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No One Wants To Be The Last One In

A report from the Seattle Times in Washington. “For years, the dreaded bidding war was a depressing rite of passage for anyone entering the Seattle-area real-estate market.  But with the market turning, those days are gone. The number of buyers out there keeps dropping, while more sellers are seeing their homes sit unsold for weeks, prompting them to cut list prices just to attract a single buyer.”

“Peng Tea, a John L. Scott broker on the Eastside, said sellers have mostly done away with ‘offer review dates’ – a deadline for interested buyers to submit their bids, usually a week after the listing goes live — in favor of taking bids on a first-come, first-served basis.”

“The second advantage is on terms. Previously  buyers were doing uncomfortable things, like handing over large sums of nonrefundable earnest money, to outshine other bidders. Now, with the power swinging the other way, sellers have been more willing to fix things like plumbing at their own cost, or to approve a delayed sale contingent on the buyer’s ability to turn around and sell their own home.”


“Tea said a client bought a house in Bellevue two weeks ago as the lone bidder, and was able to leverage that position to knock $30,000 off the list price and $7,500 off closing costs. The buyer also kept all their contingencies – allowing the buyer to back out if their mortgage falls through, for instance.”

“‘You’ll have a much higher likelihood of keeping some protections for yourself as a buyer,’ Tea said. ‘It’s a much more favorable market for a buyer today, especially as you go toward the higher price points. You have more power to negotiate.'”


“The lack of competition is just the latest indicator of a real-estate market that has been cooling for the last six months. Inventory is up, prices are down and sales volumes have declined.”

“And brokers have reported less investment money pouring in from buyers in China, who are more likely to make all-cash offers that typically win bidding wars.”

“Seattle is also part of a national trend: Even though the market is changing faster here than just about anywhere, markets are cooling in other areas, especially in pricey West Coast cities.”

“The national rate of bidding wars was 32 percent in November, the lowest in at least seven years and down from 59 percent at the start of the spring, Redfin’s data shows.”



From Curbed Los Angeles in California. “Home prices in Los Angeles reached record heights in 2018, climbing to levels far above those recorded in the years leading up to the Great Recession. But price increases have fallen off since summer, and a new analysis from Zillow suggests a cooling trend in the market will continue into the new year.”


“Now that median home prices have climbed to unprecedented levels in Los Angeles, many buyers may be priced out of the market, says Skylar Olsen, Zillow’s director of economic research.  Others may simply bide their time.”

“‘We think a big part of it is basically demand exhaustion,’ Olsen says. ‘People can’t just outbid each other anymore.'”


“Jordan Levine, senior economist for the California Association of Realtors, suggests some buyers are hoping prices will suddenly bottom out. ‘Some folks remember 2008, when prices fell dramatically,’ Levine says. ‘There’s a big consumer confidence element to the housing market. No one wants to be the last one in.'”

“Levine says it’s a mistake to think home values will tank the way they did during the last recession, since mortgage providers are still shying away from the kind of risky home loans that fueled the housing market’s last collapse. More likely, says Levine, is that home values will continue to grow—but at a more modest rate.”


“Olsen agrees. ‘Really we’re getting back to normal,’ she says. ‘This is actually good news, though sellers probably won’t see it that way.'”


“Buyers might also have a hard time getting excited. As Levine points out, nearly three in four residents of Los Angeles County can’t afford to buy a median-priced home in the area. ‘There is a limit to how much folks can afford to pay,’ he says. ‘People are actually picking up and leaving.'”


This Post Has 48 Comments
  1. FYI, I updated this blogs software last night and now the document creation is all sorts of screwed up. So the formatting you see above is not what I’m used to. Hopefully I can find a setting to put it back closer to what I was dealing with.

    It follows a general theory I have with technology especially on the internet: updates almost always make things worse.

  2. Are you still HODLing your risk assets? Which are doing best as of year-end 2018: stocks, bonds, real estate, commodities, cryptocurrency, other?

    1. Stocks
      U.S. Stocks Lost $1 Trillion in Less Than a Week
      By Sarah Ponczek / Bloomberg December 7, 2018

      (Bloomberg)—How bad has the start to December been for U.S. stock investors? Almost $1 trillion has been wiped from the value of stocks in just four days of trading.

      The Russell 3000 has plunged 4.9 percent this week as of 3 p.m. Friday in New York, as the six-week rout in American stocks deepened amid concern global growth is slowing and the Trump administration will escalate trade tensions.

      1. Remember when Bill in California, between giving us weekly updates on his body-fat leanness (don’t care) or assuring us that 56 was the new 19, harangued us about buying Bitcoin and called us Yellen’s toadies for not converting our greenbacks into dollars? Sorry, Bill, but I converted my greenbacks into physical gold rather than the scam cryptocurrency the Bitcoin True Believers smugly assured us was going to replace the “barbarous relic” being held by “old bugs.”

        Bill, if you’re still out there, maybe you could pause your stamping of little feet long enough to note that the value of my “relic” is holding up just fine, unlike your Bitcoin – aren’t you happy for me?

        https://www.cnbc.com/2018/12/07/bitcoin-plunges-as-rout-continues-to-drag-down-cyptocurrency-market.html

        1. It’s hard for a newfangled, ephemeral, possibly even imaginary (no way to verify!) virtual non-currency to compete with the physical form of the barbarous relic, whose value has held up across epochs of human civilization.

        2. Bill might possibly have cashed out at $20k bitcoin and is sitting on a beach somewhere laughing his butt off over your ‘gold’ investment.

          Smart people usually don’t just assume they are always the smartest in the room.

      2. “– One trader sees possibility of Bitcoin slumping to $2,500.”

        Mr. Banker sees the possibility of Bitcoin slumping to its intristic value, which is zero.

    2. Why the stock market is freaking out
      By Matt Egan, CNN Business
      Updated 4:42 PM ET, Fri December 7, 2018

      New York (CNN Business) Extreme fear is once again sending Wall Street into chaos. Investors are debating whether the longest bull market in American history is nearing an end or just taking a breather.

      From “Tariff Man” tweets and inverting yield curves to conflicting messages from Trump advisers and the arrest of a Chinese executive, there is no shortage of headlines keeping investors awake at night.

      After booking its best week since 2011, the S&P 500 plunged 3.2% Tuesday and tumbled again Thursday before staging a massive recovery. Stocks fell sharply on Friday after Trump officials Larry Kudlow and Peter Navarro contradicted each other on trade.

      No matter the catalyst, the overarching fear is over just how long the economy has until the next recession strikes. Months? Quarters? Years?

      “Markets are fully convinced we are in the last stages of an economic cycle,” Nicholas Colas, co-founder of DataTrek Research, wrote in a note to clients. “Traders are feverishly looking for the dry tinder that will turn a simple short circuit into a full-blown conflagration.”

      Signs of worry abound. The Fear & Greed Index, a CNN Business gauge of market sentiment, is flashing “extreme fear.” Germany’s stock market is flirting with a bear market. Oil prices are already there. The VIX volatility index (VIX) spiked 29% this week. And the S&P 500 is on track for its worst quarter in seven years.

  3. “For years, the dreaded bidding war was a depressing rite of passage for anyone entering the Seattle-area real-estate market.

    Nobody forced buyers to play these silly REIC games or buy into a housing bubble. Now the responsible and prudent who sat out the madness are finally going to see their patience rewarded as the Fed’s Everything Bubble implodes like a supernova and “winning bidders” find themselves mailing in the keys and slinking off under cover of darkness.

    1. “Now the responsible and prudent who sat out the madness are finally going to see their patience rewarded…”

      Being a small minority, I fully expect the PTB to finda way to give them the shaft, in order to better reward the putative victims.

      1. Being a small minority, I fully expect the PTB to finda way to give them the shaft, in order to better reward the putative victims.

        History is on your side.

  4. “And brokers have reported less investment money pouring in from buyers in China, who are more likely to make all-cash offers that typically win bidding wars.”

    Um, yeah – after the arrest of the Huawei founders’ daughter, I wouldn’t count on Chinese investors to prop up the housing bubble. Instead, they’re going to be bailing out of the U.S. like Ted Kennedy from a submerged car.

  5. On the east end (i.e. Bellevue, Redmond)

    The Chinese money was moving it to get away from govt control – but that has slowed down because of Chinese govt controls.

    The really interesting one is the E.European money. Some (not all or even a majority) is a scheme. They find a family member (cousin etc) and provide a heads i win, tails you lose scenario. Putting down 5% on condos and are willing to walk away if the prices go down.

    1. Anecdotal comments from a agent I occasionally talk to is that the numbers of (obvious) foreigners at open houses and showings around here is way down, and the rate of offers has dropped off more than the tire kickers (which are down and blamed on the cold weather).

  6. “Levine says it’s a mistake to think home values will tank the way they did during the last recession…”

    Thanks Levine boy. I guess I’ll wait then

  7. California is the most impoverished state in the country:

    “Spotify’s departure underscores continued challenges in the Mid-Market area, where tech investment has brought thousands of high-paying jobs but hasn’t changed a challenging street milieu of poverty, homelessness and drug dealing.

    The change was motivated in part because some Spotify workers felt unsafe, said two former Spotify workers, who requested anonymity to avoid repercussions from former or current employers. The Mid-Market and Tenderloin neighborhoods have some of the highest violent crime and poverty rates in the city, according to government data.”

    https://www.sfgate.com/business/article/Spotify-gives-up-SF-Mid-Market-office-and-tax-13450875.php?t=2157b7d7e6

    1. San Francisco now has the highest property crime rate in the country as all non-violent crime has basically been decriminalized. Aggressive drug addicted and insane homeless people are everywhere, including tourist areas. These people are an interest contrast with the tech millionaires who also infest the place. The city has a dystopian feel and I wouldn’t live there if you put a gun to my head.

      1. You can say the same for Seattle, San Diego and other cities along the pacific coast.

        It’s not just the high priced, massive-disparity areas like the west coast though. I was in a downtown park in Houston last year, saw a bunch of homeless, and asked a cop there about it. It sounds like pretty much anywhere where warmer weather will support year-round homeless in this country has a problem.

      2. I’m under the impression that every county has their armpit city where the homeless services and women’s shelters will be located usually downtown along a transportation corridor. This allows the other cities to develop their trendy luncheon and shopping areas with higher “walk scores.”

  8. ‘We think a big part of it is basically demand exhaustion…People can’t just outbid each other anymore’

    Why not? I haven’t read an article saying “Joe Sixpack was turned down for a loan and couldn’t out bid”.

    The REIC is really pushing this exhaustion line. Like we’re all at it, buying shacks once a week and darn it we’re tired! And doesn’t the first article say bidding is going down?

    Speculators actually like bidding wars because it validates their insanity. That’s why they say “won” the bidding war.

    I’ll say this to the REIC out there: you are going to regret this whole “bidding war” crap, with giddy gamblers setting the values for what used to be a stable asset.

    1. The REIC is really pushing this exhaustion line.

      This mythical “buyer fatigue” is being trotted out as the latest REIC spin for why buyers are sitting on the sidelines. Other than a few lost souls who hit multiple open houses each weekend to validate their existence, there’s nothing particularly tiring about deciding to sit out the madness and wait for prices to come back to earth. It’s not nearly as stressful, for example, as being a winning bidder on a Seattle house and watching your “prize” sink deeper underwater each month.

      1. “buyer fatigue” is a real thing, but it’s not quite like the RE agents have been describing (It’s worse – for them).

        I am guessing a lot of the ‘winners’ of those bidding wars were operating on FOMO and feel like they really had to ‘settle’ for (sometimes much) less than they wanted in a house. Those people, watching home “values” sink and hearing that bidding wars have gone away, are going to be collectively pissed, especially the ones that are, or about to be, upside-down.

        1. “buyer fatigue” is a real thing

          I wonder if it doesn’t just illustrate the common delusion of UHS, seeing people as a captive herd of dumb cash cows.

          Oh, the herd must be tired, don’t worry, they’ll be back.
          The ones that are going to be really tired are those who bought at bubble prices and will be paying relentlessly for thirty years watching their earnings relentlessly go down the drain. That’s tiring.

          1. herd? as in ‘once plentiful, but hunted to the brink of extinction?’

            A cute allegory, but also a fair question – has the QE / ZIRP / Etc of the last decade and the unwinding we are about to see reduced the number of future buyers at nearly every price point for years to come? That would be one awful long supply surplus hangover to work off.

          2. for years to come?

            I think you’re right. This easy credit thing has pulled demand way forward, and in directions that will prove to be off the mark. A correction now cannot go to Normal and stop there.

            If our herders hadn’t put drugs in the feed a decade ago, we might have solid footing on a path forward by now. It’s a shame.

            I say we, but thankfully I’ve left the reservation over a decade ago.

    1. Trac shacks for 500, Mobile Homes decorated to look like Trac Shacks – all now painted in the fashionable dark blue or black – for 470. They have a loooooong way to go.

  9. I know we like to use the term ‘ebola’ to describe the plague-like spread of housing price reality, but I just read about the outbreak of the real thing happening right now in Butembo, eastern Congo, and that’s literal scare the s**t out you class stuff.

    If that thing ever mutates or is deliberately modified to be any easier to transmit, we’re going to see some sci-fi horror in real-life.

    1. What scares me right now is Acute Flaccid Myelitis. Looks a lot like polio and we don’t seem to have a handle on what is causing it.

        1. I haven’t walked away, just finding some balance. Medical care is a monopoly in my state and largest employer is making some major (negative) changes for the profession. Having a 4-year-old in a good pre-school means we don’t want to change cities in the middle of the school year. We will re-evaluate next summer.

  10. the most interesting thing from the Seattle Times article in my opinion:
    “Prices in several Seattle neighborhoods, however, were down from a year ago. Among these were Southeast Seattle, Sodo/Beacon Hill, the Capitol Hill/Central Seattle area, Queen Anne/Magnolia, the Ballard/Green Lake area and downtown.”

    Queen Anne/Magnolia and Ballard/GreenLake are trendy areas where the DINKs who started having kids were buying. This will be shocking to many in Seattle.

  11. Buyer exhaustion. I am getting exhausted hearing the concept.

    I really liked the guy commenting about market getting back to normal and it being a good thing. Unless you are a seller!

    Brilliant.

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