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A National Housing Market In The Throes Of A Downturn

A report from The Herald in Washington. “For the 23 Washington counties that the listing service tracks, inventory rose to 15,830 in November, compared to 11,193 a year earlier. Say the words ‘housing bubble’ and George Moorhead, owner of Bentley Properties in Bothell is likely to crack a smile. ‘It’s funny because people are like, ‘Is there a bubble?’ he said. ‘We haven’t seen a healthy market in more than 15 years.'”

The San Mateo Daily Journal in California. “The amount of available homes in San Mateo County are up, according to the SAMCAR report which shows there were 537 homes on the market in November, which is nearly 200 more listings than the amount available at the same time last year.”

“The recent surge in inventory runs contrary to conventional wisdom in the real estate industry, which suggests the amount of listings dwindle during colder months as families hunker down for the winter. But in San Mateo County, inventory in November grew by about 50 more homes than the amount listed in July, a summer month usually known to see a swell of properties coming to the market. For perspective, inventory levels in July of last year dropped from 422 listings to 347 in November.”

“The availability growth seen in San Mateo County is spreading across the Bay Area, according to Trulia, which claims inventory rates in San Jose and San Francisco grew by 66 percent and 36 percent respectively — some of the most aggressive housing stock availability jumps in the nation.”

“While the most recent median sales price is up from the $1.2 million hit in November 2015, it is essentially flat from the same time last year and down from the year’s high median sales price of $1.8 million in April.”

“Despite the potential hazards, ultimately the confluence of market forces are pushing in favor of the home shopper, according to Ralph McLaughlin, deputy chief economist with CoreLogic, who suggested the trend will continue gradually in that direction. ‘Recent signs point to a gentle softening of the housing market, rather than a crash landing,’ he said.”

The Naples Daily News in Florida. “Home sales in November increased by double digits across every price category resulting in an overall increase of 24 percent compared to November 2017. Median closed prices decreased for homes under $1 million in November and inventory rose 12 percent to 5,971 homes, according to the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island).”

“The $0 to $300,000 single-family home market had the most impressive activity in November where inventory rose 38 percent and closed sales increased 30 percent compared to November 2017. ‘We haven’t seen this level of inventory going into season in six years, said NABOR® President Jeff Jones. ‘Plus, days on market is cascading downward which is a sign of better pricing. The trend to price homes to sell is clearly taking hold and it’s definitely making a difference in overall sales numbers. Visitors will be impressed at the choices and stable prices this season.'”

“Broken down geographically, Collier’s housing market in November had some interesting pockets of activity. For example, median closed prices decreased 19 percent in the Naples Beach area (34102, 34103, 34108); but increased 12 percent in the North Naples area (34109, 34110, 34119).”

From CNBC on New York. “There may be another bear market under way – in New York City real estate. For much of 2018, housing in the Big Apple has been entrenched in a buyer’s market, where prospective homeowners are able to extract lower prices from those looking to sell.”

“A new report from Warburg Realty underscores just how deep the problem is, with the real estate firm estimating prices have tumbled between 10 and 20 percent since peaking in 2015. Since the start of the fall season, reluctant sellers have relented and offered steeper discounts on their homes, Warburg said, adding that the market may not hit bottom for months.”

“‘The news from the post-Thanksgiving period is that this price capitulation has begun driving deals,’ wrote Frederick Peters, Warburg’s CEO. ‘In December sellers whose pricing reflected the new market realities sold their properties, especially where inventory remains limited.'”

“Overall, however, New York City has become a microcosm of a national housing market in the throes of a downturn – if not an outright correction. Home prices in Manhattan slid more than 3 percent in November versus the prior year, according to StreetEasy data, with 18 percent more homes on the market during the month than the comparable year-ago period.”

“Still, the city is building residential units at breakneck speed, raising the possibility that many of those vacancies will go unfilled in the coming months. A February report from analytics firm CoStar Group showed that New York City has more than 60,000 units under construction – the most of any U.S. city tracked by the firm.”

“Although CoStar data shows vacancy rates in the city have hovered between 2 percent and 4 percent, Warburg characterized the market’s ability to absorb new units as ‘slow,’ especially among newly constructed condominiums.”

“As a result, ‘it will require several more years for the full complement of inventory in this category to enjoy full absorption,’ Peters wrote. ‘As we look to the months ahead, price capitulation remains key. Sellers who cannot accept the essential shift in market dynamics will likely see their properties linger on the market.'”

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This Post Has 66 Comments

  1. ‘Visitors will be impressed at the choices and stable prices this season.’

    ‘Broken down geographically, Collier’s housing market in November had some interesting pockets of activity. For example, median closed prices decreased 19 percent in the Naples Beach area (34102, 34103, 34108); but increased 12 percent in the North Naples area (34109, 34110, 34119)’

    Yeah, that’s some stability there Jeff.

    1. This REIC double-speak would do Orwell proud. So now cratering is recast as “stable”?

      I see what you did there, Jeff. Nice try.

  2. ‘New York City has become a microcosm of a national housing market in the throes of a downturn – if not an outright correction’

    How can there be a shortage anywhere if there’s a glut in Manhattan? I’ve been saying this since, oh…

    ‘estimating prices have tumbled between 10 and 20 percent since peaking in 2015’

    1. ‘Still, the city is building residential units at breakneck speed, raising the possibility that many of those vacancies will go unfilled in the coming months. A February report from analytics firm CoStar Group showed that New York City has more than 60,000 units under construction – the most of any U.S. city tracked by the firm’

      In a sane world, the main stream media would be asking, “just how the fudge can you guys be so wrong?” Think of all the Costars, and city planners and finance people, rolling billions after billions down the sewer.

      I’ll tell you what happened: these markets were seriously distorted. Distorted by artificially low interest rates – for years. Distorted by a flood of money creation the world has never seen – for years. People do incredibly dumb things when they are blinded by what they see as easy money.

      2. “People do incredibly dumb things when they are blinded by what they see as easy money.”

        Because they have none of their own. To them, price doesn’t matter irrespective of the fact that price happens to be double triple or quadruple. This also explains the proliferation of DebtDonkeys and HousingHens everywhere.

        1. This also explains the proliferation of DebtDonkeys and HousingHens everywhere. Reminds me of my grandma who used to raise chickens every summer out in the country. She would get a box of very young live chicks by mail order – and yes, this is still possible! One morning she found her entire little flock had decided to go swimming the night before in a nearly full rain barrel at one corner of the shack. The chicks all drowned. Grandma was heart-broken, and gave each dead chick a talking-to as she fished them out.

  3. “A new report from Warburg Realty underscores just how deep the problem is, with the real estate firm estimating prices have tumbled between 10 and 20 percent since peaking in 2015.

    I remember all those MSM headlines from 2015 alerting readers that the RE bubble had peaked and reversed course.

    Oh, wait…that was in the HBB. The REIC shills of the MSM were still telling us that Everything is Awesome!

  4. ‘in San Mateo County, inventory in November grew by about 50 more homes than the amount listed in July, a summer month usually known to see a swell of properties coming to the market. For perspective, inventory levels in July of last year dropped from 422 listings to 347 in November’

    ‘The availability growth seen in San Mateo County is spreading across the Bay Area, according to Trulia, which claims inventory rates in San Jose and San Francisco grew by 66 percent and 36 percent respectively — some of the most aggressive housing stock availability jumps in the nation’

    Where are these shacks coming from? Did they recently get built? No. It’s almost like they were there all along trying to get top dollar, like pork bellies.

    ‘While the most recent median sales price is up from the $1.2 million hit in November 2015, it is essentially flat from the same time last year and down from the year’s high median sales price of $1.8 million in April’

    Typical UHS mind trick. Throw an irrelevant 2015 number in to confuse. Well it’s a good thing everybody out there put 20% down and the stock market’s holding up!

    1. ‘While the most recent median sales price is up from the $1.2 million hit in November 2015, it is essentially flat from the same time last year and down from the year’s high median sales price of $1.8 million in April’

      When YoY doesn’t work for ya, throw in a new spin going back 3-4 years. “That should do it” -realtor

      1. “as home sale prices for November across the county hit nearly the annual low, floating at a median price of $1.5 million.”

        Gobbledygook. Except for the part that median prices are down -$300k (-16.7%) in 7 months.

  6. Mr Market has decided to rally today, all by himself.

    Stock market opens higher on New Year’s Eve, aims to end a miserable 2018 on a high note
    By Mark DeCambre
    Published: Dec 31, 2018 9:35 a.m. ET

    U.S. stock indexes opened solidly higher New Year’s Eve Monday on hope of progress on trade disputes with China, but were on track to book miserable returns for the month and year. The Dow Jones Industrial Average (DJIA, +0.99%) was up 216 points, or 1%, at 23,293, the S&P 500 index (SPX, +0.72%) gained 21 points, or 0.9%, at 2,508, while the Nasdaq Composite Index (COMP, +0.70%) advanced 1% at 6,648. President Donald Trump tweeted Saturday that he and Chinese leader Xi Jinping had made “big progress” in a telephone discussion about trade, and that a deal was “moving along very well.” But sources close to the talks said Trump may be exaggerating progress in a bid to calm markets, according to The Wall Street Journal.
    …

    1. Despite gasoline getting poured onto the open fire, the lumps of coal left over by the failed Santa Claus rally are barely able to sustain a flame.

  7. Where high cost housing creates an impossible problem: Nantucket.
    “Hospital hopes new housing can ease ‘Nantucket Shuffle’”

    NANTUCKET — Pauline Skok was struck by the beauty of this island the first time she stepped off the ferry, on a work assignment in 2016. So after years of working as a traveling nurse, she decided to take a job at Nantucket Cottage Hospital.

    Skok knew that this summer playground of the upper crust, with its historic charm and picture-perfect beaches, had a shortage of affordable housing. But she was not prepared for the struggle she would face next.

    The veteran nurse wanted a stable, year-long lease — but instead drifted through eight residences over two and a half years. Every time she moved, she wondered: “How much more can I do?”

    Skok’s experience is so common that it has a name — “the Nantucket Shuffle” — and the local hospital, a major employer on the island, is taking an unusual step to address it.
    Hospital officials plan to build up to 83 units of housing for staff across the street from a completely rebuilt hospital building, which will open to patients next month.

    They hope their new apartments, which still need local approval, would help them attract and retain staff …

    Many of Nantucket’s wealthier residents are aware of the island’s housing problem and have written big checks to try to solve it. Silly rich bugs just need to write MUCH BIGGER CHECKS. Paying each hospital worker an extra $1million a year to cover their housing expenses would solve this fake shortage real fast!

    1. Expect the vectors of shortage of affordable housing and healthcare and education to get weirder in the coming year. We’ve already seen multiple school districts paying to build teacher housing because wages don’t support it. The next prediction is that we’ll have hospitals building it for their nurse aides, techs, and even nurses.

      1. we’ll have hospitals building it for their nurse aides, techs, and even nurses. That was once the rule for hospitals. Back in the day they didn’t pay enough for staff to live on their own, so housing was a benny to make the pay scale go farther. Schools of nursing affiliated with hospitals would always have a dorm nearby for student nurses.
        40 years ago a CT hospital I worked at as a resident had nice townhomes built on the other side of the parking lot for house staff, very reasonable rents. I was told they got a gov’t grant to build these. Without the cheap housing they would have had almost no house staff at all. Local rents were beyond ridiculous even then. As little time as I had off, it was so nice to simply walk across the parking lot and go to work. Married house staff could go home for lunch, since they were no real distance away.
        On Nantucket I imagine the NIMBYs are very strong & opposed to letting the riff raff live nearby.

        1. I just got a frantic text from the hospital I used to work at:

          “We are down 4 nurses already and the house is full! Come work today and get time and a half plus holiday pay!”

          Our hospital can’t keep staff. It’s a vicious cycle because staff loads burn out nurses, then they leave, and the remaining staff is stretched even thinner, which prompts them to look for an exit. Pay is pitiful compared to Vegas or California.

          1. my sister-in-law (CO) emergency ward nurse works 2 12’s one week, and 3 12’s the next. 12s are 12 hour shifts. The actual dept leads and the doctors love it, and she loves the flexibility.

            Of course now hospital higher ups, want to kill this part of the program. So the nursing leads will be spending even more time trying to schedule. Go figure.

          2. Maybe the gov can recruit students to work in rural hospitals and in return help pay off college loans… meh, they’ll just import more immigrants.

          3. And those same immigrants will require health care paid for by you and me, putting even more strain on the system and the doctors and nurses involved.

            Libtard solution: give free health care for free to everyone, everywhere in the world. Then Hillary would win 6 billion to 1!

    2. These are the eCONomic distortions you get from reckless monetary policies from the central banks.

      This is why I am vehemently opposed to the President when he loudly calls for more low rates. The artificially low rates have crippled this country, particularly the middle and lower classes.

      It’s ugly out there, and it’s not just the Nantuckets and the Aspens of the world – it’s everywhere. It used to be that even the lowest paid worker could find a studio apt or a single wide trailer at an affordable rate. Now, those studios and single wides are priced for middle income folks. There is no more affordable housing. SURPRISE, SURPRISE – you get hordes of 50,000+ homeless overtaking large areas of LA, etc.

        1. Didn’t get a chance to reply yesterday, but thanks Chinbabwe and PB for the interesting comments and links re 70s inflation yesterday. Good reading.

  10. @CarlMorris: I updated the extension to get rid of the extra delay I had added to account for the scroll animation when you load the comments page. I killed the “built-in” scroll animation and added my own, which should make things better/faster all-around (I got sick of waiting for all the 3rd party/ad content to load before I could start looking at comments).

    Let me know if you run into any issues, but I think this is a win-win for all

        1. Just got back from vacation snowmobiling across Yellowstone a couple of times. Looks like I’m 4.8.2 now so I guess I missed the drama…I haven’t seen any issues so far trying to catch up.

    2. Drumminj, thanks again for this awesome plug-in.
      I haven’t been browsing here too much lately, but now when I right-click on the Next button to mark everything read, I just get the browser’s menu. Did the ‘mark all read’ behavior go away?
      Thanks in advance and Happy New Year!

      1. Did the ‘mark all read’ behavior go away?

        Thank you for the kind words.

        Yes, when I ported the extension to the new blog software, I did not move that functionality over. It wouldn’t be difficult to do, I was just trying to simplify/jettison unneeded functionality where possible.

        If others find it useful, speak up here and I can go add that back. I didn’t know if anyone was actually using that (anymore), so didn’t put in the effort to migrate it over.

        1. I really like it because it’s much easier to tell when there are new posts. I typically scroll through reading everything (instead of clicking ‘next’ over and over), mark it all read in one fatal swoop, and then wait to see if there are new responses.

          1. I really like it because it’s much easier to tell when there are new posts.

            Keep an eye posted for updates. I have it working here locally, just want to test for another day to make sure I didn’t break anything inadvertenly. Version 4.8.0 will add the ‘mark all comments read’ context menu back.

  11. Di$torted by artificially low intere$t rates – for year$. Di$torted by a flood of money creation the world has never seen – for year$.
    Mr. Ben … aka: $ir $traight $hooter!

    + thee “True Believer$” #1 $pice:
    greed·y (grē′dē)
    adj. greed·i·er, greed·i·est

    Greedine$$, n.
    1. Having or $howing a $trong or exce$$ive de$ire to acquire money or po$$ess thing$, e$pecially wi$hing to posse$$ more than what one need$ or de$erve$.

  12. CEO of Redfin had some interesting things to day about the housing market in 2019:

    Q: What’s it going to take to fix this shortage in affordable housing?

    A: I view much of our economic policy as a way to defend the wealth of baby boomers. People get up in arms about protecting the value of their home and making sure that it increases. When the city wants to increase density, everybody living in a single-family home, who is usually between the ages of 40 and 65, absolutely freaks out and prevents that construction. And in some ways that’s just acting as a cartel where the people who hold the good prevent more supply of that good from reaching the market and maintain artificially high prices.

    https://abcnews.go.com/Business/wireStory/redfin-ceo-glenn-kelman-talks-2019-housing-trends-60075979

    1. The “I got mine, now f**k the rest” attitudes of tens of millions of older Americans is disgusting.

      1. It’s disgusting, but also rational and predictable. There is no negative consequence to preventing building and a huge incentive to discourage it if it will impact what is your single greatest asset. For many older Americans, the bulk of their net worth is tied to their house. So they will fight tooth and nail to prevent anything that might put a ding in their retirement plan.

        On a more rational note, the way to prevent this is to tie the two fates together. If the housing have’s are discouraging building and acting like a cartel, policy makers need to couple that with some form of automatic property tax increase diverted to social housing or assistance programs. The system has to be re-engineered so that it is more painful to discourage affordable housing building than to prevent it. Until this happens, we can only expect economic actors to dig in. Until of course they move to an assisted living center or nursing home. But until that point, they will retrofit their place and age in place. And then there will be a tipping point at which a flood of old homes will come onto the market.

        1. I meant to say “so that it is more painful to discourage affordable house building than to allow it.” We need more carrots towards affordable housing construction and more sticks. The entire initiative is much broader though and would involves tighter regs on housing finance (higher down payments, loan value to median income caps, 2nd home exclusions, reduction of easy monetary policy, etc.)

        2. The lack of affordable housing has NOTHING to do with a lack of supply. It has to do with the bubble and the fact that all of the affordable housing has ratcheted up in price where people can’t afford it. That’s the distortion of housing bubbles.

          You’ve been reading this blog long enough to understand what Ben has been posting FOREVER. There is a PRICE bubble. You can’t build yourself out of it.

          1. Most readers on this blog agree there is a bubble. I am only pointing out that the cause of said bubble is multifactorial, and I believe it does include restrictive zoning which prohibits development in urban areas with high paid jobs. An HBBer posted the Reason clip yesterday of San Francisco where the coin-op laundry mat has spent 4 years trying to develop only to get squashed by Calle 24, a Latino anti-gentrification group. This was a good example highlighting the anti-Nimbyism stance that contributes to the sky-high costs in San Francisco. It’s not the only cause, but it is part of it.

            It is difficult to say to what extent each factor plays in promoting the bubble and the price increase. We have foreign money coming into coastal markets and changes in the debt-to-income standards for FHA loans. And we have easy monetary policy. We also have non-bank lenders, HGTV propaganda, and a tax code that still gives the mortgage interest deduction. All of these play a role. I’m not saying building is the only solution, but it is part of a solution. And I’m not talking about building luxury. If a builder can build affordable, then it will put downward pressure on the unaffordable.

            The Austrian school would say that the boom creates too much in the wrong places. Too much would be too big, or too expensive. I would argue that this is what has happened. We have too many luxury condos and luxury apartment buildings because affordable can’t be created in our current circumstances since input costs are too high.

            You posit that you can’t build out of a bubble. I think that is could be true IF we are willing and able to reverse some bubble conditions, such as reducing almost non-existent regs for average joe to get stupid amounts of funding to buy an overpriced houses. Curtailing foreign money would be another way to prick the bubble. So would raising interest rates.

      2. When the city wants to increase density

        What I have seen of this is pure crap stacked up and shared sides while there is plenty of land surrounding. It is crap, because that’s what makes builders profits. And no, it’s not so affordable. Hatred of the older generation might blind some to things they might actually know about

        1. I wouldn’t describe my feelings as hatred, just an acknowledgement that there is an inter-generational power struggle. As you say, I don’t think any house buyer wants buy housing of any type (e.g. townhouse, condo, or detached home) comprised of shoddy workmanship. I don’t think it necessarily follows that density automatically means poorer quality. I’ve seen plenty of slap-dash McMansions that are shoddy.

          It’s common for people to rail against condos on this blog, but our first place was a condo for $126k and it was lovely. Our total utility bill was about $15/month. HOA was steep though at about $230, but that included parking, landscaping, snow removal, and high speed internet. I would go back to that condo if I could.

          You are on the sane side and by staying out of the mania and eschewing debt. I respect that, but you are also kind of an outlier.

        2. Apt and condo towers surrounded by empty land is one of the worst ways to house people. Better to have some streets of small row homes with tiny but private yards.

          1. This is preference. In a desert though everyone trying to have their own private lawn turns out to be an arms race in the burbs and ends up further straining limited water.

      3. As opposed to your view (perhaps) and many others:
        “I want MINE and F**k those old people who already got theirs (like I really want to do).”

    2. “freaks out and prevents that construction.”

      They do? Aren’t most cities on pace for record highs in new unit construction? How many years of supply of empty high-density airboxes do we have in Miami again? NYC? SF? DC? Not building enough is not the problem.

      1. I posted before I saw your comment. Exactly. This has nothing to do with a lack of supply, as Ben has shown for years upon years.

    1. remember – most of the characterization of the real-estate markets comes from the industry groups and the folks that own the realestate brokers. They are so embedded in the internal industry mis-characterizations that they either on purpose — or on confusion — repeat the half (or less) truth.

      ——–
      from a link:
      Contrary to popular belief, most real estate agents sell only 4 to 6 homes a year. The saying is 20 percent of the agents do 80 percent of the business. In the example above, an agent who comprises part of the 80 percent category (that wins 20 percent of the business) would gross about $18,000 a year. Agents don’t generally go into the business wanting to be part of that 80 percent, but that’s often the stark reality.

      How Much Do Top Producer Real Estate Agents Earn?
      Top producers earn a lot more than the average real estate agent. Each real estate office sets its own standards for top producers, but it’s probably safe to say that a top producer would need to sell at least one home a month to qualify. Top Producers make around $100,000 a year to start. Mega-stars earn $500,000 per year and up.

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