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What’s Especially Striking Is How Widespread The Drop Is

A report from KTBS in Louisiana. “Dallas’ once booming house market is slowing down, seeing high-end builders having to drop the prices on their homes-sometimes by as much as $150,000.00. But what does that mean for our current housing market? Barry Rachal is an associate broker with KellerWilliams NWLA. ‘One thing that’s happening in Dallas is an influx of homes being built and not being sold. Rachal says we don’t have that issue in Shreveport-Bossier.’

“‘We have a quantity of builders who are building a specific number of homes. So we never, our inventory never reaches points like it does in the Dallas area where they are building thousands and thousands of homes and they can overbuild very quickly,’ he said.”

“At the root of the less than glowing housing market predictions-rising mortgage interest rates. ‘Buyers are always concerned and it affects and impacts them the most because as the interest rates go up, the cost of them owning a home will also go up,’ says Rachal.”

“There are some other negative implications of rising mortgage rates. ‘It can slow the growth of sales prices if there’s a large rise in the interest rates… people who have to sell are probably going to have to sell in a little bit more depressed market.'”

The Herald Democrat in Texas. “For many communities across Texoma, the past four years have seen strong growth in the local housing market, with each year surpassing the year before. Now, as 2018 nears its end, area officials say this trend is continuing.”

“With more than a month left in the year, the cities of Sherman and Denison are reporting that they have or will soon pass the number of single-family housing permits issued in 2017. This comes on the heels of recent growth as development spreads north from the Dallas-Fort Worth Metroplex.”

“‘The city of Sherman has already easily eclipsed the total number of homes permitted last year and we’re on pace to break 200 by the end of the 2018, which would be the most building activity in several decades,’ Community and Support Services Manager Nate Strauch said Tuesday.”

“With more than a month left in the year, Denison officials said earlier this month that the city is quickly closing in on the 153 permits issued last year for single family residential construction. This is more than triple what Denison issued in 2015, when it broke a 10-year record on housing permits.”

“‘We are on schedule to do that again this year,’ City Manager Jud Rex said, regarding breaking records. ‘Typically, we do see a slowdown (in the winter), but we haven’t seen it yet this year.'”

From KIRO Radio on Washington. “Seattle is finally leading a desirable national statistic with regards to housing: Home prices in the Seattle area are falling faster than the rest of the country. We were leading only a few months ago. What’s especially striking is how widespread the drop is; it extends from Pierce to King to Snohomish counties.”

“‘The word has gotten out on Seattle being a really expensive place to live,’ said KIRO Night’s Drew Barth. ‘And I wonder how many people are just looking at Seattle as a non-starter.'”

“This appears to be the case. The housing market has seen pricing fatigue from brokers and buyers after the unrelenting price growth, which easily outpaced wage gains, reports The Seattle Times. With the increase in homes on the market, sellers have been forced to be more flexible and are cutting prices.”

“Despite the decline, it’s still only a drop in the bucket for housing prices that remain up 61 percent more than inflation since 2012. For co-host Gee Scott, the increased cost of housing in city centers isn’t a sacrifice worth making.”

“‘Let me ask this: Would you rather save yourself $200,000-$300,000 on a house, but maybe increase your drive everyday by an hour and a half? I’m taking the drive,’ he said.”

From KTVU on California. “On Wednesday night, hundreds of people packed a town hall meeting in San Jose, hoping to one day own a home in the Bay Area. Santa Clara County is introducing a new county program that could help middle-income, first-time homebuyers raise the cash for a down payment.”

“The new down payment program for first time home buyers is funded by Measure A, which was passed in 2016. $25 million is available now. ‘This could be for two people who work at Safeway,’ said Santa Clara County Supervisor Cindy Chavez. ‘This is really designed for families who make between $80,000 and 150,000 of area median income.'”

“The program offers up to 17 percent down payment with the buyer contributing at least three percent. It’s a 30-year shared equity loan. The maximum price for the home is $800,000. According to the Santa Clara County Association of Realtors, the median price for a single family home in the county is $1.2 million and a condo and townhome is $925,000.”

“‘It’s going to be a challenge, a little bit of a challenge but I think the market is softening a little bit,’ said Hilda Ramirez of Keller Williams Silicon City Real Estate.”

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This Post Has 50 Comments

  1. ‘Home prices in the Seattle area are falling faster than the rest of the country. We were leading only a few months ago’

    This is more consistent with a bubble popping than a cycle.

    1. Don’t we have to wait six months for Case Shiller to announce it before saying prices are falling? This is so confusing.

      1. That guy will be late to the party as usual but will hog the media limelight when he “calls” it.

        Roubini, too.

  2. ‘high-end builders having to drop the prices on their homes-sometimes by as much as $150,000…’So we never, our inventory never reaches points like it does in the Dallas area where they are building thousands and thousands of homes and they can overbuild very quickly’

    And tens of thousands of apartments at the moment! That shortage talk is quickly disappearing from the media.

  3. I’ll tell ya’ one thing: even if the never-ending examples of idiots in the snippets don’t amuse, you’ll certainly get a geography lesson.

    “ Texoma” !? say what? where ?

  6. ‘The word has gotten out on Seattle being a really expensive place to live,’ said KIRO Night’s Drew Barth. ‘And I wonder how many people are just looking at Seattle as a non-starter.’”

    Translation: With baked in appreciation off the table, current prices in Seattle are a non-starter.

    1. They’ve been a non-starter for 60-70% of people here for a while now (getting worse as time went on).

      There’s multiple markets around here in Seattle – older existing homes, new construction replacing an older home, and new construction away from the city. Due to geography, the proportions are much different than say around Dallas.

      As much as older existing homes are taking a haircut, it is looking a lot worse for new homes built on teardowns. The builders have gone all out to maximize returns by putting up the largest house possible, and for the most part they occupy the top 25% or so price-wise. Judging by price cuts and DOM, not to mention the advertising they are now doing, the supply of buyers for their new monster homes has really dried up compared to the other segments. And they have the most amount of money ‘at stake’ to lose. I’ll bet it’s already gotten ugly for people employed by them.

      1. Even worse than the housing bubble, in my opinion, is the greed on the part of the local governments to jack taxes on everything, introduce layers and layers of fees, and just make the cost of living, irrespective of housing, onerous.

        1. 6-figures worth of fees in places around here. Gonna be some layoffs of city employees in the next couple years…

    2. “Tran$lation: With baked in appreciation off the table, current prices in Seattle are a non-starter.”

      E$pecially, if one prefers natural sunshine over tanning $alons

  7. If I am reading the Market watch article from 1:35, it says the UHS FORECASTS housing prices will fall 2.5% next year.
    Wow
    FWIW
    I will take the over ( bigger losses) on that

  8. “Market softening a little bit”

    Yep, just a smidgen. Just a tiny little slight inconvenience. Nothing to worry about at all…..

    What is the real translation? Can you say 2011 redux? Atleast the Dallas commentator was speaking straight.

    Popcorn.

    Regards.

  10. “it’s still only a drop in the bucket for housing prices that remain up 61 percent”

    What we’ve been saying all along. Interesting how quickly newspaper quotes turned from “now you can buy at a discount!!” to “I wouldn’t even get out of bed for only 3% off.”

    Like a whole nation telling sellers all at once that single-digit percent price cuts aren’t going to be enough.

  11. “The program offers up to 17 percent down payment with the buyer contributing at least three percent. It’s a 30-year shared equity loan. The maximum price for the home is $800,000.”

    Because throwing money at the problem always works! said every politician everywhere.

    1. The key is “shared equity.” The government expects to be repaid and more with a share of the buyer’s sweet sweet profits when they sell.

    2. Shoe-horning a couple of Safeway workers into a $800,000 shack is going to help how?

      ‘The program offers up to 17 percent down payment with the buyer contributing at least three percent. It’s a 30-year shared equity loan’

      I guess the county gets a cut of that sweet equity should it appear.

      1. $25 million is available now. ‘This could be for two people who work at Safeway,’ said Santa Clara County Supervisor Cindy Chavez.

        Oh…I thought they meant it would cost 25 million just to buy houses for 2 Safeway workers :-).

      2. Still baffled how this would work. Even with a 20% down, you’re looking at around $4k a month for the shack payment. What “middle income” person can shell out that kind of money?

        Seems like the focus is always on the down payment, never on the monthly nut. Always.

        1. Seems like the focus is always on the down payment, never on the monthly nut. Always.

          I think people have been getting creative with that for so long that nobody thinks about it any more. There’s just an assumption they’ll get a bunch of roommates or heloc it every year to get the payment money.

          1. Roommates, renting out the garage, several families under one roof – it’s the American Dream!

            The government is propping up prices by fitting people into houses that they cannot afford – but is looking for the sweet, easy money on the back side – you can’t make this shit up!

      3. $canning grocery job$ that won’t $urvive the 30 year$ length of the $800,000 mortgage + intere$t contribution$ … $eems to bee a “gov’t + corporate Bidne$$” form of … “cruel & unu$ual” puni$hment … (None dare call it a con$piracy!)

  12. To follow up on yesterday’s FHFA announcement about conforming loan limit increases – sounds pretty desperate. So on Jan 1, 2019, people can borrow more money than last year, and at higher interest rates than last year! How many takers will they have with the ‘how much a month’ crowd for that deal? Loan limit raises only work when interest rates are going down.

    Also funny how the new limit in high-cost (also high tax) areas of $726,525 is just below the new mortgage interest deduction cap of $750k. Coincidence, surely.

  14. as the interest rates go up, the cost of them owning a home will also go up,’ says Rachal…people who have to sell are probably going to have to sell in a little bit more depressed market.’”

    Which is it Rachael.

    2. The key phrase is “little bit”. This indicates that the price for a given house will not go down enough to counter the monthly payment increase due to higher interest rates. Ie, the buyer will suffer more from the higher payments than the seller will from the lower price.

  15. Just simple math says that those 3% mortgages are now entering 6% (double) range which means about $1,200 more a month on a $400,000 mortgage (fudge factor for unrelenting municipal taxes).

    How many people can afford to double their monthly payment and keep their homes?

  17. “Would you rather save yourself $200,000-$300,000 on a house, but maybe increase your drive everyday by an hour and a half?”

    Loosers.

    2. save yourself $200,000-$300,000 on a house, but maybe increase your drive everyday by an hour and a half?

      $300K extra. Call it $600K with 30 years of interest and taxes. Extra. That’s 30 or 40,000 hours of salary absolutely gone up in smoke. Nothing else to show for it, not even food.

      Insanity. I left the system a long time ago.

  18. “This could be for two people who work at Safeway,’ said Santa Clara County Supervisor Cindy Chavez. ‘This is really designed for families who make between $80,000 and 150,000 of area median income.’”

    Ok well this is very generous of you Santa Clara county but I’m wondering a few things. 80-150k working at Safeway? Are these corporate Safeway higher ups? I don’t think the average position at Safeway pays anywhere near that, prob closer to 1/2. This “shared equity” loan, sounds like a pretty good deal, sign me up. I’ll buy now and default that b$tch when the market drops below my purchase value.

    1. In Santa Clara pretty much anything is $15/hr (I mean McDonalds). Safeway pays better than that. So 80k is possible/probable.

      1. anything is $15/hr

        Two debt donkeys at $30K apiece gross, if they have a full time gig, is abject poverty in California.

  19. When I worked at Vons (Safeway’s stores in SoCal) from 1995-1998, cashiers were making $15 an hour and as a bag boy I was making about $7. I think Deli workers were about $10 if I recall. It was a pretty sweet deal until the workers shot themselves in the foot and went on strike in 2003-04 – all because they were asked to start contributing a nominal amount towards their healthcare. It went in to a tiered system with new employees making lower than current employees.

    According to this, cashiers pull down 19.40/hr now. So a couple working 40/hr a week could eek out $80k a year. Still, that’s 10x income on an 800k shack.

    Now if you’re talking a pharmacy tech – that’s the highest paid in the store. They make 6 figures easy. So much so, their paychecks were in thick envelopes that had to be handed out by the store GM. The rest of us riff-raff got ours from the shift supervisor (“key-carrier”) out of a box – no envelope.

    2. out of a box

      20 years before that I was getting handed $300 folding money from the “box” on payday. 40 years before that my dad was given a fistful of silver dollars. He’d come home and spill them out on the kitchen table.

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