Sellers Are Now Realizing Demand Isn’t What It Used To Be And Are Dropping Their Prices
A report from Redfin. “Evidence that the market is cooling down can be seen in price drops. In October 31.3 percent of homes for sale had at least one price drop of more than 1 percent. This is the highest share of price drops on record since Redfin began tracking this metric in 2010, and 6.3 percentage points above last October’s level of 25 percent. In Seattle, almost half of homes for sale had price drops, with an average price cut of $27,500, down from more than $30,000 a year earlier.”
“The number of homes for sale was up 1.3 percent from a year earlier. This was the highest level of inventory growth since September 2015. National inventory growth continues to be driven by big increases in softening coastal markets like San Jose (110.9%), Seattle (73.2%), San Diego (38.2%), and Boston (17.3%).”
“The number of homes newly listed in October rose 5.4 percent year over year, but the number of completed home sales continued to sink, dropping 5.7 percent from 2017. Home sales declined in 59 of the 71 largest metro areas that Redfin tracks.”
“Metro areas like Seattle, San Diego and San Jose are seeing the biggest increases in inventory coupled with decreasing sales. The biggest sales declines were in some of the most expensive metros, including Seattle (-19.6%), San Diego (-15.7%), and Honolulu (-22.9%).”
“‘Some homebuyers are adjusting their price range down, and others are backing out of home-buying entirely–deciding that renting is a better deal. Sellers are now realizing buyer demand isn’t what it used to be and are dropping their prices. When buyers and sellers are on the same page, the market moves quickly, but since sellers were slow to react, we’ve seen a slowdown in the housing market,’ said Redfin chief economist Daryl Fairweather.”
From the California used house salespeople. “As market uncertainties continue to linger, California home sales declined for the sixth straight month in October and remained below the 400,000-level sales benchmark for the third consecutive month, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said.”
“‘Homebuyers continued to put their homeownership plans on hold in October and wait out the market,’ said 2019 C.A.R. President Jared Martin. ‘With mortgage rates at seven-year highs making homeownership more expensive and home prices beginning to flatten, this phenomenon will likely continue for the near term as buyers wait for further price adjustments and for interest rates to stabilize.'”
“The statewide median home price fell to $572,000 in October. The October statewide median price was down 1.2 percent from $578,850 in September and up 4.7 percent from a revised $546,430 in October 2017.”
“‘October’s sales decline was not as severe as the double-digit drop experienced in September, but the continued pullback in sales suggests the market will continue to slow and likely soften further into 2019,’ said C.A.R. Chief Economist Leslie Appleton-Young. ‘Likewise, as home sales continue to soften, the median price, which was the lowest since March 2018, will also ease up,’ said Appleton-Young.”
“Statewide active listings rose for the seventh consecutive month after nearly three straight years of declines, increasing 28 percent from the previous year. October’s listings increase was the largest in four years.”
“Active listings in the $500,000-$750,000 price range experienced the largest year-over-year gain (43.9 percent), followed by homes priced $750,000-$999,999 (40.1 percent). The sub-$200,000 market was the only price segment with a decline of 6.2 percent from last year.”
The Shawnee Mission Post in Kansas. “In the past, I had written a lot about the market shift or correction that was heading our way. Now that it is here, and make no mistake – it is here, I wanted to answer a question that I get a lot. ‘What is causing the market to slow down?'”
“This is really a great question and it comes down to one thing – affordability. Home prices in the Shawnee Mission School District, and all over the city for that matter, have appreciated over the last five years at an unbelievable rate. In 2017, from January to June, the median home price rose by 16.3 percent. That is crazy talk! In real dollars, that was an increase of $32,550.”
“Home price appreciation at that rate year over year has caused price weariness and buyer fatigue. If you talk to someone who has purchased a home in the last couple of years, more often than not they will share something like, ‘we had to write an offer on 2 or 3 homes before we got the one that we bought. And we had to pay over list price to get it.'”
“There are only so many buyers who are willing to purchase a home in this kind of an environment and, based on current trends, they have all now purchased a home. I say this because overall housing demand has dropped sharply in the last month or so.”
“Although home appreciation is a good thing in most cases, when it significantly outpaces wage growth and inflation, a bubble is created.”
“Home prices are coming down – homes that are actively for sale today are, in many cases, being forced to drop their price to attract home buyers. The last time I saw price adjustments on a regular basis was nearly five years ago.”
At the bottm of the CAR link are some tables.
‘What is causing the market to slow down?’
‘This is really a great question and it comes down to one thing – affordability. Home prices in the Shawnee Mission School District, and all over the city for that matter, have appreciated over the last five years at an unbelievable rate. In 2017, from January to June, the median home price rose by 16.3 percent. That is crazy talk!’
Behold, a UHS in Kansas knows more about how the real world works than all the central bankers put together.
” Home price$ … have appreciated over the last five year$ at an unbelievable rate.”
“Hey man, this doesn’t happen in the really real world, there ain’t no coming back!” …The Crow
Thanks Ben for documenting this economic craziness for posterity.
There were many factors that caused prices to rise on the way up, but all can ultimately be traced back to the Fed and other CBs working overtime to save their cronies from the GFC 10 years ago.
The world was (until recently) awash in cheap credit and easy money. QE, ZIRP, NIRP, Operation Twist, and other unprecedented easing measures inflated most all asset classes across the globe. This included housing, which used to be simple shelter until Wall St. financialized it. Wall St. has financialized America. Just think of America = Sears and you’d have a pretty good idea of how we got here, and where we’re going.
But now the tide is turning; the Fed is tightening via QT and raising interest rates. Welcome to the roller coaster economy a la the Fed. Why should anyone be surprised that asset prices are now falling in concert, and that the bottom is still a long way down? (Insert my shocked face here.) Mean reversion is a bitch. For a return to some sense of economic normalcy: End the Fed; bring back free markets and sound money. Got gold?
“You never know who’s swimming naked until the tide goes out.” – Warren Buffett
Russel Casse: “Payback’s a bitch, ain’t it?” – “Independence Day” (1996)
(“Price discovery’s a bitch, ain’t it?” – Paraphrase in the era of Keynesian Central Banking)
“The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers’ stone to make it last.” — Ludwig von Mises (1940)
render people prosperous by credit
Extending credit turns people into sucked eggs.
The Beatles – Kansas City
‘in Seattle, almost half of homes for sale had price drops…inventory growth continues to be driven by big increases in softening coastal markets like …Seattle (73.2%)’
Softening coastal markets – Wa? But, the weather! What happened to my shortage?
Camarillo, CA Housing Prices Crater 21% YOY As Construction Costs Fall Through $50/ Square Foot Floor
interesting demographic situation when my semi-retired neighbors sold at the very peak of the market here in N. CA back in Sept, then promptly moved to the Carolinas, while the buyers were a family from . . . Utah!
Utah!? unusual as common knowledge has it people move TO Utah, not AWAY.
Dean Martin, Foster Brooks & Ron White and a donkey stumble in to a bar…
Nonsense. Nobody is exhausted by not buying a house that is too expensive. The fatigued ones are the debt donkeys.
‘ In October 31.3 percent of homes for sale had at least one price drop of more than 1 percent. This is the highest share of price drops on record since Redfin began tracking this metric in 2010…the highest level of inventory growth since September 2015. National inventory growth continues to be driven by big increases in softening coastal markets like San Jose’
Lower prices, many more listings. Kinda the opposite of how supply and demand should work. However, it’s perfectly consistent with a bunch of speculators rushing for the exits having missed the peak.
supply and demand
The S&D preachers were living in the mania all along.
Seattle WA Housing Market Collapses On Borrower Fatigue As Bellevue Housing Prices Crater 30% YOY
Average size house is one third the size YOY. That may have something to do with price drop you’re stating. Especially when you see that average price per square foot is actually up $10. So looks to me a wash. Certainly not the plummet your headline suggests. When you see YOY price per sq foot crash, I’d love to know.
Again.$/sq ft valuation is a poor performer as it excludes all items in the transaction except for the structure and the area of dirt directly under it.
Bothell, WA Housing Prices Crater 11% YOY As Tech Layoffs Barbecue Seattle Area
As Tech Layoffs Barbecue Seattle Area
I try to avoid feeding the troll but…tech layoffs in Seattle? Did I miss something while on vacation???
El Dorado, CA Housing Prices Crater 24% YOY As Sacramento Area Economy Stumbles
When you see YOY price per sq foot crash, I’d love to know.
I disagree that it’s a wash. A thin ring of gold is more per ounce than a thick ring. And all you want to see is the price of gold lumps.
However, the frequent posts here of people taking a loss selling their house gives you what you ask for in a nutshell. When you see the Case Shiller index fall, you will see what the rest of us have been seeing for months.
Mountain climbing dog
Made people wonder how he got up there.
Last seen on The Housing Bubble Blog.
If foul play is involved there is a $500 reward that leads to an arrest and conviction.
And Lola will make a matching $500 contribution to the HBB.
Trying out the emojis 🃏
What’s up Miss Tarara
I am hoping you and your family the first best deal to come out of this related bubble.
Thanks, jeff. I hope you are feeling better (though I know that’s unlikely, takes so much time.) I’m just starting to feel a bit better after a loss which can’t be compared to yours. So, as always, I wish you the best.
I’m still kinda beating myself up over not buying in 2011 (the mediocre rental I was offered for $150K that’s now selling for $300K+). But it wasn’t really about the price, it was the neighborhood. I swore after living in NYC I would never again listen to salsa (don’t know what the west coast equivalent is) blaring all night long, so we left. It wasn’t the majority, just the (unfriendly) people who moved in next door. Not smart financially in the short term, we’ve been getting increasingly killed on rent YOY. Probably will get the boot again soon. Should have broken out the bagpipes in protest – och aye as my grandparents would say.
Codicil: we’re not wealthy, and at this point probably won’t be in a position to buy anything unless I throw all caution to the winds, so I tend to give the squint eye to those who post here talking about very expensive houses – I remember more lower/regular middle class (I guess fooling themselves) people posting here years ago. Because I am older, I hear these prices I think “insanity”.
It could be because I am frugal (cheap), though. I’m not giving in.
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