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In The West, The Buyers Have Disappeared

A report from the Wall Street Journal. “Sales of previously owned U.S. homes edged up in November from a month earlier but clocked the largest annual decline in more than seven years, signaling the sputtering housing market may finish the year on a soft note. Sales in November decreased 7% from a year earlier, the largest year-to-year drop since a May 2011 decline.”

“The western U.S. is enduring an especially precipitous housing slowdown, reflecting affordability challenges in markets including Seattle and San Francisco. Existing-home sales in the West declined 15.4% in November from a year earlier.”

“In the West, ‘The buyers have disappeared; inventory is sitting on the market,’ said Lawrence Yun, chief economist at the National Association of Realtors. Prices there may soon start falling, he said, which could be a relief for buyers but could cause panic among sellers.”

The Dallas Morning News in Texas. “At first glance North Texas’ November home sales decline was bad. And looking closer at the 4-county Dallas-Fort Worth area the annual home sales declines were even worse.”

“Total home sales in November for all of North Texas were down 8 percent from November 2017 – the largest such decrease in more than seven years. The year-over-year home sales decline in three of the D-FW area’s central counties – Collin, Dallas and Denton – where even steeper than the overall area.”

“Dallas County home sales by real estate agents through their multiple listing service fell 14.7 percent from November 2017 totals, according to an analysis from the MetroTex Association of Realtors. And the number of houses up for sale in Dallas County was up 29 percent from a year ago – another sign the market is slowing.”

“Collin County home sales in November fell 14.4 percent from a year ago. And sales were down 10.5 percent in Denton County. Paige Shipp with Metrostudy Inc. said that many buyers were caught off guard by the higher home finance costs this year.”

“‘They are going out and realizing that what they thought they could buy they can’t now,’ Shipp said. ‘I think the buyers have to reset their thinking.'”

“The same goes for sellers, she said. ‘Sellers thought for a long time that it was normal to put your house on the market and have it sell in three days with multiple offers,’ Shipp said. ‘That’s not normal. Some sellers are still overpricing their property thinking it’s a year ago.'”

This Post Has 73 Comments
  1. Eeee-bola Denton!

    ‘Prices there may soon start falling, he said, which could be a relief for buyers but could cause panic among sellers’

    When the cheerleaders are on the bus, the game is over.

      1. “…but this guy appears to be a paid hack…”

        No mention of the spread between household median income vs median house prices. He’s a speculator.

  2. Yun says prices in west may start falling and is benefit to buyers. Always the optimist is our man Lawrence. At least he is speaking truth. By the time LY start speaking this way, you know the new paradigm is here.

    If you recall the last debacle, it started in the most inflated locations and then spread. Stock market was high and unemployment was low and a recent series of interest reductions had recently reversed direction. Look familiar? What is different is that stocks took a while after real estate’s downward spiral before tanking. That much is a bit different. What next? bank failures, economic downturn across board?

    1. “Prices are rising, hurry up and buy before you’re priced out forever!!”

      “Prices are falling, it’s a great time to buy and get a deal, before prices go up again!!”

    2. “What is different is that stocks took a while after real estate’s downward spiral before tanking. That much is a bit different.”

      What’s different this time is that we are at the back end of a decade-long period of extraordinary accommodation from the Fed and other developed economy central banks that artificially suppressed interest rates to quite literally the lowest levels in the entire human history of money lending. This policy severely depressed risk premiums on all financial assets, and drove hordes of yield seekers out of low-risk asset classes like government bonds and bank CDs into risk assets like stocks or junk bonds, or even outright speculative gambles like cryptocurrencies.

      Now that central banks are collectively and most gingerly tiptoeing towards unwinding this grand scale monetary policy experiment, it shouldn’t be all that surprising for the human lab rats to exhibit a degree of consternation about a return to the normal rules of finance, where interest rates and repayment risk play fundamental roles in asset valuation.

  3. North Texas avoided the worst of the previous bust in large part because prices didn’t go wacko… but then they finally got caught up in the price runup of the last 5 years and prices have detached from incomes.

    They’re going be in for some serious hurt this time.

    I do think the change in TX property taxes (they didn’t go up as fast as prices – I need to research why – otherwise that would have caused an armed revolt) helped fuel the fire.

    As Dr. Smith once said “The Pain. Oh, Will.. the Pain…”

    1. “North Texas avoided the worst of the previous bust in large part because prices didn’t go wacko…”

      You mean to tell us Dallas housing prices fell 45% from 2006-2010 because they weren’t overpriced?

      Then why did they?

    2. Same with North Idaho and Eastern WA.

      Didn’t get too crazy but this time around is full-on Clown Town.

      1. You’re not kidding. In fact, a look around at a lot of the tumbleweed town’s prices elicits a “haha, what?”

      2. “Same with North Idaho and Eastern WA.”

        Everything from Spokane, WA to Coeur d’Alene , ID has inflated since 2012. This is a snowy corridor where life slows to a crawl for three or four months per year.

        1. This is true. But only thing that hasn’t slowed to a crawl has been these Clown Town prices that shot to the moon. All of the doctors in America have moved to Spokane and Coeur D’Alene I guess. That’s why prices have all doubled.

  4. “In the West, ‘The buyers have disappeared; inventory is sitting on the market,’ said Lawrence Yun, chief economist at the National Association of Realtors. Prices there may soon start falling, he said, which could be a relief for buyers but could cause panic among sellers.”

    We, buyers, are still here. The people that disappeared are the flippers, speculators, foreign money launders, greater fools, etc. However, just like the last Housing Bubble burst, we are not interested in buying at peak or near peaking pricing….Tell your sellers to start cutting or otherwise start riding the market down…its 2007 all over again!

    1. “… but could cause panic among sellers…”

      Double the panic if would be seller has HELOC’d themselves into oblivion.

      [Side bar] Have not noticed the word “shortage” used in any REIC communique recently. That would require some serious chutzpah.

      Is our beloved REIC minister of propaganda getting a bit nervous perhaps?

      1. Double the panic if would be seller has HELOC’d themselves into oblivion.

        I tend to agree with the people who think they were lucky and sold at the peak. To the bank.

    2. Also disappeared: Sellers who have a clue about the value of a house as shelter.

      Hint: It’s less than what a shadow bank lender will loan a subprime borrower to finance a home purchase.

  5. “The same goes for sellers, she said. ‘Sellers thought for a long time that it was normal to put your house on the market and have it sell in three days with multiple offers,’ Shipp said. ‘That’s not normal. Some sellers are still overpricing their property thinking it’s a year ago.’”

    LOL Now she tells us

  6. WTF is going on in the stock market today? Is the Fed’s actions/forecast good news or bad news? Stocks seem schizophrenic. I sold some of my gold miners at $9, saw them go even higher, then drop like a rock after the announcement, bought the shares back at $8 and now it’s heading towards $7.50 where I have an order to buy more. A 20% swing in one day! Is the dollar really still king?

          1. Why not buy gold or other PMs? When did those stop becoming safe havens? Fed already announced only 2 rate hikes next year. Expectation was for 3, that was priced in. Shouldn’t the dollar drop now accordingly? Unless someone is shorting PMs to prevent the truth coming out ..

  7. “She said the current slowdown is nothing like the home market experienced a decade ago during the recession.

    “We are not seeing anything that shows me we are anywhere close to what we saw in 2008,” Shipp said. “This is just a shift in the market.”

    LOL living in dreamland and about to wake up soon.

  8. Another day another market dump….housing collapsing…etc…all going according to the plan….The Trump Recession starts officially in 2019

  9. “‘They are going out and realizing that what they thought they could buy they can’t now,’ Shipp said. ‘I think the buyers have to reset their thinking.’”

    Nothing to reset, Paige. I refuse to overpay for a shack – end of story. And now that ten years of Federal Reserve monetary malpractice has reached its limits, the cratering is going to be epic.

    1. I refuse to overpay

      I refused as well, and opted to not play by the rules as far as shelter goes. However, like everyone else, I’ve been overpaying for food, gas and other important things because of the Fed’s thievery. I will be glad to see the credit bubble implode.

        1. Manitou Springs FBs set snares for squirrels in local parks, adopt SPCA cats for the stew pot as Eee-bola overtakes local housing market.

          (My attempt at a Mortgage Watch headline.)

        2. No, I’m just stating the fact that we haven’t seen real panic yet. When we do, it’s going to get really ugly.

  10. When will everyone and their mother stop leaving CA and Seattle and moving into Idaho, AZ, TX, and WA?

    I wonder if that will make home prices in Idaho go down.

  11. So everyone is forecasting increasing mortgage rates. Unless salaries are going up as well that reduces quite substantially the amount folks can pay. The only way to square that circle is for prices to drop.

    1. “Unless salaries are going up as well that reduces quite substantially the amount folks can pay.”

      It’s already been reduced considerably for a small step towards normal interest rate levels. And rates have a long way to go up from here to historic norms.

    2. Asia Markets
      Chinese banks drag mainland markets lower; Japan down more than 3 percent
      Published Wed, Dec 19 2018 • 7:00 PM EST Updated an hour ago
      Eustance Huang

      Key Points
      – Stocks in Asia were broadly lower on Thursday afternoon.
      – Overnight on Wall Street, the major indexes hit new closing lows for 2018 after the Fed appeared to continued to include a statement that more rate hikes would be appropriate after raising interest rates for the fourth time in 2018.

      Stocks in Asia were broadly lower on Thursday afternoon after the U.S. Federal Reserve raised interest rates for the fourth time in 2018.

  12. The Fed is sure getting a heaping helping of vituperation from the financial press for following through on punchbowl removal operations that were preannounced years ago.

    1. It’s quite interesting to witness all the hard core easy money credit addicts wailing and moaning as the Fed rescinds their free fentanyl.

      1. ” … ea$y money credit addict$ wailing and moaning … ”

        Ya know Mr. Professor, in an odd sorta way, eye can see the indu$trial pharmaceutical$ corpooration$ profiting from such human $uffering/pain$.
        (Plan “B”, coca-cola classic & 20 mg of the best.of.the.west left coast edible$)

    2. The punchbowl removal discussion dates back at least five years. Now that the day of reckoning has finally arrived, it has caught many financial market gamblers by surprise.

      Monday, June 24, 2013
      The Punch Bowl Speech: William McChesney Martin

      In monetary policy jargon, “taking away the punch bowl” refers to a central bank action to reduce the stimulus that it has been giving the economy.

      Thus, last Wednesday, Ben Bernanke discussed the possibility that if the U.S. economy performs well, the Federal Reserve would reduce and eventually stop its “quantitative easing” policy of buying U.S. Treasury bonds and various mortgage-backed securities. Everyone knows this needs to happen sooner or later, but Bernanke’s comments raised the possibility that it might be sooner rather than later, and at least for a few days, stock markets dropped and broader financial markets were shaken.

      Various blog commentaries and press reports referred to Bernanke’s action as taking away the “punch bowl” (for example, here, here, and here).

      1. Word to the wise: Don’t fight the Fed’s punchbowl removal process.

        And if they cave, don’t fight that either. It’s a losing battle. We are so far above the fundamentals that they don’t matter. Only the Fed matters.

        1. “And if they cave, don’t fight that either.”

          “After finally winning the presidential election of 1968, Nixon named Burns to the Fed Chairmanship in 1970 with instructions to ensure easy access to credit when Nixon was running for reelection in 1972.” —wiki

  13. The stock market futures look grim yet again, and it’s all the Fed’s fault. The people who gambled that risk asset prices will always go up are above culpability for the pot of stew in which they boil.

    U.S. stock futures under pressure as Fed-related selloff set to continue
    By Barbara Kollmeyer
    Published: Dec 20, 2018 2:17 a.m. ET
    Reuters
    Federal Reserve Board Chairman Jerome Powell in Washington, U.S., December 19, 2018.

    U.S. stock futures were under pressure on Thursday, as negative reaction to the Federal Reserve’s interest-rate hike and outlook on future moves continued, on the heels of a bruising session that left all three indexes at fresh record lows for 2018.

    Dow Jones Industrial Average futures (YMH9, -0.50%) slid 122 points, or 0.5%, to 23,162, while S&P 500 futures (ESH9, -0.51%) dropped 12.9 points, or 0.5%, to 2,490.50. Nasdaq-100 (NQH9, -0.52%) fell 33.5 points, or 0.5%, to 6,319.

  14. How do bottom callers pull round figures out of the air?

    After Fed shock, S&P 500 needs to shed 10% before it hits bottom, says strategist
    By Barbara Kollmeyer
    Published: Dec 20, 2018 8:50 a.m. ET
    Critical information for the U.S. trading day
    AFP/Getty Images
    Deck the halls

    The worst December for stocks since 1931? Call off Christmas already.

    Investors are still staggering this morning, a day after that coal-in-your-stocking move — to some — by Fed Chairman Jerome Powell & Co.., who defied nearly everyone from POTUS to your Uber driver, by hiking rates and not sounding quite dovish enough over future moves:

    As it stands, the Dow is looking at its worst December return since the Great Depression, unless the waning days of the month produce a Christmas miracle.

    1. You need to be able to visualize a head-and-shoulders apparition in a stock chart to feel the bottom.


      For this market to move forward, he echoes some other strategists who have been saying the market needs to flush out a few more sellers and find a solid bottom to rebuild from. He’s looking at that bottoming out to come around 2,250 to 2,300 for the S&P, basing that on a so-called head and shoulders technical pattern, shown in this chart:

  15. Are you missing out on the crypto moonshot?

    $4,020.56 Bitcoin price
    +$746.51 Since last week (USD)
    +22.8% Since last week (%)

    1. The earth is flat, there’s a fella in the Mojave desert with a rocket launch that offers all the proof you round heads need in order to wrap yer head around it!

      1. Of course it’s flat – just like the moon and the sun which just so happen to be at perfect angles from anywhere on earth so as not to appear elliptical due to their flat-as-a-pancake-ness – if you catch my drift!

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