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The Longer They Linger On The Market, The More Their Prices Come Down

A report from the Orange County Register in California. “Real estate agents report some of their clients have decided to wait it out. Home prices are due to go back down, those buyers say. This doesn’t mean the sky is falling, said real estate consultant Pat Veling, president of Brea-based Real Data Strategies. ‘The market is correcting to a more normal condition,’ Veling said. ‘The problem is, we haven’t seen a normal market in so long, people don’t know what it looks like.'”

“And yes, a recession could be on the horizon, but not before 2020, most economists agree. ‘The very idea of asking when a recession is going to occur is silly,’ said economist Christopher Thornberg. ‘You need to ask why (it would occur). If you don’t have a why, no recession.'”

The Wall Street Journal. “Lindsey Gudger, a real-estate agent in Seattle, which has experienced one of the country’s sharpest drops in buyer demand in recent months, said many clients are using stock in locally based tech companies like Amazon to help them come up with down-payment money to buy a home, so recent market declines have had an outsize impact on their appetite.”

“‘We have Amazon employees that say, ‘I feel 25% to 30% poorer than I did six months ago. I’m going to pause this’ home search, he said.”

From Curbed Atlanta in Georgia. “Even as reports claim Atlanta’s housing inventory is shrinking—and at above-list prices—some properties across the intown landscape just can’t seem to land a solid offer. Take these five listings: All are in sought-after locations and offer modern updates. And, the longer they linger on the market, the more their prices come down. At what point do they finally garner a committed buyer?”

The Orange Observer. “Winter Park continues to see its niche market thrive, according to experts and local real-estate agents — even if it isn’t thriving as much as last year. But the market still remains healthy, and it’s not a bad sign to see things slow down slightly, Orlando Regional REALTOR Association President Jeffrey Fagan said.”

“‘Everything’s in context — if you look at the growth that occurred in 2015, 2016 and 2017 in price and units being sold, we necessarily have to slow down a little bit,’ Fagan said. ‘A thriving recovery is one that’s more balanced as opposed to something skyrocketing. If something skyrockets too fast or too long, it suppresses the total long-range growth.'”

The Mountain Xpress on North Carolina. “Like an airplane leveling off after a rapid ascent, local Realtors believe the strong upward climb in property values in the Asheville housing market could be giving way to a more relaxed rate of growth.”

“‘I think that is a trend we’re going to see continue as the appreciation rates are cooling a little bit, says Beverly-Hanks & Associates President Neal Hanks. ‘But I don’t think they’re going to go negative.'”

“At the moment, David Bluth, the owner of the BLUEBLAZE Real Estate Group, is seeing a gradual increase in housing inventory, but demand is still strong enough to sustain healthy growth in the market for homes between $250,000 and $500,000. Bluth believes demand for homes in the range of $1 million to $2.5 million, however, could diminish. ‘There’s just not much inventory turn in that market,’ he says.”

“Bluth thinks the moderation of Asheville property values could be tied to changes in the area’s feeder markets. ‘Florida is one of our big feeder markets and as Florida has slowed down, and Floridians have struggled a little bit with their house sales, then they tend not to purchase here,’ Bluth says.”

“Bluth encourages his clients to negotiate with forethought about how much the value of their home will change in the years after the purchase. ‘You don’t want to overpay in this environment,’ he says.”

This Post Has 41 Comments
  1. ‘negotiate with forethought about how much the value of their home will change in the years after the purchase. ‘You don’t want to overpay in this environment’

    As opposed to when it’s “to the moon Alice”, when you got to roll with it.

    1. Like an airplane leveling off after a rapid ascent, local Realtors believe…

      As if houses have wings! Actually, they are more like a brick shot into the air. There will be no leveling off Mr. Hanks.

  2. Good – i remember in the doc-com boom that folks were doing things —- like taking out lines of credit (through Morgan Stanley and others) against their stock options (because obviously it was going to go up forever), to make downpayments. A bunch of folks lost almost everything

    At least now – they are stopping their searches and will re-group.
    “‘We have Amazon employees that say, ‘I feel 25% to 30% poorer than I did six months ago. I’m going to pause this’ home search, he said.”

  3. just saw a wierd advert in the coffee room in a big building on the microsoft campus

    Rent a room for as little as $950 in a very large room. They called out that it was 40k sq ft on 5 acres. They actually had a picture of the house – and it really a mansion.

    Did someone run out of money? is the fmail.y looking for more income and dividing out half the house to rent? what the hell – thus must be a minimum of $10M house

      1. I smell cash flow problems…

        but 950 a month on a place that large can’t amount to much…

        very odd…

        1. I wonder if it is this type of business model:

          There are now some startups that are looking to divvy up rooms in houses and rent them out to strangers. These companies kind of perform a match-making service. I can see this being useful in some cases. I had a prospect in my leasing office today who was inquiring about an individual room (as opposed to an entire contract on a 1-bd or 2-bd).

    1. Seeing lots of this lately in the PNW Region. Most recent one was of a mansion owner and his wife renting out several rooms in their house with flexible arrangements – each room w/priviate bath and then the set up a shared TV Room w/shared kitchen use. Rents range from 800-950.

      Then in other suburban areas, rooms w/bath do go for 800-950 where they just put a little table in the corner w/a microwave and tell them they have to do the dishes in the bathroom sink. I know of a couple retirees who are paying it- doing it out of pure desperation. They do get internet, garbage, electricity inlucded so it’s the best deal they can find for some if they want to maintain any privacy and live in a safe area within walking distance to work, bus lines, etc.

      1. Again, I don’t see this as the worst thing. To me it is capitalism at in action: it’s putting to use excess capacity and making efficient use of an idle asset. There is so much housing stock already in play in the form of empty bedrooms scattered all across the United States. My brother is a perfect example. They have two kids and an enormous house with a huge basement that they hardly use. Their property tax for a year is a bit higher than our entire rent for the year!

        1. The downside is the loss of privacy and/or what happens when your tenant decides to be a jerk or take liberties with the rest of the house.

          We have had people stay with us for 1-4 months a couple times the last few years, and quickly found that even good friends can get entitled and be really irritating.

  4. Sad day

    High court won’t take case of Kennedy cousin Michael Skakel
    Staff and wire reports Updated 11:59 am EST, Monday, January 7, 2019

    WASHINGTON — The Supreme Court announced Monday that it is leaving in place a decision that vacated a murder conviction against Kennedy cousin Michael Skakel.

    Skakel was convicted in 2002 of the 1975 bludgeoning death of Martha Moxley, who lived across the street from the Skakel family in Greenwich, Connecticut, and whose body was found in her family’s backyard. Both Skakel and Moxley were 15 at the time of her death.

    John Breunig: Judging the judges in Skakel case
    Published 12:00 am EST, Sunday, January 8, 2017

    The other Skakel

    The three judges use the word “compelling” to describe the argument that Tommy could have killed Martha.

    They seem unable to resist the catnip to play detective as they circle around Tommy’s behavior in the days around Oct. 30, 1975. Tommy himself reportedly described leaving Martha with her pants around her knees after they engaged in sexual activity, the way her body was found on Halloween.

    They also point to Tommy’s “history of mental instability and violence.”

    1. Sad day

      Maybe so. However, and I have lived this, everyone might be convinced personally of a person’s guilt, but if all the pieces of evidence and all of the statements do not form a solid without holes, our system of justice is not supposed to convict.

  5. Since the Santa Claus rally was late in coming, are you hoping for the January effect to make up for your 2018 stock market losses?

    1. Since the bottom is in, and it’s off to the races for another bull market, are you going all in?

      “For anyone who owns stocks, the holiday season was pretty grim. But that’s behind us, and now it’s time to deploy the rest of any buying power you may have. Or put on a little margin if that’s the only way to increase exposure to stocks at this point.

      The reason: The bottom is in, and 2019 will bring a 15% rally in the S&P 500.”

      1. I don’t trust Wall Street crony capitalism enough to go all in, especially since we were supposedly in a bear market up until just last week. But I also don’t trust the Fed’s inflation control program, hence try to maintain some level of exposure to stocks (but not much in 2018!).

      2. “The bottom is in, and 2019 will bring a 15% rally in the S&P 500.”

        That title implies some sort of rigging… a la “Your ash goes down in the fifth.”

  6. ‘The very idea of asking when a recession is going to occur is silly,’ said economist Christopher Thornberg. ‘You need to ask why (it would occur). If you don’t have a why, no recession.’

    You’re a funny guy Chris. I’ve got about 10 “whys” in my back pocket and so do you. You just hope your audience can’t think of any…

    1. What was the “why” behind the Great Recession, which started in December 2007 but wasn’t officially announced until late 2008? Can’t say it was due to the mortgage meltdown, because that situation was not widely recognized or acknowledged by December 2007.

      1. Is the “why” behind an avalanche the months worth of accumulated snow, or the last flake that falls? To me it sounds like Chris is looking for a “last flake” or “loud noise” excuse to feed the masses.

        I’d say the “why” in 2008 was all the accumulated debt combined with Fed tightening. Which would be the same as today.

          1. I’m sure Alexandria Ocasio-Cortez panties are soaking wet with this debt “might not be so bad” pronouncement.

      2. Watch “The Big Short” on NFLX – he knew…he warned, no body listened… I forget his name – shame on me – but worth a watch if you have not seen. If you have, perhaps for all of us, now is the time to watch it again.

    2. You’re a funny guy Chris.

      Indeed. Things never happen in the real world without first being explained in our minds.

  7. “Even in this current housing correction,” Doti said, “buying a home is still a good long-run investment.”

    how long I wonder 20 years ?

      1. Ahh, these are the classic tram-shacks…the ecru, beige, blue cheaply built, all almost touching each other, they all look the same…these are the first ones to rapidly decline and sit on the market unsold forever.

    1. nervous Donald?

      I expect not, JMO. I do find it ironic that during the last government shutdown the press vilified the resistors in Congress and this time not at all.

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