California. “Sonoma County home sales plunged last month to the lowest level for September in 11 years, the clearest sign yet of a housing market slowdown. Many sellers feel whiplashed by what seems a sudden drop in buyers’ interest, agents said. ‘If you haven’t sold in 30 days, it’s price, condition and location,’ said Brenda Alcaron, an agent with Keller Williams in Santa Rosa. Listed homes had ‘better be dialed in,’ not only clean but with attractions like recent bath and kitchen upgrades, she said.”

“People bought just 327 single-family homes here in September, according to The Press Democrat’s monthly housing report compiled by Pacific Union International senior vice president Rick Laws.”

“That’s a nearly 25 percent decrease in homes sold from a year ago, and the fewest sales in September since 2007 when the housing market was entering a historic crash that ended with sale prices cut in half.”

“Too many homes are sitting on the market without offers, because buyers view them as overpriced or the properties lack the preparation to stand out in a more crowded field of houses listed for sale, real estate agents said.”

“The median price of a single-family home last month hovered at $660,000, a decline of less than 1 percent from August. That represented a nearly 7 percent increase from a year ago, but was below the record median price of $700,000 set in June.”

“Agents said the first half of the year marked the peak in county home prices. Indeed, median sales prices the past three months lagged those of the first six months of the year. ‘We know we’re at the top because it’s behind us,’ said Trish McCall, an agent with Keller Williams in Santa Rosa.”

“While sellers still have been slow to reduce prices, buyers have been equally reluctant to make lower counteroffers because of uncertainty about ‘where the bottom’s going to be,’ said Laura Hall, associate partner with Terra Firma Global Partners in Santa Rosa. ‘Nobody wants to do anything because they’re afraid of making a poor decision,’ Hall said.”

“Hall has listed a house for $998,000 for seller Melissa Nagle on Marsh Hawk Drive in the Skyhawk neighborhood in east Santa Rosa. As of Tuesday, the home had sat on the market 33 days. It drew eight groups of potential buyers during an open house ‘and it’s been silent ever since,’ Hall said.”

“If the home fails to sell this fall, Hall said, her client likely will take it off the market this winter and list it again for sale next spring. Hall quoted a colleague on what it takes for a house seller to land a buyer in this era of rising home inventory: ‘You have to be the Goldilocks.'”

This Post Has 50 Comments
  1. ‘Many sellers feel whiplashed by what seems a sudden drop in buyers’ interest’

    Sharp drop after a blow out top suggests a bubble.

    ‘If you haven’t sold in 30 days’

    But. Six months. Balance. Sellers market!!

    1. ‘Many sellers feel whiplashed by what seems a sudden drop in buyers’ interest’

      Hire yourselves an ambulance-chaser, greedheads.

        1. Don’t forget the low inventory. Cuz if realtors had more inventory, they could sell it all. They said so, and realtors don’t lie.

      1. Maybe it’s time for would-be buyers to send greedhead sellers maps depicting the local food banks and homeless shelters. And a complimentary bottle of their future adult beverage of choice, Mad Dog 20/20.

  2. More Boise flipper action… this same realtor did well on a flipped house back in May. Apparently, not so for their current endeavor… they keep delisting/relisting this flip on the MLS to make it appear as though it is “fresh” and not languishing at a wishing price. Flippers gonna get roasted.

    Check out the shenanigans: https://www.redfin.com/ID/Boise/4223-W-Camas-St-83705/home/106783683

    p.s. this flip I posted a few days ago just had an $8k reduction… https://www.redfin.com/ID/Boise/1611-N-7th-St-83702/home/106669829

    1. This is precisely the point in the bubble where the greatest fool is exposed. These specuvestors never stop buying until prices revers, then a whole army of them lose everything. Hello, foreclosure.

    2. PS – WOW, that is a hideous choice for a front door and accent color. They need to repaint that immediately if they’re to unload that boat anchor.

  3. ‘While sellers still have been slow to reduce prices, buyers have been equally reluctant to make lower counteroffers because of uncertainty about ‘where the bottom’s going to be’

    Bottom? Sounds like gambling.

    ‘what it takes for a house seller to land a buyer in this era of rising home inventory: ‘You have to be the Goldilocks’

    Well, you might try writing letters and feeding various wild rodents. Just sayin.’

      1. Sold for 2.2M in 2007 they had asked 4M now back to what they paid for it more or less. So no profit in 10 yrs Jersey and Zen? Hmm

  4. “That’s a nearly 25 percent decrease in homes sold from a year ago, and the fewest sales in September since 2007 when the housing market was entering a historic crash that ended with sale prices cut in half.”

    Thanks for the reminder and insight telling me that I should continue waiting until we see 50%+ price reductions.

    1. Funny we focused on the same quote at almost the same time.

      This time is different than the 2007-2009 episode. Don’t ask me how I know…

  5. “That’s a nearly 25 percent decrease in homes sold from a year ago, and the fewest sales in September since 2007 when the housing market was entering a historic crash that ended with sale prices cut in half.”

    Not to worry! That will never happen again, as lightning is well known to never strike twice.

  6. “If the home fails to sell this fall, Hall said, her client likely will take it off the market this winter and list it again for sale next spring.

    Your client is an idiot, Ms. Hall. By next Spring her shack will almost certainly be worth far less than it is right now. This is as good as it gets, greedheads.

    1. “…her client likely will take it off the market this winter and list it again for sale next spring….”

      The adult version of “give me allowance or I am going to hold my breath and turn blue”

    2. I would bet $$$ that this Spring will bring a massive glut of listings, for two reasons:

      1) Sellers are in denial about where market is headed, so they naturally think waiting until Spring will bring back the mania (which they have not come to realize existed until very recently)

      2) Realtors confirming the mistaken beliefs above, blaming slowdowns in rising interest rates and seasonal slumps.

      Bring. It. On.

  7. “That’s a nearly 25 percent decrease in homes sold from a year ago, and the fewest sales in September since 2007 when the housing market was entering a historic crash that ended with sale prices cut in half.”

    Gosh, it’s almost like history is repeating itself. But that would be un-possible, since that most peerless of prognosticators, Janet Yellen, assured us there would not be another financial crisis “in our time.”

  8. “…buyers have been equally reluctant to make lower counteroffers because of uncertainty about ‘where the bottom’s going to be,’ said Laura Hall…” “…Nobody wants to do anything because they’re afraid of making a poor decision,’ Hall said…”

    Seems to me that all the “poor decisions” were made when all these astute buyers were fighting each other to overbid each other.

    1. they’re afraid of making a poor decision…

      If you buy anything that you can’t pay for without a 20 or thirty year loan, you made a poor decision.

      1. Nope, sometimes buying real-estate is a good decision, sometimes it is a bad decision. Don’t get caught in the flip side of ” it always goes up” it is equally wrong to assume it is “always a bad deal”. Sadly in this life there are no certainties.

        1. There are some certainties we ought to hew to, namely that we shouldn’t overextend ourselves for housing. If you’re mortgage is 2x-3x your income, that is a bit more reasonable. If you are at 6x, 8x, or 10x, that is gambling. You might win, but you have to look at the consequences of what will happen if you lose.

  9. Listed homes had ‘better be dialed in,’ not only clean but with attractions like recent bath and kitchen upgrades, she said.”

    What do you all think of this? Is it better to list at a lower price and let the buyer do the updates, or go all HGTV on the house and get a higher market price?

    1. I’d certainly rather do the upgrades myself to my preferences than overpay for someone else’s taste/preferences!

    2. Better to list lower and let buyer do updates. Different potential buyers will have varying preferences over future updates one could make. By trying to anticipate future buyer preferences, the seller is likely to guess wrong, therefore paying for improvements in excess of the resulting bump in the sales price. It’s more economically efficient to reduce asking price by what you guess the repairs would cost and let the future owner figure out what improvements to make.

      1. One further thought: It might work better to not list lower, but be ready to make concessions for the anticipated cost of future repairs if your buyer requests them. Generally speaking, an up front offer to give away money is seldom an optimal selling strategy, and that’s what you are doing if you make repairs before putting your home on the market. Used home sellers will recommend this every time, as you are contributing to their commission.

    3. go all HGTV…

      Decades ago it was commonly said that you’ll not get more than half of what you spend on improvements back in sales price when you sell.

      During the bubble making improvements might have been profitable simply because of the passing of time.

      In a falling market, time is your enemy and improvements are cash in the trash.

  10. Asset Management
    ‘This is just the start’ — fund managers react to China rout
    Investors and China-watchers on the prospects for a resolution of the trade standoff with the US
    By Mark Cobley
    October 23, 2018
    Updated: October 24, 2018 1:25 p.m. GMT

    Fund managers investing in China are expecting no quick resolution of the country’s trade war with the US, and bracing for a bumpy ride in stocks — but most hold steady to the view that the country’s long-term prospects are good.

    China’s benchmark CSI 300 index lost 2.7% on Tuesday, dropping to 3,183.4 as of market close at 08.00 BST. That in turn pulled European indexes down on October 23, with the FTSE 100 off by 1.1% at 6,969.32 by market close at 16:30 BST.

  11. In West LA, we are in a kind of suspended animation. I see the same tired old listings over and over, some with major reductions, such as this one (which I linked a few weeks ago)
    https://www.zillow.com/homes/for_sale/Los-Angeles-CA-90064/house_type/20498886_zpid/96045_rid/3-_beds/globalrelevanceex_sort/34.067485,-118.38584,34.003186,-118.47416_rect/13_zm/0_mmm/

    It went pending in September for 700K less than original asking price. The sign outside still says “in escrow” but now it’s back on the market as of Oct. 12.

    On the other hand, what is not happening yet is a major jump in inventory. It will be interesting to see how long that takes and how it plays out. I am keeping track of inventory in two zip codes. I’ve learned from the last time around that the general conditions of a market manifest themselves locally in different ways. In my area, I don’t expect a huge jump in inventory of “viable” homes any time soon. First we have to go through all the oversized new homes and the dumps.

      1. I would not call it a dump. To me it’s a cottage on steroids, way larger than necessary for a normal family with a normal income for this area. Lots of empty square footage as in empty calories. But if you want to see unbelievable inflated ugliness (or real dumps) come to visit West LA. I guarantee you will be shocked.

    1. Agree about the suspended animation so far. To the extent sellers are informed, I think they are still in the “it’s different here” mindset, though maybe not for long. Seems like a bigger shift in the high end, where there was always more inventory than demand, and recycled listings are competing with ones held off-market by people trying to time the top.

      For example, one building I watch had less than one listing a year in 2012-17, and suddenly there are at least four new listings in the last two months. And the neighborhood I watch has has about 10% more for sale than last year, but all the new listings are at the very high end.

  12. I live in Marin, which is just south of Sonoma / Napa Counties.

    In the aftermath of the wildfires (October 2017), the MSM pounded the drum on the huge housing shortage, blah blah, like everyone impacted by the fires would a) of course choose to stay and b) have the financial means & time horizon to re-build or re-buy.

    From friends who live up there, the story on the ground is different. It’s difficult to get contractors/builders and stricter codes make it a very lengthy and expensive proposition. And as these areas got increasingly expensive during Bubble 2.0, less & less of the labor is local, ergo big delays and added cost of rebuilding.

    And it’s still a fire trap.

    1. “… And it’s still a fire trap….”

      Even after a rebuild and even if insurance covers 100% of replacement value.

      What is going to happen to insurance rates (including fire)?

      Ditto for property taxes.

    2. In fire-prone areas of CA, especially the Sierra Nevada foothill communities, some companies are no longer underwriting insurance policies – they see the writing on the wall with the population pushing into these areas while the seeming frequency and destruction caused by these fires is increasing (increased population density). CA is in for a drier, more fiery future.

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