I guess real estate is making a comeback to the blog because conditions seem to be accelerating pretty quickly.
Price reductions in my city are now at 15 days since the last time I wrote about it. At that time markdowns were happening at 20 days.
A LOT of new inventory came on. So I'm guessing cut's will start coming sooner.
80% of houses on the market after 30 days have markdowns. Last time I checked it was probably 50%. Basically unless you are sitting on a mansion (or new construction) - you have a price cut. People with mansions tend to have a longer timeline to sell and a larger reservoir of funds. So they hold out longer.
And the price cuts seem to be getting more price cutty. Yeah... that's a word. When I start seeing 161,000 dollar price cuts on houses going for 1.1 mil, I think it's time to start really paying attention. That is a decent price cut. It's the kind of price cut that gives you a little swoon in your belly honestly.
And there is a LOT of pressure at the high end market. (3000 square ft and over) Lot's of places being listed. Built, and a few coming through as foreclosures. Just a couple, but last time I looked there was only 1. I'm not sure what is causing this.
Nothing that makes me feel more uncomfortable with the current market euphoria than the real estate market is acting like this. It makes me feel like someone is lying.
Also, price cuts are starting to hit Silicon Valley proper. Fremont is getting hit at 20 days now. Last time I looked they had none. So, the bedroom communities are spreading to the center which is Silicon Valley.
I know it seems like I'm giving mixes messages with my posts lately, but I do think there is a slowdown under way. I just don't think the same elements are in place to recreate a 2008 scenario.
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Don't focus on the Ratchets playing Ratchet with their ARMs ...
ReplyDeleteThat's not going to be how this plays out this time.
I'll ask a question first though: where do you think all that money came from during the period of "tight credit" from 2008 through 2012 or so?
How do you think so many commercial real estate projects got built?
Some kinds of money laundering are less obvious than others and don't involve little pipsqueaks that look like Joe Pesci. :-)
So there's this commercial real estate bubble that's been overfunded because of all of this money trying to seek legitimacy, and what it means is that when that money starts to go away, you really will have a slowdown, but this time it's going to be focused in commercial real estate first.
Part of the commercial real estate bubble consists of big building firms pushing through new developments on top of such things as schools, parking lots, old crappier neighborhoods, and so on. Within the construction business, the houses are referred to as "spec houses", or houses built to specifications for an unknown buyer, and there are entire "spec developments" that have been built this way.
New apartment complexes are super-easy to build this way, and there's a new development pattern for them: build them as you can find people to move into the buildings, keeping an eye on demand in such a way that lets you hire just enough construction people to do the job over a longer period. This prevents building a new complex and having most of it sit unoccupied because it arrived in a single lump of development.
Basically it's going to be not like 2008 in terms of how it happens, but the people in the back seats won't know the difference.
OH AND GOOGLE CAPTCHA NICE GOING THERE YOU HAD ME CLICK A YACHT BECAUSE AROUND HERE THOSE ARE USED LIKE CARS :-)
I'm not going to try and convince anyone there aren't giant distortions in the market. No one believes that. But your perspective is interesting. I haven't seen an appreciable uptick in stress on residentia. But that will be a tell.
ReplyDeleteBTW, Privacy Pass, which is a browser add-on for dealing with Cloudflare captchas, stopped working on Wednesday ...
ReplyDeleteThe "captcha.website" server that was needed to make it work isn't responding to traffic on HTTPS, and the base Web page now for HTTP is a Namecheap Web site stub.
Maybe it's going to work in the not-too-distant future, but for now this complicates dealing with a lot of sites because you'll have to answer captcha crap for each and every one of them. With Privacy Pass, you only had to do this after you'd gone through thirty Cloudflare captcha pages.
I don't know if this is also going to complicate making comments with regular Google captcha challenges, but I suppose I'm about to find out ...