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There Is The Feeling Of, ‘How Much Further Is This Going To Fall?’

It’s Friday desk clearing time for this blogger. “New data from Realtor.com offers the clearest sign yet that home price relief might finally be on the way for prospective homebuyers on the West Coast. Median listings prices in markets across California, Colorado, Washington, and Oregon saw year-over-year declines in November, and when listings prices are lower, sale prices usually follow suit.”

“The largest active listings median price drop in November came in Denver, where the drop was just shy of 12 percent, followed by Salinas, California, at 7.31 percent, Boulder, Colorado at 6.24 percent, and Santa Rosa, California, at 6.17 percent. These dips reflect realtors’ belief that homes will begin selling for less than they did a year ago.”

“San Jose had the highest jump in active listings year over year by a whopping 160.3 percent. Denver also saw a huge spike in active listings year over year at 122.9 percent. Santa Rosa jumped by 64.1 percent. San Francisco saw a 58.3 percent jump in active listings year over year.”

“As the housing market continues to cool, sellers are cutting prices to entice buyers — some by more than $1 million. The value of California homes is declining. Even in pricey Silicon Valley, values peaked earlier this year. Certified appraiser Bob Thompson of Reese, Thompson & Associates located in Campbell said that he’s seen a drop of 10 to 15 percent on homes appraised by his company.”

“So who’s ready to deal? Plenty of sellers around California Patch communities are dropping the asking price on their homes.”

“Ever dreamt of living in a million-dollar home? Well, this is the time to strike. But wait, aren’t house prices rising in the Twin Cities, I hear you say? ‘One high-producing colleague has sent me six individual ‘price reduction notices’ in the last three months – every reduction was at least $300K, two were more than $500K. Quarter and even half million dollar reductions – in one swoop!’ said Larry LaVercombe, of Lakes Area Realty.”

“Metro Denver’s housing market looked like it had regained its footing in October after stumbling in September. But last month, home sales hit another icy patch, according to the monthly market trends report from the Denver Metro Association of Realtors. Compared to November of last year, the inventory is up a big 46.7 percent.”

“‘I think everyone agreed that the downward shift in the market that started mid-year continued in November,’ Jill Schafer, chair of the DMAR market trends committee, said in the report.”

“The buzz, or lack of buzz, about real estate conditions tends to be a self-fulfilling prophecy. Earlier this year, when Kelowna’s housing market was hot, people speculated, momentum built, sales were brisk and prices escalated. The road bumps of higher mortgage interest rates, talk of a speculation tax and an overheated market led people to take a breather, and the market faltered with flagging sales and weakening prices.”

“In November, the average selling price of a single-family detached home, which is considered the benchmark, was $650,785. That’s down only 3.5 per cent from the average of $674,624 in the same month the year before. However, it’s a nosedive from the record high earlier in the year of $782,398 in July.”

“Rio Ferdinand made a huge loss on his plush mansion in Alderley Edge, Cheshire, slashing the price by an incredible fifty percent as he tried to offload the family home he once shared with his late wife. The former Manchester United footballer originally put the vast house, which he purchased for £2.5million at the height of his Manchester United career in 2003, up for sale at £4.5million. According to The Sun after another price drop to £3million, he dropped it again to £2million for the sale earlier this year.”

“The footballer joins a host of celebrities who have faced difficulties selling their homes. In December 2016 footballer Raheem Sterling took his £1.2m Birkdale, Merseyside mansion off the market after failing to find a buyer for over a year. The home originally went on the market for £1.5m in August 2015 but the price was slashed to £1.2m – £50k less than he paid – in March of that year.”

“A third of all sellers in Britain reduced the asking price of their houses in 2017, the highest amount since the 2012 recession.”

“Hong Kong home prices saw the steepest drop in the last decade, down by as much as 20% from the August peak and look to drop by another 10% in 2019 amid poor sentiment. In fact, the decline in home prices has accelerated since August, with the price of representative estates such as City One Shatin and Taikoo Shing dropping by 20.0% and 15.7% respectively as of December, whereas Residence Bel-Air and The Harbourside have dropped by 11.3% and 14.0% respectively over the same period.”

“In other words, the gains in prices recorded during 2018 have been erased for many estates.”

“Fall is traditionally peak season for consumption and investment in China, hence the phrase ‘Golden September and Silver October’. For the real estate sector, this is supposed to mean two months of upbeat property sales. This year many real estate developers struggled through what some media gleefully dubbed a ‘Copper September and Iron October’.”

“This slowdown in sales was largely a result of government attempts to cool China’s bubbling property market, combined with broader headwinds to growth like trade tensions and a credit squeeze.”

“Copper and iron may lack the rich sheen of a precious metal, but they’re still worth something. Next year may be far worse. China Vanke Co. Ltd., one the country’s biggest developers, recently said ‘survival’ was the ultimate goal for the next three years. China International Capital Corp., the largest state-backed investment bank in China, expects a ‘year of recession’ in real estate in 2019.”

“Industry pundits may have to think of some even cheaper materials to express their disappointment come next fall.”

“Robert Mellor, managing director of BIS Economics, says median house prices are unlikely to drop lower than 15 per cent in Sydney and Melbourne, with a fall beyond that degree unprecedented. He says the biggest threat, however, comes from the impact of such drops on investor sentiment. With prospective buyers spooked out of the market, he says, the current downturn could be prolonged.”

“‘If you start talking about annualised figures of 7 or 8 per cent, someone sitting there and making a decision, as an investor or even as an owner-occupier, you’d sit on your hands because there is the feeling of, ‘Well, how much further is this going to fall?'”

“Frank Gelber, chief economist at BIS Economics, highlighted the risk of increased regulation, as investor sentiment is fundamental in driving median house prices, which greatly impacts the rise and fall of the market. ‘The structural difference is that now investors won’t come back,’ he said.”

“‘Last downturn in Sydney took nine years, and we were sitting there saying, ‘The market is undersupplied. We need to build more, but prices are below development costs,’ he said. ‘You couldn’t build anything until we saw price rises, and it was Chinese investors that drove that upswing, and then we all joined in.'”

This Post Has 70 Comments
  1. ‘Last downturn in Sydney took nine years, and we were sitting there saying, ‘The market is undersupplied. We need to build more, but prices are below development costs,’ he said. ‘You couldn’t build anything until we saw price rises, and it was Chinese investors that drove that upswing, and then we all joined in.’

    Frank, you need one of those maps that says “You Are Here.”

  2. ‘Robert Mellor, managing director of BIS Economics, says median house prices are unlikely to drop lower than 15 per cent in Sydney and Melbourne, with a fall beyond that degree unprecedented’

    I smell crow cooking on the barbie…

  3. You just gotta love this REIC nonsense

    “…Frank Gelber, chief economist at BIS Economics…”

    “…The structural difference is that now investors won’t come back,’ he said….”

    So Frank, does that mean that speculators (aka “investors”) have run out of money or is there now a shortage of bigger fools?

    1. Well, a shortage of a new supply of fools as the first string has already turned through, cutting their losses, 2nd strings are the FB’s who just couldn’t wait to buy that overpriced, cheaply built shack from Toll-Cam-West Bros and are now land locked, trapped in their houses and jobs. The 3rd strings the RE Vampires are desperately hunting for and Developers are offering bright shiny objects too by way of FREE Poor Quality Appliances as upgrades are the once bailing out on their contracts. We speculate we’ll see more and more of this as the cycle is just getting started.

    1. “…Things coming unglued rather rapidly…”

      Yep, the great unravel can be fast, California Wildfire fast.

      Case in point: How many would be zillionaires in Malibu a few weeks ago are no longer because of inadequate insurance?

      1. Well, we might as well throw in bitcoin.. (today down to about $3.4K).

        Only if Rodney Dangerfield was still around.. He would have enough REIC/bitcoin/student loan joke material to last 100 years.

        1. Just in case you feel the urge to buy the dip, the article linked below has a link to another article entitled, “What is blockchain?”

          Bitcoin’s epic plunge continues
          By Paul R. La Monica, CNN Business
          Updated 11:57 AM ET, Fri December 7, 2018

          New York (CNN Business)
          What a difference a year makes for bitcoin.
          In December 2017, bitcoin prices hit a record high of just under $20,000. Flash forward to December 2018 and bitcoin is now trading a little below $3,400. That’s a more than 80% plunge. Bitcoin is at a 15-month low.

          But prices have really gotten whacked this week, falling nearly 20% in just the past five days alone.
          Bitcoin isn’t the only cryptocurrency getting hit either. Ripple/XRP, ethereum, stellar, litecoin and numerous other cryptocurrencies have plunged in the past week.

          Little tangible news can explain or justify the current crypto carnage.

          One possible reason is that a pro-crypto member of the Securities and Exchange Commission warned at a conference this week that she’s fighting an uphill battle trying to convince the rest of the SEC to approve more bitcoin exchange traded funds.
          “Don’t hold your breath. I do caution people to not live or die on when a crypto or bitcoin ETF gets approved,” said SEC commissioner Hester Peirce.

          That’s not a good sign. Peirce’s comments probably mean hopes for a bitcoin ETF getting approved anytime soon have been dashed, according to long-term bitcoin bull Naeem Aslam, chief market analyst with Think Markets UK Ltd.
          Bitcoin prices keeps plunging. When will they hit bottom?

          Bitcoin prices keep plunging. When will they hit bottom?

          Aslam argued that bitcoin prices could wind up plummeting below $2,000 and even test the $1,500 level.

          “Simply put, the bad news keeps coming just like cockroaches coming out of a hole,” Aslam wrote in a report.

          More downside could be ahead simply because the price of bitcoin and many other digital currencies just ran up so sharply last year. It was a parabolic move that defied reason, similar to internet stocks in the late 1990s — a classic mania.

          Nearly two-thirds of money managers surveyed by asset management firm Natixis still thought that cryptocurrencies were a bubble, the firm reported this week.

          1. Dec 7, 2018, 09:00am
            Is Bitcoin Going To Zero?
            Peter Mallouk
            Forbes Finance Council
            Community Voice
            Post written by
            Peter Mallouk
            President & Chief Investment Officer at Creative Planning Inc.

            In my opinion, bitcoin is dead.

            It won’t go quietly, but the recent precipitous drop may be the beginning of its inevitable and inexorable death spiral. Or there could be a dead cat bounce. Either way, I see bitcoin as a dead man walking. Future generations may read about bitcoin in a finance textbook as a curiosity and wonder what all the fuss was about. There are still some die-hard adherents espousing the virtues of bitcoin, desperate to make a silk purse out of a sow’s ear. Unfortunately for them, the end may not be pretty when it comes.

            https://www.forbes.com/sites/forbesfinancecouncil/2018/12/07/is-bitcoin-going-to-zero/#44d4bab57a47

  4. “These [price] dips reflect realtors’ belief that homes will begin selling for less than they did a year ago.”

    These realtors are either really dumb or just plain stoopid.

      1. UHS think they control INFORMATION about the market, but more and more former sheeple are starting to become awake and aware, and are turning to alternative media and citizen journalists like Ben for real news and real truth they won’t get from the NAR or its corporate media shills.

  5. It’s a BUBBLE, people. Not the first one and certainly not the last. Created by easy money and capital flight and FOMO and human nature in general. If these shills could just say the word we could move on and concentrate on cleaning up this mess. I am up to my nose with analysis that could be summarized in one simple word. Many current articles refer to the last housing bubble as the “great financial crisis” or just the “subprime crisis”, thus erasing the feared word from the narrative. I suspect this inability to call the thing by its name will facilitate new bailouts.

    1. “… human nature in general.” + ea$y credit fund$ + ea$y digital acce$$ + “flip.a.roof” $peculators elixir

      = hou$ing bubble 2.0 “it’s different this time!”

  6. “on the West Coast. Median listings prices in markets across California, Colorado, Washington, and Oregon”

    Denver is not on the West Coast, Denver is flyover.

    And Denver’s coastal bubble prices will CRATER back to flyover prices.

    1. ‘I think everyone agreed that the downward shift in the market that started mid-year continued in November’

      See Jill, this is why you make the big bucks. The Denver Post must really hate reporting on the bust if this is all they can muster as a quote.

      1. You’re lovin’ on the psychopath sitting next to you
        You’re lovin’ on the FB sitting next to you
        You’ll think, “How’d I get here, sitting next to you?”
        But after all I’ve said, please don’t forget

        All my friends are heathens, take it slow

      2. I was straining to make the connection, but as a mere lowbrow on the HBB I lacked Jill’s faculty for making statements of the blindingly obvious. No wonder she dines on lobster while I have Hamburger Helper.

  7. “Hong Kong home prices saw the steepest drop in the last decade, down by as much as 20% from the August peak and look to drop by another 10% in 2019 amid poor sentiment.

    When housing losses we must eat
    Let us stamp our little feet!

  8. ‘As the housing market continues to cool, sellers are cutting prices to entice buyers — some by more than $1 million…Even in pricey Silicon Valley, values peaked earlier this year. Certified appraiser Bob Thompson of Reese, Thompson & Associates located in Campbell said that he’s seen a drop of 10 to 15 percent on homes appraised by his company’

    Huh. You know Leslie and the CAR gang haven’t mentioned this.

  9. ‘If you start talking about annualised figures of 7 or 8 per cent, someone sitting there and making a decision, as an investor or even as an owner-occupier, you’d sit on your hands because there is the feeling of, ‘Well, how much further is this going to fall?’

    Everybody is behaving like speculators Bob. What happened to “we have to have a roof over our heads”? Oh right, they already have one.

  10. ‘he purchased for £2.5million at the height of his Manchester United career in 2003, up for sale at £4.5million. According to The Sun after another price drop to £3million, he dropped it again to £2million for the sale earlier this year’

    So half a million less than 2003. That takes out the peaks in 2005 and a few years ago. Talk about erosion!

  11. “Hey guys.. been super busy this week. Haven’t had time to check the markets at all. Good thing my other investments have been doing so good…”

    /cues ominous background music

    1. my other investments

      Noted that you’re still thinking that buying a big house at the peak is an investment. Is something bought with borrowed money an investment? Oh never mind. It’s all in good fun and all that.

      1. Now, now, you’re misrepresenting me again.

        I didn’t buy a house as an “Investment” – that was the furthest thing from my mind. I bought this particular house to enjoy living in it for a long time, with the hope of staying in it even after retirement. That puts my motivations pretty far away from any speculavestor.

        I could pull out all the details of the deal and my situation, but you guys would just argue the minuta for fun 😛 And I bring that on myself by staying here – as I’ve mentioned before, Ben’s blog gave me an important heads up 10 years ago when I really needed it.

        That said, I’ve got a co-worker (of sorts, long story) whose ‘day job’ is an account manager for a financial services company. He had a scheduled surgery the other day, and has been out most of the week, leaving his individual clients to be helped by someone else. I was chatting him by skype to distract him from all the bleeding (normal) and he was telling me that he was really glad to be away as apparently a lot of the investors he is assigned to are freaking out big time.

        We debate back and forth the situations in the markets, housing, etc, and it is interesting to see other perspectives on the big picture and how the financial service firms are slow to say “Houston, we’ve got a problem.”

        1. My take on your purchase is this:

          You are part of the problem because you purchased at peak bubble pricing. If people like you didn’t exist, there could not be a bubble. However, you bought the house to live in for the long term and can presumably afford it. That is much more respectable than the speculators simply looking to make a quick buck who have turned housing into a casino.

          Having said that, I have my suspicions that when you purchased your house you did not believe prices would fall very much, or something along those lines. I also suspect that a 50% haircut would completely change your mind about your purchase, and you would be extremely disappointed, which would mean you were kind of betting on the market staying irrational rather than being supported by fundamentals.

          But everybody has to live somewhere and you made your decision which I respect and I don’t begrudge you. There are worse things than somebody buying an overpriced house to live in.

          1. Ok.

            So is it simply the fact that I did purchase a home at a point in time when the over situation was peaking (timing)? or something specific about my purchase (details)?

            If it’s the former, the only way to not somehow ‘be part of the problem’ seems to have been to abstain from the market altogether.

        2. Sounds like you knew what you were getting into and didn’t purchase with an intent your home would be an “investment” but rather a roof over your head until you no longer needed it and maybe pass it along to your family. I respect that. I do not respect the specuvestors that caused our RE to shoot up and who contributed to the creation of this mania that has displaced the average joe and his family from owning a home or borrowing a sustainable amount of money to pay for that home for 30 years. I could go on about the foreign money laundering specuvestors but I’m tired and y’all heard it enough I’m sure

  12. KingSee there, talking the truth doesn’t hurt so bad, does it?

    Actually, realtors will start to talk doom when they feel it can motivate sellers to lower prices and increase likelihood of making a sale. They do this once pessimism predominates and there is less resistance on the part of sellers.

    Of course, this is when we jump in and buy. There will be a time for it. Just not right now.

  13. “… human nature in general.” + ea$y credit fund$ + ea$y digital acce$$ + “flip.a.roof” $peculators elixir

    = hou$ing bubble 2.0 “it’s different this time!”

  14. All this talk of crow and Ebola is making me hungry.

    How about some crow marinated in Ebola sauce.

    https://www.zillow.com/homedetails/1001-Columbia-St-Santa-Cruz-CA-95060/16105035_zpid/

    11/24/2018 Price change $979,000
    11/15/2018 Listed for sale $1,875,000
    7/27/2018 Sold $1,545,000
    12/9/2013 Listing removed $2,600
    11/19/2013 Listed for rent $2,600
    11/4/2012 Listing removed $2,950
    9/5/2012 Listed for rent $2,950
    8/7/2012 Sold $720,000
    6/30/2012 Sold $720,000
    3/30/2012 Listing removed $675,000
    3/22/2012 Listed for sale $675,000

  15. I have walked around San Jose, CA quite a bit and I have seen those million dollar homes. No thanks. I’ll just live in my $300,000 North Carolina home that’s twice as big.

    1. Mortgage Stress… sounds a little like “buckling factor in columns.” It’s amazing how causally these Auzzies toss around $1M here or $850k there. There’s absolutely no connection between actually earning that kind of money and the amounts they’ve been able to borrow.

    2. Gotta like that closing shot too… mortgage stress resulting in whimpering tears, but she still has her smartphone.

  16. “…relief might finally be on the way for prospective homebuyers on the West Coast. Median listings prices in markets across California, Colorado, Washington, and Oregon saw year-over-year declines in November, and when listings prices are lower, sale prices usually follow suit.”

    Global warming must be far worse than reported if Colorado is now located on the West Coast!

  17. “…home price relief might finally be on the way…”

    I’m impressed the used home sellers correctly identified falling housing prices as relief and a reversion towards affordability, rather than confusing the situation with an eee-bola outbreak.

    1. With buyers sitting on the sidelines, UHS are facing the prospect of Hunger Games competition for commissions. Which means as panicked FBs who overpaid try to offload their shacks, the same UHS who played on their FOMO will pressure them to price their houses for a quick sale, since 6% of zero = zero.

    1. Is $1 billion alot?

      For comparison, I recall recently reading about $700 billion in cryptocurrency losses this year…and that was maybe a month ago, before a number of successive 10% “corrections” with no ensuing dead cat bounces.

      1. Dec 5, 2018, 6:10 am
        As Cryptocurrency Losses Exceed $706 Billion, Chinese Investors Are Losing Faith In Blockchain
        Nina Xiang, Contributor
        Forbes Asia
        I write about China’s exciting VC and tech sectors.
        Bitcoins are displayed in front of a bitcoin price graph of Bitfinex cryptocurrency exchange website on Nov. 20, 2018 in Paris, France. (Photo: Illustration by Chesnot/Getty Images)

        The global cryptocurrency market has already seen more than $706 billion of its total market capitalization evaporate since hitting a peak in early January, according to research site CoinMarketCap, and those losses appear to be triggering a shakeout in the wider blockchain community in China. Many startups there are finding it increasingly difficult to gain access to capital as investors grow skeptical of the fundamental claims around digital currencies and the blockchain technology that underpins them.

      2. “….I recall recently reading about $700 billion in cryptocurrency losses this year…”

        Good lord…

  18. From the California link:
    “Half Million Dollar Price Cut On Palatial Berkeley Home”
    LMFAO… this is the epitome of the liberal plantation.

  19. ‘How Much Further Is This Going To Fall?’

    It’s a good question for stock HODLers, too.

    Stocks could be set up for another violent week of selling
    – Stocks are set up to test recent lows in the week ahead, coming off one of the worst weeks of selling this year.
    – The S&P 500 was just 2 points above its November low, a key technical area, and was down 4.6 percent for the week.
    – Analysts will be watching retail sales and inflation data, but the most important developments for markets will be in U.S.-China trade relations.
    – Treasury yields could continue to move lower, after the biggest one-week move in the 10-year since 2015.
    Patti Domm
    Published 9 Hours Ago Updated 7 Hours Ago

  20. Pretty interesting. Especially here in Santa Rosa, CA where many “single family homes” are now single lots.

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