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This Is What A Housing Recession Looks Like

A report from the Sun Sentinel. “In South Florida, there was an increase of more than 57,000 jobs in 2018 than a year earlier. At the same time, unemployment is lower than it has been in over a decade, according to the state’s final monthly unemployment and job creation report for 2018.”

“‘The last time we saw that was at the peak of the housing bubble — that’s pretty remarkable,’ said Sean Snaith, economist at University of Central Florida in Orlando. ‘There’s solid job growth. This long into the [economic] recovery … to continue this momentum is pretty impressive.'”

From Wink News in Florida. “Scenic high rises and new homes are popping up all across Southwest Florida. But, fewer people are buying residential property. New data shows plummeting housing sales in Southwest Florida. Florida Realtor shows lower closed sales between December 2017 to 2018. In Lee County, closed sales are down 15 percent, 14 percent in Charlotte County and 2 percent in Collier County.”

“‘End of last year it was very slow,’ said Mike Lombardo, a real estate broker. ‘We’ve seen that reflected in you know, home prices being dropped, you know 14 percent, 15 percent, in some places.'”

“Lombardo and Shelton Weeks, the Florida Gulf Coast University chair of the Dept.of Economics, said it is too early to worry. ‘This is what a normal recession looks like, a housing recession,’ Lombardo said. ‘Hopefully it will pan itself out again in spring or summer.'”

“‘I wouldn’t panic yet,’ Weeks said. However, Weeks said if this declining trend continues into a recession, property values could drop and taxes would follow.”

From KJZZ on Arizona. “Home sales have been flattening nationwide over the last year. And that means home prices are also falling and sellers are slow to adjust. Zillow reports a 7.6 percent home price appreciation for Maricopa County during 2017. That gain is less than anticipated by Valley home sellers, who are just now noticing that prices are flattening.”

“Nate Martinez is a real estate agent with RE/MAX. He says while sales are still strong in the Valley, some sellers are pricing homes too high as the local market starts to level off. ‘And I’ve studied several different cities, mostly in Glendale and Peoria. Both of those cities, for several months in a row now, each month we’re seeing at least 50 percent of the inventory obtain a price reduction,’ said Martinez.”

From The Coloradoan. “Timnath home prices, already the highest in Northern Colorado, will bump along with a 1 percent increase, bringing the average to $617,000 after falling 1.5 percent in 2018, Group President Brandon Wells said. Both Windsor and Timnath, typically among the priciest towns, are seeing an influx of lower-priced homes.”

“Windsor-Severance’s average home price dropped 3 percent last year. ‘We are seeing a lot of new construction at lower price points … which is pulling the average sales price down,’ Wells said.”

“In the under-$400,000 market, Fort Collins has a 1.4-month supply, which means it would take just over a month to sell all the homes on the market right now. That puts sellers in the driver’s seat. The $400,000-to-$700,000 market has 2.6 months of inventory, while the over-$700,000 market is a buyers’ market with a nine-month supply.”

From The Olympian in Washington. “The Thurston County housing market had another red-hot year in 2018, with more than 5,000 single-family homes exchanging hands, according to the Northwest Multiple Listing Service.”

“But 2018 wasn’t as strong as 2017 — the best year on record for the county — because the market slowed toward the end of year. The market still favors sellers because of low inventory levels, but slowly the market is beginning to shift. Windermere Olympia owner Steve Garrett said the ‘feeding frenzy,’ which was characterized by sharply escalating prices and multiple offers on homes, is over. ‘The market is settling down,’ he said. ‘There is more inventory and more options for buyers out there.'”

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  2. ‘The last time we saw that was at the peak of the housing bubble — that’s pretty remarkable,’ said Sean Snaith, economist at University of Central Florida in Orlando. ‘There’s solid job growth. This long into the [economic] recovery … to continue this momentum is pretty impressive.’

    Modern economic downturns are the result off bad decisions made during too much boom. And the downturns are how the bad decisions are turned into something more productive. It gets old listening to these so called economists say “we can’t have a recession, look at how everything is booming!”

    That right: most economists have no idea how the real world works. Note:

    ‘Scenic high rises and new homes are popping up all across Southwest Florida. But, fewer people are buying residential property. New data shows plummeting housing sales in Southwest Florida’

    Popping up just when sale plummet? Bad decisions.

    1. In my experience, macroeconomists give the rest of them a pretty bad name. Micro, theory, and applied people are aware of their own ignorance and rarely go around making predictions. Even at the highest levels of academia the underlying techniques the macro people use are at least 30 years old (my wife is an economist and laughs at the macro crowd). Basically it’s math that says “the past predicts the future” which is why they are so often wrong. They also literally make up a lot of the data they put into their models. They call it “calibration” — change the data until your results match the recent past, then extrapolate forward.

    2. “Bad decision$” = In Austrian busine$$ cycle theory, malinvestment$ are badly allocated business investments, due to artificially low cost of credit and an un$u$tainable increase in money supply. Central bank$ are often blamed for causing malinvestments, such as the dot-com bubble and the United $tates housing bubble.

      1. An ill wind blow$ there … Ver$us … $omething Wicked this way come$!

        Coming Soon!

        Rich Ru$$ians flock to Florida to deliver American babie$

        Jan 25 2019 | france24

        “The weather, white-sand beaches and dazzling turquoise waters are common reasons given for traveling to give birth in this city of 20,000 people, north of Miami.

        But one 34-year-old, who gave her name only as Anna, was more direct.

        “For the American pa$$port!” she told AFP, smiling. She arrived in the U$ while expecting now two-month-old Melania.

        Both she and compatriot Helen, mother to a three-month-old, said ten$ of thousand$ of dollar$ and month$ of planning went into their trip$. “

  3. Here’s another example:

    Metro area added 37 self-storage centers last year and more are on …
    The Denver Post-Jan 25, 2019
    Thirty-seven self-storage facilities opened in the 10-county Denver metro … “That would have been a great place for an affordable-housing building, you know?’

    Denver needs more self storage like a hepatitis outbreak. But here come millions more Yellen bucks to money heaven.

    1. 85% of my neighbors can’t park their cars in their garages because they’re using them for storage. The last time a really bad hailstorm came through, back in late 2016, mine was one of the few cars that escaped unscathed. A lot of them had to be totaled.

        1. 1,000 nd$ of Beanie.Babie$ stored in large fish aquariums is knot considered junk, nor $torage! … ( @ least knot according to my nephews)

    1. ” …expo$es a har$h truth: Most American$ are unprepared for the next rece$$ion”

      Bugs: “eh, this mights include all the Elmer$ Fudd$ @ Thee.Fed.CentralCa$ting!

      DAVOS | Jan 25 2019 | Jonathan Cable

      Central bank policy tightening: damned if they do, damned if they don’t

      “Tighter policy usually $trengthens currencie$ while reducing con$umer and bu$iness $pending, which should keep inflation lower – but it also ri$ks curtailing what is pretty $cant growth in many countrie$.

      The Bank of Japan has been targeting inflation of 2 percent for years without success. It is not expected to start normalizing its extremely loose monetary policy until 2020 or later.”

  5. ‘Zillow reports a 7.6 percent home price appreciation for Maricopa County during 2017. That gain is less than anticipated by Valley home sellers, who are just now noticing that prices are flattening’

    A couple of things. Again it’s reported prices are down but overall numbers (and speculators expectations) are up. The median is a lagging indicator. Everybody in the business knows this but the REIC/media never mention it. Second of all Zillow is the REIC, and their numbers have always been a fantasy.

    ‘Nate Martinez…says while sales are still strong in the Valley’…

    Obligatory boosterism.

    ‘some sellers are pricing homes too high as the local market starts to level off. ‘And I’ve studied several different cities, mostly in Glendale and Peoria. Both of those cities, for several months in a row now, each month we’re seeing at least 50 percent of the inventory obtain a price reduction’

    Note the Phoenix area UHS haven’t said boo about this. Hmmm…

    1. “Second of all Zillow is the REIC, and their numbers have always been a fantasy.”

      Exactly what I had running through my head while reading this. What seller wouldn’t want to try to get some astronomical dream price especially if Zillow puts that out there for you in a zestimate… yes these shack sellers are majority greedheads but look who backs up the over the top asking prices, the REIC that advertise the shacks. Until the reality check hits these estimated shack values, sellers are going to keep asking the inflated “my neighbor sold his home for x dollar” prices.

    2. ‘some sellers are pricing homes too high as the local market starts to level off‘

      And who’s fault is that mr UHS? Who’s the expert, who is the one hired to help set this price?? the used home sellers need to look beyond the possibly highest commission check and edumicate there clients. Putting a dream price with as many 8’s in the price tag as possible isn’t working anymore. Hop back online and go back through you real estate course UHS. Shouldn’t take you more than a few hours and you may soak in some good insight to push you through this next housing recession.

    3. ‘Zillow reports a 7.6 percent home price appreciation for Maricopa County during 2017. That gain is less than anticipated by Valley home sellers,…”

      (Somehow) investors/speculators have be led to believe that a 7.6 annual return on house prices is normal and expected. Let’s look at this from the rule of 72 and compounded interest calc. (about the same answer). 9.46 years to double house price. So the expectation is that a depreciating asset with high overhead costs (maintenance, taxes, insurance, etc., not to mention a mortgage payment for most people) should double in price in less than 10 years?

      That’s a reasonable “cap rate” for an investment rental property, but not for primary residence shelter housing. The long-term historical return on shelter housing has been near zero until it became financialized and treated as an asset class. The average Joe needs to be able to afford a house (or apartment). This becomes unreachable in a bubble-nomics economy.

      Shelter housing should never be allowed to be considered an investment, else we have the current situation. Twice in a decade.

      the U.S. economy is nuts! It’s based on debt and speculation as promoted by the Fed as a way to 1) provide a facade of recovery following the GFC for the masses (think Potemkin village), and 2) Increase the power of the oligarchy and further increase the already yawning chasm of income and wealth inequality.

      As a U.S. citizen, I’m not feeling very represented by our Congresspersons who seem to be mostly focused on self-enrichment and helping their crony elite buddies. Great system we have here, and they wonder why populism is growing globally.

      “In order to become the master, the politician poses as the servant.” ~Charles de Gaulle

      “Betting against gold is the same as betting on governments. He who bets on governments and government money bets against 6,000 years of recorded human history.” – Charles De Gaulle, Leader of the French resistance during WWII and 18th President of France

      1. “…the U.S. economy is nuts!”

        It is nuts. I can attest to that fact given local traffic. It’s worse than 2005. When I look at the miles of cars and backups, I imagine the trillions of Yellenbucks it took to create such a fake situation, and I am repulsed.

  6. ‘Steve Garrett said the ‘feeding frenzy,’ which was characterized by sharply escalating prices and multiple offers on homes, is over. ‘The market is settling down,’ he said. ‘There is more inventory and more options for buyers out there’

    There should never be a feeding frenzy for shacks. Not in one town or city, much less all across the US at the same exact time. And these so-called regulators are fools for missing it.

  7. ‘bringing the average to $617,000 after falling 1.5 percent in 2018…Both Windsor and Timnath, typically among the priciest towns, are seeing an influx of lower-priced homes.

    ‘Windsor-Severance’s average home price dropped 3 percent last year. ‘We are seeing a lot of new construction at lower price points … which is pulling the average sales price down’

    New construction priced below existing shacks = kiss of death.

    1. “New construction priced below existing shacks = kiss of death.”

      Which is why it’s never advisable to pay more than construction cost($50/sq ft lot labor materials and profit) less depreciation for a used house.

      How many times must people be advised of this?

      1. “How many times must people be advi$ed of this?”

        Can’t ya just remodel $helter.$hack bathroom with cheap China ceramic$ & faucet$, to$$ in a outdoor Pizza oven & make $10,000 & $10,000 of U$dollar$ quick.like? Are there knot $everal program$ with happy.happy folk$ showing you how to DO.IT.YER$ELF?

        1. People who bought in 2011 and sold in 2018 are happy with their bank account. timing is everything. Your mileage may vary.

          1. As soon as Inter.re$t rates plunge to 0%’$ again, they can wa$h, rin$e & repeat$!

            Coming $oon! … (Just ye wait$ & see$)

    2. I have been tracking the same thing in the northern Denver Metro for awhile. The “Colorado native” coworkers I work with just stare at me blankly and shrug. Most of them have only see RE go up, but my rust belt roots know better.

  9. “‘I wouldn’t panic yet,’ Weeks said.

    Gosh, lots of “experts” all telling me not to panic, while here I am cool as a cucumber in my cozy rental home. I suspect ole Weeks, on the other hand, is gobbling Xanax by the handful when he gets home and night and scans the latest headlines and data.

    1. Where does this end? There’s a lot of resentment out there for people who occupy “underutilized” housing, such as retired couples who stay in their 4 bedroom house when it could be lived in by a family with kids, people in the city with a garage but no car while others park on the street, etc. How soon until there’s a vacancy tax on your basement? Do you really need/deserve that empty guest room? After all, you could be renting it out on AirBNB to help with this housing crunch.

      Every time we’re told a new tax is aimed at “other” people, it comes back to us eventually.

      1. Speculators have made housing unaffordable for the prudent and responsible. Hitting them with a vacant housing tax, as well as punitive fines for not maintaining their property, is a good first step to freeing up inventory and making housing more affordable.

        1. +1,000,000

          Why stop at raising the tax, hit them with fines too! I overheard a locker room conversation about some FB who just did his taxes and found that his past 9k return was now under 1k. Hate to admit it, but it brought a smile to my face…

          1. “his past 9k return was now under 1k”

            Are you talking about his tax refund? I’m absolutely in favor of the tax changes that make people pay what they owe. The fact that people in high-tax states with expensive housing were insulated from the real cost because they could write-off their huge property taxes is ridiculous and definitely a factor in this and previous bubbles.

            So this guy now actually has to pay the $8k he should have been paying all along. Fantastic. If his property is vacant, that $8k might incentivize him sell or rent it out. Awesome. And what did it was enforcing existing taxes more fairly, not creating new ones while leaving the old unfair ones in place to benefit some at the expense of others.

        2. Btw, I’m with you that vacant properties are a huge problem. So why are properties left vacant? It’s not because they are undertaxed (though not enforcing existing taxes is definitely a problem). Reasons are largely clustered around the fact that owners have financing-based alternatives to monetize property without renting/selling (like helocs and appreciation), plus other regulatory issues like mark-to-model accounting, foreclosure moratoriums and the illegal hotel industry.

          A vacancy tax doesn’t solve any of those problems. And the housing bubble could still continue or get reinflated with a vacancy tax in place. What’s one new annual holding cost when a property doubles in value in ten years? Just look at how many people the world over have been willing to pay huge condo fees and/or pay more on their mortgage than they get in rent on their “investment condos” for years to unlock that sweet appreciation.

          One reason I’m opposed to vacancy taxes is that it does nothing to hold the people and policies responsible for the above reasons to account. In fact it covers up all the shenanigans that have taken place to screw up the economy to this point.

          A vacancy tax is aimed at punishing the beneficiaries of bad policy when we should be looking at the policy itself. Of course the beneficiaries are part of the problem, but simply allowing the upcoming crash to happen should go a long way to remedying this imbalance. But if we don’t recognize what got us into this bad situation, we will certainly repeat it, just like we did post-2008.

          1. A vacancy tax is aimed at punishing the beneficiaries of bad policy when we should be looking at the policy itself.

            Policymakers at the national level are completely captured by the FIRE complex and their lobbyists. Ditto for the state level. The only way local communities can defend themselves against policies that aid and abet housing-related speculation is to come up with their own localized responses that actively discourage such speculation. Longer-term, of course, the captured policymakers need to be sent packing and replaced with officials who will be more responsive and accountable to their constituents and the public interest.

          2. “policymakers need to be sent packing and replaced with officials who will be more responsive and accountable to their constituents and the public interest.”

            We can definitely agree on this. But I see a vacancy tax as rewarding people who helped create the problem. Local governments already benefit from increased property taxes based on speculative valuations. Vacancy taxes seem like just trying to grab a little bit more on top, along with creating the illusion that they are “doing something.” Meanwhile local gov’t officials quietly encourage more development and empty homes and commercial spaces because they too are in the pocket of the REIC. Just look at how many cities are still building, building, building, and have been for years. So now if local gov’ts get tax money from vacant RE on top higher property taxes, wouldn’t that give them an incentive to encourage more vacant RE?

            It’s like short-term rental regulation. Some cities are actually trying to stop it, while others are only pretending to in order to get a share of the action. So the city gets more money, short-term rentals continue unabated, but residents still don’t have more places to live.

            Fun discussion, btw.

  12. So federal workers don’t seem to be big believers in a 6 month emergency fund. According to the workers the MSM put on stage they miss 1 check and they are a month behind on their bills and cleaning out any nearby food banks.

    1. I guarantee you that if you look at their social media pages, you’ll find plenty of examples of them taking expensive vacations, driving luxury cars, and generally living large with no care for tomorrow. Then they show up in food banks boo-hooing about how living beyond their means makes them victims. Clearly they never read “The Ant and the Grasshopper.”

      1. It’s easy to feel like an ant just for having a govt job in the first place. Until something like this happens.

  14. Globalists gotta globe….

    From Farhad Manjoo at the New York Times

    “Imagine not just opposing President Trump’s wall but also opposing the nation’s cruel and expensive immigration and border-security apparatus in its entirety. Imagine radically shifting our stance toward outsiders from one of suspicion to one of warm embrace. Imagine that if you passed a minimal background check, you’d be free to live, work, pay taxes and die in the United States. Imagine moving from Nigeria to Nebraska as freely as one might move from Massachusetts to Maine.

    “There’s a witheringly obvious moral, economic, strategic and cultural case for open borders, and we have a political opportunity to push it. As Democrats jockey for the presidency, there’s room for a brave politician to oppose President Trump’s racist immigration rhetoric not just by fighting his wall and calling for the abolishment of I.C.E. but also by making a proactive and affirmative case for the vast expansion of immigration.”

      1. That was WestWorld5, who like so many, is too caught up in the false left/right paradigm to see that globalists are destroying this country.

    2. “case for the vast expansion of immigration.”

      Oh boy

      That means we could have even more undocumented drunk drivers without drivers licences, tags or insurance to smash into my vehicles and injure my family members leaving us no way to be reimbursed for damage to our vehicles or medical bills.

    3. Imagine the kind of drugs you’d have to be on to believe this Utopian BS. Like the US can actually handle that many people? For the love of all that’s holy, why can’t those people get it right in their own country? That’s right, it’s because they’re screwed up people, and they want to come here and screw it up like their place.

      1. I kind of see it like this: once the entire US population has access to basic human needs (housing, food, shelter, etc.) then we can begin to be more liberal in our immigration policy. If our demographics looked like Japan then yeah, we should consider more immigration. But certainly we are not at that point. We need to get serious about enforcing visa overstayers and penalize employers who employ illegal immigrants. Expand e-verify. End birthright citizenship.

    4. There’s a witheringly obvious moral, economic, strategic and cultural case

      Let the author show us by throwing open the doors of their own home to strangers, without rules or restrictions. Just let us know how it works out.

  15. “The owners of the dirt-and-asphalt crater next to the I-25 and Broadway light rail station have finally found a buyer to build homes, businesses, offices and parks on the site.

    Austin-based Endeavor Real Estate Group closed on the land, part of the former Gates rubber factory site, Tuesday afternoon. The company would not disclose the price it paid for the 7.5 acres at Broadway and Mississippi.”

    https://denverite.com/2019/01/23/broadway-station-midtown-whatever-it-will-be-called-please-not-midto-the-gates-rubber-factory-site-will-finally-get-developed/

  16. Post-Structuralist
    January 26, 2019 at 3:50 pm
    “policymakers need to be sent packing and replaced with officials who will be more responsive and accountable to their constituents and the public interest.”

    Hi all. Read daily, rarely comment. Great discussion and post. For a good look on the current continuing controversy about vacancy taxes in Canada you all will certainly enjoy Honorable Garth Turner’s blog on Canadian real estate etc over at http://www.greaterfool.ca

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