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Buyers Have More Choices And Can Argue For Concessions Or Price Reductions

A report from SCV News in California. “The number of active listings of homes and condominiums for sale in the Santa Clarita Valley rose in October 2018 for the fifth consecutive month while sales slowed and resale prices continued to move higher, the Southland Regional Association of Realtors reported Monday. ‘To have five consecutive months post increases in supply suggests owners believe prices may have peaked and now is a good time to sell,’ said M. Dean Vincent, chairman of SRAR’s Santa Clarita Division.”

“There were 655 active listings at the end of the month, an increase of 36.5 percent over a year ago. From January 2015 through May of this year the inventory had posted declines, with the only one exception.”

“‘Demand for housing remains high, but any increase in inventory will ease upward pressure on prices,’ he said. ‘That’s especially important today because prices have risen high enough that the pool of people who can afford to buy is shrinking,’ Vincent said. ‘Sellers will have to be aware of the shifting market dynamics even as they seek the best price possible for their property.'”

“‘Buyers certainly gain a bit more leverage as the inventory grows,’ said Tim Johnston, the Association’s chief executive officer. ‘Yet it remains a sellers’ market even as buyers have more choices and can argue for concessions or price reductions.'”

“The median price of single-family homes that changed owners last month came in at $595,000, up 2.6 percent from a year ago. The monthly median has posted higher than the prior year virtually every month since prices hit bottom at $340,000 in November and December 2011.”

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  2. ‘To have five consecutive months post increases in supply suggests owners believe prices may have peaked and now is a good time to sell’

    So where are they going to go M. Dean? Were they just sitting there ready to pull the trigger all along? Or did they decide to move, at the exact same time? Sure looks like speculators trying to time the market.

    1. I bet a lot of it is Baby Boomers sitting in way too big empty nests delaying downsizing into luxury elderly living communities near their grand-kids because they were making money hand over fist via equity growth. So not exactly speculators, a lot of age-in-placers that have been having fun via cash out refis for five years.

      1. Nope. Pretty much just speculators. The entire bubble has been driven by speculation, nothing more, nothing less.

      2. People who base their ownership tenure decisions on the assumption that real estate appreciation rates can remain north of 10% forever are speculators by definition.

      3. I’d argue that the Baby Boomers have been slow to downsize not because of being transfixed with their equity gains, but because they have been putting off retirement in masse, since the recession a decade ago melted down their holdings.

        While many people profited by being on the sidelines jumping into the market around 2010-2012, many more were wiped out and are just now getting back to where they were a decade ago (just in time for the roller coaster to plunge down again)

        1. Just before the 2008 recession, the DOW peaked at 14000. Now the DOW is hovering around 25000. I don’t blame the markets for BBs refusing to retire. I think it’s because many of them cash-out refi’d their homes to send the kiddies to college, and they want to pay off the mortgage while they can still pull down a six-figure salary.

          2. Or to put my question another way, how many more 400+ point daily drops can the Dow weather before it is a lot lower than 25,000?

          3. It will need a lot more to 400-point drops to reach the 1400 peak before the recession. TBH, I think a lot of Boomers are just *afraid* to retire. 1 million/2 million isn’t enough, what if my kids need (more) money… I’m still paying support to my ex… what if I want to travel to Fiji… I want to live somewhere nicer than a trailer park… what if I get a massive health problem… I need health insurance for my (second) wife because she’s 15 years younger and too young for medicare… what if live to 95… better hang on at work for another year.

          4. a lot of Boomers are just *afraid* to retire.

            In a little while you might be able to add to the list: “Buying that overpriced shack on credit destroyed us financially.”

  3. ‘Yet it remains a sellers’ market even as buyers have more choices and can argue for concessions or price reductions’

    You can call it what you want – as long as you slash those prices Tim!

  5. “‘Buyers certainly gain a bit more leverage as the inventory grows,’ said Tim Johnston, the Association’s chief executive officer. ‘Yet it remains a sellers’ market even as buyers have more choices and can argue for concessions or price reductions.’”

    OK I’ll just wait then

  6. Age in place baby boomers are benefiting from the healthy lifestyle they have chosen and will probably remain in their homes for another 15 years (until age 80 +/-). Construction costs have always kept pace or exceeded inflation which is rising making the value of existing homes and new homes higher every year. If a recession appears and equity prices and home prices fall 30%, that doesn’t mean the waiting buyers will be able to acquire the homes they want (curb appeal, good schools) at 30% off. The homeowners will just stay in their homes. The only way to acquire the dream home is to pay near the market price at todays price. Not to mention when the international trade wrangling ends there will be plenty of off shore buyers for the coastal properties.

    1. The only way to acquire the dream home is to pay near the market price at todays price.

      Looks like a realtor just self-identified.

      1. The only way to acquire the dream home is to pay near the market price at todays price.

        That’s what living in the mania looks like. While you tell us to do the stoopid thing, some of us have successfully taken another path.

        1. Passing to kids has been happening in Santa Barbara for decades.’

          Thats handy because their are not many jobs there that pay well.

          Chalk art is not a real job AFAIK

        2. I recently spent a week in Santa Barbara… no street people, no graffiti, etc., very impressive! Los Angeles and San Jose are schitt holes by comparison.

          2. The only way to acquire the dream home is to pay near the market price at todays price.

            Who said anything about a dream home. Most people are just looking for something affordable. They haven’t all drunk the HGTV koolaid. The thing that might make things more affordable would be some innovations in transportation like self-driving which would allow more feasible building in areas where land costs are lower relative to urban city centers. Not ideal by any mean’s, but it’s an idea. The other innovation would be for serious modular building and pre-fab techniques to go mainstream. Housing cannot exceed wage increases by double for very long before you exhaust the pool of purchasers, which is probably where we are now.

          3. self-driving

            I don’t know about more expensive and extensive travel making life more affordable, seems like the long way around. I used to take the train, which is about the same approach, only very cheap.

          4. Oh, yes they HAVE drunk the HGTV kool-aid. Buyers may not want a mansion, but they’ll turn up their nose at a sturdy serviceable house if it has harvest gold wallpaper and walnut paneling. Flippers make money for a reason.

            Variations on work-at-home is far more likely than self-driving. Yes, I know you’re a nurse and can’t telecommute, but at least w@h will take the cubicle dwellers off the road to make your drive/bike a little easier.

          5. Don’t know where you were, but I’ve been accosted by panhandlers and seen passed out homeless in planters in Santa Barbara.

          6. I stayed near Los Positas and State Street. I saw the police questioning the few slum-dogs that I did see. I’m guessing that they push their street people toward Carpenteria or Ventura.

    4. As a side note, having a healthy lifestyle as you age is almost priceless. An ever growing percentage of our population is unhealthy and obese, and their life expediency is trending down.

      More time is the one thing we can’t buy.

      Or I may be stressing because one of my parents has suddenly fallen seriously ill….

      1. Condolences to you and your family. Hope you can find peace and strength through whatever challenges your loved ones may be facing.

    5. “Age in place baby boomers are benefiting from the healthy lifestyle they have chosen and will probably remain in their homes for another 15 years (until age 80 +/-).”

      Oh, yeah, all the drugs, booze and smoke has really led to a healthy body at the later stages of life….

      Meanwhile, in the real world, boomers are dying off en masse in their 50s and 60s.

      1. Oxide,

        You know the saddest thing about my current work situation? I am not practicing as an RN at the moment. Yes, I renewed my license for 2019-2021, but I’m managing full-time of all things a luxury condo building in Salt Lake City. I love nursing, but I found that taking care of other people and tending to their health wasn’t conducive to taking care of mine. I try to run about 70 miles a week, but the nursing schedule and lack of breaks plus “secondhand sugar” was killing my training. I started getting the nursing guy bod (you should see all the pretty young female RNs I graduated with two years on, it’s very sad). Nursing is probably the worst profession for trying to live a healthy lifestyle.

        2. “I’m managing full-time of all things a luxury condo building in Salt Lake City.”

          That’s awesome…

          “Nursing is probably the worst profession for trying to live a healthy lifestyle.”

          …and in turn sad. Although I submit that doctoring is worse.

          Hopefully the healthcare profession will someday once again benefit from your training and skills, in case the condo management gig ends.

  8. “‘Buyers certainly gain a bit more leverage as the inventory grows,’ said Tim Johnston, the Association’s chief executive officer.

    So the longer I wait, the more leverage I gain. Got it.

  11. Are you going to HODL your stocks all the way to the bottom of the correction / bear market? You might want to review the duration of the tech stock crash of the early 2000s before deciding. My recollection is that stocks kept on crashing for many months before finally settling down.

    1. What do random and down have in common?

      The market right now doesn’t care how fantastic your stocks are
      By Vitaliy Katsenelson
      Published: Nov 19, 2018 7:12 p.m. ET
      In the short run, good decisions don’t always produce lucrative results

      The Roman philosopher Seneca wasn’t talking about the stock market when he wrote that “Time discovers truth,” but he could have been. In the long run a stock price will reflect a company’s (true) intrinsic value. In the short run the pricing is basically random. Here are two real-life examples.

      Let’s say you had the smarts to buy Microsoft (MSFT, -3.39%) in November 1992. It would have been a brilliant decision in the long run — the software giant’s stock has gone up manyfold since. But nine months later, in August 1993, that call did not look so brilliant: Microsoft shares had declined 25% in less than a year. In fact, it would have taken you 18 months, until May 1994, for this purchase to break even. Eighteen months of dumbness?

      In the early 1990s, the PC industry was still in its infancy. Microsoft’s DOS and Windows operating systems were de facto standards. Outside of Apple (AAPL, -3.96%) Macs and a tiny fraction of IBM (-1.04%) computers, every computer came preinstalled with DOS and Windows. Microsoft had a pristine balance sheet and a brilliant co-founder and CEO in Bill Gates who would turn mountains upside-down to make sure the company succeeded. The above sentence is infested with hindsight — after all, that was almost 30 years ago. But Microsoft clearly had an incredible moat, which became wider with every new PC sold and every new software program written to run on Windows.

      Here is another example: GoPro (GPRO, -2.17%) is a maker of video cameras used by surfers, skiers, and other extreme sports enthusiasts. If you had bought the stock soon after it went public, in 2014, you would have paid $40 a share for a $5.5 billion–market-cap company earning about $100 million a year — a price-earnings ratio of about 55. Your impatience would, however, have been rewarded: The stock more than doubled in just a few short months, hitting $90.
      …

    2. Netflix’s ‘death cross’ is the third for FAANG stocks and Nasdaq Composite is next
      By Tomi Kilgore
      Published: Nov 19, 2018 4:11 p.m. ET
      Amazon and Apple are the last FAANGs to not produce a ‘death cross’ while the Nasdaq Composite should produce one next week
      Getty Images
      Netflix CEO Reed Hastings

      Netflix Inc. stock has fallen far enough and long enough to produce its first “death cross” pattern in nearly three years, and become the third member of the former FAANG technology darlings to suffer that bearish technical fate.

      A death cross refers to when a price chart’s 50-day moving average, viewed by many as a short-term trend tracker, crosses below the 200-day moving average, which many recognize as a dividing line between longer-term uptrends and downtrends. Technicians view the bearish cross as marking the spot a short-term pullback graduates to a long-term downtrend.
      …

    3. This is going to go down as the biggest pump & dump in human history. The key difference between what’s coming and the previous Wall Street-Federal Reserve pump & dumps (Tech Bubble 1.0, Housing Bubble 1.0, and the 2008 global financial crisis) is that this time there is such a high potential for the algos to go haywire and really wreak havoc, and the derivatives overhang has gotten so gargantuan that we we could have a no-kidding “this sucker is going down” financial crisis on our hands, especially given the insane debt and credit bubbles caused by ten years of central bank QE. In addition, whereas in the 1990s most of the sheeple meekly accepted their fleecing, people now are a lot more awake and aware, and pissed off – they’re not going to react well to the swindles being perpetrated against them by our financial and political elites.

    1. What happened to the permanently low plateau of $6,550 from which Bitcoin was supposed to break out to the upside?

    2. It’s crashing too fast for the news to keep up. It’s moving faster than the fire that consumed Paradise, CA.

      Technology
      Cryptocurrencies Plummet, With Bitcoin Breaking Below $5,000
      By Vildana Hajric
      November 19, 2018, 1:53 AM PST
      Updated on November 19, 2018, 7:27 PM PST
      – Token reaches lowest since Oct. 17 after Bitcoin Cash split
      – First civil penalties against ICOs announced Friday by SEC

      The slide in cryptocurrencies accelerated Monday, with Bitcoin piercing the $5,000 mark for the first time since October 2017, amid speculation that increased regulatory scrutiny will prompt issuers of initial coin offerings to liquidate holdings.

      Bitcoin declined as much as 14 percent during U.S. trading hours, falling just below $4,700 before bouncing back slightly. The largest digital currency was holding steady around $4,862 at 10:52 a.m. in Hong Kong. Rival coins Ether and Litecoin were largely flat after both tumbled as much as 16 percent overnight.

      https://www.bloomberg.com/news/articles/2018-11-19/cryptocurrencies-falter-as-bitcoin-tumbles-toward-5-000-level

    3. https://news.bitcoin.com/new-study-looks-at-the-cost-to-mine-btc-across-the-globe/?utm_campaign=Push+Notifications&utm_medium=notification&utm_source=OneSignal+Push

      At the January 2018 mining difficulty level, it was estimated that it required $4758 worth of electricity to mine a single bitcoin in the US. (The estimates apparently don’t account for other costs involved, such as the cost of the servers, a building to house them, etc.)

      I presume the difficulty of the calculations has increased since then. Thus more electricity is required to mine. So the cost has increased. Probably above the current price of BTC.

      1. “Probably above the current price of BTC.”

        Don’t forget to include the cost of HODLing when losses have recently exceeded 10% per day.

      2. Am I the only observer to find the concept of mining an imaginary currency at over $4000 per unit, plus high energy and greenhouse gas emissions costs, patently absurd?

      3. This sounds like a self-enforcing feedback loop. If the price is too low, the miners stop mining, and supply stays stable so prices stabilize or rise. When prices rise, miners start mining again.

        I hope that Arrogant Joe in Baltimore sold out his $15 mil of Bitcoin before it crashed.

        1. Or people get a collective clue that mining an imaginary currency is a worthless activity, and the whole scheme collapses…

    4. Is $60 billion alot? Whose cryptobux just got sent to money heaven?

      Cryptocurrency price collapse: Why have bitcoin, ethereum and ripple all suddenly crashed?
      For once, the market-wide crash is not being blamed on bitcoin
      Anthony Cuthbertson
      1 hour ago
      The Independent Tech

      Cryptocurrency markets have lost more than $60 billion in value in less than a week, following a price crash that has caused bitcoin, ethereum and ripple to hit their lowest levels since 2017.

      The price falls appear even more dramatic given the remarkable period of stability that preceded them, which had prompted some analysts to warn that the lack of any major market movement since early September would likely be the “calm before the storm.”

      https://www.independent.co.uk/life-style/gadgets-and-tech/news/cryptocurrency-price-bitcoin-cash-ethereum-ripple-crash-a8642551.html

  13. As of 10:00 PM Pacific time, Asian stocks are down across the board. I predict further US market declines on Tuesday.

  15. Oh, the humanity! As the Fed’s Everything Bubble implodes, the bagholders are in full-blown panic as scam cryptocurrencies plunge closer to their intrinsic value: zero.

    Remember Bill in wherever, the self-described “anarcho-capitalist” (WTF that means) who obsessively harped on how we should all convert our Yellen Bux to Bitcoin, before Ben banned him for general douche-baggery? I can almost feel the seismic vibrations from the frenzied stamping of little feet.

    https://www.zerohedge.com/news/2018-11-20/people-have-panicked-crypto-collapse-accelerates-bitcoin-plunges-towards-4000

  17. CR8R

    Opinion: Misguided share buybacks are hollowing out companies’ balance sheets and will lead to even bigger stock-market trouble
    By Martin Hutchinson
    Published: Nov 20, 2018 8:28 a.m. ET
    GE’s troubles are a reliable signal of trouble ahead for U.S. companies
    Getty Images

    A year ago, I wrote about the worrying increase in leverage among America’s blue chips caused by share repurchases (“Hollowed-out blue chips are the next subprime”). Today I want to return to the subject, because the travails of General Electric are a reliable signal of the trouble ahead for the large corporate sector of the U.S. economy.

    GE (GE, -1.79%) was one of Wall Street’s major share buyback operators between 2015 and 2017; it repurchased $40 billion of shares at prices between $20 and $32. The share price is now $8.60, so the company has liquidated between $23 billion and $29 billion of its shareholders’ money on this utterly futile activity alone. Since the highest net income recorded by the company during those years was $8.8 billion in 2016, with 2015 and 2017 recording a loss, it has managed to lose more on its share repurchases during those three years than it made in operations, by a substantial margin.
    …

  19. Does it seem like there is an irrationally exuberant level of bullish sentiment lingering in the market at this juncture?

    Ray Dalio says it’s just like the 1930s for investors right now’
    By Barbara Kollmeyer
    Published: Nov 20, 2018 8:54 a.m. ET
    Critical information for the U.S. trading day
    Getty Images
    Wall Street circa 1930

    When we look back on the biggest calls of the 2018, no doubt the word “stupid” is going to stand out.

    In January, the manager of the biggest hedge fund in the world, Ray Dalio, made some headlines when he declared that investors holding cash were going to “feel pretty stupid” because they would miss out on the “blowoff rally” to come.

    The Bridgewater Associates founder took some heat for that call. It was just a couple of days later, on Jan. 26, that the S&P 500 surged all the way to 2,821, and everyone said, “buy into this market now, are you crazy?” But then after a choppy spring, stocks resumed a march higher and the index made it nearly to 3,000, that is until October when things got rough again and generally stayed that way.
    …

  20. Can someone please remind me how many times already in 2018 the Dow, S&P 500 and Nasdaq indexes have all turned negative for the year?

    Is this the first time?

    Silver lining for panicked bulls: The Fed is likely to smell the panic in the air and back off its rate hike schedule.

    1. Someone had to do it. It was inevitable. Say, that little confab he had with Brown and Newsome in the woods was interesting to say the least. Most interesting was that house behind them, burned to the ground, just a blackened chimney sticking up. And yet there were the trees, not a char mark on them.

      POTUS is in the process of ending the war in Afghanistan, but the lamestream won’t tell you that. Cleaning up the dirt left behind by that last two presidents. Not to mention Yemen, which is also headed toward resolution. Can you do that? No, I didn’t think so. But you can slap him with a cute nickname. I don’t remember you complaining about all the bloodshed and carnage.

      1. In his defense, there has been a recession in the first term of almost every Republican President in the past century. So it’s not like it is different this time.

        And if the recession impacts land mostly in 2019, then 2020 can be a recovery year, just in time for election season.

        1. there has been a recession
          We’ve been in one for years, despite the mainstream headlines and partisan perspectives. The bursting of the biggest commodities boom ever has been a slow motion train wreck, whitewashed here and there only by debt expansion. Take the debt away and the recession would be quite obvious. Borrowed prosperity is a lie.

      2. The large conifers survive ground fires handily and in fact need them to clear out the forest floor and activate their seed pods, which drop and hopefully sprout. Seems like this fire did a good job of clearing out all the stuff that occluded the floor. From the trees’ perspective it is too bad there’re all those concrete slabs still littering the place.

        Environmental science is an interesting discipline to study in California…

    3. “Cheetoh Jesus”

      This is the kind of divisive rhetoric that defines the libs in this country. It’s ok if it’s directed at Trump, but if something like this is directed at one of their own, then the person who delivers it is to be absolutely crucified and ruined.

  23. Fat lady isn’t singing bull market’s swan song—‘but if you listen closely you can hear her warming up’, says strategist
    By Mark DeCambre
    Published: Nov 19, 2018 4:11 p.m. ET
    LightRocket via Getty Images

    Warnings that good times are coming to a halt are coming fast and furiously, now. And perhaps, that is for a good reason: the three main benchmarks on Monday were enduring a fresh pummeling on the back of a slump in shares of once-highflying technology and internet-related stocks, including Apple Inc. (AAPL, -3.92%) (flirting with a bear market) and Facebook Inc. (FB, -1.24%).

    Wall Street analyst Michael Arone offers a fitting encapsulation of how market participants are perceiving this latest downdraft, with tech-heavy Nasdaq Composite Index (COMP, -2.42%) deepening its slide in correction territory—defined as a decline from a recent top of at least 10%— the Dow Jones Industrial Average (DJIA, -2.03%) sinking more than 500 points at its lows, and the S&P 500 index (SPX, -1.86%) declining by 2%. The drops pushed the S&P and Dow into negative territory for the month to date, down 0.7% and 0.5%, respectively. The Nasdaq is down 3.5% since the end of October.

    “You can’t hear the fat lady singing just yet but if you listen closely, you can hear her warming up in the background,” Arone chief investment strategist at State Greet Global Advisors, told MarketWatch. He reiterated comments made on CNBC earlier Monday afternoon, referring to the likelihood that a nearly decadelong bull market in stocks may be coming to a halt within the next year or so.

    Arone’s comments capture the growing concern on Wall Street that the euphoria following the late-2017 tax cuts promoted by the Trump administration may soon be wearing off.

    Goldman Sachs Group Inc. Economist Jan Hatzius offers a similar view in a recent research note, writing that he expects economic expansion to grind to peter in 2019: “We expect tighter financial conditions and a fading fiscal stimulus to be the key drivers of the deceleration.”

    For Arone’s part, he sees four key reasons for the eventual death of the bull market:
    – Higher rates underpinned by the Federal Reserve’s normalization path
    – Expectations for slowing earnings after a healthy run of quarterly results in American corporations
    – A longer-than-hoped-for trade dispute on tariffs between China and the U.S.
    – And the lessening of the positive effects from the aforementioned fiscal stimulus

    Market bears are increasingly warning that higher rates and a protracted trade spat could combine to deliver a fatal blow to bulls.
    …

  24. Seattle and the Bay Area stock crash is going to push those markets down pretty hard. Most high flying tech stocks are down 30-60%. No funny money to buy Bay Area shacks

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