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Breaking The Belief House Prices Only Ever Go Up

It’s Friday desk clearing time for this blogger. “A Realtor economist said Friday, Nov. 2, not to believe those ‘scary headlines’ about ‘plunging’ home sales and stock prices. Pushing back against claims of a housing market bubble, Lawrence Yun, chief economist for the National Association of Realtors, said home sales and prices merely are undergoing a ‘mild adjustment in the data.'”

“Yun’s forecast in a nutshell: No price plunge. No bubble. No unsustainable mortgage debt. ‘The housing market is on very firm ground,’ Yun said during NAR’s annual conference in Boston. ‘We should not be worried about price declines.’ Negative housing news could affect consumer behavior, causing a ‘self-fulfilling prophecy.’

“‘If people view the housing market as (having) peaked and prices are going to go lower, people will postpone their decision (to buy),’ Yun said. ‘That could affect demand.'”

“Yun conceded that luxury homes in Southern California and throughout the state could face price drops in 2019. As for the Bay Area, all bets are off. Prices could keep going up, Yun said. Or they could be more volatile and go down. ‘It’s in its own world,’ he said of the Bay Area.”

“Sure, she sold her former Midtown West condo at nearly 50 percent off, but considering she’s Victoria’s Secret’s longest-running Angel, we’re guessing Adriana Lima will be just fine to take the blow. The Brazilian supermodel bought the three-bedroom apartment at 146 West 57th Street in 2003 for $1,995,000.”

“Six years later, she married NBA player Marko Jarić, and after the couple had two children, they put the 42nd-floor pad on the market for $5.5 million in 2013. But after five years, a 2016 divorce, and four price chops, the pad has finally sold, reports the Post, for the much-discounted price of $3.3 million.”

“If you were looking to buy the house of a golfing legend at a reduced price … well, you’re in luck. Per MRT.com, the Dallas mansion belonging to Lee Trevino has seen its asking price slashed. The number had been $8.5 million since January, but that figure has now dropped to $7.5 million. According to MRT.com, the house originally was put on the market for $13 million back in 2014.”

“It wasn’t all that long ago that the prospect of buying a detached home in the City of Vancouver for under $1 million seemed like a dream from another era. That appears to be changing, as B.C.’s real estate market enters what some analysts believe is a sustained downward trend. As of Oct. 26, there were at least six detached homes in Vancouver with a sub-$1 million sticker price.”

“‘I think we’re in the midst of a correction right now,’ said Vancouver realtor Steve Saretsky. ‘When one or two start to sell like that it sets a new benchmark, it’s what buyers start to expect or anticipate.'”

“The property developer behind the conversion of central London’s Centre Point office skyscraper into multimillion-pound luxury apartments has given up trying to sell the flats after receiving too many ‘detached from reality’ lowball offers. CEO Mike Hussey said the company had decided to halt formal sales of the flats in the 1960s brutalist tower, now called Centre Point Residences, rather than slash prices.”

“The decision to halt sales means about half of the tower’s 82 flats, which range from £1.8m for a small one-bedroom apartment to £55m for the two-storey five-bedroom penthouse, will now lie empty, adding to a glut of unsold ultra-luxury property across London. More than half of the 1,900 ultra-luxury apartments built in London last year failed to sell, adding to fears that the capital would be left with dozens of ‘posh ghost towers.'”

“The warning bell has rung in Hong Kong as prices of used homes in September dropped at a much faster speed than in the previous month, continuing a slide that is sparking worry through the property market, from agencies to homeowners to developers.”

“Centaline Property Agency has stopped expansion and will lay off agents who aren’t selling homes. ‘At least a quarter of agents could lose their jobs,’ said Louis Chan, CEO of the residential division at Centaline.”

“Property listings website Realestate.co.nz says Auckland’s housing market favours buyers to an extent not seen for nearly nine years. The total number of homes for sale in the city in October was up 17 per cent on 2017, to 9906. There were 4449 new listings in the month, 20.1 per cent more than the same time last year.”

“Spokeswoman Vanessa Taylor said given the level of new listings, the total number of properties for sale and the slowing sales rates, Auckland purchasers were in a better position than they had been for nine years. ‘There’s plenty of homes for buyers to choose from, without having to deal with the frantic market that we’ve seen in past years,’ Taylor said.”

“As has been the case for some time, the national price decline largely reflect falls at the top end of the housing market. In Sydney and Melbourne, the most expensive 25 per cent of properties in those cities saw their values drop by nearly 9 per cent.”

“We are concerned that without policy easing the largest price fall in decades could break the belief ‘house prices only ever go up,’ the UBS team said. With total listing numbers likely to push higher over the final quarter of the year, buyers are becoming more empowered and will increasingly find themselves in a stronger position when it comes to negotiating on price. Prices are also falling in regional areas.”

This Post Has 22 Comments
  1. Negative housing news could affect consumer behavior, causing a ‘self-fulfilling prophecy.’ ‘If people view the housing market as (having) peaked and prices are going to go lower, people will postpone their decision (to buy),’ Yun said. ‘That could affect demand.’

    Have you tried stamping your little feet Larry?

    1. Is he really suggesting that the media should cover falling sales and rising inventories up so the debt party lasts longer? Seems offensive to me.

      1. This Yun story is really about someone from a previously-favored industry arguing with a media that, for political reasons, suddenly decided to turn against him by reporting facts instead of covering them up like usual. Translation: “What are you doing?!? Be careful or you’ll panic buyers and sellers and we won’t be able to control the outcome.”

        Yun is in that denial stage where he doesn’t realize the media has turned against him and the RE bubble intentionally. He still thinks the negative coverage of price drops and panic might just be an accident and that the NAR and the media are still in it together.

        1. Yun’s forecast in a nutshell: No price plunge. No bubble.

          I’m just impressed that he was able to get paid to lie in two separate cycles. I thought that that would be impossible after burning up all credibility the first time.

  2. ‘Yun conceded that luxury homes in Southern California and throughout the state could face price drops in 2019’

    Already happened.

    ‘As for the Bay Area, all bets are off’

    Already cratering.

    ‘Yun’s forecast in a nutshell: No price plunge. No bubble’

    Anyone notice the only time the media mentions a bubble is when someone is saying there isn’t one?

    1. ‘As for the Bay Area, all bets are off’

      Yeah sounds like a losing bet to favor the over inflated RE here me Yun. Least your backing off the optimism on that one.

      How long will it take for the MSM to correlate the lack of foreign investors to the sudden downward shift on sales. We keep building for them but they stopped buying, one back and buy these luxury air boxes China!

      All we hear is how the little bump in interest rates has potential FBs on the sidelines, nothing about the surge in inventory and the masses of home being built for god knows who. Supply is there and much more than we need being built, the demand is not.

  3. The man who name looks like it should rhyme with “sun” but actually rhymes with “moon” is not reading how the planets are actually lining up.

    His priority is to not cause panic. That is true, but his salary is paid from dues to belong to the NAR and as such he tows their line. Simple as that. Have not been able to take his words as credible for years. Time will soon tell the stiry.

  4. another recent article that I don’t recall seeing here:

    “Home flippers are fleeing the market as their profits shrink”.

    Flip sales, defined as houses bought and resold within 12 months, are 18% lower compared nationwide to the same time in 2017. Flips also have lowest profits in 7 years and most time to sell in 12 years.

    Just a mild adjustment in the data…

    https://www.msn.com/en-us/money/realestate/home-flippers-are-fleeing-the-market-as-their-profits-shrink/ar-BBOQYuI?li=BBnb7Kz

    1. It’s hard to disentangle the speculative demand from the organic demand. A lot of the buyers in the last year or so were flippers. These buyers competed with buyers buying at the top. Once the flippers walk away, then the revelation begins that the demand and current prices is even less than it appeared.

  5. Good thing half the households in Los Angeles County earn at least $134,000, C.A.R. reports needed to buy median priced home Oh, yeah, and $125,000 in the bank for a downpayment.

    1. What is CAR’s formula this year, 3 year ARM financing, during the last bubble it started at a sensible 30 year fixed then they had to pivot to an ARM, what’s next excluding taxes, insurance, and HOAs fees? I feel bad for people who sign on the dotted line believing the CAR’s affordability numbers.

      With the tax law changes I’m sure CAR factors that in too right

  6. ‘We should not be worried about price declines.’

    I’m not worrying about them at all. I’m rather happy they have finally hit the overpriced West Coast.

  7. Mauldin …

    (snip)

    “Our current prosperity is built on an explosion of debt; it is therefore unsustainable. The US added roughly $1.3 trillion of GDP in the fiscal year that ended in September but also added $1.271 trillion of debt. Interest rates, while still running well below real-world inflation, are rising in a heavily leveraged economy. The $1.271 trillion increase in federal debt was nearly $500 billion or 39% higher than the official annual deficit of only $779 billion, which means that politicians are keeping significant amounts of debt off-balance sheet. I don’t know who they think they’re fooling, but they aren’t going to be able to keep this con game running much longer. Over the past five years, the official deficit was reported as $2.977 trillion whereas the federal deficit grew by $4.777 trillion, meaning that 38% of the actual shortfall was hidden by our feckless leaders. And all of these figures do not include trillions of more dollars of off-balance sheet entitlement obligations promised by the government to future retirees and other voters.”

    Thoughts from the Frontline – Economic Brake Lights

    https://mail.yahoo.com/neo/m/message?sMid=1&fid=Inbox&fidx=1&sort=date&order=down&startMid=0&filterBy=&ac=WnC7yv8T.s0f688QkvwiTX4vNdU-&.rand=274495295&midIndex=1&mid=APtyD55N-RWhW91JOgtKoIdf00w&fromId=&blockimages=0

    1. “A billion here, a billion there, pretty soon, you’re talking real money.” – Attributed to Everett Dirksen, US Senator

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