Housing market is showing signs of cracking: 'Anything-goes list-price strategy is no longer working

[TomCADem]

Source: CNBC

Sales of both existing and newly built homes fell in June, the latter to the lowest level since last year. Prices continue to rise, but the gains are slowing. Mortgage applications to purchase both new and existing homes have been falling steadily, and mortgage rates are rising again. Single-family home construction also fell and was lower than June 2017.

In one of the nation's hottest metropolitan markets, Denver, Colorado, home sales fell 5.5 percent annually in June, even as prices hit an all-time high, according to a report by RE/MAX. Realtors there blame it squarely on a lack of homes for sale.

"Year-over-year prices have been climbing for more than two years now, which is great news for homeowners and sellers," said RE/MAX CEO Adam Contos. "The slower sales figures we're seeing are tied to inventory more than anything else."

But the slowdown is also tied to overheated prices. Even in the hottest markets, there is a limit to affordability, and that limit is clearly now being hit.

Read more: https://www.cnbc.com/2018/07/26/the-anything-goes-list-price-strategy-is-no-longer-working-in-housin.html

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June prices have gone down. In a way, this seems like good news if it finally opens up the market. The fear is if folks speculated like 2007 to inflate the market. With the Consumer Protection Agency being gutted by Trump, the door could be open to the liar loan days.

[vi5]

1. I thought that happened a while ago....

I thought the "Anything goes list price strategy" stopped after the crash of....whenever it was.

My wife works in real estate at the corporate level and she said the problem there is the same problem as everywhere else in America these days and that's the fact that the industry and it's moves and marketing and emphasis has been on high end wealthy types who want big homes, which to the point of the article there is already a lot of inventory of.

She said the starter home/mid range market is still strong but that's not what's being emphasized and having money thrown at it by the real estate industry.

And it's made worse by the fact that everyone who wants to buy these super expensive mansions and high end houses want it to be exactly like they want, down to every detail, which is obviously never going to happen given that people have different tastes. So not only is there a glut of inventory, people are being more picky.

[Dopers_Greed]

2. Crash baby crash

There are a TON of new developments happening in my city now, most starting at the $300k price point, which is completely unaffordable for me.

Even older houses in good locations are hitting the market at 2x-3x what they were going for several years ago. And they're being sold within a few days on cash offers OVER the list price.

[progree]

3. A gloomy picture from an investment newsletter -

... existing home sales fell in June, again, marking the fourth month of year-over-year sales declines. Prices are continuing to rise but not as quickly as they did several months ago. The fact that the fixed 30-year mortgage rate has gone from about 3.9% to 4.6% since sales peaked in November does create a bit of a headwind relative to where the housing market was just months ago.

New home sales also declined, but more importantly the median new home price fell, on a year-over-year basis, for the second month in a row—a rare but not unheard-of occurrence. ... For now, a month or two's worth of data doesn't make a trend. We'll have to see where this leads

---Vanguard Adviser Hotline, 7/26/18 (not affiliated with Vanguard)

[melm00se]

4. I am rooting

for a pull back in housing prices as I am getting ready to buy a 2nd property in FL as a rental and, long term, a retirement house.

[exboyfil]

5. New tax law has to have an impact

Less of the mortgage interest and property taxes are able to be itemized.

[CrispyQ]

6. My house is the size of a postage stamp & worth almost half a million.

We're in Boulder county. The rest of Colorado is almost as bad. My sister just bought a house in Loveland & said there was nothing under $300k.



This trail is 10 minutes from my house & why people are moving here. Of course, the frackers are after it, too. "It won't ruin your hiking trails," they say. Evil fuckers.

[ellie]

8. Gorgeous!

We live in Denver and these tiny homes are going for $700k. Who can afford that besides rich people? Of which I am not one.

[CrispyQ]

9. That was taken with my phone!

I didn't realize Denver was so bad until I read the article. I don't know how young people start out their life with a half a million dollar mortgage! And a lot of them have student loan debt, too. We tell ourselves we're free, yet many of us are debt slaves most, if not all of our lives.

[OriginalGeek]

11. Man I understand the urge to move there

I have visited my friend in Denver a few times in the last couple years and it is simply breathtaking. (high-altitude pun not intended.) The first time I saw the mountains just blew me away and then we actually went up them!

[CrispyQ]

15. The front range, on a clear day, viewed from downtown Denver, is stunning.

The trails along the foothills are lovely & not so high altitude. My friends do fourteeners, but I prefer low altitude hiking.

[Solly Mack]

17. That's a truly nice photo, CrispyQ

Perfect for how the eye travels.

[CrispyQ]

18. If only a little bird had been perched on that twig sticking out from the upper left.

It's easy to get good shots on our beautiful trails!

[Solly Mack]

19. No bird needed. That photo stands alone with all that beauty.

[Sunlei]

7. trend with developers/builders near my houston area is buy land & cram in

cram in 'garden homes' for rentals. A very close one bought 7 acres and is building 86 homes.

[BumRushDaShow]

13. Quick calc and that comes out to

about 3546 sqft per lot.

Here in Philly, anything that was a literal "alley" downtown that had a tiny parking lot where an old multistory 19th century house used to be, had been getting the 10-story condo treatment. In some parts of the city, some older homes on larger lots had owners able to subdivide, and then up went a McMansion on that side-lot. And with the 10-year real estate tax abatement here (still in place), they are still scouting locations to put up "townhouses" (expensive row homes, basically).

[Bengus81]

21. Houston still not have zoning hearings and reqirements??

I thought I read years ago where people always voted against them which is STUPID.

[Sunlei]

24. The developer is permitted by the city, he's built quite a few buildings in the area.

Went to see the land last week, developer drove up and he is breaking ground & utility lines are going in. There was an old house on the road frontage (house was 'thrown in' free) he's roofed & remodeled the old house and already has a ground manger living in the home.

This area has zoning, codes & requires building permits. We also have code enforcement officials.

[blue-wave]

10. I've noticed homes on the market longer

and some price drops, small drops but downward none the less. Also a lot of listings out there.

[dixiegrrrrl]

12. Britain has passed a law against all cash sales

plus you have to show your income is based on a real and legitimate source.

the law is designed to stop out of country buyers from stashing their cash in housing, which they often leave vacant, which drives house prices.

On the surface, it sounds like a good deal. If we had a law like that, Trump could not have sold to all the Russian mobsters.

I know there are ways to defeat the intent of such a law, straw buyers comes to mind, but hopefully that is addressed by the new law.

[BumRushDaShow]

14. "the law is designed to stop out of country buyers from stashing their cash in housing"

That's what they have been doing in Detroit. Buying up swaths of vacant properties to launder money and then leaving them vacant.

[dixiegrrrrl]

20. same same on the West Coast.

Seattle Times story a couple weeks ago about another high rise building, the penthouse apt. will be rented at 19,000 a MONTH.

Article did explain that apt. would be probably for short term stays.

and of course the building is going up near the the water, blocking out views from other hi-rise condos which were sold because of then scenic views.

[Igel]

16. That really depends on where you are.

The average is misleading.

[roamer65]

22. Feels like August 2007.

[JustAnotherGen]

23. We bought a historic district

Home in 2013. 50K in materials and almost all done by my husband. Even if it crashes we are way ahead.

It took 3 reactors to get what we wanted. The first two kept trying to push 6 bedroom McMansions that were poorly made.