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The Contrast From The Frenetic Pace Led Some To Fear A More Significant Shift

A report from CNBC. “Each new housing data point is worse than the last, and they are prompting a leading industry analyst to say the market is in a correction. ‘I definitely think we’re in a correction,’ said John Burns, CEO of John Burns Real Estate Consulting. ‘Sales, according to our survey last month, were down 19 percent year over year. … I would call that a correction.'”

“Single-family housing starts fell more than 13 percent year-over-year, according to the U.S. Census. Building permits, an indicator of future construction, were down nearly 2 percent.”

“A new survey from the NAHB, which has yet to be released, found 41 percent of builders reported reducing prices as a sales incentive for July through October Oct 2018, up from 26 percent a year earlier.”

From the Associated Press. “U.S. developers broke ground on more homes last month, but the increase occurred entirely in apartments. The construction of new single-family houses fell. Sales of new homes plummeted nearly 9 percent in October and the number of newly built, unsold homes sitting on the market has climbed to its highest level since 2009.”

The Wall Street Journal. “At the end of its next meeting Wednesday, Fed officials are set to raise their short-term rate for the ninth time since they began raising it from near zero in December 2015. The Fed has moved its benchmark short-term rate up to a little over 2% since 2015, remarkably little action when considered against history.”

“The housing market has been among the first sectors of the U.S. economy to slow. ‘All of the market was priced as if a 4% mortgage would last forever,’ said Glenn Kelman, chief executive at Redfin. ‘Consumers had forgotten what a more normal mortgage rate is.'”

“In California, more than three of every seven homes for sale in October had their asking price reduced at least once, the highest such share in seven years, according to the California Association of Realtors.”

The San Francisco Chronicle in California. “A mid-century marvel of 11,270 square feet on two parcels, this Fairfax estate has lingered on the market for over 100 days. Now, after a $400,000 price drop, it could be yours for $3.895 million.”

“This home is among a select few homes that for whatever reason has fallen through the cracks of an otherwise heated, seller’s market in the Bay Area.  And if its the house for you, you can also consider that this time (the holidays) is often particularly challenging for sellers.”

From The Columbian in Washington. “Clark County real estate activity slowed down in November, according to the latest numbers from the Regional Multiple Listing Service’s Market Action report.”

“Although new listings did decline from October, they were still 13.6 percent higher than in November 2017 and 23.8 percent higher than in November 2016, according to local real estate broker Mike Lamb, which resulted in a higher number of active listings at the end of the month than in any of the previous three years.”

“‘Listing activity also slowed in November, but not as much as is typical for this time of year,’ Lamb wrote. ‘In fact this was the best listing activity in November this decade.'”

“The cooling off of most market numbers in November was in keeping with typical seasonal patterns that often cause markets to slow down at the end of the year, Lamb said. He added that some real estate agents have expressed concerns that the decline might go beyond typical seasonal changes.”

“‘The contrast from the frenetic pace of last spring appears to have led some to fear we may be seeing a more significant shift (in the market),’ he wrote.”

“In his own assessment, Lamb said that it’s too soon to know whether the November declines point to a more dramatic shift in the market, but he characterized the increase in inventory and decrease in pricing as good news, allowing home buyers to find more options which should eventually stimulate more sales.”

“‘So while we may not have gotten everything we wanted for Christmas,’ he wrote, ‘at least we didn’t get a lump of coal.'”

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This Post Has 29 Comments

  1. ’41 percent of builders reported reducing prices as a sales incentive for July through October…Sales of new homes plummeted nearly 9 percent in October and the number of newly built, unsold homes sitting on the market has climbed to its highest level since 2009′

    Oh dear…

  2. ‘lingered on the market for over 100 days’

    Wa? But two weeks and it’s snapped up?

    ‘This home is among a select few homes that for whatever reason has fallen through the cracks of an otherwise heated, seller’s market in the Bay Area’

    Again, uncalled for boosterism at a time when people could make really horrible borrowing decisions.

    1. ‘This home is among a select few homes that for whatever reason has fallen through the cracks of an otherwise heated, seller’s market in the Bay Area’

      All unsold homes that are “lingering on the market” are doing so for exactly the same reason: they’re not priced to sell.

      Get to sawin’ and slashin’, Greedheads. Ain’t no other way your “select” shack is going to find a buyer.

  6. “In his own assessment, Lamb said that it’s too soon to know whether the November declines point to a more dramatic shift in the market, but he characterized the increase in inventory and decrease in pricing as good news, allowing home buyers to find more options which should eventually stimulate more sales.”

    NOW is the best time to buy folks. We lied about that 6 months ago and also one year ago. But we are not lying now. I promised. NOW is the best time to buy.

    – Realtors

  7. Realtors seem to forgotten the golden rule

    When you can’t afford house price, you don’t buy. No buy = No commission.

    Start cutting the prices…you ran out of greater fools last month!

    1. Nice reply to the article:

      “This article is pure BS. Housing is NOT going to continue to go up. It’s going down in many major markets. As we enter the recession, it will go down even more. Ignore this trash”

    2. Yes, hilarious. The good news though is that they forgot to remove the comments section. Have at it, and let’s see if we can force them to shut it down!

  10. “fell through the cracks” Hmm, more like a fault line.

    Ever notice the straight talking types like the first guy say it pretty much accurate whereas the glib meandering ones usually give you smoke. Press will turn when the news is no longer disputable, then it is not their fault if a panic follows.

    The dark clouds are gathering. Still there seems to be an effort on the part of Yun and the like to paint in pastels at the moment. He had a quote yesterday something to the extent of “prices are not increasing but also not falling in 2019” By his standards that is wildly apocalyptic! It appears that the REIC (love that one) is trying to draw a line to defend. Will be temporary at best. They look like such fools.

    “just a return to normal, and that is a good thing, but no crash or bubble” Really? Well, how do they know? History presents other possibilities and some sources are beginning to consider in public. The shift is here.

    Regards.

    1. just a return to normal, and that is a good thing, but no crash or bubble

      What he doesn’t understand is that in order to return to normal, there *has* to be a crash (or severe wage inflation). Whether it’s a sudden drop or years-long is immaterial; “normal” is not 10-20x median income.

    2. Speaking of Lawrence Yun, it’s very easy to do a Google News search around 2007 and 2008 and see what he was preaching at that time.

      Note: it’s very similar to what he’s saying now.

  12. Oil is tumbling…Texas/OK/ND/ etc….Real estate about to join the party…its getting uglier everyday…be prepared for the worst folks

  13. ‘I definitely think we’re in a correction,’

    Ya think!?

    Markets
    Builders Brace for Weaker 2019 as Rate Hikes Bite Into Demand
    By David Caleb Mutua and Carolina Wilson
    December 18, 2018, 7:14 AM PST
    – Home prices expected to drag as buyers seek less costly homes
    – Analysts say industry’s woes are unlikely to relent next year
    …
    ‘‘Sales of new and existing homes and new home construction continue to come in below expectations, and most of the leading indicators show the trend is likely to continue and perhaps intensify,’’ Wells Fargo analysts led by Mark Vitner wrote.

    The hurdles facing homebuilders are unlikely to relent soon and home sales and new home construction should continue to underperform the broader economy, according to the Wells Fargo report. The S&P 1500 Homebuilding group is down 31 percent this year compared with a 3.9 percent decline in the S&P 500 Index.

    Homebuilder ETFs

    Investors have also been yanking cash from exchange-traded funds tracking builders. The $811 million iShares U.S. Home Construction ETF, ticker ITB, has seen more than $1.2 billion worth of outflows this year, putting the largest fund tracking the industry on pace to lose the most assets since it started in 2006.

    The $601 million SPDR S&P Homebuilder ETF, ticker XHB, has also bled cash, with investors pulling about $383 million this year. The fund’s stock prices has fallen 26 percent in 2018, compared with a 31 percent decline for ITB, because it equally weights its holdings rather than basing it on market capitalization, reducing exposure to some of the larger builders and boosting the presence of smaller firms that have done better.
    …

  14. ‘I definitely think we’re in a correction,’ said John Burns, CEO of John Burns Real Estate Consulting. ‘Sales, according to our survey last month, were down 19 percent year over year. … I would call that a correction.’”

    Somebody earned his big bucks with that statement of the blindingly obvious.

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