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Homes Aren’t Selling For As Much Money As A Few Months Before

A report from the Mercury News in California. “The median sale price for an existing house, excluding condos, in Santa Clara County was $1.15 million in November, down 2 percent from $1.175 million at the same time last year, according to CoreLogic. It’s the first time prices have dropped in the county on a year-over-year basis since August 2016 and the largest drop since January 2012, CoreLogic analyst Andrew LePage.”

“Gustavo Gonzalez, president-elect of the Santa Clara County Association of Realtors speculates buyers got spooked last month over talk that the real estate market had gone as high as it could, prompting them to wait in hopes prices would come down. ‘Nobody wants to buy at the peak,’ he said.”

“Prices dropped more dramatically in November in Napa and Sonoma counties. The median sale price for an existing house fell nearly 11 percent in Napa County and almost 8 percent in Sonoma County compared to last November. Prices rose in those communities following the fires, LePage said, so last month’s dips might be attributable to a correction of that spike.”

“In the East Bay, real estate agent William Doerlich is seeing more price reductions and noticing that homes aren’t selling quite as quickly or for as much money as they did a few months before.”

“‘It’s definitely been a bit of a slowdown, but you know what? When you’ve been in the hyper market we’ve been in for the last seven or eight years, it’s not a catastrophe,’ said Doerlich.”

The San Francisco Chronicle. “Bay Area home prices rose at their slowest year-over-year pace in almost two years last month, another sign of a decelerating market. The median price paid for a home or condo in the nine counties was $815,000 in November, down 3.8 percent from October and up 3.8 percent from November 2017, CoreLogic said. The median price is down 6.9 percent from its all-time high of $875,000 set in June.”

“Sales of new and existing single-family homes and condos, meanwhile, totaled 6,147 in November, down 14 percent from October and down 15.2 percent from November of last year. Sales typically slow between October and November, but the average decline since 1988 is only 8.8 percent.”

From NBC Bay Area. “Bay Area home sales declined 15 percent in November compared to the same month last year, marking the second-largest decline in more than two years and the slowest November in four years, according to CoreLogic. Sales in the nine Bay Area counties tracked by CoreLogic have fallen on a year-over-year basis the past six consecutive months, the report says.”

“CoreLogic analyst Andrew LePage said in a statement, ‘November’s slowdown affected all major price categories, including a nearly 10 percent annual drop in $1 million-plus sales, which have fallen year-over-year in two of the last three months. Higher mortgage rates worsened affordability constraints this year and in recent months stock market volatility could have contributed to a high-end pullback.'”

The Petaluma Argus Courier. “A look back at the top local stories of 2018: Several large scale housing projects were approved or broke ground in the past year, but Petaluma remained mired in a regional housing crisis.”

“Those pipeline projects, which took strides but also faced hurdles this year, will add nearly 1,000 units of desperately needed housing to the city’s stock. The biggest of the projects, the 273-unit mixed-use Riverfront development off Hopper Street, hit a snag after breaking ground last year. Builder Comstock Homes in April shuttered its sales office and looked to offload the project to another developer. The company continued to build the roads and utilities for the development, but the year is ending without any new housing starts on the property.”

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  2. ‘The biggest of the projects, the 273-unit mixed-use Riverfront development off Hopper Street, hit a snag after breaking ground last year. Builder Comstock Homes in April shuttered its sales office and looked to offload the project to another developer’

    This thing didn’t start last summer.

  4. “[Real estate agent] Doerlich is confident the Bay Area will have a strong 2019. ”

    Asking a real estate agent if the next year will see a strong housing market is like asking a barber if you need a haircut!

    1. One thing I notice with many of these statistics is that this year, the median house square footage is somewhat smaller than that of last year – in most places. This means the price per sq ft remains the same (or even increases slightly) even as the median list price has come down dramatically.

      I wonder what this means….

      1. It means those buyers still remaining are opting for the smaller, less expensive choices.

        A fire like this mostly burns from the outside inwards. More expensive homes stop selling first while the cheapest ones still have some momentum remaining. Outlying areas with long commutes see sales fall off sooner/faster than close-in areas. And so on.

        Only as the outer layers burn off, those inner layers closest become the new outer layers and start to burn next.

        …. and so it goes …

        1. And I have noticed over the last year, smaller houses have been pushing up…so something that should be priced at 199-250 – including appreciation, is now priced at 310-399. I thought this was manipulation by the Crook Estate Agents to ratchet up that bottom so the slide will be less, in their minds…and visually trick those looking to downsize. But, the value clearly is not matching on the low end at all.

      2. It means there is a tendency to less expense homes. Not surprising since as homes have gotten more expensive, the previous years housing budget will afford a smaller house this year. Increased interest rate has the same affect. Also same when buyers conclude that values will not climb going forward. These things are same as in 2006 to 7 period. Typically means downward trajectory will follow.

  6. ‘Nobody wants to buy at the peak,’

    More to the point, nobody wants to get stucco by catching themself a falling knife.

  8. They’re number one!

    The Financial Times
    Chinese economy
    China to end year as worst performing stock market

    Shadow banking crackdown and trade war wipe more than $2tn off Chinese equities
    3 hours ago
    …

    1. In some respects, it seems like the Chinese leadership is more willing to work through the pain of punchbowl removal up front than are US leaders.

      1. Xi Jinping did say in October that “houses were for living in, not speculation.” Not sure how much good that will do to damped the epic Chinese speculative real estate frenzy. A property tax would be a good first-step.

  10. In all of the homes I have bought, I never once thought about whether the market was going up or down, as an aside though In my life time I have bought one new car and two new homes. And of course that means in my 75 years of buying cars and houses.

    Times are different now, I guess

    1. During a period characterized by a very large amplitude credit cycle and speculative bubbles in multiple risk asset classes, the rewards to market timing are unusually large.

    2. “Times are different now, I guess”. Yes they are. You likely bought your homes as shelter whereas many now a days buy as an investment, piggy bank, or as a funnel for money laundering leaving the average household family with that need for shelter outside there means. This whole crypto mania is very similar but instead of an airbox as an exchange, they are actually getting air

  11. “The median sale price for an existing house, excluding condos, in Santa Clara County was $1.15 million in November, down 2 percent from $1.175 million at the same time last year, according to CoreLogic.“

    The full article is worth a read. Although it does point out the Santa Clara YoY declines it opens up with “What price hike? Bay Area home prices barely inched up in November
    Is it time for buyers to celebrate?”. Again this YoY nonesense. Santa Clara just happens to have gone down quicker than other areas in the Bay Area that they mention. MoM they are all down so the “barely inches up” still paints hope for these panicked specuvestors. And then here they go with painting that rosey picture:

    “I saw in November a huge pause,” said San Jose agent Gustavo Gonzalez, president-elect of the Santa Clara County Association of Realtors. “I don’t know what happened, but the market just kind of stopped for a few weeks. And then in December it kicked up again.”

    Case in point: a San Jose house that he listed for $700,000 in early November. The home sat for four or five weeks, then suddenly received multiple offers in December and recently sold above asking price.“

    Either they got many offers UNDER or they likely priced it low to encourage bidding. A quick scan through the MLS or RE search site like trulia will reveal almost all these properties are sitting unsold and many with price cuts. 2019 is going to go down hard!

    1. There’s going to be some erratic noise in the sales data for a little while yet and some people are going to point to specific sales and say “See.. it isn’t a downturn (please, I need more commissions)” while trying to ignore the big picture data until it becomes too loud.

      1. I agree and think it will take until about the same timeframe where the mass foreign withdrawal in RE midway this year a year (mid 2019) to get the commission driven promoters to voice any reason

  13. Does it seem like there is a risk of running out of hand lotion in 2019?

    The Financial Times
    Central banks
    The Federal Reserve versus the markets: who has it wrong?
    Central bank optimism about the global economy stands in contrast to investor outlook
    Whether the declining confidence in markets accelerates will depend in part on how deftly central banks respond
    © EPA
    Sam Fleming in Washington and Chris Giles in London
    11 hours ago

    The message sent by investors in stormy financial markets is clear: the global economic expansion could be in trouble. But the Federal Reserve remains optimistic, publishing strong growth forecasts for the US and plotting out more interest rate rises.

    So are investors right to be worried? World output growth for this year was projected at a healthy 3.7 per cent by the IMF in October, but the fund’s outgoing chief economist Maurice Obstfeld acknowledged more recently that there is now “some air coming out of the balloon”.

    Five advanced economies — Japan, Germany, Italy, Sweden and Switzerland — all experienced contractions in the third quarter of this year.

    While the declines were spurred in part by one-off factors, including more stringent car emissions standards in Europe, together the economies affected represent a hefty 15 per cent of world gross domestic product, according to Oxford Economics.

    Many economists expect stronger growth in the fourth quarter, but worries remain significant enough for Mario Draghi, the president of the European Central Bank, to speak of “downside risks” to the eurozone at this month’s monetary policy meeting.

    Leading indicators have turned downwards, with the OECD this month noting “easing momentum” across Europe, Canada and now the US.

    Growth could be set to slow simultaneously in the US, China, Europe and Japan next year compared with this year.

    In the US, where the economy is on course for a 3 per cent expansion in 2018, corporate executives are getting nervous.

    A total of 48.6 per cent of US chief financial officers surveyed by Duke University now believe the US will be in recession by the end of 2019, and 82 per cent think a recession will have started by the end of 2020.
    …

    1. “A total of 48.6 per cent of US chief financial officers surveyed by Duke University now believe the US will be in recession by the end of 2019, and 82 per cent think a recession will have started by the end of 2020“

      I could be wrong but I recall these stats to be closer to 5-10% just months ago. What force has driven this pessimistic new view among our expert forecasters?? Stocks pausing there trajectory to the moon perhaps

  14. I have the feeling that today will be a very good day on Wall Street, and the January Effect will continue the trend. Don’t miss out!

  15. The trillions of hot-money Yellen Bux that sent Hong Kong housing prices into the stratosphere, especially for the “ultra-exclusive” mansions favored by the oligarch recipients of central bank “stimulus,” are now shedding some serious “value” as the central bank punchbowls are being taken away.

    https://www.scmp.com/property/hong-kong-china/article/2180186/what-difference-nine-months-make-price-mount-nicholson-home

    What a difference nine months make – price of Mount Nicholson home drops by US$7 million

    A home in Hong Kong’s ultra-exclusive Mount Nicholson neighbourhood on The Peak is the latest victim of souring sentiment in the world’s most expensive property market. On Monday, House 16 sold for 7.4 per cent less – or HK$58.12 million (US$7.42 million) – than House 17, which was sold in April this year.

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