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More Than Half Will Wait For Meaningful Correction

A report from The M Report. “More than three-quarters of Americans say their housing markets are cooling down as well, according to the Q4 2018 Modern Homebuyer Survey, released by ValueInsured. After five straight quarters of a majority of Americans saying their market was ‘overheated,’ 72 percent said in the most recent survey that they are not surprised that their market is now slowing down.”

“Millennials, in particular, are beginning to perceive a shift in the housing market with 72 percent saying home shoppers are ‘less aggressive’ than a year ago in their market and 67 percent saying they believe homes purchased today will decline in value over the next year.”

“Looking forward, ValueInsured’s CEO and Founder, Joe Melendez, said, ‘Expect the market to stall in the near term.'”

“After first reporting ‘overheating’ in the housing market in August 2017 and warning of pending correction, Melendez said, ‘Fast forward fifteen months, Southern California is in its worst housing slump in over a decade, Seattle leads the nation in fastest home-price drop, and North Texas has the largest sales decline in seven years. Buyers have switched from hoop jumpers to bargain-hunter mode.'”

“Additionally, even with the moderation in many markets, a majority—72 percent—of Americans say home prices are too high, which ValueInsured noted is an increase of 10 points from the second-quarter report.”

“The most-cited culprits for high home prices were ‘flippers and speculative investors’ and ‘wealthy transplants from more expensive housing markets,’ which were cited by 70 percent and 66 percent of respondents, respectively.”

“More than half of respondents—59 percent—who expressed interest in purchasing a home say they will wait for ‘meaningful correction’ before making a purchase, and 14 percent will ‘drop out of buying altogether if a correction does not occur.'”

From KUOW on Washington. “Coffee giant Starbucks announced plans to lay off 350 people, most of them at the company headquarters in the Sodo neighborhood. That’s roughly 7 percent of its Seattle headquarters. The cuts began in early September when several senior executives lost their jobs.”

“These layoffs, although not significant in the grand scheme of Seattle’s economy, come at a time when the city’s budget office is predicting a slowdown in growth. Indeed, half an hour after Starbucks made the layoffs public, Amazon announced where its second and third new major offices would be located — North Virginia and New York City.”

“Rents have already started to fall, with landlords giving away free months to entice tenants. Housing prices are sinking even in the city’s more popular neighborhoods, with ‘for sale’ signs staying up far longer than even a few months ago.”

“Amazon growing elsewhere means less jobs growth here in Seattle in the long term and potentially less office construction — less boom, in other words. The city predicts that this year — 2018 — will be Seattle’s peak.”

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This Post Has 40 Comments

  1. ‘Southern California is in its worst housing slump in over a decade, Seattle leads the nation in fastest home-price drop, and North Texas has the largest sales decline in seven years’

    DONG!

  2. ‘More than half of respondents—59 percent—who expressed interest in purchasing a home say they will wait for ‘meaningful correction’ before making a purchase’

    You know, I don’t think they are buying the shortage thing.

    1. Meanwhile it seems like plenty of new rental inventory is in the pipeline.

      There’s never been a better time to sit on the sidelines, watch, and wait.

      1. There’s never been a better time to sit on the sidelines, watch, and wait.

        Ya know, I was just saying that to the realtor at the last open house I graced with my presence. She didn’t seem to appreciate the sentiment, for some odd reason.

        1. What has started to liven up my spirit is seeing all these new apartments coming online. My wife and I had always thought that there might be a nice affordable house that we would buy. But now I see all these really nice apartments that are coming on line and are actually cheaper to rent than buying. We feel like we have good options to rent in quality areas even if housing doesn’t correct (which of course it will). We can ride out the insanity by renting a nice place for a good price until prices dramatically fall.

  3. Melendez said, ‘Fast forward fifteen months, Southern California is in its worst housing slump in over a decade, Seattle leads the nation in fastest home-price drop, and North Texas has the largest sales decline in seven years.

    How the mighty have fallen. Congratulations, winners of all those bidding wars. You will serve as an instructive object lesson for what befalls the reckless and the greedy.

    1. There are three properties for sale in our complex.

      One on the market for 153 days, one for 146 days, and one for about a month (can’t find the listing online, but the owner is a broker – let’s see how well that works for him).

      It’s been interesting watching these places sit with nearly zero foot traffic at the open houses.

  4. ‘The city predicts that this year — 2018 — will be Seattle’s peak’

    And there’s only 48 days left!

    “The sun don’t shine on the same dog’s ass all the time.”

    Catfish Hunter

  5. “The most-cited culprits for high home prices were ‘flippers and speculative investors’ and ‘wealthy transplants from more expensive housing markets,’ which were cited by 70 percent and 66 percent of respondents, respectively.”

    The MSM has done a stellar job of keeping the sheeple in the dark as to the pernicious role of the Keynesian fraudsters at the Fed, whose deranged money printing and “stimulus” lavished on the likes of BlackRock to buy up the distressed assets of the proles or “invest” in luxury apartments played the biggest single role in the asset bubbles since 2009.

  7. Back when we were discussing it here, I predicted the DC metro area for the second Amazon headquarters, so I will give myself partial credit. Bezos has to realize that a populist revolt against his company is coming, and he wants to be near the center of power. A revolt against Facebook and Google is coming too. Maybe they will announce plans for an additional headquarters.

    1. http://www.usatoday.com/story/opinion/2012/11/26/hunger-games-washington-economy-glenn-reynolds/1725783/

      Column: Are we living in the Hunger Games?
      Glenn Harlan Reynolds 6:25 p.m. EST November 27, 2012

      D.C. has power and wealth while the rest of the country suffers. It’s not a question of who the odds favor.

      You know the story: While the provinces starve, the Capital City lives it up, its wheeler-dealer bigshots growing fat on the tribute extracted from the rest of the country.

      We don’t live in The Hunger Games yet, but I’m not the first to notice that Washington, D.C., is doing a lot better than the rest of the country. Even in upscale parts of L.A. or New York, you see boarded up storefronts and other signs that the economy isn’t what it used to be. But not so much in the Washington area, where housing prices are going up, fancy restaurants advertise $92 Wagyu steaks, and the Tyson’s Corner mall outshines — as I can attest from firsthand experience — even Beverly Hills’ famed Rodeo Drive.

      Meanwhile, elsewhere, the contrast is even starker. As Adam Davidson recently wrote in The New York Times, riding the Amtrak between New York and D.C. exposes stark contrasts between the “haves” of the capital and the have-nots outside the Beltway. And he correctly assigns this to the importance of power.

      Washington is rich not because it makes valuable things, but because it is powerful.

      With virtually everything subject to regulation, it pays to spend money influencing the regulators. As P.J. O’Rourke famously observed: “When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.” But it’s not just bags-of-cash style corruption. Most of the D.C. boom is from lobbyists and PR people, and others who are retained to influence what the government does. It’s a cold calculation: You’re likely to get a much better return from an investment of $1 million on lobbying than on a similar investment in, say, a new factory or better worker training.

      So Washington gets fat, and it does so on money taken from the rest of the country: Either directly, in the form of taxes, or indirectly in the form of money that otherwise would have gone to that factory or training program.

  8. “Rents have already started to fall, with landlords giving away free months to entice tenants. Housing prices are sinking even in the city’s more popular neighborhoods, with ‘for sale’ signs staying up far longer than even a few months ago.”

    Can’t wait for the foreclosure sales to begin in earnest. Going to be some sweet deals for renters who refused to get caught up in the lunacy of the Bernanke-Yellen bubbles.

    1. Can’t wait for the foreclosure sales to begin in earnest.

      Maybe. Last time it turned out they would rather let them rot than let the comps get too low. But maybe the strategy will be different this time.

      1. “….Last time it turned out they would rather let them rot than let the comps get too low….”

        I don’t think that was the real reason. The special servicers could take up to 24 months to dispose of a foreclosure and bill the investors $500/hour to do it. Why would they sell themselves out of a $500/hour golden goose?

    2. The number of San Diego County homes Zillow shows as “preforeclosure” is nothing short of astonishing. We’ve been fed the story by the MSM for some time now that foreclosures were a thing of the past. Now it appears the foreclosure flood is building during a record breaking economic expansion. The dam might break in the next recession.

      1. San Diego is one of few places where everyone does want to live

  9. Does anyone else find this Zlisting peculiar?

    9030 La Jolla Shores Ln
    La Jolla, CA 92037
    2 beds 2 baths 2,615 sqft
    Off Market
    Zestimate®: $12,035,045
    Rent Zestimate®: $22,087 /mo
    Est. Refi Payment
    $49,703/mo

    Here’s your chance to build a one of a kind executive compound replete with spectacular main house and stylish guest house as the property is zoned for two separate structures. The current configuration offers a two bedroom two bath main house and with de

    Facts and Features
    Type Single Family
    Year Built 2000
    Parking 3 spaces
    Lot 1.52 acres
    Interior Features
    Bedrooms
    Beds: 2
    Floor size: 2,615 sqft
    Unit count: 1
    Type and Style Single Family
    Dates
    Last remodel year: 1958
    Built in 2000
    Lot: 1.52 acres
    Other Exterior Features
    Parcel #: 3440302100
    School district: SAN DIEGO UNIFIED
    Parking: 3 spaces
    Last sold: Aug 2009 for $6,550,000
    Activity On Zillow
    Views in the past 30 days: 43
    1 shopper saved this home
    Zestimate $12,035,045
    Zestimate Range
    $10.47M – $13.24M
    Last 30 Day Change
    +$1,147,113 (+10.5 %)
    One Year Forecast
    $12,319,072 (+2.4 %)
    Inside the Zestimate
    The Zestimate is Zillow’s best estimate of a home’s value. It is based on a blend of valuation methods, each of which may produce a different estimate depending on the available data.
    Estimate based on comparable homes $2,631,263
    Market appreciation $10,385,620
    Rental Zestimate : $22,087/mo

    Price History
    Date Event Price Agents
    8/19/2009 Sold $6,550,000 -45.4% Gregg Whitney
    5/31/2008 Listing removed $12,000,000 —
    5/1/2008 Listed for sale $12,000,000 +2300%
    4/22/2008 Sold $500,000 —

    Report issue with price history
    …

    1. Zillow predicts La Jolla home values will decrease 1.2% next year, compared to a 6.2% increase for San Diego as a whole. Among La Jolla homes, this home is valued 633.4% more than the midpoint (median) home, and is valued 474.6% more per square foot.

      WTH! So Zillow is actually forecasting a decrease for La Jolla but an increase for SD? well they are 1/2 right…

      1. I should have mentioned that it sits atop a cliff overlooking La Jolla Shores Beach, which makes it hard to find good comps.

        1. Many mixed old (some very old) and new homes through out La Jolla so yeah comps are a bit vague. My grandparents own a small 1920’s 2br 1ba shack there (literally a shack) that shows a estimate of 1.5 million. Between the traffic and the mischievous people that surround La Jolla (PB mainly), I don’t get the pricing to live there. Beaches and scenery is nice but not nice enough for the price tags

      2. Zillow predicted a decrease for Santa Monica in 2014. I found that curious and watched the market since: up over 8%/year since then!

  11. I love how HQ2 is announced as “Crystal City” and “Long Island City”. Basically Arlington and Queens, where traffic is horrific, parking is impossible, and only worn out skyboxes are available. My guess is not too many people are packing up and relocating. If you’ve wanted a job in these areas chances are you probably would have had one by now. They’ll drain out the existing brain power from these areas and it’ll be a net neutral for the local economy, all the meanwhile AMZN gets a nice tax beni to add to their books. Congrats D.C. And NYC! It was yours all along!

    2. Northern Virginia and Long Island City?
      Are they picking out new headquarters for the American Basketball Association?
      What about Pittsburgh, Buffalo, Lexington, Memphis, San Antonio, Denver, and Anaheim?

      da bear

  13. The Tech Collapse ™ is going to crush Seattle. And when turn unions finally choked Boeing out, Detroit 2.0 will be well underway.

  14. New York Times buy vs rent calculator is very interesting.

    A lot of the buy vs rent decision swings on expected appreciation of the property. Your expectation of RE (de)appreciation has a huge impact on the breakeven rent. So once folks realize RE might actually be falling by 3 or 4k mo the money they are throwing away on rent doesn’t look so bad.

    1. You raise a good point, which is that rents may remain elevated for the duration of the period when owner-occupied housing prices are falling, as people who normally would buy opt to rent rather than catch themselves a falling knife. Equilibrium will only be achieved after purchase market prices are done falling and prospective buyers who have been renting to avoid catching themselves falling knives feel ready to tiptoe back into the market.

    1. Looking forward to many more of these! Personally I would never get into an HOA bound property again so these “deals” are off my radar

  16. The millennials should be careful. I bought my first foreclosure from Countrywide in late 2008 for $385,000 (down from $650,000 in 2006). It was 3,100 SF and I thought it was a great deal. Similar models dropped all the way to $235,000 in 2012. Real Estate is sticky on the way down.

    1. Buying in the middle is much better than buying at the top. Of course buying at a bottom is always preferable but good luck with that…

      1. good luck with that…

        Timing the market is not the most important thing. What is important is not to pay what you cannot afford and saddling yourself with decades of pulling a heavy Donkey Cart. It is important not to buy at prices that are multiples of replacement cost. That would be crazy.

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