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The Next Economic Storm Brewing Just Beyond The Horizon

A report from CNBC. “Builders warned of a slowdown in home sales. And they were right – except the numbers are even worse than expected. ‘This number really sucked,’ wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, noting that August’s read was also revised lower. ‘Anyone watching home builder stocks or watching the data all year should not be surprised but its’s clear this important area of the US economy, highly sensitive to price and rates, has obviously slowed sharply.'”

“The census number is key because it is based on signed contracts in September, not closings as existing home sales from the National Association of Realtors are. The census numbers measure buyers out shopping for homes in September, already seeing higher rates and deciding if they can still afford to make the deal. Clearly fewer could.”

“‘New home sales fell in September as rising prices and mortgage rates knocked out some buyers and spooked others into waiting to see if mortgage rates reverse or prices decline — even though both of these outcomes are unlikely,’ said Danielle Hale, chief economist at Realtor.com. ‘Instead of taking advantage of reduced competition in the fall, buyers seem to be hibernating, marking an earlier end to the homebuying season than we’ve seen in recent hotly competitive years.'”

“‘Builders can read the early signs of a cooling housing market as well as anyone — including a slowing in home value growth, rising mortgage rates and an uptick in price cuts,’ said Aaron Terrazas, senior economist at Zillow. ‘With an increasingly cloudy economic outlook over the next two years, builders may be growing weary of putting sticks in the ground that won’t be delivered to buyers for several months’ time … having only barely recovered from the last downturn, no one is eager to be swept away in the next economic storm brewing just beyond the horizon.'”

From The Island Now in New York. “After rising steadily throughout the summer, the median price for sold homes in Nassau County dropped in September to $525,000, according to the Multiple Listing Service of Long Island. It is the first month-to-month drop since April. Since bottoming out that month at $492,000, the median price of homes sold continued to climb until peaking in August at $550,000.”

“The number of homes sold dropped steeply, from 1,479 in August to 991 in September. It was also down from 1,167 in September of last year, a 15.1 percent drop that was the biggest year-to-year fall of any month since at least October 2017. The median price for pending sales also dropped from $520,000 in August to $500,000 in September.”

“Like everything else, the number of pending sales in Nassau County was also down from August. The 958 units pending sale in September was the lowest total of any month since January. It was a decrease from 1,337 in August and 1,010 in September 2017, a year-to-year drop of about 5 percent.”

“In neighboring Suffolk County, the picture was similar. The median sales price dropped to $381,500, down from August but up from September 2017. The number of homes sold and homes pending sale both dropped from August, although the homes sold was way down from September 2017 while homes pending sale saw a very small increase.”

From Greenwich Time in Connecticut. “Listed for $2,225,000 five years ago and at $2,050,000 last year, this 1940 expanded Cape Cod home sold last week for two-thirds of its asking price after 489 days on market. What did the buyer get? How about a 3,430-square-foot home on two-thirds of an acre in Riverside’s private Harbor Point Association?”

“This three-bedroom, two-and-a-half bath home is at the end of a cul-de-sac with unimpeded water views across a neighbor’s waterfront parcel. It is known as the ‘Ice House’ and renovation or reconstruction are two options for the property, which was damaged by Hurricane Sandy and is in need of repairs.”

“At 54 percent of its tax-appraised full value and given its location in Riverside, it is a bargain for the right buyer and has tremendous upside potential from its $1.35 million selling price.”

This Post Has 25 Comments
  1. ‘At 54 percent of its tax-appraised full value and given its location in Riverside, it is a bargain for the right buyer and has tremendous upside potential from its $1.35 million selling price’

    There’s a table of shack sales on this link. These people are getting hammered.

    1. Yah, Greenwich is really getting hammered at the high end. Maybe some of the residents will start putting in panic rooms like their brethren in the Hamptons, to protect against gang attacks from Bridgeport. It’s coming. Believe it.

      Chickens are starting to come home to roost. People getting accosted in restaurants, gang attacks, kidnappings. That’s what happens when you blow out the middle class buffer. My wish for these manipulators and corporate meat puppets is that they can never enjoy their ill gotten gains, never able to show their faces in public, can’t even take a dip in the poisoned waters off their beaches. Nowhere to run to, nowhere to hide.

      1. Chickens are starting to come home to roost. People getting accosted in restaurants, gang attacks, kidnappings.

        Testify, Brother Palmetto. Screech, Maxine Waters, Holder, and their ilk call on their SJW Red Guards to engage in mob behavior, then discover actions provoke reactions.

      2. Pretty ridiculous. I grew up in Greenwich and it’s literally unchanged over the last 2 decades, excepting an explosion of ugly McMansions that scraped respectable, normal-sized homes. Biggest danger now (as it was back then) is getting hit by a drunk teenager driving their daddy’s Porsche. There are no gang attacks in Greenwich – you are talking out of your ass.

  2. ‘Builders can read the early signs of a cooling housing market as well as anyone — including a slowing in home value growth, rising mortgage rates and an uptick in price cuts’

    Cuts?

    ‘With an increasingly cloudy economic outlook over the next two years, builders may be growing weary of putting sticks in the ground that won’t be delivered to buyers for several months’ time … having only barely recovered from the last downturn, no one is eager to be swept away in the next economic storm brewing just beyond the horizon’

    Aaron, you old doom and gloomer. Turn that frown upside down and embrace the ebola!

    1. “having only barely recovered from the last downturn, no one is eager to be swept away in the next economic storm brewing just beyond the horizon”

      Its hard to believe I’m reading these headlines from the slime that just months ago preached to us about a RE market that was headed to the moon. It’s almost as if they are putting it out there to cover there asses and say “no see after I said it was going up and buy now I warned everyone that it’s going down”.

      1. Media loyalty is to what gets viewers. When bad news is distasteful then print / broadcast “going to the moon” stories. When people get nervous about real estate and want to find out about a potential upcoming debacle, the media gives them that. They really have no other angle. Of course if it is NAR releases, then you know where that is going. Consider the source and their motivations. Of course, when the media starts reporting bad news, that in itself can trigger actions and the snowball will accelerate. Saw it all back in 2007-8. This is a plain repeat of history despite the supposed safeguards in place. Popcorn please

    1. Wanna bet it’ll be up again tomorrow? I’m really sick of this crap.

      And Dooshbank shouldn’t even be in business.

    2. $hit happen$.

      The Wall Street Journal
      U.S. Markets
      U.S. Stocks Fall Sharply as Markets Extend Rocky Stretch
      Nasdaq loses 4.4%, Dow and S&P 500 indexes relinquish their gains for 2018 in late day selloff
      By Amrith Ramkumar and Avantika Chilkoti
      Updated Oct. 24, 2018 4:43 p.m. ET

      The Nasdaq Composite plunged into correction territory after its worst day in more than seven years Wednesday, the latest sign of wavering investor confidence in the technology stocks that have powered the most recent leg of the bull market.

      The weakness in the technology sector infiltrated other corners of the market, with the Dow Jones Industrial Average slumping 608 points. The blue-chip index and S&P 500 erased all of their 2018 gains.

      Explosive Devices Sent to Clinton, Obama, CNN, Former Head of Democratic National Committee

      The stock market faces ‘unlimited downside risk,’ warns veteran trader

  3. ‘This number really sucked,’ wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group

    That sounded awfully familiar. Then I remembered…

    D.R. Horton CEO Donald J. Tomnitz said he expects to get more pricing power in 2008 but not before home prices continue their decline this year as builders try to sell the glut of houses currently on the market.

    “I don’t want to be too sophisticated here, but 07 is going to suck, all 12 months of the calendar year,” Tomnitz said.

  4. The negative correlation between stock and Treasury price movements is back.

    10-year Treasury yield slinks to three-week low as stocks remain under pressure
    By Mark DeCambre and Sunny Oh
    Published: Oct 24, 2018 3:41 p.m. ET

    U.S. Treasury prices rose Wednesday, nudging yields lower, as U.S. stocks continued to demonstrate signs of weakness amid persistent worries about corporate earnings and the outlook for the U.S. and global economy.

    Those worries were creating an ideal environment for bonds to rally weeks after long-dated yields were near multiyear highs.

    What are yields doing?

    The yield on the 10-year Treasury note (TMUBMUSD10Y, -2.14%) fell 4.2 basis points to 3.122%, its lowest since Oct. 2, while the 2-year Treasury note yield (TMUBMUSD02Y, -1.66%) shed 2.2 basis points to 2.855%. The 30-year Treasury bond yield (TMUBMUSD30Y, -1.12%) fell 2.1 basis points to 3.342%, according to Dow Jones Market Data.

    Yields and debt prices move in opposite directions.

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