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If The Home Doesn’t Sell In The First Month, They Panic

A report from the Orange County Register in California. “Southern California’s housing market hit a big pothole in September, with home sales sinking almost 18 percent from the year before, CoreLogic reported. It’s the biggest sales drop in nearly eight years. Agents throughout the region say they are seeing the slowdown.”

“‘Houses are staying on the market longer,’ said Liliana Alfonso, an agent with Rodeo Realty in Studio City. ‘I think buyers are having a lot of trouble. … There’s a big gap there between what the cost of housing is and what people can afford.'”

“In Cypress, just southeast of L.A. County, Berkshire Hathaway’s Nancy Huang sees homes taking longer to sell. ‘Because it used to be a hot seller’s market, (sellers) are expecting to get top dollar for their homes,’ Huang said. But, she added, ‘buyers are seeing homes sit a bit longer, so (buyers) have more leverage. … They can negotiate more on the price.'”

“Jordan Levine, the Realtor economist, said buyers remember the 2007 market crash and are holding off, waiting for prices to drop. ‘Folks are worried that prices are at a peak,’ Levine said.”

“The slowdown has prompted Riverside agent Mike Brusca to caution clients not to cut their price when their homes take longer to sell. ‘A lot of times, if the home doesn’t sell in the first month, they panic,’ said Brusca of Westcoe Realtors.”

“‘Fewer bidding wars. That’s where we are,’ said El Segundo broker Moses Dennis. ‘Buyers are balking, and that’s why houses are not moving as fast.'”

The Union Tribune. “San Diego County home sales dropped 17.5 percent to the lowest level in 11 years for a September in the first significant sign of a slowdown in the market, CoreLogic reported. Last month, 2,942 homes sold in the county, down from 3,568 sales a year ago. It was the lowest number of sales for a September since just before the Great Recession when 2,152 sold in September 2007.”

“Also, last month’s median home price dropped to $575,000 — the first decrease since January — after hitting an all-time high of $583,000 in August. San Diego was not isolated in a sales drop in September, with some of the highest priced markets seeing the biggest sales drops.”

“Rising home prices throughout the year have been largely attributed to a strong economy mixed with strong competition for a limited number of homes for sale. However, the home inventory in September was one of its highest in years, said data from the Greater San Diego Association of Realtors.”

“There were 7,824 homes for sale in September, up from 5,678 in September 2017; 6,597 in 2016; and 7,134 in 2015.”

“The CoreLogic report showed that all types of housing in the county had a price reduction and sales drop in September. There were 255 newly built homes sold for a median price of $702,500. Condos had one of the biggest drops in sales, 867, which was its lowest since February. The median home price for condos, the fastest rising in the resale market this year, was $427,500 in September, down from the all-time high of $432,000 in July.”

“Resale single-family homes are typically seen as the biggest indicator of the market because it makes up the largest portion. There were 1,820 sales, the lowest since February. Also, the median was $615,000 — down from the peak of $630,000 reached in June and July.”

“The closely watched S&P CoreLogic Case-Shiller Indices showed the resale home market in the San Diego metropolitan area losing momentum. David Blitzer, managing director of the index, wrote in the report that a repeat of the housing crash is unlikely because default rates are low for mortgages right now.”

“‘Without a collapse in housing finance like the one seen 12 years ago,’ he wrote, ‘a crash in home prices is unlikely.'”

From The Real Deal. “The Westlake branch of mortgage processing firm Urban Fulfillment Services LLC is shutting its doors, a possible symptom of the slowing housing market.”

“The closure will result in the elimination of 85 jobs, including financial analysts, credit risk analysts, financial associates, and team leaders, according to the San Fernando Valley Business Journal. The layoffs are effective Dec. 3. This year the L.A. has seen its slowest summer for home sales in four years. But the slowdown isn’t unique to Southern California.”

“Urban Fulfillment wouldn’t be the first, nor the largest mortgage-related business to downsize. Rising interest rates and pricing have slowed down the housing market nationwide, prompting some of the biggest lenders in the country to downsize their operations.”

“JPMorgan Chase was the latest major player to do so, laying off 400 employees around the country in October. Wells Fargo laid off 650 mortgage employees in August. Chicago-based BMO Harris Bank laid off 170 mortgage workers at its branches not long after JPMorgan did.”

“On top of that, non-bank lenders have been siphoning off lending business from traditional lenders for years. They now account for 10 percent of market share, or five times their share in 2014.”

This Post Has 43 Comments
  1. ‘There were 7,824 homes for sale in September, up from 5,678 in September 2017; 6,597 in 2016; and 7,134 in 2015’

    Where did these shacks come from? They didn’t just build them, so they must have been there all along!

    ‘all types of housing in the county had a price reduction and sales drop in September’

    All these years we had to listen to people say “build more shacks and prices will drop.” Nope. One sniff of fear and they bust out of the bushes.

  2. ‘Without a collapse in housing finance like the one seen 12 years ago,’ he wrote, ‘a crash in home prices is unlikely.’

    Prices are crashing Dave.

    I hear crows, winging over San Diego.

    1. Dave has a tenuous grasp of cause and effect. Housing finance crashed because the housing bubble burst and hundreds of thousands of FBs walked away from their underwater shacks, and lenders ended up holding the bag until the Fed and taxpayers rode to the rescue.

      Ain’t going to happen this time around. The Fed has used up all its ammo and the proles are in no mood to bail out Wall Street again.

  3. “On top of that, non-bank lenders have been siphoning off lending business from traditional lenders for years. They now account for 10 percent of market share, or five times their share in 2014.”

    I’ve heard the non-bank lenders count for up to as much as 50 percent of the market share. It may not be that high, but I’m sure it’s higher than 10 percent

    1. October 24, 2018

      “One of the nation’s top bank regulators says the banking system is safe, but worries about risks at non-bank financial institutions, particularly mortgage servicers. The remarks from Federal Deposit Insurance Corp. Chair Jelena McWilliams come days after regulators freed the last ‘too big to fail’ non-bank from extra regulation.”

      “Jelena McWilliams, chair of the Federal Deposit Insurance Corporation, told a banking conference Tuesday that post-crisis regulatory reform helped make the banking system safer but could have pushed risky activity to non-bank lenders. Those lenders, McWilliams feared, are not regulated by the FDIC or the other two banking regulators: the Federal Reserve and the Office of the Comptroller of the Currency.”

      “‘The question is: If we have reduced systemic risk in the banking sector, where did it go? It did not just disappear, it is not ether now,’ McWilliams said.”

      “McWilliams added that she sees a problem in the fact that eight out of the 10 largest mortgage servicers in the country are non-banks.”

      “Quicken Loans, which offers its popular Rocket Mortgage product, became the largest residential mortgage lender in the United States in February 2018, edging out traditional banks like Wells Fargo. The company, which has no branches, uses its online platform to originate its loans and relies on wholesale funding to support its lending.”

      “Alluding to the 2008 crisis, McWilliams said the non-bank mortgage lenders worry her because of the possibility of foreclosure. She also expressed concern that a lot of mortgages end up with the two government-sponsored enterprises: Fannie Mae and Freddie Mac.”

      http://housingbubble.blog/?p=295

      1. “McWilliams added that she sees a problem in the fact that eight out of the 10 largest mortgage servicers in the country are non-banks.”

        So unless those 2 out of 10 are humongous, it’s safe to say the 10 percent number is false.

        1. mortgage servicers

          This is just a commission clerking service. I don’t understand how they or their job security could be a threat to the economy.

    1. “Over 25% collapse in a month, and still no sale.”

      Let’s be clear. Someone overpricing their home, then adjusting it doesn’t mean the market price fell. But that thing is $60k under the Zestimate which is basically tracking peak values at this point.

    2. But per Zillow, looks like it was purchased for $195k so whoever owns it still has a bunch of flexibility on price I would think. OTOH the rapid price drop might be a cold hearted investor figuring he has to get out while the getting is still OK.

      1. I wouldn’t pay that much for a house that is over 100 years old. Japanese housing actuaries depreciate housing at 4% annually. Just saying.

  4. “Jordan Levine, the Realtor economist, said buyers remember the 2007 market crash and are holding off, waiting for prices to drop. ‘Folks are worried that prices are at a peak,’ Levine said.”

    No, Jordan. Folks that aren’t already onboard that express train to Schlongville know they’d be fools to buy now and overpay in a cratering housing market.

  5. “The slowdown has prompted Riverside agent Mike Brusca to caution clients not to cut their price when their homes take longer to sell.
    I can foresee some bitter recriminations between Mikey and his FB clients when they run into each other at the local food bank or homeless shelter in the not so distant future.

    1. I can foresee a new country song “Whiskey for my Kool-Aid and Beer for my Horses”. This guy is clearly drinking it if he thinks sellers are mistaken in getting out now.

  6. “Jordan Levine, the Realtor economist, said buyers remember the 2007 market crash and are holding off, waiting for prices to drop.”

    This may be the primary driver of a quicker correction this time around. Last time the experts were saying “Home prices have never fallen on a national basis before.” This time we’re just as greedy but maybe a bit more savvy.

    1. Sorry I don’t get it. Price is down 13% YOY and square footage is down 14% YOY. Price per square foot is UP and now $30 more YOY.

  7. California agents famous for panicking sellers after short period to get their commission faster?
    Sorry agents things have changed rapidly, now you really have to work for it?

  8. ‘Buyers are balking, and that’s why houses are not moving as fast.’

    Ya know…when you’re used to selling your wares in a house of ill repute, any kind of normal healthy market is going to seem oddly slow and careful to you.

    1. Are we looking at the same link? This is from your link:
      “The median home value in 97205 is $479,800. 97205 home values have gone up 2.9% over the past year and Zillow predicts they will rise 3.0% within the next year. The median list price per square foot in 97205 is $414, which is higher than the Portland average of $293. The median price of homes currently listed in 97205 is $394,408.”

      1. price of homes currently listed in 97205 is $394,408

        That’s what is down, not supposed value.

        They stopped showing actual sale prices a long time ago.

  9. I have been following this blog for a while as I believe as you all do. Being unable to cover a down payment, I, of course am following rents…especially in the Oakland area and I thought you might like this.

    https://www.youtube.com/watch?v=PMZeCGB1IFQ&feature=youtu.be

    Three months ago I was offered a free month rent during the Grand Opening and now I have received an offer in the mail for two free months rent. I drove by and they are absolutely empty! To make matters worse they are high lighting this fact by lighting up the building at night. I count Seven more buildings going up of luxury apartments within a few miles of each other in the next 18 months. Rent for an apartment I was looking at was going to be 3600 a month! Haaaaa! Yeah, right.

    1. Thanks for sharing this video. Without knowing more information, it’s hard to know how ominous this is. When did this particular complex come online? It generally takes 6 months to 1 year in the lease-up period. The key will be to watch for massive concessions and a slower-than-average lease up.

      1. I walked in to their Grand Opening weekend on August 11th (that is when I joined their email list) I was the only one at the Grand Opening around 9am, that Saturday which I thought was a little odd. I was there for 30 minutes looking around viewing the apartments. So over three months ago.

  10. There’s a big gap there between what the cost of housing is and what people can afford.

    What an astute observation, Liliana.

  11. “‘Folks are worried that prices are at a peak,’ Levine said.”

    Sounds like the buyers are wising up. If prospective buyers would all collectively take a breather from their home searches for, say, six months, the sellers would likely get the hint and seriously start slashing and dumping inventory they have only been HODLing to capture price appreciation, not because they need a place to live in. Long elusive affordability would finally be achieved.

    1. One huge difference between now and 2008 is that millions of former sheeple have become awake and aware after being badly burned by their misplaced trust in compromised and complicit “experts,” i.e. Suzanne, and are much more likely to question what they’re being told and assign more credibility to alternative media truth tellers, i.e. Ben Jones & the motley crew at the HBB, rather than the congenital liars of the MSM or REIC, or clueless policy-makers.

      1. True. But millions of sheep are also convinced that you should always buy the dip thanks to the Fed. So yes…they are much more aware of the current danger, but they also are looking at it thinking they are the predators rather than the prey.

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