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Are We In Another Housing Bubble?

A report from the Seattle Times in Washington. “After having the hottest housing market in the country for two years, Seattle home sales have cooled. This is annoying news for people who paid way over the asking price for their house purchases at the height of the market a few months ago. It is also a disappointment for folks with homes to sell right now. Instead of having the price jacked up in a frenzied bidding war between potential buyers, sellers are cutting the asking price to lure in the diminished number of house hunters.”

“This is good news for homebuyers, right? The answer is yes — with a big asterisk. From 2012 to last spring, prices shot up 136 percent. The 11 percent drop since then is significant, but it still leaves the median sale price of a house in King County at $644,000.”

The Tampa Bay Times in Florida. “Will we see the same trends as in 2018, when prices rose due to a relatively scant supply of available homes? To get some answers, we spoke with four experts.”

“Daren Blomquist, senior vice president of ATTOM Data Solutions: ‘I see Tampa Bay shaping up similar to what we’re seeing in many markets, which is a cooling trend in 2019 with the rate of price appreciation slowing down. ..We saw a string of many months that were double digit going all the way back to 2015.'”

“‘The Tampa Bay market is still outperforming the national market and many others similarly sized including Phoenix, Charlotte, Austin and Nashville but we’re still seeing that trend toward slowing appreciation, which I think is a good thing. We were seeing unsustainable price growth over the last six years, and if it continued we’d be talking about, ‘Are we in another housing bubble?’ What really stands out is not just the price increase but that the increase in wages has not kept up. (Since 2012, home prices have risen 120 percent in Hillsborough County while wages are up 9 percent. In Pinellas, prices are up 110 percent versus 10 percent for wages.)'”

“Charles Richardson, regional senior vice president of West Central Florida, Coldwell Banker Residential Real Estate: ‘I’m relatively optimistic (about 2019). We still have excellent pricing when you compare our market to other markets around Florida and the country… That said, inventory is growing right now. There is a little bit of a shift from everything selling in a week to people being very judicious with their evaluations of pricing.'”

From Nevada Business. “Nevada’s luxury home market is growing. New residents flocking to our state bring with them equity from cities with more expensive housing markets and unfriendly tax environments, and find they can buy a whole lot more house for their money.”

“An important factor buyers need to understand is, it’s an expensive market, said James Pickett, president, Montreux Homeowners Association. ‘A lot of people have sticker shock when coming into Reno, Las Vegas, Phoenix or Sacramento. The people who don’t are coming from the Bay Area or Orange County.'”

“The Reno luxury home market may see a slight leveling off in 2019. ‘That’s not a bad thing,’ said Pickett. ‘This past summer it was kind of a frenzy that anything that would come on the market would sell and now subcontractors are calling back saying they’re ready to bid on projects where three months ago they couldn’t even bid they were so busy.'”

“‘With luxury homes, the higher the price point, the less people are using financing to get into $2 and $3 million and up, said Heidi Kasama of Nevada Realtors . Many of those homes are purchased with all cash, so [financing] is no longer an issue. But $1 to $2 million, those are getting loans on the properties and lending standards have tightened.'”

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This Post Has 31 Comments

  1. ‘A lot of people have sticker shock…The people who don’t are coming from the Bay Area or Orange County’

    That’s right, they see these people as suckers.

    ‘This past summer it was kind of a frenzy that anything that would come on the market would sell and now subcontractors are calling back saying they’re ready to bid on projects where three months ago they couldn’t even bid they were so busy’

    But…labor shortage?

    ‘We saw a string of many months that were double digit going all the way back to 2015’

    There’s your bubble Daren.

    1. BTW, an old truth will come back to haunt Tahoe. These are second (or third) shacks. No one up there can earn enough locally to buy a shack. And this is basically speculation, as there are a number of much cheaper ways to visit. It all went down in flames before and it will again.

      1. Many years ago second (vacation) homes around Lake Tahoe became popular because of tax write-offs. Later… another administration came along and changed the tax code. The bottom fell out of the that market in one fell swoop! The typical family is some strong contractor guy with a 4×4 pickup truck and his stacked girlfriend who works at the casinos, both keeping an eye peeled for an angle.

  2. This is annoying news for people who paid way over the asking price for their house purchases at the height of the market a few months ago. It is also a disappointment for folks with homes to sell right now.

    “Annoying” and “disappointment” are likely understatements for what most FBs are experiencing. I’m guessing “involuntary bowel movement” would be closer to the mark.

      1. Underwater loanowners who “bought” in 2018 are sh*tting the bed over their incalculable losses.

  3. The Sydney Opal Tower saga is still going…

    ICYMI: “Opal Tower, which started taking occupants in August, was evacuated on Christmas Eve when cracks opened up in a concrete panel on the 10th floor, accompanied by banging noises in the building. While most residents were soon allowed to return, late last week Icon moved all inhabitants to nearby hotels and other accommodation, so as to investigate the whole building and start remedial work.”

    Now: “The NSW government, which initially tried to dodge any responsibility for the project despite having fast-tracked it away from council supervision by declaring it a state-significant development…”

    In other words, south Australia was SO desperately short of airboxes, the government decided to speed things up by looking the other way. Trusting the developers and construction companies to do everything correctly without any checks.

    “In a statement on Monday, WSP said its engineers had found two more sets of cracks, on the fourth floor, and had installed more steel support struts as a precautionary measure… With engineers also ruling out an inherent fault in the prefabricated concrete panels that cracked in the architectural “slots” for gardens, the problem is now thought to relate either to ­errors in construction, or the ­design of the building.”

    https://www.theaustralian.com.au/national-affairs/state-politics/blame-game-ignites-over-sydneys-opal-tower/news-story/aad02c9bbf3cfe02cd0a6eac43757a0e

    1. the problem is now thought to relate either to ­errors in construction, or the ­design of the building.”

      That’s got to be comforting for all the speculators and FBs who overpaid for these shoddily-constructed skyboxes. The blame game will likely reveal the extent to which policymakers, regulators, and enforcers were all in bed with the REIC – just as they are here. How many Opal buildings are waiting to be uncovered in formerly “super-heated” U.S. housing markets?

  4. Regarding the CA equity locusts swarming into Nevada cities… I assume these are just speculators? There can’t be that many jobs and companies moving over from CA. Most people need a job to get the money to pay any mortgage.

    1. Same as last time. When the carnage is complete, NV will once again be a housing wasteland. When CA gets the flu, NV gets drawn and quartered, then roasted on a spit.

        1. In the meantime, rent it for half the monthly cost. Buy it later after prices crater for 75% less.

  6. “This is good news for homebuyers, right? The answer is yes — with a big asterisk. From 2012 to last spring, prices shot up 136 percent. The 11 percent drop since then is significant, but it still leaves the median sale price of a house in King County at $644,000.”

    It just goes to show how much further prices are going to fall, and how grotesquely overpriced shelter has become. RIP, Seattle/Western Washington house prices.

  7. Pent-up demand, meet pent-up death:

    “For the second year in a row, a record number of people experiencing homelessness died in the seven-county Denver metro area in 2018, according to a statewide advocacy group.

    The Colorado Coalition for the Homeless worked with local service providers and the Denver medical examiner to count 233 people who died while experiencing homelessness in the metro area between Jan. 1 and Dec. 13. The youngest person who died was 18 years old and the oldest was 73, according to the coalition’s report.”

    https://www.thedenverchannel.com/news/local-news/233-homeless-people-died-in-metro-denver-in-2018-2nd-record-setting-year-in-a-row-advocates-say

    1. So.. are these people who didn’t have any family and/or friends? …

      Or…

      Are they people who became addicts and/or committed enough crime that family and/or friends disowned them?

        1. Study: Opioids are killing more children and teens, too
          Posted 10:24 am, December 28, 2018, by CNN Wire, Updated at 10:25AM, December 28, 2018

          WASHINGTON — A growing number of children and adolescents in the United States are dying from opioid poisonings, a study shows.

          Nearly 9,000 pediatric deaths were attributed to opioids from 1999 through 2016, according to a report published Friday in the journal JAMA Network Open.

          During that 18-year span, the mortality rate for youth because of opioid poisonings nearly tripled.

          “What began more than 2 decades ago as a public health problem primarily among young and middle-aged white males is now an epidemic of prescription and illicit opioid abuse that is taking a toll on all segments of US society, including the pediatric population,” researchers wrote.

          “Millions of children and adolescents are now routinely exposed in their homes, schools and communities to these potent and addictive drugs.”
          …

          1. It’s awful when it spins out of control, but what they’re putting people in pain through to get these drugs is wrong.

          2. “Millions of children and adolescents are now routinely exposed in their homes, schools and communities to these potent and addictive drugs.”

            I have some difficulty believing the numbers are in the millions, given how incredibly difficult it has become for people in legitimate pain to get anything stronger than OTC meds. Recently had someone we know go to the doctor in deep pain, confirmed she had a kidney stone [not the first one for her or even with that doc], and be given ibuprofen. A OTC med that does all of diddle and squat for her kidney stone.

            Someone is lying big time, and ‘children’ today can get a hold of pot, or other items outside of ‘normal’ channels much easier than opioids. I’d like ‘follow the money’ it were possible to find out the real motivation is.

          3. Very funny movie clip, though nowhere I can find, nor do I remember where it was from – Fred Willard saying that after having a gallstone attack he decided to go back to church.

          4. Recently had someone we know go to the doctor in deep pain, confirmed she had a kidney stone [not the first one for her or even with that doc], and be given ibuprofen. A OTC med that does all of diddle and squat for her kidney stone.
            I too have had kidney stones. Decades ago I received IV morphine for the pain, didn’t help one bit. For recurrent attacks, acetaminophen, naproxyn, super strong coffee and a couple of teaspoons of milk of magnesia along with a lot of fluids does the trick.
            Everyone’s mileage varies.

  8. “Appreciation slowing”

    The current battlecry of the industry. Of course, these folks would anger their constituents if they spoke straight because they would think that one negative comment could shift public opinion.

    Clearly there is an unwritten rule that you do not make negative statements to the press. This is why so much spin is applied when commenting.

    It will be done until the facts can no longer be spun. Then it will be “great news for buyers…..”

    They will turn quickly on sellers when being pro buyer facilitates comissions. That is always the end loyalty. Chameleon like and just looks rediculous. Another couple months and the YOY data will look disastrous (one year after peak) and it will then cease to be referenced other than by Shiller.

    1. Mathematically speaking, appreciation could “keep slowing” even after prices have started to fall. For instance, if prices fell by 10 percent in year one and 20 percent in year two, that would be “slowing appreciation” in the sense of a negative second time derivative of the price level.

      I’m quite certain this is what the MSM-quoted real estate experts had in mind, in the interest of staying consistent with the facts.

      1. Not sure if the term “appreciation” could be used at all, but then again, when did that ever stop them!

        Looking over MLS data tonight I noticed in my favorite island zip code, a number of price reductions logged just today. Some are absurd such as 10k off a 700k property, but others more realistic such as 50k off of a 640k property. Some high lux properties with several hundred k’s off.

        Similar to what I saw in 2006 there was a fairly long standoff where sales were nearly non existent but list prices did not drop. Then things started to move. This appears to be happening again in our area. Would love to have a,crystal ball to see list prices in 6 months or 12 months from now. So far, events are repeating pretty close. Getting ready to party like it’s 1999. No, actually like it’s 2007 to 8. Also getting ready to make contrary type investments. I.e. precious metals, streaming companies, and miners.

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