Over 25 Percent of Home Sellers Dropped Their Price in June In Most Metro Areas

mrchinup

4 years ago

Great job! Should get real interesting in a year or two just like in 2005.

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8dots

4 years ago

Don’t look at the fake positively biased C/S, look at the sharp decline of BRK.B.

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Six000mileyear

4 years ago

The Case Shiller index will probably be discontinued before it is the most useful in finding bargains. I’m would be looking to buy when valuation returns to levels at the housing crash bottom.

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Casual_Observer2020

4 years ago

FWIW the chart coincides with the Chinese government imposing a 50% tax on bank accounts over $50,000 in 2013. I don’t think that is coincidental that real estate prices across North America started skyrocketing again magically in 2013. This is just money from China and not anywhere else.

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Zardoz

4 years ago

Reply to Casual_Observer2020

They’re spending the hoard of money we gave them for 4 decades worth of plastic crap that’s now in landfills.

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Jack

4 years ago

Reply to Zardoz

This is twisted.

We fill up our landfills with Chinese garbage and they buy our houses with the profits.

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LPCONGAS99

4 years ago

Reply to Jack

and liberals wonder why populism and so called far right leaders emerge. It is a natural human reaction to your living space being destroyed

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Call_Me

4 years ago

Reply to Zardoz

Among other places-

“Through normal water and food consumption, it’s estimated that the
average person consumes about 5 grams of plastic each week, equivalent
to the size of a credit card, according to the WWF report.”

https://news.mongabay.com/2020/07/our-life-is-plasticized-new-research-shows-microplastics-in-our-food-water-air/

https://www.medicalnewstoday.com/articles/323428#Salt-of-the-earth

Call_Me_Al

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Casual_Observer2020

4 years ago

I don’t think the bubble will pop but deflate a bit. There is a lot of foreign money still pouring into US real estate as there has been over the last 10 years. There always seems to be money to launder and real estate is the easiest and best asset to use to clean money. Homes on the west and east coast and Florida and Texas have an endless supply of buyers (think Asian, Russian and Mexican money). No one lives in these homes but buyers are willing to live with the risk of 10 or 20% “loss” in order to continue to launder 100% of their money. I don’t think anyone even on blogs such as these has analyzed the impact of laundered money in real estate on prices or overall economy. This is one of the ongoing side effects of globalization of capital. This is all done via LLCs or some other front company masking as an “investor”.

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Casual_Observer2020

4 years ago

Reply to Casual_Observer2020

https://www.icij.org/investigations/fincen-files/a-kleptocrats-dream-us-real-estate-a-safe-haven-for-billions-in-dirty-money-report-says/

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Maximus_Minimus

4 years ago

Reply to Casual_Observer2020

Between money laundering and Blackrock, where does an individual home buyer turn to? Certainly not to the government they voted for.

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Zardoz

4 years ago

Reply to Maximus_Minimus

Maybe the launderers ARE Blackrock.

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ajc1970

4 years ago

Reply to Casual_Observer2020

“a lot of foreign money”

What % of the trillions of dollars? It may be significant in some areas (Seattle, San Fran, Vancouver, etc), but location is everything in real estate, especially for this.

China isn’t buying up houses in Ocala, FL, Bend, OR or Bakersfield, CA

They might keep markets from sinking in coastal urban cities but they’re just a drop in the overall ocean

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TexasTim65

4 years ago

Reply to ajc1970

No, but the markets they do enter get pushed up and the people there who can’t afford things move out and put their money elsewhere pushing up another market. Why do you think so many Californians are suddenly moving to Idaho and leaving the nice Cali weather behind.

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Rbm

4 years ago

Reply to TexasTim65

My observation of living in both id and ca. is people are taking the wealth they built in the ca market and moving to id where your money goes farther.

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SleemoG

4 years ago

How many potential sellers chose not to sell because they would have to drop price? Has inventory continued to dry up?

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Zardoz

4 years ago

Reply to SleemoG

Not at all. Double or triple what it was last year, and still increasing.

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Captain Ahab

4 years ago

To put Case-Shiller in perspective, $1.00 in 1987 is worth about $2.61 in 2022 (260 on the chart). Nationally (averaged), there is no reason why home prices should increase more than inflation. Don’t think there is greater ‘real’ demand at the national level. The ‘spike’ in recent demand was speculative, driven by Fed incompetence.

It is hard to miss the lessons of 2006/7/8 from the Case-Shiller chart. Some observations: the hot cities in the last bubble, are pretty much the hot cities in the current bubble. The bigger the bubble, the bigger the ‘pop.’

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Captain Ahab

4 years ago

Reply to Captain Ahab

Also, that $1.00 in 1987 was worth $1.98 in 2011 , which should ‘put’ the national (average) Case-Shiller at 198 in 2011. The Case Shiller National Index bottomed at about 200 in 2011-12….

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shamrock

4 years ago

Reply to Captain Ahab

Does your calculation take into account there are 90 million more people in the country now? 100 million if you count illegals.

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worleyeoe

4 years ago

“Home prices have gotten so insane, this is barely a start to what’s coming.”

100% agree with Mish and part of the reason is he’s also correct that this will be a shallow recession in terms of job losses which may not actually start until early next year. Likewise, 30YFRM will dip below 5% before the end of the year which will coincide with a 10% or so dip in sales broadly across most US cities by February 2023. Could be a little more in some areas, but this collision will cause the housing market to do a 180 by early next spring. Will there be 15-20% YOY growth? No, of course not. However, in the hot areas, prices will increase by 5-8% within six months. At this point if inflation is still above 6% like it probably will be, this will put the Fed into a pickle.

Remember nowadays, the Treasury borrows primarily in the 3 year and under notes and 1 year and under bills. As such, the Fed can’t let the FFR rise above 3.5% materially and stay there. To do so would allow too much competition for these short-dated treasuries, which would reduce demand just enough to force yields back above 3% and sustain themselves. An FFR of 4% or more would push the 2 & 3 year treasuries up to 3.5% which will be a very big deal. There’s at least $5T in debt rolling over in the next 30 months. This year’s total interest on the debt will easily push above $600B with declining tax revenues.

It’s all about QT in terms of bond & MBS running off without the Fed being forced into selling assets which would cause yields to spike. Time will tell as to how stable employment stays, and of course a lot of that depends on how well the global economy holds up. Not looking great for China & ECB.

Last, a lot of people are going to get big sticker shocks this winter. Everyone who had a 12-month fixed rated NG or heating oil plan is now rolling over to much higher cost per therm. I went from 38.5 cents per them to 73 cents, or a 90% increase in price this past June. This will be a very big deal. There’s a decent % of people who dodged the bullet like me this past winter. Only those who locked in for 18-24 months are safe through this winter. It’s utterly crazy that Congress hasn’t got involved with doing something to slow all of the LNG exports that’s the DIRECT CAUSE for driving up prices. It’s not a matter of production but letting LNG exports push up domestic prices.

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LPCONGAS99

4 years ago

Reply to worleyeoe

Agree with your comments and Mish is almost always spot on….But I can tell you there are some areas still filled with insanity………..

Ulster County NY…….Kingston area and more so Saugerties…….You still have people coming up from NYC and either buying their 2nd home as a vacation home that they work out of now or Air B&B it and offering well over ask… Talked with someone whose son bid $325,000 on a house in Watkins Glen, NY even farther north, $325K was listing price, someone bought it for 400K.lots of land but this is almost 4 1/2 hours north of NYC

Yes, it can’t last ……… I guess………….locals starting to get annoyed with all the hot money coming in too

Saugerties is a lovely area. if you are ever coming back from upstate NY on the thruway stop off at exit 20, head south into the village, go down and see the lighthouse, come back up to the Dutch Ale house then Main St Restaurant for excellent mexican food made in front of you and the best frozen Maragaritas i have ever had(made in a slushy machine)

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worleyeoe

4 years ago

Reply to LPCONGAS99

I think it’s reasonable that what I’m speculating generally plays out. Certainly, something could come out of left field and really cause unemployment to tick up say 2-3% instead of at most 1% in the next 12-18 months.

But what I foresee is inflation staying above 5% all through next year, and I don’t think the downturn is going to be significant enough for the Fed to really start lowering the FFR. So by this time next year, the job losses move sideways for several months and stabilize, but we’ll still be left with inflation 2-3 times what the Fed wants long-term.

Basically, the Fed will pivot at a moment’s notice to save the housing market. They DO NOT want a repeat of 2009-2011. That, to them, would be catastrophic. Thusly, what we have is an asset bubble that’s going to take a pause for about 6-9 months then start to ramp back up, creating even greater pressures. I think 2024 is the year that something much bigger than what most people think can happen today will actually happen.

And finally, if the government does rent & mortgage relief again, then that’s the point that we can say it’s all going to come crashing down wihtin 3-5 years, because the housing market is going to get even worse.

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LPCONGAS99

4 years ago

Reply to worleyeoe

well said. agree……….

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Maximus_Minimus

4 years ago

Reply to worleyeoe

Another unaccounted feature of the most recent housing market is the incessant growth in jumbo homes. Will be costly to heat with the new gas prices. This cannot be completely blamed on shenanigans of the financial mafia.

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Zardoz

4 years ago

Reply to Maximus_Minimus

That blame goes to HGTV.

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Over 25 Percent of Home Sellers Dropped Their Price in June In Most Metro Areas

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