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You Have To Set Expectations

A press release from Boston Agent Magazine in Massachusetts. “The start of a new calendar year is welcomed with parties, well-wishing and an eye toward new beginnings. But in the business and finance world, most people rang in 2019 fixated on endings. The business cycle, the bull market, home sales, price growth — so many economic indicators and financial models ended 2018 on a sour note. ‘We are going to see a very good market in 2019 because sellers have been humbled,’ broker Anthony Lamacchia told Boston Agent Magazine.”

“From Joshua Stephens’ perspective, a sense of change was in the air as soon as July. ‘By then, buyers were realizing they had the upper hand,’ he said. More listings were staying on the market for longer periods, eventually facing price cuts. Within a few months, ‘unless you have a pristine property, you’re not going to get a lot of offers,’ said Stephens, vice president at Berkshire Hathaway HomeServices Warren Residential, describing the state of things by late fall.”

From Atlanta Agent Magazine in Georgia. “Though it may feel remote from the day-to-day pressures of running a real estate business, it’s vital that agents and brokers watch the economy carefully. Slowing sales indicate to Compass agent Chrissie Kallio that the housing market in the Atlanta area and across the country is evening out after several years of rapid growth.”

“‘While we may see some shifts in the economy bringing change in some of the more outlying areas, I think the heart of Atlanta and in-town Atlanta markets will continue to have a good year,’ Kallio says. ‘It’s just going to be more realistic here in the sense that everything has been elevated over the last four to five years. Actually, you reach point where you can’t continue to go up any further. I feel like we reached that point; it’s just a natural stabilization of the market.'”

“Kellios expects a slower market may force builders to focus on quality rather than volume. ‘The market has been so skewed in one direction for so long and buyers are tiring of it,’ she says. ‘Sellers don’t think they have to do any work and investors are building crappy products.'”

From Chicago Agent Magazine in Illinois. “Though it may feel remote from the day-to-day pressures of running a real estate business, the overall economy plays a vital role in the local residential market. To Geoff Smith, executive director of the Institute of Housing Studies at DePaul University, the bifurcation of the economy into high- and low-income households is a problem for the real estate industry.”

“‘The way the market has been functioning lately, there has been a lot of new development at the high end of the market’ he says. ‘That’s produced perhaps an oversupply of really expensive housing and a shortage of housing at the lower and middle tiers of the market.'”

From Miami Agent Magazine in Florida. “The start of a new calendar year is welcomed with parties, well-wishing and an eye toward new beginnings. ‘When you look at the numbers, you might conclude it’s a buyer’s market, but Miami really has micro-markets,’ said Sladja Stantic, luxury broker for ONE Sotheby’s International Realty in Miami Beach. ‘In 2019, I’m hoping to be more direct with buyers but especially sellers. A lot of them think appreciation will keep going up and up, but that’s not guaranteed. You have to set expectations.'”

“‘[In 2018] buyers were in waiting mode, there was no sense of urgency,’ Stantic said. ‘Even with a property that is priced well, people were overly cautious. I’m hoping buyers are more confident to move faster. That comes as a result of sellers being more in line on pricing.'”

From Houston Agent Magazine in Texas. “Though it may feel removed from the day-to-day pressures of running a real estate business, you can’t ignore the economy. James Gaines, chief economist at the Real Estate Center at Texas A&M University, does not expect a slower national economy to translate into a full-blown recession.”

“‘Nobody’s anticipating a national recession,’ Gaines says.”

“Sherry Campbell of Energy Realty has seen the recent downturn in oil prices affect her business in Houston’s Energy Corridor. ‘I think that our buyers have become spoiled, because at 3 percent they can afford a lot more house,’ Campbell says. ‘At 4 percent or 5 percent their affordability rate drops. They’re going to have to get used to that. Maybe they can’t qualify for the $500,000 house and have to buy the $400,000 house because payments are higher. We have to see some adjustments with that, because I think it’s kept some buyers away his year since they’re not able to get what they were expecting to buy.'”

“Wendy Cline of Wendy Cline Properties, suspects that a higher cost of borrowing may cause some buyers to put off making a purchase. ‘It will give some of the buyers who are on the fence a reason to stay on the fence and not go ahead and consummate a purchase,’ Cline says of the higher cost of borrowing. ‘We’re also seeing that the higher priced properties like $700,000 and up stand to see some extended shelf life and days on market.'”

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This Post Has 35 Comments

    2. “Airbnb to start building homes.”

      Unfu*kingbelievable. Airbnb is now a builder? At the market peak? And Zillow is flipping homes? Heckuva job, Obama, Bernanke and Yellen. Heckuva job making housing unaffordable for hundreds of millions of people.

    3. What AirBnB is proposing is no different from a rooming house, or a bed-and-breakfast. Or any old McMansion with an in-law suite (either to rent out, or for the owner to live in). AirBnB just wants to circumvent the regs and zoning needed for commercial rentals.

      On a broader scale, I wonder about the fate of this sharing economy. Is this really going to last indefinitely, or will people eventually want to return to private property?

      1. It doesnt matter to me. Building or Sharing… this just add supply to the market which in the end will contribute to popping of the bubble.

      2. What we have is a situation where all the money, fake and otherwise, is running into the “needs” sectors to try to extract every last penny from people through things they cannot do without – shelter, food, energy, healthcare, etc. How long can it last? Until the entire system fails, country and all.

        1. It’s lasted for at least a dozen years for housing. I was harping on “needs” industries back during the 2004 run-up.

      3. will people eventually want to return to private property?

        Of course. They never stopped wanting to. But what you want and what you can afford just keep getting farther apart…so you make do.

        2. Carl, you’re right. But instead of despairing of losing private property, the media is glorifying it to soften the blow. I’m convinced that “side hustle” and “sharing” and “connected” are just distracting euphemisms for “broke” and “can’t buy anything” and “selling your info because it’s all you got.”

          (it’s a lot like how overweight females are now “real women.” )

          1. I don’t know, everyone seems to be down on this idea. But I kind of like it. NYT did a feature a couple of months ago on how the new dream home (e.g. Next Gen Home) was one that you never had to leave. It had “flex” rooms and dedicated spaces that could be partitioned for in-laws, a college student, or a short-term rental. My sister and her husband renovated their home so they could rent the downstairs. It makes a lot of sense to put idle space to work, but most people’s home is not conducive to the privacy they would want to do that. I’m on board with new home designs and utilizing unused space.

      4. I think it will all depend on how much money the make relative the pain in the ars it is to manage. if you may a firm to do it, it’s still a pain in the ars and many don’t want the headache of some idiot calling them every day for: my light bulb…not bulbs or electrical…but the bulb is out, my dog dropped a chew toy in the toilet and now it’s overflowing…what do I do…my dishwasher is broken…my garbage disposal won’t work…on and on and on. Or you get complaints from the neighbors about your renters. PAIN!.

  2. ‘Nobody’s anticipating a national recession,’ Gaines says’

    Does he think this statement is more serious if he says “nobody”?

    Notice that this is the one economist that they managed to rope into this parade of propaganda. What a coincidence that it all hit the web at the same time!

    1. The recession genie is back in the bottle for now, cork in place. Now might be a good time to load up on some puts, if you favor that sort of investment strategy.

      Dow Gains 370 Points as Recession Fears Recede
      By Ben Levisohn
      Jan. 4, 2019 7:10 p.m. ET
      Dow Gains 370 Points as Recession Fears Recede
      Photograph by Ian Dooley

      The market is acting like a teenager, responding to every rumor about their crushes with pure emotion. Is it finally ready to grow up?
      …

    1. Opinion: Why the housing and mortgage crisis is far from over
      By Keith Jurow
      Published: Jan 7, 2019 8:55 a.m. ET
      Here’s the shocking truth about mortgage deadbeats
      MARK RALSTON/AFP/Getty Images

      With major data providers reporting that mortgage delinquencies continue to decline, Wall Street and the pundits are more convinced than ever that the mortgage crisis is dead and buried.

      The enormous delinquency problem in the New York City metro area shows why I’m convinced that the U.S. housing and mortgage crisis is far from over, and reveals an ugly truth about mortgage deadbeats. Moreover, New York City is not the only city in this weakened position.
      …

      1. Quite a conclusion: some 225,000 deadbeat “homeowners” are seriously behind or perhaps not even paying. But still living in the home.

        If that number is even close to accurate, what kind of screwed-up system can tolerate that? If the loans were on the books of banks, they would have to foreclose and liquidate the property to clear the loan. Instead, I guess these loans are in MBS’s or similar cloudy arrangements?

        1. It’s a system which privatizes the profits and socializes the losses. It’s working very well for the moneyed special interests.

          “It’s a big club, and you ain’t in it.”

          “The table is tilted, folks, the game is rigged.”

          -George Carlin

      2. Property taxes pay for the K12 schools, state colleges and universities. It’s difficult to imagine any state not moving forward to collect these taxes. So assuming that the taxes are being paid then the legal owner of the property should be clear. Am I missing something?

      3. to relive our county from pension they would have to double taxes for a year
        or? 7% bump for 10 years
        not sure the rule of 72 applies but can’t be far off.
        I’m betting your county is worse-er

  4. I just love some press outlets tiptoing. Today on CNBC an article suggesting that surveyed people think real estate may not climb as fast as previous.

    They did not appear to ask their surveyed individuals if they believe re will go down. Still a taboo in writing and reporting I guess. They will hold on to thier YOY comparisons until that doesn’t work anymore, then it looks like new strategy will be to ask others their opinions.

    Can’t keep dancing forever but they are burning the floor up pretty good for now.

  5. “‘Sellers don’t think they have to do any work and investors are building crappy products.’”

    NOW SHE TELLS US!

    1. Re the article about Manhattan, and specifically the photo that accompanies it…wasn’t the West Side Highway supposed to have already been under water?

    1. Think of buying T-bills as a similar investing srtategy to hiding your money under the mattress, as an alternative to gambling on risk assets. Falling rates are consistent with increased demand for, and purchases of, T-bills.

    2. Treasury yields bounce as fresh round of U.S.-China trade talks begin
      By Sunny Oh
      Published: Jan 7, 2019 3:48 p.m. ET

      Treasury yields rose Monday, following last week’s volatile trading, as investors watched for progress in renewed trade talks between U.S. and Chinese officials.

      The 10-year Treasury note yield (TMUBMUSD10Y, +1.03%) rose 2.3 basis points to 2.684%, from an intraday low of 2.634%. The 2-year note yield (TMUBMUSD02Y, +1.80%) advanced 3.6 basis points to 2.524%, while the 30-year bond yield (TMUBMUSD30Y, +2.98%) was mostly unchanged at 2.977%. Bond prices move inversely to yields.
      …

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