Real Estate Days on Market?

[ultrarunner]

Yep... year over year down 20% in my market...

Real Estate always cyclical in my experience.

 

[Dftodd]

This seems pretty legit we are starting to seem houses sitting on the market and some price drops. Market was like the wild west here till recently.

 

[ultrarunner]

Latest SF data shows median prices down 300k, 23% of buyers under contract backing out, days on market increasing and price reductions becoming common in the San Francisco market.

New projects with approvals being sidelined as labor and material cost remain high but some very large projects remain in progress.

Near me I’m starting to see some nervous flippers… and at least one seller glad she took the cash offer from the flipper 3 months ago.

 

[CloverKnollFarms]

Nothing to see here… remember, inflation is a figment of the imagination. We are stronger than ever. Many are saying we have not seen the end of the real estate pullback. Americans are now carrying more debt, than ever before. Ever before. To think that will not creep into every economic corner, is foolish.

 

[2manyrocks]

I was looking at a house near Nashville that has already been through two weekends of open houses and is now set for a third open house this weekend. A year ago, it would have had a contract on it within a day of the first open house probably over list price.

They got one offer which they countered and then the prospective buyer never responded to their counter.

 

[Dftodd]

I was looking at a house near Nashville that has already been through two weekends of open houses and is now set for a third open house this weekend. A year ago, it would have had a contract on it within a day of the first open house probably over list price.

They got one offer which they countered and then the prospective buyer never responded to their counter.

There are several around here like that. Way over priced for what you were getting. Once they bumped the price down to something more realistic for what it was, it then went under contract.

Wife and I've been looking for a couple months. One place we looked at, the seller absolutely fell off their rocker and bumped their head.

Place has been on the market for a few months now. Has a weird smell coming from the crawl space. Tiny bathrooms. Warped floors, and a couple supports in the crawl space that are either rotted, washed out, or termites or carpenter ants got hungry.

The floor bouncing doesn't really instill confidence.

Can't access the garage with other then a moped, no apron for the garage. Needs a new AC unit, plus some wiring issues.

Person is asking super premium prices for crap.

There were 30 different realtor cards strewn across the counter.

 

[ultrarunner]

My in box is flooded with price reductions which hasn't happened for years... the market change is dramatic because it happened so fast.

Some Realtors are pulling listings and relisting so as not to reflect actual price reductions

Homes that would have went pending in 7 to 10 days are now 60+ days with no activity.

The number of buyers cancelling escrows or negotiating reductions in Escrow is unprecedented...

If the biggest issue in the Bay Areas is lack of inventory it seems raising interest rates has cured it... supply of homes for sale continues to grow as number of buyers declines...

I do believe foreclosure threat is less as this last run up buyers used larger down payments or all cash.

A flipper near me paid 1,000,000 for a home as-is and another 60k in upgrades then listing the property for 1.4m.

Today the property is listed at 998k.

So even in a best case sale at list will lose at least 100k+ with repairs made, sale costs, taxes, etc... city gets a 15k transfer tax on a million sale...

 

[2manyrocks]

There may not be the degree of threat of forced sales due to foreclosure compared to 2008. However, home affordability looks like a repeat of 2005.

"housing affordability is still a major constraint for potential homebuyers. As a share of median household income, our estimate of the principal and interest payment on a median-priced home is still just below the highest since 2005. Mortgage rates are up about 235 basis points from a year earlier and house prices have appreciated on an annual basis by 19.4 percent through Q2 according to the Fannie Mae House Price Index. Additionally, a strong “lock-in” effect for consumers remains: Many existing homeowners are likely reluctant to move due to having a current mortgage with a rate well below current market rates. At 5.22 percent, we estimate 84 percent of outstanding mortgages are at least 100 basis points below current market rates." Weak Growth Continues as Housing Slows | Fannie Mae

One of the reasons for the price run up is potential home sellers were disincentivized to sell their existing homes in a sellers market where buying a replacement home was a lottery because they never could know how much they'd be outbid over list on the home they wanted. Then they were faced with home prices having increased so much that replacing their existing home would be more costly. They may have had a very favorable unusually low interest rate by historical standards while inflation on building materials was ramping up significantly. And apparently in Calif, they would have faced increased property taxes on a replacement home.

So that limited the inventory of homes for sale helping to drive up prices.

Now that rates have increased, the rate lock in is also contributing to limiting the inventory of houses for sale. People who bought homes pre 2019 at a favorable rate won't want to lose the deal they already have.

But since we live in the bizarro world of quasi economics, I suppose I'm totally wrong.

 

[ultrarunner]

There may not be the degree of threat of forced sales due to foreclosure compared to 2008. However, home affordability looks like a repeat of 2005.

"housing affordability is still a major constraint for potential homebuyers. As a share of median household income, our estimate of the principal and interest payment on a median-priced home is still just below the highest since 2005. Mortgage rates are up about 235 basis points from a year earlier and house prices have appreciated on an annual basis by 19.4 percent through Q2 according to the Fannie Mae House Price Index. Additionally, a strong “lock-in” effect for consumers remains: Many existing homeowners are likely reluctant to move due to having a current mortgage with a rate well below current market rates. At 5.22 percent, we estimate 84 percent of outstanding mortgages are at least 100 basis points below current market rates." Weak Growth Continues as Housing Slows | Fannie Mae

One of the reasons for the price run up is potential home sellers were disincentivized to sell their existing homes in a sellers market where buying a replacement home was a lottery because they never could know how much they'd be outbid over list on the home they wanted. Then they were faced with home prices having increased so much that replacing their existing home would be more costly. They may have had a very favorable unusually low interest rate by historical standards while inflation on building materials was ramping up significantly. And apparently in Calif, they would have faced increased property taxes on a replacement home.

So that limited the inventory of homes for sale helping to drive up prices.

Now that rates have increased, the rate lock in is also contributing to limiting the inventory of houses for sale. People who bought homes pre 2019 at a favorable rate won't want to lose the deal they already have.

But since we live in the bizarro world of quasi economics, I suppose I'm totally wrong.

Sounds spot on to me...

One sticker shock that often hits buyers well after close is property tax.

With 1930's 2 bedroom bungalows at a million in some neighborhoods that equates to $1500 a month property tax...

Even if prices drop taxes are due as assessed and it can take years for an appeal to be heard... I have won every appeal and received thousands back but it was always years after paying my filing fee.

Don't forget supplemental bills as they always come as a surprise to first time buyers.

Having the market turn so fast is what surprised many... including professional flippers.

 

[CloverKnollFarms]

The government is here to help, with zero down mortgages for minority groups. You can’t make this stuff up!

 

[CloverKnollFarms]

None of this should be a surprise

 

[check]

I didn't realize this part. I know people who move every two years, to take advantage of the tax benefit. Moving costs, et.al. are all deductible against that 250/500K threshhold.

Wow, having to move every 2 years in order to escape capital gains taxes - that is a bummer!

Here the rule is simply no capital gains tax on your primary residence - ever. (Regardless of the amount.)

 

[2manyrocks]

None of this should be a surprise

Funny you should say that because it makes absolutely no financial sense to me that 30 year mortgage rates could ever have been as low as they have been. Interest rates should always be high enough to offset the effects of price inflation, include a risk premium for the possibility of default, cover administrative costs, and at least include some compensation for taking the risk that rates might change adversely over the term of the loan.

Roughly speaking, in the 1990s, the rates were 7-9%. In the early 2000s, rates were hovering around 6-7%, then 5-3.5% post 2008, and then in 2020, dropped below 3%. 30 Year Fixed Mortgage Rate - Historical Chart

They've held rates down so long that investors started looking around for somewhere safe to put their money. Indirectly, I suspect this contributed to investors buying homes to get a better return on their funds. They had the money to outbid potential homebuyers and this also contributed to the crazy run up in home prices.

Even though the inflation bear has now come out of the woods for all to see, the current mortgage rate is still below the current rate of inflation.

 

[arto98607]

Bye bye to what once was a large middle class......

 

[plowhog]

Some Realtors are pulling listings and relisting so as not to reflect actual price reductions

This is a common practice that sometimes occurs even in a hot market. If it was priced too high to start.

There is a LOT of scrutiny and attention to brand-new listings on the RE market. By pulling the property off the market and then re-adding it, the property again becomes a "brand new listing." Except its not.

Licensed realtors who have access to the local MLS have a big advantage over non-realtors in this area. When you look at the MLS listing you can easily see the history. It is much more difficult for "average joe" to get access to that information.

I've seen MLS listings that have had 10+ price adjustments or on/off the market gyrations.

btw, lots of price reductions throughout Northern CA. Pretty widespread, significant price cuts.

 

[Torvy]

I'm not too worried. According to this article 5 of the top 10 markets are here in the DFW area.

Best US real estate markets in 2022, according to new report

WalletHub published a report on the best real estate markets of 2022, based on 17 metrics in two categories: “real estate market” and “affordability and economic environment.”

www.foxbusiness.com

 

[Torvy]

Even though the inflation bear has now come out of the woods for all to see, the current mortgage rate is still below the current rate of inflation.

Inflation rate and interest rates do not have that type of correlation. Inflation rate is the rate of increase of prices over time. (Based on a market basket of consumer goods). Interest rates are based on many things and while increasing rates is one tool to cool inflation, the inflation rate compared to the interest rate means nothing.

Inflation is all about money supply. Fiscal policy is government spending, which is at all-time highs. Monetary policy is how the fed raises rates and buys/sells securities to make money looser or tighter. Right now you have them working at cross purposes.

Rates on mortgages are not as directly affected because a) they are long-term and b) real estate does not lose value as much as other assets like cars. Regional differences can be huge, though.

 

[2manyrocks]

Hmm, then all of the principles underlying the calculation of net present value of a stream of future payments must be wrong.

 

[ultrarunner]

btw, lots of price reductions throughout Northern CA. Pretty widespread, significant price cuts.

My in box has dozens of reductions every day…

My city MLS shows 500+ listings.

At least the mailbox solicitations to sell have tapered.

 

[ultrarunner]

Regarding inflation and rents…

Many cities including mine enacted emergency legislation now that Pandemic Rent freeze expired.

The new rules max rent increases to 1/2 the published rates of inflation…