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The Competition Disappeared

A report from the Seattle Times. “King County’s cooling housing market has turned downright chilly as prices have dropped to their lowest point in two years — with the median home now selling for $116,000 less than last spring. Even on a year-over-year basis, prices declined 3 percent — the first annual drop since the market bottomed out in the housing bust seven years ago, according to data released Thursday by the Northwest Multiple Listing Service.”

“The median King County house price of $610,000 was the lowest since March 2017, when prices first reached $600,000. Last May, at the peak of the market, homes were selling for $726,000. The total 16 percent price drop over the last eight months is the second-biggest decline for any eight-month period on record dating back two decades. During the peak of the housing bubble a decade ago, prices sank 18 percent from July 2008 to March 2009.”

“The turnaround is even more pronounced when zeroing in just on the city of Seattle. The median home in the city sold for $711,000, a decrease of 6 percent in a year and down $119,000 since last spring’s peak.”

“The number of homes sitting unsold has more than doubled in the past year across the county. And while that’s been the trend for a while, new this month is a partial reason why: More people are putting their homes up for sale, as opposed to homes sitting unsold for longer.”

“Home shoppers reported seeing never-been-lived-in townhomes drop $100,000 off their price. They were able to convince sellers to pay for thousands of dollars in closing costs and potentially tens of thousands more if an inspection turned up significant problems.”

“Matt Holt and his fiancé began looking for a house a year ago when the market was still sizzling, only to find 15-20 offers on every house they put an offer on. They went as high as $60,000 over asking price on a house in Renton last year and agreed to waive the contingency that would have allowed them to back out of a deal if an inspection showed the house needed work — but they still didn’t get a house at the time.”

“Then they got back into the market and just closed on another Renton house this week for $10,000 under asking price, with no contingencies waived. ‘We went from going $60,000 over to $10,000 under on pretty similar houses in the span of eight months,’ Holt said. The ‘competition disappeared.'”

This Post Has 65 Comments
  1. ‘The total 16 percent price drop over the last eight months is the second-biggest decline for any eight-month period on record dating back two decades. During the peak of the housing bubble a decade ago, prices sank 18 percent from July 2008 to March 2009’

    Doesn’t that suggest a bubble currently popping?

      1. Almost no one is putting 20% down. How could there not be a slew of foreclosures come out of this, strategic at least.

        Last spring Seattle was the hottest market in the US. Frenzied blow out top followed by a swift crash is classic mania top and reversal.

        1. “Matt Holt and his fiancé began looking for a house a year ago when the market was still sizzling, only to find 15-20 offers on every house they put an offer on. They went as high as $60,000 over asking price on a house in Renton last year and agreed to waive the contingency that would have allowed them to back out of a deal if an inspection showed the house needed work”

          No one overpaid in this environment Ben. Everyone put 20% down and sold their current house at the same time….

          1. Ten bucks says Matt’s fiancé bolts like Ted Kennedy from a car accident once it dawns on her that she’s marrying an FB.

        2. A sudden 20% minimum down payment requirement would crash the shack market overnight. Eeee-bola from coast to coast!

          1. A 20% minimum down payment requirement would likely produce a more than 10% price drop, by whacking the amount the marginal buyer could “afford” to pay, or even taking the 3% downpayment buyers off the playing field.

    1. They are comparing apples to oranges, as the July 2008 to March 2009 decline was the maximum over the entire duration of the Great Recession, right up until the onset of Quantitative Easing, while the 16 percent price drop over the last eight months is merely the warmup act for the present episode.

      1. The Fed will just put a pause on QT and slash rates into negative territory. You might even see 30 year mortgage rates in the 1.5-2% range. I know it sounds crazy, but. . .we’ll see.

    2. That’s 2% a month, 24% a year. With insanely low rates and decades low unemployment. How could it be anything else?

      YoY is going to get progressively uglier until we get one year post-peak.

    3. Doesn’t that suggest a bubble currently popping?

      Don’t be such an alarmist, Mr. Jones. Surely if a bubble was bursting, all of those housing experts on my TeeVee would’ve sounded the klaxon by now.

  2. ‘We went from going $60,000 over to $10,000 under on pretty similar houses in the span of eight months’

    Sounds just like Sydney. I told you Seattle and California, what has happened in Vancouver, Toronto and Sydney was comin’ to get ya!

    1. Have heard this happening anecdotally in LA/OC parts of So Cal too. Several properties I have been tracking for “fun” the last few months have just sat on the market for weeks, EVEN AFTER multiple price reductions. There must be some less-than-savvy realtors out there, because not all of the listings are allowed to expire, hence showing the whole set of price reductions in the price history. Even the previously “HOT” El Sereno neighborhood of LA, which is a dump by the way on almost every measure (crime, school ratings, lots of industrial buildings, or even how crappy things look to the naked eye), has seen lots of price drops after being relisted multiple times. I also heard the “locals”, as the REIC calls them (basically Latinos who have lived in those barrios for several generations), have been vandalizing some of the flips. See link below for some tidbits:

      1. Chris-boy will be the new David Lereah on this site.

        From wiki,
        “Lereah has also written about real estate investing. His most recent book, All Real Estate is Local, was published by Doubleday in 2007. His 2005 book Are You Missing the Real Estate Boom?: Why Home Values and Other Real Estate Investments Will Climb Through The End of The Decade—And How to Profit From Them[6] was re-released in February 2006 as Why the Real Estate Boom Will Not Bust—And How You Can Profit from It.”

    1. FWIW, Mortgage Watch appears to be Big Fat Bastard on ZeroHedge. Similar, if not same, headlines and links. If so, please change the visual!

    2. You are cherry picking 1 zip code. The metro area as a whole was up YoY despite major headwinds. Single family homes near the coast and in good school districts will continue to perform well due to complete lack of inventory in these neighborhoods. Unless you are shopping for a condo in a bad school district, no chance you’ll be able to get a house on sale in 2019.

  3. How many congresspeople are there? How come we only here from 10 of them. Why do the others even get paid? Not a fresh idea for 50 yrs.

  4. Wow, it’s Sleepless in Seattle and not the movie this time.

    What is movie-like is the scene playing out there is like a coming attraction for Everytown, USA. “Coming soon to a theater near you, the 2019 suspense thriller: Bubbletown”

    1. At some level of wealth attainment, the rules that you or I live by seem to no longer apply.

      Except his ex didn’t see it that way.

    1. How the European economy is raising fresh global growth fears
      By Anneken Tappe
      Published: Feb 8, 2019 1:25 a.m. ET
      AFP/Getty Images

      The Bank of England and the European Commission both offered downbeat outlooks on Thursday, reaffirming growing fears about the health of Europe’s economy.

      Although, the BOE left interest rates unchanged, as expected, it cut its forecast for 2019 gross domestic product to 1.2% versus its previous estimate of 1.7%, with its current level representing the weakest growth since 2009 when a crisis sparked by complex mortgage bonds cast a pall over the global financial system.

      “Naturally, the uncertainty over Brexit means considerable uncertainty over the U.K. macro outlook, and therefore monetary policy,” said Bill Diviney, senior economist at ABN Amro.

    2. Asia: Markets tumble on US-China talks, Europe growth
      Fri, Feb 08, 2019 – 11:36 AM

      [HONG KONG] Asian stocks fell sharply Friday following losses on Wall Street as fresh doubts emerged over the prospects for US-China trade talks and Europe’s growth outlook.

      Hong Kong returned from the three-day Lunar New Year break and was immediately in the red, as investors reacted to negative signals from the US ahead of next week’s crunch trade negotiations in Beijing.

      “Fear raised its ugly head in overnight market action,” said CMC Markets chief strategist Michael McCarthy.

      “US investors cited concerns about seemingly stagnant trade negotiations between China and the US, despite a week long holiday in China.”

    3. Markets
      Dollar Libor Slumps Most in a Decade as Market Plays Catch Up
      By Alex Harris
      February 7, 2019, 6:50 AM PST
      Updated on February 7, 2019, 10:06 AM PST
      – Three-month rate fixes lower by 4.063 basis points Thursday
      – Market may be catching up to cash rates, BMO’s Hill says

      One of the world’s most important borrowing benchmarks staged its biggest single-day decline in a decade on Thursday.

      The three-month London interbank offered rate for dollars sank 4.063 basis points to 2.697 percent, the largest one-day slide since May 2009. The move may reflect a benchmark that’s making up ground following a repricing of short-end Treasuries and associated instruments in the wake of the Federal Reserve’s dovish pivot in recent weeks.
      Three-month dollar Libor plunged on Thursday

      The Libor move “largely represents the market catching up to cash rates, though the speed and severity of the adjustment were faster than presumed,” Jon Hill, a strategist at BMO Capital Markets, wrote in a note to clients.

      After reaching a 10-year high of 2.82375 percent on Dec. 20, three-month dollar Libor has retreated by almost 13 basis points as the Fed has signaled patience in its efforts to normalize policy.

      “In essence, it’s not too much of a stretch to claim that not only are short-term borrowing costs not increasing, they’ve declined by half a hike since the December FOMC meeting,” Hill wrote.

    1. Notice there’s no talk of shortage anymore? Why doesn’t the media call up the shortage people and ask them Wa Happened? I’m serious. This stupid “narrative” ran the show for almost a decade, now people are losing their ass left and right so what happened to the fooking shortage!

  5. A house in the Bay Area finally managed to get ‘Contingent’ status after it was on the market for nearly 3 months. Not sure how much they dropped the price and what the contingencies are. Does anyone know what the success rate of the ‘contingent’ status has been these days?

    1. That’s a good question. The way I understand it, any “offer” on a home regardless of whether the prospective FB has bank approval or even plans to follow through with the deal, would put the home in “contingency”. That being said, I would say, from what I have observed recently, it’s a very low success rate to advance to pending and from there to sold. Mabye 1/4. Many of the homes here in the Bay Area seem to either sit or get relisted.

  6. Good stuff right here:

    “Absent more direct government subsidy and Fed stimulus, the housing market is going to continue contracting, with prices falling. Anyone who bought a home with less than a 10% down payment mortgage over the last 3-5 years will find themselves under water on their mortgage. I expect home equity mortgage delinquencies and default to begin rising rapidly in the 2nd half of 2019“

    1. You have to admire the writer’s bullish optimism:

      Contrary to the official propaganda, the economy must be in far worse shape than can be gleaned from the publicly available data if the Fed is willing to stop nudging rates higher a quarter of a point at a time and hint at the possibility of more money printing “if needed.” Remember, the Fed has access to much more detailed and accurate data than is made available to the public, including Wall Street. The Fed sees something in the numbers that sent it retreating abruptly and quickly from any attempt to tighten monetary policy.

  7. yo Oxide
    Gained Wealth From:
    $2.93 billion Illinois
    $681.41 million Ohio
    $218.79 million New York
    and MI , WI etc
    RTW states rule

    1. The stock market dip? Keep buying, says Bank of America Merrill Lynch
      By Barbara Kollmeyer
      Published: Feb 8, 2019 9:32 a.m. ET
      Critical information for the U.S. trading day
      Getty Images
      The water is still fine, isn’t it?

      Stock market action over the last 24 hours is telling us that either investors are looking for excuses to sell, or reality has caught up with everyone in a big way.

      Wall Street met a wall of selling on Thursday, though nothing like the ugly days of December, as worries about global growth and trade got together and collectively blew up confidence a little. Given it’s Friday and lots of investors want to see if this move down has legs, there may not be too many too many bravehearts out there ready to dive back in. At least that’s how things are shaping up.

  8. Can you imagine? As values drop more and more and we get closer to 1 year from peak, the difference from 1 year ago will get greater and greater. Then those YOY comparisons will broaden and the REIC strategy of quoting YOY will begin to bite them bad.

    This is the single most stupid metric I have ever seen. “Despite recent monthly downturns, prices are still increasing slightly when ‘seasonally adjusted’ on an annualized basis”

    How stupid can people be! Can you imagine if they did this with stocks? “XYZ has fallen for 20 consecutive weeks but fortunately is still trading slightly higher than a year ago, therefore price is still appreciating, just at a slower rate”

    I will love seeing how REIC will explain when YOY starts showing 10, 15 or 20% downward YOY. I am sure they will convert to MOM reporting to minimize the ugliness of the data.


    1. REIC will explain

      What’s to keep them from comparing to 5 years ago? It will always be a great time to buy a house.

  9. The bubble will not be televised. There will be no one like Peter Schiff or Harry Dent on MSNBC this time. And the bailout will not be televised. And there will be no congressional hearings or authorizations for the bail out. The fed will just do it covertly and no one will be allowed to talk about it on the news.

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