It's the inventory, stupid.
When I sold my overpriced condo last year in Phoenix, inventory was at 5,000 units. Now Phoenix is showing 53,806 units for sale, combined with 11 straight months of sales decline.
Pop.
U.S. Cities With Biggest Housing Inventories
Record-high inventory levels are forcing price cuts and buyer incentives in metro markets around the country
In the summer of 2005, the Phoenix real estate market was experiencing what local brokers call a "feeding frenzy."
All these homes bought by investors to try and get a quick return are having to be sold because of the interest rates and the leverage they put into them," says Pat Lashinsky, ZipRealty's senior vice-president of product strategy. "[Phoenix] is having to go through some market correction to get that right."
"Not only has the inventory increased threefold, but the amount of buyers on the market is less than half of what it was last year," notes Ron Fillion of Ocean International Realty in Miami.
Linda Rheinberger, GLVAR's president, has advocated several strategies to sellers that could help bring the market back to equilibrium. "We're encouraging people who aren't motivated to sell to delist and place a tenant in their property," she says.
While price cuts are becoming rampant in most areas of the country, a handful of markets are too stubborn to come down. In the San Francisco Bay Area, inventory has almost doubled in the past year -- from 15,826 to 28,621 homes -- yet a proportionally small number of sellers have dropped their asking price.
At the other end of the spectrum, Boston is already backing down from its peak inventory level of 45,815, recorded in June of this year. Last month, 46% of the homes for sale in Boston were reduced -- an aggressive selling trend that will likely begin to show its face in more and more markets around the country.
September 14, 2006
BusinessWeek: From feeding frenzy to housing hangover - price cuts becoming rampant in most areas of the country
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21 comments:
Interesting to see how this is playing out. San Francisco was everyone's example of a housing bubble until about 2003, when other cities (Miami, Vegas, San Diego, Pheonix) started to grab the headlines away.
I'm wondering who will be hardest hit. SF does still have a high income population, and with the exception of south of market, there wasn't a huge construction boom here. However, prices got ludicrously high. In other cities, prices never did get as high, but the massive amount of new construction created an excessive inventory level that seems almost guaranteed to drive prices down.
At least high prices make sense in SF (not this high, though). Personally, I think SF will take a hit, because inventory is up and sales are down. But not as bad as the big condo boom cities.
Just got back from walking the baby, and on a street I walk every day there is 1 house for sale on the market about 3 months. Here comes a Escalade SUV with a guy in a tie, I automatical think realtor pimp, gosh I was right. He pulled up at the POS flipper and jumped out like a rat (head moving back and forth scanning) then ran for the door. Not a bad area its just a overpriced house that is too small. Good luck.
Last month there were three "luxury" high-rise condo projects announced here in Jacksonville. Yesterday, exactly one month later, all three were cancelled. Three more are finishing up this year with no buyers.
Homes for sale on the MLS passed 16k today and the average listing price is down about 10% from this time last year. It's an all time record for area listings and nothing is selling.
My favorite word on a for sale sign:
'reduced'
MWAHAHHAHAHAHAHA!!!!!!!!
Word on a "For Sale" sign:
Trade?
Home listings in Boise Idaho has more than doubled since January of this year.
I just love a 'Price reduction' sign hang'n in the yard!
From $999k to $995k WOW!
Here in N.San Diego we had a developer Stop in the middle of grading!
The large grading contractors are not known to do that! They start and finish the job. It costs a lot to pull your equipment on and off a job. Most of the site is rough graded, but not finished by a longshot Future Lots sit empty, growing weeds!
Words for a for sale sign:
please, please, PLEASE!
"...developer stop in the middle of grading!"
I agree. Being in the construction industry myself, it's really odd to have a "pause" in the construction activities. Usually after site work (grading and paving, underground utilities), foundation/slab follows and framing.
There is a similar case in Pittsburg,CA. The 2nd phase literally stopped after grading and paving was completed.
In San Francisco, "a proportionally small number of sellers have dropped their asking price."
SF is definitely still in denial - panic has not hit yet. As 'Anon 2:23:57' noted, there is a relatively high proportion of high paying jobs and wealthy people here compared to say, Phoenix or Vegas - but housing prices have rocketed well beyond any normal correlation to the income of your average San Francsican.
There has been plenty of flipping going on in San Francisco - it's just not as obvious as other locales where entire new subdivisions are built and people try to flip the whole neighborhood at the same time.
Where is California Centex Homes project being dropped? Central California?
How about a whole development consumed by 10' tall weeds. that's what we have in town. Roads got put in and there were no buyers for the houses so no houses got built.
LMAO.
My favorite word on a for sale sign:
'reduced'
MWAHAHHAHAHAHAHA!!!!!!!!
Thursday, September 14, 2006 3:16:17 PM
My favorite is "Price Improvment"
signs like "$299,999.95 reduced to $294,999.99" or "motivated" or "new price" or "improved price" kind of give me a tickle.
still a nutty sh*t sandwich no matter how you slice it.
Inventory jumps... but prices are not falling much? I am talking about houses, not condos...
WHY? WHY? WHY? WHY? WHY?
prices are falling, actually they're plummeting, but they're not correctly reported, as the "official" numbers don't take into account incentives
the price numbers are bogus
A 10% drop seems right. I view the MLS regularly. In early August our town had a median asking price of $389,900 (number: 115). Today it is $349,900 (number: 113). 10% drop in 40 days! Is it indicative of a marketwide price correction? Or perhaps it's just usual for this time of year... (Sturbridge, MA)
Anonymous said...
I just love a 'Price reduction' sign hang'n in the yard!
From $999k to $995k WOW!
Thursday, September 14, 2006 5:03:10 PM
I definitely feel bad for those sellers that are reluctant to lower. Most of them listen to their realtors who say " It will get better in a few months". Poor saps.
Everyone knows a trend when they see it. Why is it that they think a bad housing market won't be a trend?
"Inventory jumps...but prices are not falling much."
Too early in the game. We've just started. I say this, because one possibility is that they could no longer drop the price below what they owe, otherwise it'll be foreclosed. The other possiblity, is that they may have some cash reserves derived from their HELOC and they're just recycling it.
Just watch when they can no longer sustain it.
Great for sale sign in Yard!
"Will whore out my wife"!
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