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Waiting To See What Gives

A report from MarketWatch. “Momentum in the housing market has waned enough that it’s starting to worry many observers. David Blitzer, who manages the Case-Shiller report at S&P Dow Jones Indices, told MarketWatch that he thinks the market is at an inflection point. ‘For 11 months straight, up until July, the national index has gone up by an annual rate of more than 6%,’ Blitzer said. ‘Inflation’s 2%, plus or minus, wage increases are between 2 and 3%, so home prices are going up almost twice as fast as anything else in sight. That shouldn’t happen forever. Something’s got to give in a market, whether it’s buying houses or groceries. So I’ve been waiting to see what gives.'”

“The bigger question now, for Blitzer, is whether the housing downturn will pull the broader economy along with it. ‘Housing, because it’s interest-rate sensitive, turns up first in a recession and probably turns down first in a boom, but with a long lead time,’ he said.”

“‘I don’t think we’re going to be in a recession by Christmas this year. No bets for next year. But it probably does indicate that not everything is coming up perfectly roses. If we get a recession that starts sometime between now and the end of 2020 I think people will look back on it and say a-ha, back in October, the stock market was a little bit nervous and housing was going down, that’s when it began.'”

From Chicago Now on Illinois. “Former Chicago Bears center Olin Kreutz has paid $2.4 million to buy former Chicago Bulls guard Kirk Hinrich’s nine-bedroom, 9,270-square-foot mansion in Bannockburn. Hinrich paid $4.4 million in 2007 for the mansion, which was built by Orren Pickell Builders in 2005. As a result, Hinrich took a $2 million loss on the mansion, which he first listed in April 2017 for $4.499 million. He later cut his asking price to $3.9 million and then to $3.55 million in March. His final price cut was to $2.75 million in August.”

From Brookline Patch on Massachusetts. “There’s expensive and then there is beyond expensive. This sprawling estate on the market since 2016 was listed at $90 million until last month when it quietly went down by $21 million.”

From Northern Nevada Business. “Much like he did to acres of rolling hills and sagebrush in northwest Reno, developer Blake Smith plans to transform the northwest corner of Sierra Highlands and Pyramid Highway into the region’s latest master planned community.”

“Across the region, residential home prices in Reno and Sparks continue to hold strong. In September, the median sale price of $374,000 was up 11 percent from the same month in 2017, the Reno-Sparks Association of Realtors reports.”

“Sales volume has cooled noticeably, however. The RSAR reports that September sales of 439 homes was down nearly one-quarter from August and also from the same month compared to 2017.”

“Signs also point to a potential cooling in pricing. In September, there were 1,377 housing units listed for sale, up from a 12-month low of just 646 units in January. The rise in inventory could potentially ease pressure on pricing, the RSAR reports.”

From Lehigh Valley Business in Pennsylvania. “Like the weather, the residential real estate market shows signs of cooling down. In September, the Greater Lehigh Valley saw closed sales drop by 9.1 percent and new listings fall by 6.4 percent compared to September 2017.”

“‘Right now what I’m seeing is that inventory is either moving very quickly or it sits forever,’ said Chris Daubert, real estate agent with Coldwell Banker Residential Brokerage in Wyomissing. ‘There’s not a whole lot of in between right now.'”

“Stephen Filson, broker at RE/MAX Skylands Real Estate in Hackettstown, believes sellers remain hesitant to list since the market’s lack of price appreciation won’t allow them to get the price they want.”

“‘You have some areas like Phillipsburg (where) prices are still going down, being battered by bank-owned homes, foreclosures, that kind of problem,’ Filson said. ‘In the better parts of Warren County, you are seeing stability but there is very little, if any, appreciation.'”

This Post Has 26 Comments
  1. ‘For 11 months straight, up until July, the national index has gone up by an annual rate of more than 6%…Inflation’s 2%, plus or minus, wage increases are between 2 and 3%, so home prices are going up almost twice as fast as anything else in sight. That shouldn’t happen forever’

    I’ve been saying that for a while Dave. And in a lot of places, like Ferndale Michigan, it’s been crazier than your national index. One would think the people responsible for regulating housing bubbles might have taken notice.

    Just who is responsible for that?

    1. “One would think the people re$ponsible for regulating hou$ing bubble$ might have taken notice.”

      Can’t the repubican pre$ident, repubican$ $enate, repubican$ hou$e & repubican $upreme court$ do $omething re$ponsible to $top $uch bubble$?

      Fake bubble$!

      1. Well who got punished the last bubble? Nobody? So I suppose Nobody will be responsible for taking care of this bubble as well.

  2. ‘The RSAR reports that September sales of 439 homes was down nearly one-quarter from August and also from the same month compared to 2017…Signs also point to a potential cooling in pricing. In September, there were 1,377 housing units listed for sale, up from a 12-month low of just 646 units in January’

    Eeee-bola Reno-Sparks! Congrats to the recent buyers of those Toll Brother shacks!

    1. Now Mr. Ben, they’$ ju$t a hop, $kip & jump to the $ensational Tahoe-Truckee Soriee’$.

      (“cut with the negative wave$ Kelly!)

    2. I have mixed feelings about this. In 2008 I lost my job and returned 3 months later at a 40% cut in pay. We were renting since buying seemed insane during that time period. Fast forward to today and we are still renting. Restructuring after that sort of adjustment takes time. Now it seems like just as there’s any breathing room our rent goes up which totally offsets any wage increase. Add to that helping pay for college tuition. 2 steps forward and 1 back. While I hope the prices start to come down, I’m fearful for what’s on the other side.

  3. “he thinks the market is at an inflection point.”

    From what I remember of graphs, an inflection point is when the rate of increase slows to zero before quickly resuming in the same direction. So he’s effectively saying that house prices are going to shoot up again soon.

    1. Technically an inflection point is when concavity shifts to convexity or vice-versa. So if prices were until recently increasing at an accelerating rate of appreciation but now the rate of increase is slowing, that would be an inflection point. It is not necessary for the rate to slow to zero for an inflection point to be reached.

      Perhaps Blitzer really meant to say ‘infection point.’ EEE-BOLA!

  4. “If we get a recession that starts sometime between now and the end of 2020 I think people will look back on it and say a-ha, back in October, the stock market was a little bit nervous and housing was going down, that’s when it began.’”

    Hindsight is 20-20, especially when it comes to financial crashes.

  5. “There’$ expen$ive and then there i$ beyond expen$ive.”

    “There’$ $tupid and then there i$ beyond $tupid.”

    $ame # of $’s … (certain that ha$ little influence on a buyer$ deci$ion proce$$es)

  6. ” …$ellers remain he$itant to li$t $ince the market’$ lack of price appreciation won’t allow them to get the price they want.”

    Here’$ $omething $ellers might find appreciative:

    “They who he$itate are lo$t” … Confuciu$

    1. “It’s out, optimi$tic, ro$ey toned, liar$…”

      All eye know$ i$ what’$ eye read$ in the digital new$device$!

      “…this of the wor$t cata$trophes in the world. Oh it’s… [unintelligible] its flame$ … Crashing. … oh, the humanity of it!”
      Herbert Morrison’s eyewitne$$ radio report for station WL$ in Chicago

      American homeowner$hip increa$es again as hou$ing market look$ for balance
      By Andrea Riquier / Published: Nov 1, 2018

      https://www.marketwatch.com/story/american-homeownership-increases-again-as-housing-market-wobbles-toward-equilibrium-2018-10-30

  7. “the national index has gone up by an annual rate of more than 6%,’ Blitzer said. ‘Inflation’s 2%, plus or minus, wage increases are between 2 and 3%, so home prices are going up almost twice as fast as anything else in sight.”

    I think you’re not too good at math David. Currently the only thing levitating the CPI is the supposed cost of shelter. Take that away and prices are pretty flat or falling.

  8. Does it seem like irrational exuberance has taken hold again?

    “Famed economist Robert Shiller, whose research helped develop the index released this week, raised eyebrows when he told Yahoo News that the housing market now reminded him of 2006, just before it fell off a cliff.”

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