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I Don’t Want To Give My Home Away

A press release from the California used house salepeople. “California home sales declined for the eighth straight month in December, and a stagnating market for much of the year pushed sales lower in 2018 for the first time in four years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. ‘The housing market continued to shift in December and drift downward as sales have fallen double digits for the past three out of four months,’ said C.A.R. President Jared Martin.”

“On a regionwide, non-seasonally adjusted basis, sales dropped double-digits on a year-over-year basis in the San Francisco Bay Area, the Central Coast, Central Valley and Southern California regions, with the Central Coast dropping the most at 24.9 percent.”

“Thirty-nine of the 51 counties reported by C.A.R. posted a sales decline in December with an average year-over-year sales decline of 20 percent. Thirty-four counties recorded double-digit sales drops on an annual basis, and 10 counties experienced an increase in sales from a year ago.”

“Sales for the San Francisco Bay Area as a whole fell 17.5 percent from a year ago. Eight of nine Bay Area counties recorded annual sales declines of more than 10 percent. Only San Francisco County posted a year-over-year increase, gaining 11.3 percent from December 2017.”

“The Los Angeles Metro region posted a year-over-year sales drop of 17.8 percent, as home sales fell 16.3 percent in Los Angeles County and 18.3 percent in Orange County. Home sales in the Inland Empire declined 19.8 percent from a year ago as Riverside and San Bernardino counties posted annual sales declines of 17.7 percent and 23.1 percent, respectively.”

“The median home price continued to increase in all regions, except in the San Francisco Bay Area. On a year-over-year basis, the Bay Area median price dipped 3.6 percent from December 2017. Home prices in Marin, San Francisco, San Mateo and Santa Clara counties continued to remain above $1 million, but both San Mateo County and Santa Clara counties recorded a year-over-year price decline.”

“Statewide active listings rose for the ninth consecutive month after nearly three straight years of declines, increasing 30.6 percent from the previous year. All major regions recorded an increase in active listings, with the Bay Area posting the highest increase at 65 percent, followed by Southern California (34 percent), Central Valley (24 percent) and the Central Coast (12 percent).”

The Los Angeles Times. “It looks like a loss for Scott Boras in Newport Beach. After buying a Mediterranean-style home for $2.975 million in 2013, the MLB agent has sold it six years later for $2.9 million.”

“Boras first listed the estate in 2015 for $3.525 million. A price cut seemed to draw more interest, as he had it on the market late last year for $2.999 million.”

The Folsom Telegraph. “Dear Kari, I have had my home listed for sale with my agent for two months with no offers as of yet. My agent says it is the price and wants to reduce it sooner than later. I don’t want to give my home away just because my agent just wants a fast commission. Can you offer some sage advice?”

“Answer: Your question is greatly appreciated. Deciding on the right price for your home can be stressful. Fortunately, there are a few ways to tell if the asking price for your home is ‘just right.’ Offering your home for the right price from the start is optimal.”

“In order to avoid overpricing, look closely at the current data in the Realtor’s multiple listing service (MLS). When looking at the homes offered for sale, keep in mind that they do not reflect the true market value because they have not been sold yet. Next, look closely at the pending homes bearing in mind that the final sales price will not be divulged until the close of escrow. Then you want to look at expired homes, these are the unfortunate homeowners that failed to sell in a timely manner.”

“Signs a home is overpriced are: the home has been on the market more than the average DOM (days on market), have had few showings, and received no offers or too low of offers. The decision to reduce the asking price is always the seller’s decision. It is widely known in the real estate industry that the longer a property sits on the market without selling, the less money the seller will receive in the end. One exception to this would be if you are in an upwardly moving market.”  

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  2. “On a regionwide, non-seasonally adjusted basis, sales dropped double-digits on a year-over-year basis in the San Francisco Bay Area, the Central Coast, Central Valley and Southern California regions, with the Central Coast dropping the most at 24.9 percent.”

    Is it safe to assume that large price drops will follow the cratering of sales?

    And how many years from now will the market reach a price trough? It’s been around five years from the onset to the bottom in past California housing busts.

    1. “…the Central Coast dropping the most at 24.9 percent.”

      San Luis Obispo, CA is a beautiful area, but the region’s median household income doesn’t come anywhere close to the high house prices typical of the area. Equity locusts from Los Angeles and the San Francisco bay area undermined the local populace. Dense traffic has also become an issue there.

  3. I’ll be traveling to San Francisco for the first time ever in a few months.

    It will be like traveling to the Denver of the future, five years from now, unaffordable housing, epic homelessness, sidewalks full of needles and feces.

      1. Years ago the San Francisco police deployed a special car with Lexan polycarbonate windows in the doors. They would leave something on the seat and the opposite window rolled down. When the thief reached far inside the window would roll upward trapping the them until they were arrested. A judge quickly ruled against the strategy, and it was shutdown.

      2. It’s been like this for years…we fled that region years ago – over 15 Yrs – due to the high crime, drugs, etc. I could only replace my windshield, car innards, or the whole car so many times as an adult before having enough.

    2. Amazing what happens when a community (city and/or state) fosters a culture of permissiveness: Suddenly, people think they can get away with anything! Surprise!

  4. “Statewide active listings rose for the ninth consecutive month after nearly three straight years of declines, increasing 30.6 percent from the previous year. All major regions recorded an increase in active listings, with the Bay Area posting the highest increase at 65 percent, followed by Southern California (34 percent), Central Valley (24 percent) and the Central Coast (12 percent).”

    One of the links from the other day shows a 90 percent year over year increase in active listings in Huntington Beach. But it’s a balanced market now, right?

  5. “It looks like a loss for Scott Boras in Newport Beach. After buying a Mediterranean-style home for $2.975 million in 2013, the MLB agent has sold it six years later for $2.9 million.”

    “Boras first listed the estate in 2015 for $3.525 million. A price cut seemed to draw more interest, as he had it on the market late last year for $2.999 million.”

    Cheer up Scott! It was still cheaper than renting!

  6. This Baby Boomer pump/dump plan is coming to an end. This housing market bubble was engineered by the party in power in DC (Boomers), and almost every Baby Boomer has or should be cashed out of the SF Bay Area market by now. Once this happens, the market should normalize after a 40-50% reduction in residential real estate.

    1. Once this happens, the market should normalize after a 40-50% reduction in residential real estate.

      There’s some logic to what you’re saying, but it assumes that we can take that pain. I think we’re riding a tiger and we can’t take the pain of getting back off. The final bagholders of that haircut won’t tolerate it without a gun at their head.

      1. I agree. The villagers will riot and then it’s back to QE4ever. But how does that ultimately end? With the rich getting richer again? But that ultimately ends in a riot too…

        I would say it’s time to leave the USA but where the hell would I go? Europe? Australia? China?

        Investing is no longer about fundamentals and finding undervalued or underappreciated companies or assets. It’s about guessing what the money supply will be 6 months out. It’s not supposed to be like this…

        1. The villagers will riot and then it’s back to QE4ever

          QE was not to benefit the villagers.

          The villagers did not riot in the last round.

        2. “Investing is no longer about fundamentals and finding undervalued or underappreciated companies or assets.”

          Agreed. Starting your own business is the only remaining option that has potential for good return, but you have to have the belly for it.

          1. I actually had the exact same thought. Starting a business seems like the best use of capital right now. But I really don’t have the guts.

          2. I am a vengeful person, so things like bad checks can lead to real trouble. A true businessman learns to accept a certain percentage of losses.

        3. The villagers will riot and then it’s back to QE4ever. But how does that ultimately end?

          I predict it ends with the Fed owning everything and the villagers just grateful to have a job working for them or their agents to cover the rent. But none shall call it slavery.

          1. Already happening in areas of the PNW where older boomers lost their homes and businesses in the 2008 slam, are now slinging retail at minimum wage, renting rooms in other peoples houses for 750 pr/mnth, unable to afford High Blood Pressure meds because medicare only pays a sliver of the cost. While they are falling through the cracks after decades of being productive tax payers, they now have to pay for the crack addicts to have free “new housing” with those taxes, driving a permanent increase in their blood pressure and an early demise. But the region has its priorities I’m sure.

            Priorities you know…

    2. The thing is, they are living with an extremely cheap prop 13 tax base. One possibility: the real downward trend happens when the Boomers actually die off in masses, and their kids inherit the house… By then, many of the Boomers’ kids will be settled in a house of their own (in another more affordable region), and will likely want to liquidate their parents 50’s-70’s era house that has much deferred maintenance. I think then you might see a true glut hit the market.

      1. This is exactly what a George Mason report and one from Fannie Mae concluded a few months ago:

        “Departures of these older adults from the homeownership market (leaving for rentals, senior care facilities, or by reason of death) will accelerate as the large baby Boom generation continues to age. With the oldest Boomers now advancing into their 70s, the beginning of a mass exodus looms in the horizon, spurring fears of a bursting “generational housing bubble” in which homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.”

        http://www.fanniemae.com/resources/file/research/pdf/housing-insights-homeowner-exodus-071118.pdf

  8. I dont recall the kids complaining whether the paid off house the parents left them was worth $1millon or $500K. Its like Free $$$ anyway.

  9. “Dear Kari, I have had my home listed for sale with my agent for two months with no offers as of yet. My agent says it is the price and wants to reduce it sooner than later. I don’t want to give my home away just because my agent just wants a fast commission. Can you offer some sage advice?”

    Dear Greedhead, you should totally stand your ground. Expecting you to give your shack, er, special listing away is totally unreasonable, even if your realtor is subsiding on Ramen noodles and food bank gleanings. The right buyer will be along any day now and will see immediately how unique and special your listing is, and will happily pay your wish price. You go, girl!

    Hugs,
    Kari

    1. “realtor is subsiding on Ramen noodles and food bank gleanings”

      This brings up another concern (outside of the RE mania) I have often wondered about. With the slough of realtors soon to be fighting over food to survive, will this create world wide shortages of ramen? What’s the shelf life on ramen? Will squirrels become extinct? Waves of canabalism? Seems like it may get very apocalyptic here… j/k

      1. Grandpa used to shoot squirrels with his shotgun during the Great Depression. Mom has lingering memories of the unpleasantness of eating the little rodents.

        1. I’m surprised a squirrel was worth a shotgun round. I thought super cheap .22 shorts were the weapon of choice for that sort of thing. The old timers in my family complained about the lack of ammo back in the eat-whatever-you-shoot good old days. And there was at least one instance of a “dead” deer waking up inside a vehicle after being poached at night with such substandard ammo.

          1. weapon of choice

            I agree. The shotgun is handy for things that fly or run fast. Back in the ’60s I used to shoot groundhogs for old man Ortman from his back porch. A single shot .22 was provided and one round. He said “Why waste the ammo if you can’t shoot?” He was in his 90s.

            That hillside farm is all McMansioned now.

    1. “We just kind of had to wise up very quickly to the fact that it’s an insane game,” Caitlin Vestal said. “And that list prices basically mean nothing.”

      Turn around, Caitlin… take one for the team!

  11. Refreshing honest advice from the Folsom answer person.

    Now that the curtain is falling, the bull chippers will fade out, hopefully.

  13. Isn’t it generally agreed that handing out mortgage loans like candy to low income folks serves to desiccate available housing inventory and drive up prices?

    But I understand the political expedience of MicroSloth throwing the affordable housing peops a bone to stave off criticism.

    The Financial Times
    Microsoft pledges almost $500m for affordable housing loans
    Funding follows criticism of technology companies driving up property prices
    Alice Woodhouse in Hong Kong and Naomi Rovnick in London yesterday

    Microsoft has pledged nearly $500m to provide loans to boost affordable housing in its hometown of Seattle, in one of the biggest moves by a technology company to deal with a sharp rise in home prices that some have blamed on the sector.

    Brad Smith, the company’s president, told The Seattle Times on Wednesday that the sum would be used to provide below-market interest rate loans to help low- and middle-income workers find housing. The company did not provide a number for how much affordable housing would result from the pledge.

    Mr Smith told the newspaper that the fund would try to help “the people who are going to teach our kids in schools, and put out the fires in our houses and keep us alive in the hospital” so that they did not have to “spend four hours every day getting to and from work”.
    …

    1. What a waste. Heres a better plan, take the 500 Millions and build your own housing for your workers. That way, you keep turnover low and your workers dont compete with teachers or librarian for housing

      1. Hit the nail on the head. You need direct intervention to make a dent in a problem like this, absent removing the structural issues that have created the bubble in the first place.

      1. Helping poor folks get into mortgages when prices are falling and a recession is brewing doesn’t seem very helpful.

    3. I never thought I’d see MSFT get burned but they’re gonna get barbecued on this one. And good to see it’s something besides tax dollars getting ripped by the housing crime syndicate.

  14. Just got done plunking around web looking at housing articles.

    Ben came up with the term REIC,, which after I figured out what that meant, I found to be amusingly cynical.

    However after my web session, I think he is right on. The REIC seems to be putting on a full court press the pretty up the landscape.

    Namely, one article from San Diego quoted a Zillow for the hottest housing market. Those are the ones predicting 2019 price gains ahead of the pack. If you can believe, within the top 10 were Denver, San Diego, San Fran, and San Jose.

    As we have seen from data here, these are amongst the cities which are clearly getting crushed?

    I now believe there is truly an REIC and it has a concerted purpose. Add to that Yun’s recent comments that prices will continue to climb through 2019, and it leaves no doubt. I am seeing data for myself here in SW Florida, and it is not subtle.

    The truth will soon be irrefutable, and reality will come down hard on those who drink the koolaid.

    Popcorn.

  15. There is no shortage of pessimism these days among Wall Street prognosticators.

    One thing seems clear: The January effect is real, unlike the pretend Santa Claus rally!

    The stock market hasn’t started a year this strongly since 1987 — uh-oh!
    Published: Jan 17, 2019 5:18 p.m. ET
    Russell 2000 is up 8.8% in the first 12 sessions of 2019
    Dow Jones Market Data
    By Mark DeCambre

    Much has been made about the performance of stocks so far in 2019.

    Small-cap stocks, as gauged by the Russell 2000 index RUT, +0.86% , are off to their best start to any year in the past 32 years, boasting a gain of 8.8% over the past 12 trading sessions, according to Dow Jones Market Data. That’s outpacing the large-cap S&P 500 (SPX, +0.76%), the U.S. stock-market benchmark, which is up 5.2% over the same stretch — a performance, however, that likewise is the strongest 12-day start to a calendar year in 32 years.

    The Dow Jones Industrial Average (DJIA, +0.67%) is up 4.5% over the same period, while the Nasdaq Composite Index (COMP, +0.71%) has logged a 6.8% advance.

    Is it a reason to cheer? Perhaps it would be if not for the fact that the gains are the strongest since 1987, when the Russell popped 11.87% over the first 12 trading days and the S&P rallied 11.22%. 1987 is a year that lives in infamy on Wall Street.

    On Oct. 19, 1987, the Dow sank 22.6% in a single session, marking its steepest percentage drop ever. That is not at all to suggest that similar action will play out this time around.
    …
    Cuz this time is different. 🙂

  16. Random from reddit, Realtor pay attention:

    “The real world is not the internet. If you get off of social media and reddit you’d see that the real world does not work as you describe. Have you ever thought about deleting your social media? It’s a soft-control mechanism designed to keep wrongthinkers in line and to keep everyone depressed and addicted to dopamine. Why are you even on social media in 2019?”

    1. I love it! 😀

      I set up an account on reddit, but that was to participate in an “ask me anything” session a few years ago. I think I’ve posted one time since then. I have IG and twitter accounts but I’ve never actually posted anything on either of those. I do use my FB account, but I find myself spending increasingly less time on FB.

      1. I set up an account on reddit, but that was to participate in an “ask me anything” session a few years ago.

        Is this who I think it is? 🙂

  18. So long as the Census Bureau is shut down, we’ll just have to put on the rose colored glasses regarding the delayed housing data.

    Real Estate
    Housing activity declines, recession probability increases
    Downward trend could be a troubling sign of a looming economic downturn
    January 16, 2019
    Jessica Guerin

    Single-family housing authorizations decreased 0.95% in December, falling for the second consecutive month and down 3.76% year over year, according to a recent report by BuildFax, a property condition data service provider.

    Single-family housing authorizations represent building permits requesting permission to commence construction. By contrast, housing starts signal that construction has already begun.

    The Census Bureau will not be releasing new data on housing starts due to the government shutdown, making housing authorizations a key indicator of the market’s current health.

    Housing authorizations are also an early indicator of a recession, according to BuildFax, which said that based on the new data, the probability of a recession could double between 2019 and 2020 if trends persist.
    …

    1. “…countries that owe money to Beijing could be forced to sign over national territory or make steep economic concessions if they can’t meet liabilities. The phenomenon has been dubbed debt-trap diplomacy…”

  20. Mr Market sure is on a tear in early 2019, especially considering the limitless consternation over the economic impacts of the interminable government shutdown.

    The Financial Times
    US government shutdown
    US government shutdown throws up ‘triple threat’ of market fears
    No end in sight as investor nerves jangle over political gridlock
    Richard Henderson and Robin Wigglesworth in New York yesterday

    Investors that skipped into the new year with fresh optimism are now starting to eye the equivalent of a banana peel in their path — the US government shutdown.

    The prolonged budget stand-off between President Donald Trump and Democrats over $5.7bn for a wall on the Mexican border is now in its fourth week, sparking fresh unease in markets. The S&P 500 has bounced in January, but only to the levels of mid-December, and the 10-year Treasury yield remains muted at 2.73 per cent, underscoring the simmering nervousness.

    The lengthening shutdown comes at a precarious time for investors, many of whom are still nursing big losses from last year and are nervous about the health of the US and global economy.
    …

  22. Wait for it: California’s overlords must be salivating at the opportunity to announce more “affordable housing” rackets, er, initiatives so its indoctrinators, er, teachers, can take advantage of taxpayer-subsidized housing while the payola and graft generated from these “public-private partnerships” flows into the coffers and pockets of state and local party machines (no need to say which ones). Remember, taxpayers, it’s for the children….

    https://www.cnbc.com/2019/01/17/california-housing-affordability-crisis-looms-over-education-problems.html

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