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Many Of Those Who Overpaid Were Having Buyers’ Remorse

A report from the Journal Times in Wisconsin. “Anyone who tried to sell or buy a home last year knew the residential real estate market was white hot. ‘Everything sold within hours or days,’ said Jessica Smith, former president of the Racine Board of Realtors. But 2018’s torrid buying spree was an anomaly, Smith said confidently. By November, the market had softened. People were having home inspections performed and requiring repairs — or they would walk away.”

“Many of those who overpaid were having buyers’ remorse, Smith continued, and some of those purchases had led to foreclosures or short sales. The same phenomena had played out on the east and west coasts about a year earlier, she said. ‘I don’t expect to have the harried buying again,’ Smith said. ‘The market’s learned a lesson.'”

“‘With that frenetic pace, lenders were understaffed; it would take two to three months to assess properties for sales,’ John Crimmings, First Weber Group vice president, told The Journal Times. ‘The first half of 2018, (we had) a very robust real estate market nationwide,’ he said. ‘Then it started to slow down in some of the stronger markets nationally: West Coast and Southwest.'”

The Arizona Republic. “Buyers holding out until metro Phoenix home prices begin to plummet aren’t likely to become homeowners this year. Home values will not fall as they did during the real estate bust of 2008-11, real-estate analysts predict, looking at the numbers and not crystal balls.”

“‘The supply of homes for sale increased, and sales slowed during the last three months of 2018,’ said Tina Tamboer, senior housing analyst with the Cromford Repor. ‘But nothing in the current data shows a market crash coming for Phoenix.'”

“She said it’s still a sellers’ market, but Valley homeowners shouldn’t expect the steep annual price increases we’ve seen during each of the past few years. Home prices recovered from the crash last summer to reach $268,000 and then slipped back down to $262,000 this fall.”

“‘I have clients who want to sell because they think prices will really fall this year,’ said Ali Al-Asady, a Valley agent with HomeSmart. ‘They are looking at the stock market. The fundamentals are much different in metro Phoenix’s real-estate market.'”

The Daily Commercial on Florida. “For the past several years, one of the first columns I write to kick off the New Year consists of my overall impression and predictions for the upcoming year’s local housing market. I wrote the following in December 2017: ‘For those in the housing market, 2018 will be a tough year with labor issues, higher costs and volatile material pricing. I expect the national housing market to be down three percent or less, and the Lake County housing market will probably follow suit.'”

“After this forecast, I feel like a fortune teller. What should builders, buyers and sellers in the housing market expect in 2019? There will be a shortage of qualified buyers and affordable homes in the first half, which will be eased as home sellers begin to cut asking prices.”

“For builders, this is not the year to be speculative. What you build should be sold because a stronger turndown could leave many builders in the financial cold if they have spec homes sitting in inventory. Builders should closely monitor pricing and begin looking for deals on land as property owners begin to see this housing cycle quickly wane.”

From the Tennessean. “In a twist of market dynamics, the cost of renting a three-bedroom apartment is currently cheaper than owning an average-priced single-family home in Nashville. This is also true for big cities across the country, including Los Angeles, Chicago and Houston, according to ATTOM Data Solutions.”

“‘This is just looking purely at if you wanted to purchase a home at this moment,’ said Jennifer von Pohlmann, spokeswoman for ATTOM. ‘Of course, (with home ownership) you’ll also have home equity and will get that back at some point, hopefully. But, because of rising mortgage rates and appreciating home prices, it’s more feasible to rent than to buy.'”

The Reading Eagle. “Among the many indicators of a housing market shifting to favor buyers is when the final sales price is below the home sellers’ original list price.”

“The first National Knock Deals Forecast from Knock, a home trade-in company that assists repeat home buyers by purchasing their new home and then selling their current home, found 62 percent of homes in the top 45 largest metro areas sold for an amount below their original list prices this year. More than half of those homes sold for an amount that was 2 percent or more below the initial list price.”

“The five markets where buyers found the most discounts were Miami, New Orleans, Chicago, Houston and Tampa. While the average discount from list price to sales price was 1.4 percent nationally, in Miami the discount was 4.4 percent.”

“Among the top markets where Knock anticipates buyers will find sellers dropping their prices are Miami, Houston, Chicago, Jacksonville and New Orleans.”

From Seattle PI in Washington. “For the most part Seattle’s December market activity was what you’d expect for the slowest month in real estate, but there were a few surprises. Breaking it down by area, most of the neighborhoods realized year-over-year declines in their sale prices.”

“The number of Seattle condo listings for sale subsided from November to December by 27.3% to 407 units. Though, that did reflect a 369.8% spike from a year ago. These figures are based on condo unit inventory reported to the Northwest Multiple Listing Service (NWMLS). This is not, however, reflective of the total number of condo units for sale as developers do not include all of their pre/under-construction pre-sale units in the NWMLS system. There are more properties available for purchase although they will not be completed for another 2-3 years.”

“The 157 closed condo sales wasn’t the lowest all year, though that number was down 25.2% year-over-year. With higher inventory levels and fairly stable mortgage rates, condo buyers will have more options and potentially better values in 2019 than they experienced last year. Sale prices will plateau so sellers should be prepared for a shifting market this coming year.”

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This Post Has 38 Comments

  2. ‘The number of Seattle condo listings for sale subsided from November to December by 27.3% to 407 units. Though, that did reflect a 369.8% spike from a year ago’

    From the table at the bottom, “QA/Mag” median down 17.3% YOY. “Dtwn/Bltwn” down 9.5% YOY.

    1. Don’t mind the YoY spike, look at the MoM decline during what is said to be the slowest month of the year for RE. Always got to have some twisted excuse these turds throw in…

  3. ‘Buyers holding out until metro Phoenix home prices begin to plummet aren’t likely to become homeowners this year’

    Not quite the “buy now or be priced out forever” stuff we usually see out of the Arizona republic.

    ‘I have clients who want to sell because they think prices will really fall this year’

    Don’t panic all at the same time.

    2. Ben, the local Phoenix metro Guru Staticstition, Michael Orr, seems convinced our Market in AZ is okay because of pent up demand. I wish I could find his old comments from 2006/2007 but I think I remember him doing the same thing…. insisting everything was fine according to the numbers.

      Here’s what he said January 8 – ‘We have just got a chance to study the affidavits that were filed in Maricopa County during December and they paint a much rosier picture of the housing market than we get from examining the ARMLS data. Why is this?

      new home sales are holding up far better than re-sales
      new home prices are gaining strength which is not reflected in MLS data since most new home sales are not in the MLS database
      December’s new home sales (single-family and condo / townhouse) totalled 1,544 which is up 10% from December 2017, while re-sales totalled 6,624, down 11% from a year earlier.

      The median sales price of a new home in December was $349,990, up 6.6% from a year earlier

      The median sales price of a re-sale home in December was $256,000, up 5.6% from December 2017.

      This data suggests buyers are increasingly being attracted to new homes rather than the limited choice available for re-sale. They took 19% of the market in December 2018 while only managing 16% in December 2017.

  4. Just watched a show on modern art and how high prices have skyrocketed for this art.

    Literally, art I did in grade school (same techniques) selling for millions and tens of millions.

    Another yuge bubble set to pop.

    At least there are no property taxes on art.

    *******

    ““Many of those who overpaid were having buyers’ remorse…”

      2. Valuing art like that turns it into a shadow currency that’s perfect for money laundering. Same with Rolexes and other stupidly expensive items.

    2. “…art I did in grade school (same techniques) selling for millions and tens of millions.”

      Are you making millions selling your art today?

    3. Just watched a show on modern art and how high prices have skyrocketed for this art.

      Art, muscle cars, original early Fender/Gibson guitars. It’s all connected, just for different segments of the population. And they will all become a lot cheaper if the Fed doesn’t try to QE their way out of their dilemma.

  5. ‘Everything sold within hours or days’

    In Wisconsin! Of course, this should never happen and indicates a mania. Then you get this:

    ‘Many of those who overpaid were having buyers’ remorse, Smith continued, and some of those purchases had led to foreclosures or short sales’

    1. But…but…but…

      They are victims. The banks took advantage of them. They deserve a bailout too.

      #fightingforourhome

      1. “The banks took advantage of them.”

        The best sex I ever had.

        😁

        I like it, I love it, I want some more of it.

    2. A few years ago, I read an article about home price-to-income ratios in different parts of the U.S., which was writing around 1990 (pre-bubble era). The research seemed credible…one of the coauthors was former Treasury Secretary Lawrence Summers.

      One statistic I recall was a number like 2.2 for Wisconsin. In other words

      , a typical Wisconsin family pulling down $50,000 owned a home worth $110,000.

      Does anyone know what the home price to income ratio is like today for Wisconsin? I suspect it went up alot in the bubble years.

  6. “‘I have clients who want to sell because they think prices will really fall this year,’ said Ali Al-Asady, a Valley agent with HomeSmart. ‘They are looking at the stock market. The fundamentals are much different in metro Phoenix’s real-estate market.’”

    Ali, it’s a sellers and buyers market right now or so you realturds keep preaching. Listen to your sellers and list those shacks pronto!

  8. “Many of those who overpaid were having buyers’ remorse, Smith continued, and some of those purchases had led to foreclosures or short sales.

    These idiots who overpaid are going to be a cautionary tale for a generation to come. These reckless, greedy speculators and FBs made housing unaffordable for the responsible and prudent, and they deserve every bit of what’s coming to them.

    1. “These idiots who overpaid are going to be a cautionary tale for a generation to come.”

      You would be correct if some sort of learning curve was in existence but (luckily for me 😁) there isn’t.

        1. (a snippet)

          “A pilot study published in February 2017 to measure financial fraud found that half the 2,000 respondents had fallen victim to fraud in the past year. More than one-third had fallen victim to two or more types of fraud, and almost 15 percent to four or more types of fraud.”

          😁

          “Someone may be more susceptible to repeated fraud attempts because they can’t believe it would happen again, or they’re “a little more desperate to get their money back,” says Marguerite Irene DeLiema, lead author of the study by the Stanford Center for Longevity and FINRA (Financial Industry Regulator Authority).”

          1. Dumb ’em down.

          2. Profit.

        2. “With every call, the “reload scam” victim paid out more, running up cash advances on his credit cards and even cashing out his individual retirement account. The final total paid to the scammers was about $100,000.”

          All to get a bogus “lottery prize” from overseas.

          1. It seems the common ailment suffered by these “victims” of fraud was their very own greed, combined with unconscious stupidity.

  9. Things have definitely slowed down in Phoenix. Houses under $300k seem to be doing alright but the luxury flips and aspirationally priced houses are sitting. There’s a lot sitting with double and triple digit days on market.

    One of the luxury flips I’ve kept my eye on has been on the market for about 5 months. They’ve kept pretty steady on the price. Well, a couple days ago it shows up as a new listing on Redfin with a $40k price increase. NEW POOL! Lol, these guys are doubling down. In April they’ll have had this house on their hands for a year. Thankfully, Zillow still shows the accurate price history and days on market.

    1. “aspirationally priced houses” ??

      Has there ever been anyone who said “Someday, I’ll be able to grossly overpay for a house” ?

  11. There are nearly 4x as many Seattle airboxes up for sale as there were a year ago?! Did I read that right?

    1. Seattle Condos? Yes, you read that right.

      The raw numbers are most likely lower per capita than other areas though due to the condo liability that made almost no one willing to build new condos* in the last decade so those numbers have been mostly older stock.

      * that’s changing now as new apartment buildings just being finished are being converted to condos before opening, as the developers switch to “Plan B” to not get stuck holding the bag.

  13. The supply of homes for sale increased, and sales slowed during the last three months of 2018,’ said Tina Tamboer, senior housing analyst with the Cromford Repor. ‘But nothing in the current data shows a market crash coming for Phoenix.’”

    Well duh. The big crash come a year or better after the downturn begins. Of course this was just realtor babble anyhow.

    Being a veteran of both the last downturn as well as of that during the S&L crisis of 87-93, I can say that the anatomy of these things are pretty similar and includes the REIC rhetoric. End result is the same along with the painful fallout. Good for us standing in the wings waiting to find a good deal.

    1. The denial goes like this:

      “Not in my state”
      “Not in my city”
      “Not on my side of town”
      “Not in my neighborhood”
      “Not my house”

      Same as it ever was.

      1. “Plus ça change, plus c’est la même chose.” – Jean-Baptiste Alphonse Karr (the more things change, the more they stay the same.)

  14. “With higher inventory levels and fairly stable mortgage rates, condo buyers will have more options and potentially better values in 2019 than they experienced last year. Sale prices will plateau ”

    If the interest rate is the same and sale prices are plateauing, how is the value “better” than it was last year?

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