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You Can Call The Trend A Slump, Or A Correction, Depending On How You Feel About It

A report from KIRO 7 in Washington. “Freddie Larsson is feeling the softening of Seattle’s real estate market. He’s selling a townhome in Queen Anne after his family moved to a larger place. ‘We were putting it on the market and thought we would get three, four, five offers in the first few days, but it’s slowed down a little bit,’ Larsson said.”

“Seattle-based Redfin predicts the city’s market slowdown could intensify once Amazon announces its second headquarters in the city. ‘We think there’s going to be a significant impact on the housing market,’ said Redfin Chief Economist Daryl Fairweather. ‘We estimate if just one in 20 Amazon employees put their house on the market, that would lead to 100 more listings. That’s a 10 percent increase of how many listings we see now.'”

“Fairweather expects the pace of Amazon hiring will be much swifter at HQ2, with less new hiring here. ‘We hear from our Redfin agents that buyers have actually postponed their decision to buy until they find out where HQ2 is going to be, because maybe they’ll want to leave. And we heard from sellers that they’re nervous about when to sell, do they want to sell now or later, because of that same decision,’ Fairweather said.”

The Colorado Springs Gazette. “Colorado Springs-area home prices rose again last month. Other key points in the October report include: Home sales totaled 1,320, a 7.8 percent, year-over-year decline and the eighth straight monthly drop in sales. The supply of homes for sale totaled 2,374 in October, up almost 23 percent on a year-over-year basis.”

“Rick Van Wieren, a real estate agent with Re/Max Properties in Colorado Springs, said the overall single-family housing market remains ‘super healthy.'”

“Yet, the 1.8-month supply of homes for sale is ‘well below what is typically termed a normal market,’ Van Wieren wrote. One result of the tight inventory: a ‘growing disparity’ between the median list price of homes for sale and the median price of properties that actually wind up selling, he said.”

“‘This could point to a new affordability gap at the low end of the market,’ Van Wieren said. ‘As more affordable homes become scarce, buyers may be finding it more difficult to purchase the homes that are actually for sale.'”

“The situation, however, isn’t a crisis, he said. Homes continue to sell even as mortgage rates have risen, Van Wieren said. And in some cases, sellers have recognized that buyers might have less purchasing power and therefore are dropping their asking prices — although sellers continue to have the upper hand for the most part, he said.”

“‘This market is still very much a seller’s market,’ Van Wieren said.”

The NPR on Oregon in Colorado. “Sara Murawski graduated right before the Great Recession. When home values plummeted, she couldn’t afford to take advantage of lower real estate prices. By the time Murawski could save for a down payment, prices were increasing rapidly.”

“She wasn’t the only millennial who had delayed home-buying. Everyone was entering the market at once, and there weren’t enough houses to go around. The fierce competition for homes drove prices up — and kept Murawski from wading in to the market.”

“Lawrence Yun, chief economist at the National Association of Realtors, says that homeowners were profiting from the booming market. ‘But for the renters and first-time buyers who want to participate in the American dream of ownership, it has become much more difficult, with prices rising too fast,’ he says.”

“Now, though, things have started to shift. It’s not that houses are becoming more affordable. In fact, as mortgage rates are rising, it’s getting even more expensive to buy a home. But those rising rates are having an impact. The runaway housing market is starting to hit the brakes.”

“Home sales have been decreasing across the U.S. for several months. You can call that trend a slump, or a correction, depending on how you feel about it.”

“But it’s not a crash. And, if the economy remains strong, the slowdown might be an opportunity for first-time buyers who have been sidelined by the booming market. That’s what happened to Murawski, in Portland. This summer, she saw the intense competition for homes was starting to cool. Prices were still high, but she wasn’t willing to wait any longer.”

“Murawski took a day off work and called a real estate agent. Soon, she fell in love with a place — not the Craftsman house of her dreams, but a condo with an elevated patio and a view of the trees. She made an offer. And the next day, it was accepted. The seller even paid her closing costs.”

“It was fast, compared to what some homebuyers have gone through. She went from first looking at houses to having her offer accepted in about two weeks, she says. No bidding war required. ‘I had been watching the market … . I’ve been following it pretty closely,’ she says. ‘I just felt like another opportunity might not come up for me.'”

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This Post Has 31 Comments

  1. ‘The situation, however, isn’t a crisis’

    True.

    ‘in some cases, sellers have recognized that buyers might have less purchasing power and therefore are dropping their asking prices’

    You got the Eee-bola Rick.

    ‘You can call that trend a slump, or a correction, depending on how you feel about it’

    My emotional support badger says it’s a crater NPR. BTW, I noticed you didn’t tell us just how much money Sara had to borrow.

    ‘

  2. ‘He’s selling a townhome in Queen Anne after his family moved to a larger place. ‘We were putting it on the market and thought we would get three, four, five offers in the first few days’

    Oh dear Freddie, you bought a shack without sell the other one first? Why that was bold. I’m sure at the time you were counting that sweet equity from TWO shacks! Well, it was cheaper than renting.

    1. Sounds like Freddie listed the home for sale at a price above current market value. Consequently, there is no buyer interest.

      Slash the price if you want to attract an offer!

      1. That or put a bunch of 8’s in the sale price ie 588,888. Seems to be the trends around here as the UHS is trying to attract the Chinese with “good fortune” pricing.

        2. OK. Well…”88″ also means “buh bye” in Chinese slang (bah is the sound when you say the number 8 in Chinese). Maybe that meaning will become the more important one soon.

          1. 948,848 (recent price drop in Santa Cruz) How about that one. I have heard some of our Chinese clients say that it’s not just the numbers but the combination of numbers. Really seems to me that the realturds are fishing in empty ponds with bait that once caught them an abundance of foreign fish

  4. “Seattle-based Redfin predicts the city’s market slowdown could intensify once Amazon announces its second headquarters in the city.”

    I assume this is a typo and they mean a second location in another city. AMZN stock being down more than 18% in a month may also be foretelling of what is in store for Seattle. I hope god they don’t come to Denver.

  5. “Sara Murawski . . . graduated right before the Great Recession. When home values plummeted, she couldn’t afford to take advantage of lower real estate prices. She was working in construction, with bachelor’s degree in housing studies. . . . By the time Murawski could save for a down payment, prices were increasing rapidly. . . This summer, she saw the intense competition for homes was starting to cool. Prices were still high, but she wasn’t willing to wait any longer. I just felt like another opportunity might not come up for me.”

    I wonder how much she paid for that degree in housing studies? She could have learned more reading Ben’s blog for a few weeks for free.

    1. At the very least NPR could have pointed out the “cycles” the REIC likes to fall back on last for years and there might not be a need to make an offer the first time there’s not a bidding war.

      1. Don’t overlook that the National Association of Realliars is an NPR supporter. You can expect a bevy of obfuscation in NPR reporting on real estate matters in return.

    2. “learned more reading Ben’s blog”

      I tell people about this blog all the time, but alas all the info available here doesn’t make the slightest bit of difference in their decision-making. Don’t forget: no one could have seen it coming. No one.

      1. ahh, untrue…read the Levy forecast…worth every penny: The Jerome Levy Forecasting Center | The world leader in …

        they nailed this prediction and many others over the past many cycles.

  6. Lots of spin going on in today’s articles. Slight acknowledgement of changing conditions but with the “everything’s fine” wrap up.

    Spinning is like any other task, the harder it becomes the less they will do it, Just like the transition around 06 and 07. You can already see how the tone of statements have changed over last month or two. Eventually it will only be the paid spinners like Yun et.al. NAR really lost credibility during the last downturn when they towed the line the whole time. It is unfortunate for those who don’t know better like the lady who was thrilled about “finally” having an accepted offer. Doesn’t realize where the trend is heading. Potentially a short sale in about 12 to 15 months. Also hurts to make motgage payments on a house deeply under water. Sad when this happens. Ingredients for the old soup are all there. Will see.

    1. Sadly for the FBs is that now they see an opportunity to get in after failed attempts to play the bidding war game. As you stated it could end up a decision that could end in a short sale or foreclosure but the ones whom have been eagerly waiting to get it are not willing to wait any longer and feel they are lucky to get in without bidding wars / over paying. We here know that they are indeed over paying and buying at the peak.

  7. “but she wasn’t willing to wait any longer.”

    THIS x1000. I’ve seen with SO many people over the last two years. Even with people who admit a “correction” is coming. But they just. can’t. wait.

    1. Funny we said basically the same thing. These FBs will be content for a few months, maybe a year but in the end be saying “why didn’t I wait”…

      1. A major problem with the lack of waiting is that the housing cycle isn’t aligning with their plan for how they expect their life to play out. A lot of millennials are starting to have kids and so of course they need a house with a yard in the burbs, heaven forbid they raise their child in an apartment! Gasp, the horror!

      1. This goes to Ben’s point about where are the regulators? Maybe flippers and the greediest of speculators could not have been stopped, but certainly these “just can’t wait” types could have been saved from themselves, if whoever is supposed to be keeping bubbles in check actually did so rather than making the bubble bigger.

      2. That comment’s about as flint-hearted as you can get. Blame people who swim against a current for years trying to spawn, only to get slaughtered for biting. It’s YOUR FAULT for not understanding interest rates and quantitative easing. Your contribution to the economy in all probability involves some variety of changing money. Go bray at someone who actually earned their misfortune.

    3. “but she wasn’t willing to wait any longer.”

      I’m going to thoroughly enjoy watching the entitled fools who just had to get up on that housing ladder learning the hard way about the virtues of deferred gratification.

    4. But they just. can’t. wait.

      I couldn’t convince my wife to wait until she saw the bad news with her own eyes. But even now if the right deal came along I wouldn’t be able to stop her if she could get the loan herself.

    5. Why the extreme urgency to buy as soon as possible? It’s almost as though these people live under the delusion that real estate always goes up. I guess they must have missed the memo that the Fed is steadily taking away the punchbowl and prices are already falling in response?

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