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Amid The Decline, More Sellers Are Joining The Price Reductions

A report from the Press Democrat in California. “Sonoma County’s retreating condominium market is providing the starkest signals for the slowdown in local home sales. Condo sales this year have fallen to the lowest level in a decade, while the number of units listed for sale in September reached its highest mark for any month in nearly 11 years.”

“Amid the decline in condo sales and prices, more sellers are joining the price reductions. After reviewing real estate multiple listing service data, Pacific Union International senior vice president Rick Laws concluded prices had been reduced for at least four of 10 condos on the market in October. For single-family houses, price cuts had occurred for at least one in three properties.”

“‘I think it shows a significant number of sellers are having to adjust their expectations,’ Laws said.”

“Real estate agents said they began to notice the slowdown in activity in late spring. For example, in May certain condominiums started to sit longer on the market without offers, said Alanna Krinard, sales manager of Century 21 NorthBay Alliance in Santa Rosa.”

“‘To me, the condos are the canary in the coal mine,’ Krinard said. What happens with them can portend changes coming to the broader housing market, she said. Prices have declined from a summer peak, and many buyers are waiting to see if values will keep falling.”

“For sellers, ‘if you’re not proactive on price, you’re going to sit,’ said Ken Schrier, a partner in Re/Max Marketplace in Cotati.”

“Schrier said the condo skid doesn’t signify a bubble bursting in residential real estate, as happened a decade ago when home prices crashed. Condo inventory remains at less than a three-month supply at the current sales pace, he said, a level still indicative of a seller’s market.”

“But the greater housing market has moved past the shakeup caused a year ago when wildfires destroyed 5,300 homes in the county, agents said. Some sellers keep pricing homes based on what fire survivors would be willing to pay, Schrier said, but ‘that ship left port by May.'”

From Think Realty. “When the Carr wildfire started in California, homeowners were naturally very concerned about the safety of their property. Once the wildfire was contained, about two months ago, most real estate analysts expected a run-up in prices after the smoke cleared. This is what happened in Sonoma County in Fall 2017. However, in the Redding area of California, it’s not happening.”

“Between August and September, however, home prices fell 11%. Local broker Brad Garbutt reported he had expected about a third of homeowners who lost their homes in the fire would opt to purchase properties elsewhere in the area rather than try to rebuild their old houses. However, ‘We are not seeing a third of the people going out and buying houses, let’s put it that way,’ he admitted.”

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This Post Has 36 Comments

  1. ‘Condo inventory remains at less than a three-month supply at the current sales pace… a level still indicative of a seller’s market’

    You UHS clearly don’t know what inventory level is a buyers or sellers market if half the people are sawin’ and a slashin’ prices now.

    1. You UHS clearly don’t know what inventory level is a buyers or sellers market if half the people are sawin’ and a slashin’ prices now.

      Oh, they know all right. But this industry of dissemblers fears one thing above all else: spooked buyers declining to buy into a cratering housing bubble.

    2. Well depending on which direction the UHS’s commission is coming from, it’s could be a sellers or buyers market

  2. ‘To me, the condos are the canary in the coal mine,’…What happens with them can portend changes coming to the broader housing market’

    This is like the Mercury News: “Oh, prices might even fall!” When prices have been falling for months. Come on Press Democrat, quit milking this thing and just say prices are down.

    Suddenly! “Prices have declined from a summer peak”

    Ya don’t say. Spring peak in Seattle, 2015 peak in Manhattan. It’s all the bubble popping.

  3. “Schrier said the condo skid doesn’t signify a bubble bursting in residential real estate, as happened a decade ago when home prices crashed.

    Schrier – rhymes with “liar” – is trying not to spook the herd. Cratering condos are ALWAYS a leading indicator of a bursting housing bubble.

  4. Speaking of collapsing bubbles, are you HODLing out hope for a return of Bitcoin to a price above $20k per ecoin?

    1. The big blockchain lie exposed as bubble bursts
      By Nouriel Roubini Source:Global Times Published: 2018/10/24 19:58:41
      Illustration: Luo Xuan/GT

      With the value of Bitcoin having fallen by around 70 percent since its peak late last year, the mother of all bubbles has now gone bust. More generally, cryptocurrencies have entered a not-so-cryptic apocalypse. The value of leading coins such as Ether, EOS, Litecoin, and XRP have all fallen by over 80 percent, thousands of other digital currencies have plummeted by 90-99 percent, and the rest have been exposed as outright frauds. No one should be surprised by this: four out of five initial coin offerings (ICOs) were scams to begin with.

      Faced with the public spectacle of a market bloodbath, boosters have fled to the last refuge of the crypto scoundrel: a defense of “blockchain,” the distributed-ledger software underpinning all cryptocurrencies. Blockchain has been heralded as a potential panacea for everything from poverty and famine to cancer. In fact, it is the most overhyped – and least useful – technology in human history.
      …

      2. ‘Blockchain has been heralded as a potential panacea for everything from poverty and famine to cancer. In fact, it is the most overhyped – and least useful – technology in human history’

        Yeah, I ordered a self-driving electric flying car from uber but it hasn’t showed up.

        1. Not going to disagree with over-hyped technology like cryptocurrency or blockchain, but Waymo is literally taking money for self-driving passengers as we speak in Arizona. I would say this is pretty cool and demonstrates that at least in this instance, self-driving is possible. Sure, there will be lots of kinks to workout, but this is very exciting stuff to me.

          https://www.ft.com/content/7980e98e-d8b6-11e8-a854-33d6f82e62f8

          2. I hope these self-driving cars work out! Mostly so I don’t end up stuck at home when I’m too old to drive. Autonomous cars would do wonders for “Senior mobility.”

          3. There’s no need for you to rely on self- driving cars for transportation after you are too old to drive. Human-driven rideshare vehicles work just fine, and I believe they pose far less danger to pedestrians than their robotic competitors.

  6. With weak sales and a listings explosion the months of supply numbers will quickly become useless as proof of market health.

  7. $498/sqft in Boise. So, this guy was trying to rent this out for $1450 about a month ago, garage not included. I went and took a look. It is a very small house in great neighborhood, and although listed as a 2 bedroom, it is really a 1 bedroom with a little office or spare storage room. There are no doors on either room. He remodeled it to be his functional bachelor pad, but has since gotten married and moved into another home with Wife. It would be fine for one person or possibly a couple who don’t want/need a ton of space. It did not rent.

    He then lowered price to $1325. It did not rent. Just went up for a sale at $348k – we need some of that ebola here in Boise.

    We are looking for another rental at the moment, and seems that there is a real standoff in prices in the neighborhood we want. Houses are sitting for months because they are overpriced. You’d think cutting the rent but actually collecting rent would win out over greed… well, not yet.

    1. “Garage not included”

      Was he planning to offset his rent income to mortgage with a grow operation in the garage while someone rented the remainder of that little shack?

    2. Gotta love that HDR color enhancement in the photos…

      MW/MB will insist that price per pound/sq ft doesn’t matter, but it’s a very good indicator and useful way to measure things between different segments of buyers.

      And the price in that listing assumes everyone is eating Wagyu or Kobe steak 3 nights a week.

      1. Kobe steak 3 nights a week.

        Maybe a good choice. A slice of Kobe is cheaper than the big Delmonico I eat one a week.

        It’s how much you spend on steak, not the price per ounce, that affects your wallet.

    3. I’ve been checking out rentals in Colorado Spring’s Old North End, Briargate, and West Side areas specifically to tell greedy landlords they’re asking more than I, a creditworthy tenant, am willing to pay.

      1. That’s awesome! You reminded me of when we sold our place after finding a rental. We did the whole here’s our rental resume and letter BS. I don’t plan on moving anytime soon but I do look forward to knowing those days of letters to landlords have turned to being able to lay it down as we are the ones paying there mortgage, whats the reason should we choose there shack over another, write me a letter explaining why and what your planning to do for me landlord 😉

        1. Amen. It’s infuriating that they act like they’re doing you a favor.

          Can’t wait for the tide to fully turn.

  10. Take it from a permabull: This time is different.

    Opinion: Here’s what the bear market in home construction stocks is trying to tell us
    By Mark Hulbert
    Published: Nov 3, 2018 9:19 a.m. ET
    Homebuilder slump won’t automatically hammer the broad stock market
    Bloomberg News/Landov

    Halloween may have passed, but home construction stocks continue to build a house of horrors: They’re down nearly 40%, on average, from their early-2018 highs. Nevertheless, don’t be too quick to conclude that their misery spells the end of the bull market.

    Of course, it’s understandable why home construction stocks’ weakness is so worrying, since the sector proved to be a good leading indicator of the 2008-09 Great Financial Crisis. A year prior to the 2007-09 bear market, for example, the iShares U.S. Home Construction ETF (ITB, -0.84%), for example, had already fallen 25%.

    By the time that bear market started in October 2007, furthermore, this ETF had fallen 56%. (See accompanying chart.)
    …

    1. Central Banks
      Trump Hasn’t Called Fed Chairman About Interest Rates, Kudlow Says
      President is unlikely to shake up Fed leadership for now, leaving Jerome Powell in place, according to Trump economic adviser
      By Vivian Salama
      Updated Nov. 1, 2018 1:33 p.m. ET

      WASHINGTON—President Trump hasn’t called Federal Reserve Chairman Jerome Powell to directly express his frustration with the central bank’s interest-rate increases and currently has no intention of replacing the Fed chief, the top White House economic adviser said Thursday.

      Lawrence Kudlow said that the president’s repeated criticism of Mr. Powell’s decision to raise rates three times so far this year is a simple expression of opinion, but that Mr. Trump hasn’t taken any steps to shake up the Fed’s leadership.
      …

  12. I‘m missing the hypothetical connection between negative interest rates and the onset of liftoff.

    Business News
    November 4, 2018 / 11:30 AM / Updated 11 hours ago
    Fed was afraid of negative interest rates: ex vice chair Fischer
    FILE PHOTO: Stanley Fischer addresses The Economic Club of New York in New York, U.S. on March 23, 2015. REUTERS/Brendan McDermid/File Photo

    JERUSALEM (Reuters) – A fear of negative interest rates kept the Federal Reserve from raising rates earlier than some policymakers had hoped, former Fed vice chairman Stanley Fischer said on Sunday.

    “The possibility of having a negative interest rate frightened the heck out of everybody who had to set the interest rate,” Fischer, who served as vice chair for 3-1/2 years until last October, told a farewell conference for Bank of Israel Governor Karnit Flug in Jerusalem.

    The Fed started to raise rates in late 2015.
    …

  13. US-China trade war’s bark turns to bite in Asia
    Published 10 hours ago

    SHANGHAI • The US-China tariff slug fest has, for months, triggered warnings that it could impact global economic growth, and recent data indicates that the trade tension is indeed beginning to bite.

    Manufacturing gauges in several export-reliant Asian countries, as well as China, weakened last month as gloom deepens over the trade outlook.

    China’s official Purchasing Managers’ Index (PMI), which measures factory activity, came in at 50.2 last month, down from 50.8 the previous month, the latest sign of weakness in the world’s second-largest economy amid the trade war and a domestic debt problem.

    But China’s troubles are bad for the rest of the region, and the world, analysts said.

    Across Asia, exporters from South Korea to Malaysia saw PMI decreases last month, according to indices compiled by Nikkei/IHS Markit.

    Taiwan saw its steepest falls in production and new business in just over three years, purchasing activity by companies fell for the first time since May 2016, and firms anticipate lower factory output in the next 12 months, Nikkei/IHS Markit said.

    “Taiwan is feeling the effects of this trade war because China is the factory for many companies in Taiwan. When the estuary is blocked, you feel the effects,” said Dr Sun Ming-te of the Taiwan Institute of Economic Research.

    China’s troubles are bad for the rest of the region, and the world, analysts said. Across Asia, exporters from South Korea to Malaysia saw PMI decreases last month, according to indices compiled by Nikkei/IHS Markit.

    South Korea’s PMI slipped to 51 last month, from 51.3 in September, while a separate Korean business sentiment index for manufacturing sank to its lowest level in two years. China is South Korea’s largest trading partner, absorbing a quarter of Korean exports.

    South-east Asian manufacturers were feeling the effects too, with PMI in Malaysia and Thailand slipping below the 50-point level, which indicates contraction in the sector. It was Malaysia’s lowest PMI since July and Thailand’s lowest in two years.

    In a recent interview, Malaysian Prime Minister Mahathir Mohamad complained that United States President Donald Trump – who has accused various trading partners of “ripping off” America – “seems to be withdrawing from all commitments overseas”.

    Tun Dr Mahathir said this hurts everyone, including the US.

    “We want to remain friendly with the US, and we want to continue trading with the US,” he said. “But the trade war that is going on between the US and China is damaging for us. We have to pay a price for that.”

    Singapore’s manufacturing outlook also continued to darken, with PMI dipping by 0.5 point to 51.9 last month, continuing its decline from the previous month.

    The International Monetary Fund warned at its annual meeting last month that the trade friction and other threats would hobble the world economy, lowering its growth forecasts for this year and the next.

    The US this year has already imposed tariffs on US$250 billion in trade with China.
    …

  14. The assumption that over half of all Uber and Lyft trips in big American cities would otherwise have been made on foot or by bike, bus, subway or train is patently wrong in San Diego. If I have to travel over a mile, I’m not going on bicycle or on foot, or waiting for a bus which may not go where I want to go, or create traffic and parking congestion driving to a subway or train station for a trip which also may not go where I want. I’m either going to drive my car or hail a Lyft or Uber, and the latter options create less congestion because I don’t need to park.
    My guess is that some environmental whack jobs funded the bicycle alternative study, and The Economist editors fell for the conclusions without giving them much scrutiny.

    Ubernomics
    The social costs of ride-hailing may be larger than previously thought
    A new study says congestion from Uber and Lyft drivers is leading to more deaths on the road
    Print edition | Finance and economics
    Nov 3rd 2018

    ECONOMISTS HAVE always been fond of Uber. Its willingness to battle incumbents, use of technology to match buyers and sellers, and embrace of “surge” pricing to balance supply and demand make the ride-hailing giant a dismal scientist’s dream. Steven Levitt, the author of the bestselling “Freakonomics”, called it “the embodiment of what the economists would like the economy to look like”. But if economists subjected Uber and its competitors to a cost-benefit analysis, they might not be so impressed.

    This might surprise customers. A study in 2016 by researchers from Oxford University, the University of Chicago and Uber itself found sizeable benefits from ride-hailing services for consumers.
    …
    But against these benefits, there are costs to weigh. Far from reducing congestion by encouraging people to give up their cars, as many had hoped, ride-hailing seems to increase it. Bruce Schaller, a transport consultant, estimates that over half of all Uber and Lyft trips in big American cities would otherwise have been made on foot or by bike, bus, subway or train. He reckons that ride-hailing services add 2.8 vehicle miles of driving in those cities for every mile they subtract.
    …

    1. I don’t know professor, I believe there is something to these stats. The rise of ride sharing platforms seems to coincide with the decrease in public transportation usage. However, it may simply be that the increase of ride sharing increased the total transportation demand. Many prognosticators believe that if we get to self-driving, the amount of miles driven by an average American per year will skyrocket because the mental cost of not having to pay attention will fall so much that people will be okay with commuting for much longer. In essence, I think it is possible that Uber and Lyft have created more congestion, but perhaps in a way that is not entirely intuitive.

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