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Multiple Offers Have All But Vanished, Price Cuts Are Rampant And Homes Are Taking Longer To Sell

A report from the Union Tribune in California. “San Diego County’s median home price ended the year at $550,000, one of its lowest points of 2018, CoreLogic reported. The median price for a resale home was $595,000, dipping from the all-time high reached in June and July of $630,000. ‘The market did an about-face in August. Come Aug. 15, it seemed like everybody came together and said, ‘These prices are too high and these interest rates are too high,’ said Gary Kent, a La Jolla-based real estate agent. ‘It was like whiplash. Like, what just happened?'”

“All types of housing saw sales decrease. The resale single-family home market had 1,673 sales in December — its lowest since 2007 when 1,074 homes sold. There were 701 resale condo sales, down to its lowest level since 521 sales in December 2007. The median price was $405,000, down from the record $432,000 reached in July. Sales for newly built homes hit a record low in December with 268 sales, the lowest ever recorded by CoreLogic for that month since the company began studying the market in 1988.”

The Orange County Register. “Southern California home sales fell for a fifth consecutive month in December, dropping 20.3 percent year over year as the once-hot 2018 housing market cooled considerably, CoreLogic reported. Area agents say multiple offers have all but vanished, price cuts are rampant and homes are taking longer to sell than in years past when a hot seller’s market gripped the region.”

“‘I started seeing things slow down,’ said Noel Palmieri, a Century 21 agent based in the San Gabriel Valley. ‘We weren’t getting the showings like we were. Things weren’t flying off the shelf the way they were.'”

The Los Angeles Times. “The housing market’s chill grew colder in December, as sales plunged across Southern California and home prices barely rose. ‘The affordability issue,’ said Leslie Appleton-Young, chief economist for the California Assn. of Realtors, ‘is finally taking its toll. The market is going to settle out. You are seeing a big pause.'”

“As sales decline, inventory is swelling, further limiting the ability of sellers to command top dollar. Last month in L.A. County, the number of homes for sale rose 22% from a year earlier, while in Orange County, listings surged 30%, according to Redfin.”

From Curbed Los Angeles. “For Los Angeles’s real estate market, 2018 ended with barely a whimper. Just 5,291 homes sold in December, representing a 20 percent drop since the same time last year, according to CoreLogic. The county’s median sale price—$581,500—was slightly higher than in December of last year, but down 3.1 percent since November. It was also more than 5 percent below levels reached in August, when LA’s median sale price of $615,000 tied an all-time record.”

From My News LA. “‘Last month’s sharp drop in home sales stands out in several ways,’ said Andrew LePage, research analyst with CoreLogic. ‘The number of homes sold was the lowest for any December in 11 years, since the onset of the last housing downturn in 2007. Sales fell about 8 percent between last November and December, whereas they normally rise significantly between those months.'”

“‘Additionally, the 20 percent annual decline in December sales was the largest for any month in more than eight years. This drop in activity reflects a variety of factors. Mortgage rates hit a 2018 high in November, affecting December closings, and stock-market volatility created an additional headwind in high-end markets. Meanwhile, some would-be buyers remain priced out or unwilling to buy amid concerns that prices have overshot a sustainable level.'”

The Ventura County Star. “Both median sale prices and the number of homes sold dropped throughout Southern California from November to December, according to CoreLogic. The report cited 15,781 home sales in Southern California, an 8.2 percent decrease from November’s 17,192 home sales. The region’s lower median price — December’s $515,000 median price was 1.5 percent lower than November’s $523,000 median price — was not enough to boost sales.”

“Since 1988, the average change in sales between November and December is an increase of 12.3 percent, according to the CoreLogic report. It noted that December sales have ranged from a low of 13,240 in 2007, to a high of 36,865 in 2003. December 2018 sales were 32.7 percent below the December average of 23,445. The last time sales were so low in the region was around when the U.S. housing bubble burst, according to CoreLogic research analyst Andrew LePage.”

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This Post Has 61 Comments

  1. I said this was coming California.

    ‘Sales for newly built homes hit a record low in December with 268 sales, the lowest ever recorded by CoreLogic for that month since the company began studying the market in 1988’

      1. “No one could’ve seen this coming. No one at all.” — Every REIC shill after finally conceding that there was a housing bubble, which then burst.

  3. January 19, 2019

    “‘We don’t have a debt problem. We don’t have an overbuilding problem. We don’t have an economic problem — prices are not going to fall,’ said Christopher Thornberg, founding partner of Beacon Economics, who called last decade’s housing crash.”

    http://housingbubble.blog/?p=807

    Caw!

    1. Chri$topher Thornberg, founding partner of Beacon Economic$, who called la$t decade’$ hou$ing cra$h.”

      Now Mr. Ben, credit$ due where credit$ due … where inn does Mr. Thornberger$ live … These.a.day$?

  4. ‘The affordability issue,’ said Leslie Appleton-Young, chief economist for the California Assn. of Realtors, ‘is finally taking its toll.

    The hell you say….

    1. This has been going on for years…dating back to 2013. Yet its a problem now that sales is collapsing. No commission checks = Problem

  5. The last time sales were so low in the region was around when the U.S. housing bubble burst, according to CoreLogic research analyst Andrew LePage.”

    Gosh, it’s almost like history is repeating itself.

    1. “So, what do you do if you are eyeing a home to purchase but your departing residence, listed for sale, does not have an offer in sight?

      Consider a bridge loan. Also known as a swing loan it’s a fast, generally easy but certainly more expensive way to extract pre-sale equity from your home to buy your up-leg abode.

      “Typically, swing loans are either second liens against your home or new first liens (must refinance any existing first into this loan), due in less than one year. There are no prepayment penalties, and the monthly repayment is interest-only (not principal and interest).

      If you are getting a screaming deal on your up-leg or you don’t want to accept a fire-sale offer on your departing residence, then this tool can conceivably facilitate a significant net savings”.

      https://www.dailybulletin.com/2019/01/31/consider-a-bridge-loan-to-avoid-in-a-fire-sale/

  7. Visiting D.C. this week and heard Powell on the radio The Fed is stopping interest rate increases now unless inflation shows up. So ladies and gentlemen, I guess that pause in home price increases was short lived. I expect the insanity to pickup this summer and not decrease again until the 2020-2021 recession takes hold punishing anyone buying in 2019.

    3. Mike in Carlsbad,

      You don’t expect SALT and/or MID caps to have any impact? Just a recession?

      1. I think they will prevent older home owners with lower mortgates to sit tight. This whole $750,000+ is a recent occurance for homes in my area. I remember in 1996 my parents were renting a mansion in Rancho Santa Fe with tennis courts, pool, stables, and orange grove and it was listed for $750,000, they laughed and said that is ridiculous, its now today a $3million dollar property.

        So my point is people that bought their 300k homes in San Diego like Carlsbad who are now “worth” 1million aren’t going anywhere, they are grandfathered in and the 750k cap doesn’t apply to them, the 10k in taxes is immaterial to them. Home supply is just going to stay low in perpuity unless some starts building more homes in San Diego (not happening due to geography and not at price points people can afford).

        The ONLY people screwed by these changes are people who bought during the last mania, held on or are FB’s who bought from 2016-2020

    4. Perhaps Powell could prop up risk asset prices, like stocks, bonds, and houses, by tanking the dollar?

      How a dovish Fed sparked a stock-market rally and tanked the U.S. dollar
      By William Watts
      Published: Jan 30, 2019 6:29 p.m. ET
      Was move overdue or did Fed go overboard?
      Getty Images
      Who let the doves out?

      The Federal Reserve and its chairman, Jerome Powell, changed their tune Wednesday, striking a surprisingly dovish tone that sparked a stock-market rally, tanked the U.S. dollar and roiled other financial markets.

      The Fed hinted that it may be at the end of its rate-hike cycle and further surprised investors by issuing a separate statement regarding its balance sheet, indicating that its efforts to reduce the $4 trillion asset portfolio could end sooner than expected. The tone was seen as an about-face from the Fed’s hawkishly received December meeting when it delivered its fourth rate increase of 2018.

      “This is one of the most dovish turnarounds by a Fed chair that I have ever seen in my 30-year career,” said Tom di Galoma, managing director at Seaport Global Holdings.
      …

    5. The Fed paused rate increases in 2006 and eased aggressively from then onward. Shack prices collapsed anyway, in fact they went down the hardest when the FFR was already at 0%. Correlation is loose at best.

  8. ‘some would-be buyers remain priced out or unwilling to buy amid concerns that prices have overshot a sustainable level’

    There’s that crazy talk Andy, you doom and gloomer. How can prices overshoot when higher prices are the definition of a good economy? What about appraisers? They wouldn’t hit the numbers like before, would they? And the lenders! Oh we have been told a million times about how careful they are – even New American Funding, whose spokespeople jump around waving their arms like mad men trying to get people to refinance.

    But now that you mention it, I have posted several dozen articles recently with REIC types saying, “what was going on was unsustainable.”

    1. “How can prices overshoot when higher prices are the definition of a good economy?”

      Definition of a good economy? Higher prices CREATE the economy. Whether this economy is good or not … well, stay tuned.

      1. ” Higher price$ CREATE the economy. ”

        Where was ye between 1979 – 1981? … In diaper$?

  10. “Come Aug. 15, it seemed like everybody came together and said, ‘These prices are too high and these interest rates are too high,’ said Gary Kent, a La Jolla-based real estate agent. ‘It was like whiplash. Like, what just happened?’”

    Like Ben said, classic bubble move. Everything is trending like 2007 again….Hmmmm what happened to the housing market in 2007????? Looks like history is about to repeat!

    1. “London may be at the epicenter of the UK’s property downturn, but its reverberations have begun to ripple outwards into the commuter belt and are now affecting nationwide figures. Prices in the suburban and commuter markets around the capital fell by 2.6% and 1.6% in 2018 respectively, according to Savills. Values of other prime properties in the wider south slipped by an average of 1.3%. It was only in Scotland and the Midlands & North that prices rose over the past year, albeit modestly.

      “It is against this backdrop that Lloyds has decided to launch its ‘Lend a Hand’ mortgage. The scheme is part of a commitment by the bank to lend up to £30 billion to first-time buyers by 2020. The goal is not to stoke a new property boom but rather to keep the current one alive.”

      This part needs repeating: “The goal is not to stoke a new property boom but rather to keep the current one alive.”

      Keeping the current boom alive keeps the current (and stupid) debt-based economy alive. Allowing the boom to die kills this stupid debt-based economy.

      A killed economy needs to be replaced by something else; Just what this “something else” is remains to be seen.

      Stay tuned.

  12. Trolling around to see what kinda tales Ziller is spinnin lately…

    381 Sakari Ln
    Kelso, WA 98626
    1/29/2019 Price change $319,900 -3% $151
    1/20/2019 Back on market $329,900 — $156
    1/16/2019 Pending sale $329,900 — $156
    1/4/2019 Price change $329,900 -2.9% $156
    9/3/2018 Price change $339,900 -2.9% $161
    6/29/2018 Price change $349,900 -14.6% $166
    5/10/2018 Listed for sale $409,900 0% $194
    2/8/2018 Price change $410,000 -12.6% $194 —
    2/3/2018 Price change $469,000 -1.3% $222 —
    1/19/2018 Listed for sale $475,000 +69.9% $225 Owner
    2/20/2015 Sold $279,609 — $132 Public Record

    So, bought in Feb 2015 for $280
    And have been attempting to sell for a year now. Initial list price whopping 70% increase at $475k. However that has “dwindled” to current price of $320k, or almost 40% off of list price.

    Note the DOM of 265 doesn’t quite add up. Then note that they took a few month “pause” last year hence it “hasn’t been on for a year quite yet” if you’re a realtor.

    Otherwise a decent buy all around if you can hack the commute to PDX and stopped traffic over the I-5 bridge/ Columbia River more or less from 1pm until 8pm. EVERY FLIPPIN DAY.

      1. Commute times.

        Bahahahaha … what’s fun to learn is when a puke visits a house for sale that is located in the boonies and does this ON A WEEK END and then he makes a decision to buy because the traffic to and from his work location doesn’t seem all that bad and then he discovers the VERY FIRST MONEY MORNING that the traffic jam is UNBELIEVEABLE and it is at this time and for the very first time he discovers that HE IS SCREWED.

  14. Nothing hard to understand. 2006 price hikes hit a brick wall, party ended, everyone put property for sale to escape. Those that need to sell dropped prices and those who previously paid more stopped making mortgage payments. All a logical and predictable process.

    Now it’s 2019, price increases have hit a brick wall, party is ending, those wishing to escape are listing for sale. Those needing to get out are dropping prices. Many have paid more and will begin to stop mortgage payments.

    Is the rest difficult to predict? It is logical and predictable. Ever seen a movie twice? This one is on the really big screen.

    The only thing surprising is how rapidly things are evolving and how fast the stats are eroding. Couple of big lender failures and we will be back to old times. The press is beginning to smell blood and will no longer gloss over. Hopefully the realtor babble is about over too. A rush to the exits like a fire in an overcrowded theater. We are about there.

      1. All a logical and predictable process

        Sorry, no. It’s a mania. The crash and burn may well exceed any reasonable logic. If logic were in play the bubble wouldn’t have ever happened.

    2. If this is the second playing of a movie, then we should expect another bailout in 2-3 years? How’s that going to work with our existing federal deficit?

        1. That’s Mauldin’s bet going forward, massive QE that will make the previous debt purchases look like a dress rehearsal.

  15. I like to walk. Every day, I pass the houses for sale in my San Diego neighborhood. I don’t think I have seen one of them sell in 3 months. I noticed one of the remodeled flips is starting to look shabby with the plants starting to die in the front yard. When there are open houses, I stop in and have a look around. Every open house I went to in the last three months I was the only person there. Someone didn’t even bother to pick up all of their open house signs at one place, one of them was left lying by the side of the road. The contrast between now and this time last year is startling. People were crawling over each other to get in the door at these open houses. Houses were selling before they were even listed. The contrast is really very startling. Something has definitively changed.

    1. The contrast is really very startling. Something has definitively changed.

      I’d say the desire not to get schlonged by the reverse wealth effect is a definite factor. Almost everyone who bought a shack since 2011 overpaid. With true price discovery finally catching up to the Fed’s Ponzi markets and asset bubbles, no sane person is going to want to catch a falling knife.

    2. Something has definitively changed.

      Only one thing has to change for this to happen. Housing just has to no longer seem like a sure bet for riches/retirement. Suddenly affordability matters again.

      1. Yes affordability would seem to be stretched to the limit of the tensile strength of the market. Just thinking about the numbers it is easy to see why. 20% down on a median priced home in SD leaves you with mortgage and property tax payments of about 3200-3300$ per month in a county where the average household income is 68k$. That’s 55-60% of the gross household wage for mortgage and taxes for a conventional mortgage. Add in federal and state income taxes; water and electricity bills; automobile insurance, maintenance, registration, and gas, and your budget is pretty much expended. If you have to pay your own health insurance, you are over budget before owning a car. The median savings account balance for US households in 2016 was 7000$. Probably not much higher now. So most households do not have even close to the savings for a conventional 20% down mortgage. So the above is actually an overly optimistic assessment of affordability. And the pool of black market laundered cash from China and part time yoga instructors who don’t care how much of their patents hard earned money they spend on an over priced house has apparently evaporated.

        1. Yes affordability would seem to be stretched to the limit of the tensile strength of the market.

          Maybe far beyond. But it didn’t matter as long as it was going to make everyone rich. It only matter when the music stops. Which it just did. But some guy is behind the stereo tinkering with wires as we speak.

        4. I suppose that explains the massive homeless encampments along the Santa Ana river and people sleeping in their cars in parking lots. Actually, I think sleeping in an electric vehicle is a viable opt-out of the housing madness for some narrow segment of the population.

    1. “The U.S. had a disappointing score of 71 this year, four points down on 2017.”

      Corruption was likely much worse when the good times rolled and accounting data-base systems didn’t exist yet.

  18. land prices
    I know they move at a multiple of built homes on lots
    how much peak to trough?
    50%
    75%
    ???????

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