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It Could All Point To A Party That’s About To End

A report from The Olympian in Washington. “The Thurston County housing market cooled in November — just as it did in October — as some buyers stayed on the sidelines because of seasonal factors or slightly higher mortgage interest rates, according to recently released data by the Northwest Multiple Listing Service.

“Sales of single-family homes dropped 11 percent in November compared to November a year ago. And the total number of homes for sale in Thurston County in November was 20 percent higher than a year ago, the data show.”


“‘We’re a long way from balance, but we’re moving in the right direction,’ said Ken Anderson, president and owner of Coldwell Banker Evergreen Olympic Realty in Olympia.”

From Boston Magazine in Massachusetts. “If you’ve so much as thought about buying property in Boston lately, you’ve probably noticed that the upward march of real estate prices seems less like a trend than a Newtonian principle—what goes up must come down, unless it’s the value of a deed in Suffolk County, in which case it shall continue tracing its skyward arc.”

“Except that lately, things have started to feel a little shakier: Nationally, the housing market has begun losing steam; the Fed is hiking rates after a decade of easy money; and murmurs that we’re overdue for a recession have grown louder and louder.”

“Do they know something we don’t? Is the Boston bubble about to pop? It’s not as crazy at it sounds. In the housing market, for instance, there’s been a recent uptick in the number of properties for sale, and they’ve been staying on the market longer. Taken together, it could all point to a party that’s about to end. “

“James Elcock, president at Colliers International Boston, is particularly bullish on this point, saying, ‘I wouldn’t say that we’re bulletproof, but if anything happens to Boston, it’s going to be a dimmer switch rather than a crash.”

“Does that mean the real estate market is untouchable here, destined to climb ever upward—sometimes faster, sometimes slower, but up, up, up? I mean, let’s not go wild. But, if you’re sitting on the edge of your seat, waiting to hear that pop!, well, we’re likely still a long way from bust.”

The Nevada Current. “With some homeowners still recovering from the Great Recession and the housing crash that decimated Nevada’s market, is the economy about to falter, threatening to plunge Nevadans underwater again?”

“‘Do I feel we have a recession coming?  No, I don’t,’ says Heidi Kasama, president of the Greater Las Vegas Association of Realtors. ‘Our fundamentals are different than when we had the big crash.'”

“‘The fundamentals of the market are still strong,’ says Kasama, adding a recent lull in sales prices and increase in inventory is good for a market characterized lately by multiple offers and bidding wars on a scarcity of available properties.”

“‘It’s a needed correction,’ Kasama says of flat month-over-month sales prices in November. ‘It was just too hot.  Buyers gave up. We have several buyers who just said ‘I’m not going to battle with these offers now.’ We were writing multiple offers, prices were going up and our agents couldn’t get the sale.'”

“‘If everybody writes these scary stories about recession, it starts to be a self-fulfilling prophecy,’ says Kasama.  ‘Prices are up 13 percent year-to-year, so the market is hardly going awry.'”

From Curbed New Orleans in Louisiana. “This gorgeous mansion on Milan Street in Uptown just got another price chop. Originally, it hit the market at $2,250,000; now it’s asking $1,650,000.”

From Curbed Hamptons in New York. “The incredible 36-acre oceanfront property at 42 Old Montauk Highway in Montauk that was on the market earlier this year for $48 million has just received another price cut. A price cut in October brought the listing down to $39.5 million, but after the most recent change in ask, it’s now listed for $29 million.”

“When we featured the property on Curbed back in September and after the $8.5 millon price cut a month later, our commenters thought the ask was too high.”

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This Post Has 72 Comments

  2. ‘Prices are up 13 percent year-to-year, so the market is hardly going awry’

    Shack prices should never go up 13% in a year Heidi.

    ‘We’re a long way from balance’

    You’re right about that Ken.

    1. “Shack prices should never go up 13% in a year Heidi.”

      It would be fine if wages and such were going up at the same rate. But that ain’t happening.

  4. “‘Do I feel we have a recession coming? No, I don’t,’ says Heidi Kasama, president of the Greater Las Vegas Association of Realtors.

    ————————-

    Every day you see articles with UHS saying “No recession”, but what the HELL do they know about economics and markets? It’s just amazing how they put these UHS on a pedestal and bask in their guidance of what’s coming around the corner for the economy! Why not ask the guy at Foot Locker or the Ford dealership if we are headed towards a recession? They have the same economic study/training/research as this realtor!

    Sorry, just salty after catching a Bernanke/Geitner/Paulson interview on a morning show today, promoting their “10 years later we are heros” documentary. They never saw a recession coming either.

    1. “‘If everybody writes these scary stories about recession, it starts to be a self-fulfilling prophecy,’ says Kasama. ‘Prices are up 13 percent year-to-year, so the market is hardly going awry.’”

      So its our fault if prices do go down cause we’re talking about it .. a little hysteria creeping in to Realtor land maybe?

      1. ‘Prices are up 13 percent year-to-year, so the market is hardly going awry.’

        I thought a “wry” market is one where there is bustling activity and a large volume of trading. What do high prices have to do with it? By her argument, prices could be a billion dollars per house, a couple of sales but it would be healthy.

        1. a “wry”

          Gone wrong. In Gaelic, gang agley.

          The best laid schemes o’ Mice an’ Men
          Gang aft agley,
          An’ lea’e us nought but grief an’ pain,
          For promis’d joy!

          Burns in “To A Mouse”

    1. ‘Discussing the history of the Fed’s response to the crisis, Yellen said the Fed “probably could have done more” quantitative easing but was held back in part by public criticism of the Fed’s bond-buying program. “At the margin, I think that was something that concerned people about pushing asset purchases a lot further.”

      1. “At the margin, I think that was something that concerned people about pushing asset purchases a lot further.”

        A straightforward admission to blowing bubbles.

        1. Agreed, that is a clear admission that they knew what they were doing, i.e., blowing a huge asset bubble. There should be indictments when this all falls apart

  6. Many of us in the PNW area that bought nice houses (well built, non track, non-fishbowl, privacy, fair value) near the bottom and have been looking for houses in the frenzy over the last couple of years for the next phase in life are simply on strike. This includes my “high earning” tech network far and wide and our kids who are out of college, renting. We’ve all had it and share notes about the outrageous pricing we have seen and how many Crook Estate Agents we’ve moved through because they don’t listen, they don’t care, and we refuse to be swindled like so many of our friends were in the era leading up to 2008…on strike, not buying until we find fair value and digging in our heals.

    1. If you want a fair value, then you’ll have to leave the PNW. Work your butt off in the vibrant big city, retire to hee-haw flyover seems to be the only way to not run out of money before you die.

      2. If nothing else, there is value in staying on the west coast for the climate. The three main areas I’ve lived in are metro Detroit, North Texas and metro Seattle. From a climate perspective, it’s no contest.

        As weather gets more extreme year after year, I have no desire to return to the places I’ve left behind, though I have considered it from a financial perspective.

        If we ever have a SHTF moment with regards to energy, much of Texas and other areas that depend on massive amounts of air conditioning to function are toast. (And expect to see a lot of ‘climate migration’) As it most people ignore how expensive it is. The rust belt states are miserable in winter, and of late the summers have periods of scorching heat that they never used to have. Granted, I’m thinking ahead here a few decades as well.

      3. Nope, waited it out last time and got the deal of lifetime…as I said, bought a beautiful home at the BOTTOM from a sucker who overpaid way too much in 2005 (although I do feel badly for them) and bought it after they had finished beautifully an 1800SF Basement – no corners cut. Thick walls, High insulation, 5 Acres of old growth firs, Hard Woods, slate floors, low rates. And as highly valued lucky tech worker, I’ve been able to work anywhere I want for years; have always worked hard and SAVED a lot of money. I choose to live here in PNW because of it’s beauty but will not be robed by the Crook Estate Mafia. You can find the value, you have to be patient, have a good eye and friends for contractors to inspect the inspectors and snuff out problems that have gone undetected or covered up. And once those are duly noted and you walk, they become a part f the public record of the house if you are smart about the way you do it and or an excellent negotiating tool – what, wood rot under that Deeziner Peppercorne/Black Paint – how could they?

        1. There is no old growth, only 2nd growth in those areas. You have to go to the Olympic Peninsula and a handful of other areas to actually find old growth.

    2. “…and our kids who are out of college, renting.”

      I have two kids myself, and they’re the ones who will likely suffer the most from this financial looting of the country.

      1. In general, the next generation(s) as a whole will suffer from what the collective “we” have done over the last 30+ years.

        I have 2 children who hopefully will leave the nest (my ex’s) and attempt independence sometime during the next decade (unsure how much college they will attempt) – and their prospects look tough.

        1. As a father of young adults, I’m not sure whether their prospects look better or worse than mine did at their ages. As a late Baby Boomer, I feel like I have lived my life out seeking a share of the spoils left over after the early Boomers finished eating. At this stage, I see many senior positions held down by aging early Boomers who are working beyond the stage when my parents and others in their generation were retired. I don’t know whether this reflects a desire to keep working or a sense of necessity to do so.

          At any rate, the Baby Boomers will continually retire in droves for at least another decade, opening up many opportunities for the younger set. And it won’t be long before Baby Boomers abandon their family-sized homes for smaller spaces better suited for empty nesters. This mass Baby Boomer exodus from the workforce and family-sized housing could open many opportunities for the younger generation.

          1. It’s still too early for me to tell what paths my kids will take.

            I think how ok they will be will depend more on their make sensible choices not just in their careers but it how they spend their time elsewhere and money and avoid many of the ways it’s easy to get behind the 8-ball when you are just starting out. I’m trying to show them the value of being pragmatic and planning for the future.

          2. I don’t know whether this reflects a desire to keep working or a sense of necessity to do so.

            I can kind of sympathize. If you feel like your children may never have the opportunity to make the money you are making, it kind of drives you to make it for as long as possible to help them out. Even though in practice that may not actually help them, it’s still human nature I think. Make hay while the sun shines…

      2. Be patient, I know it’s hard…send them over to Mr Money Mustache Blog. There is a forum there of young Gen M’s that discuss these issues, share best practices, spans all generations really and a wealth of information on what to do, how to invest for the long haul, get and stay out of debt where possible, live below one means…it’s a great inspiration. There are old folks in there too so don’t be swayed by it’s youthful appearance :)…I wish there had been something like this out there when I was young, I would have been even a lot farther along than now.

    1. Is it just me, or are they nixing the comments section on many of these sites now? I usually read these articles in order to read the public commentary but keep getting disappointed.

      1. You’ll continue to be disappointed. Most financial “news” websites exist only to propogate Realtor lies.

      2. Prepare to be more and more disappointed because, yes, they are doing away with comments on more and more sites in order to hide peoples’ true opinions on very important matters.

        Unfortunately for “them” (the moneyed special interests hell-bent on constructing a narrative and looting the country), blogs like this serve to upset their apple cart. Barring a North Koreanesqe shutdown of sites like this, they will never succeed.

      3. CNBC did away with their comment section a long time ago. I figured they just didn’t want to pay any staff to police it.

      4. I think we can blame the spambots for most of it. ( I made $18261 working from home last month and you can too… )

    2. My brother did that just a few days ago, bought a 650K townhome with cash, doesn’t like stocks at this point says they are unsafe. Good luck..

      I don’t give advice anymore last time they didn’t listen why would they now ? I rarely even talk about it, what for ? I have a pretty good idea whats going to happen and if you’re on this site you do too.

      Except in a few areas wages have not kept up with real estate prices. Done.

      3. Stocks are safe, you just have to be on the right side of the market. With RE you really cant make money in a downturn. With stocks you can always take a short postion. The great wealth has always come from the markets, not real estate.

        1. “With RE you really cant make money in a downturn.”

          Historically RE was thought of as a hedge against inflation.

          1. Yeah, that idea was that your house payment was the same while your salary inflated. Worked great 40 years ago if you worked a union factory job or rose in the white-collar ranks. But blue-collar jobs are mostly gone, white collar is dicey, and the unstable Fed can still wipe you out.

      4. “My brother did that just a few days ago, bought a 650K townhome with cash…”

        Wow, I’m sorry to hear that.

      5. Why do people believe that they will do better with one ginormous, leveraged, undiversified gamble on housing than with a diversified mix of smaller asset holdings not funded using massive leverage?

        3. Where I used to work the engineers and managers drove beaters to work while the “out in the elements” workers drove late model f350 series 4×4 diesel pickups.

        4. I think because they have given up on slow and steady and are trying to roll the dice. And that’s the only opportunity they have to make a massively leveraged hail mary bet.

          1. Importantly, it’s a *legitimized* and *state-sanctioned and encouraged* hail mary bet. Supported by the REIC machine, tax deductions on interest and property tax, elimination of capital gains tax, regs like Prop 13, associated with labels like the “American Dream”, “throwing away money on rent”, “you can paint the walls”, supported by low- and no- down payment schemes, and on and on.

            I don’t see any of that to support a prudent investing scheme in stocks and bonds.

          2. Importantly, it’s a *legitimized* and *state-sanctioned and encouraged* hail mary bet.

            …giving them the unusual opportunity to gamble with other people’s money. Normally something only reserved for elites.

  8. Dec 11, 2018, 9:17 am
    The Next Leg Of The Bitcoin Crash Is Here
    Clem Chambers, Contributor
    Intelligent Investing
    Contributor Group

    If it’s not the stock market crashing, it’s bitcoin.

    When asset instruments crash, they go down in stages. Stages are price ranges when the asset stops and maintains a level of stability before they reprice again to another level. Many markets do this on the way up as well as down. Once a market has stabilized, the next break away from that range is highly likely to produce a sizeable move. For a trader this offers a market neutral signal that can be jumped on, long or short.

    https://www.forbes.com/sites/investor/2018/12/11/the-next-leg-of-the-bitcoin-crash-is-here/#3558a1a5d5ee

    1. I would not be a buyer of Bitcoin at $100. I was asking myself if it would be worth gambling an amount I could comfortably lose – say $5,000 – in the ridiculous even that Bitcoin actually bubbled back up. Unfortunately, I just could never force myself to buy “crypto.” It is so dumb.

  10. Anyone else seeing low ball home prices on Realtor.com only to discover that they’re listed as live auction bids? Seeing more and more of these in South OC. Seems shady.

  12. Not a crash but,a dimmer switch?

    Ever see have far down a dimmer and reduce the lights? Actually not a bad analogy, just not the way the message was intended.

    Boy do the folks look rediculous.

    1. Live here in So OR. Home sales did slow down last Summer. This area had several massive wildfires all Summer, poor air quality for months, scared away home buyers looking to relocate.

  14. 3 Beautiful Arbitrages (Why Yield Curve Inversions Happen)
    Dec. 10, 2018 12:49 PM ET
    Daniel Amerman, CFA
    CFA, research analyst, long-term horizon

    Summary

    – Why yield curve inversions occur and the issue of causality are poorly understood by many investors.

    – Yield curve inversions are very uncommon distortions in bond pricing that occur when too many investors try to pile into the same arbitrage opportunity at the same time.

    – There is a good reason that so many investors try to get in at the same time – the track record is exceptional for reliable and large arbitrage profits.

    – In essence, yield curve inversions are caused by profit-seeking investors changing prices in the pursuit of their own self-interests; they are the core of how markets are supposed to work.

    – Inversions are the bond market predicting a recession – and the bond market has a MUCH better record than the stock market for accurately calling recessions well in advance.
    …

    1. Seeing the world in this way can require a different mindset for individuals, but there are really good reasons why many professionals approach the markets in that way, and these reasons can also be of critical importance for individuals when investing for a world that is increasingly dominated by Federal Reserve interventions and the associated cycles of crisis and the containment of crisis.

      This is why it’s no longer a business cycle…it’s a Fed cycle.

    2. “When the yield curve nearly converged in November and the early days of December, it wasn’t a Fed interest rate increase that did it, because there wasn’t one during that period. Instead, all the compression was driven by 10-year yields falling from a peak of 3.24% on November 8th to 2.85% on December 7th.

      Long-term rates fell by 0.39% in less than a month, which was greater than the Fed’s recent pace of 0.25% increases every three months. However, once we understand the fundamentals for why yield curve inversions matter and why they have a perfect record for calling the last three recessions over 35 years and an excellent record over the longer term, then we can see that not all convergences are created equal.

      Convergences driven by the “floor coming up”, by the Fed increasing interest rates, are the result of a committee meeting and voting every now and then. Now, the FOMC is an extraordinarily powerful committee; their decisions can send the markets soaring or crashing, and they make mistakes. However, that said, we have a very long history of Fed interest rate increases, and few individual increases are by themselves any sort of game changer for the markets or long-term investment strategies.

      Convergences driven by the “ceiling coming down” and long-term rates rapidly falling relative to short-term rates are a much more serious matter. When the entire term structure of interest rates rapidly distorts because of concerns about the economy, that is a far rarer occurrence than the occasional plunges in the Wall Street indexes. For all the screaming headlines they draw in the moment, most of the highly dramatic one day or one week stock index plunges turn out to be much ado about nothing when viewed from the perspective of 5 or 10 years later.”

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