Home Sales Are Plunging in California with falling prices in Austalia

In California, Home Sales Are Plunging Like It Is 2008 All Over Again

Economic Collapse Blog,

2 November, 2014

What goes up must eventually come down.  For years, the California housing market was on the cutting edge of “Housing Bubble 2” as we witnessed home prices in the state soar to absolutely absurd levels.  In fact, it got so bad that a burned down house in Silicon Valley sold for $900,000 earlier this year, and a condemned home in Fremont sold for $1.2 million.  But now things have changed in a major way.  The hottest real estate markets in the entire country led the way down during the collapse of “Housing Bubble 1”, and now it looks like the same thing is going to be true for the sequel.

According to CNBC, the number of new and existing homes sold in southern California was down 18 percent in September compared to a year ago…

The number of new and existing houses and condominiums sold during the month plummeted nearly 18 percentcompared with September 2017, according to CoreLogic. That was the slowest September pace since 2007, when the national housing and mortgage crisis was hitting.

Sales have been falling on an annual basis for much of this year, but this was the biggest annual drop for any month in almost eight years. It was also more than twice the annual drop seen in August.

Those numbers are staggering.

And it is interesting to note that sales of new homes are being hit even harderthan sales of existing homes…

Sales of newly built homes are suffering more than sales of existing homes, likely because fewer are being built compared with historical production levels. Newly built homes also come at a price premium. Sales of newly built homes were 47 percent below the September average dating back to 1988, while sales of existing homes were 22 percent below their long-term average.

At one time, San Diego County was a blazing hot real estate market, but now the market has turned completely around.

In fact, the county just registered the fewest number of home sales in a month since the last financial crisis…

A combination of rapid mortgage rate increases and decreased affordability, San Diego County home sales collapsed 17.5% to the lowest level in 11 years last month, in the first meaningful sign that one of the country’s hottest real estate markets could be at a turning point, real estate tracker CoreLogic reported Tuesday.

In September, 2,942 homes were sold in the county, down from 3,568 sales last year. This was the lowest number of sales for the month since the start of the financial crisis when 2,152 sold in September 2007.

And it can be argued that things are plunging even more rapidly in northern California.

In the San Francisco Bay area, sales of new and existing homes were down 19 percent in September on a year over year basis…

Home sales in the San Francisco Bay area have been falling for months, but in September buyers pulled back in an even bigger way.

Sales of both new and existing homes plunged nearly 19 percent compared with September 2017, according to CoreLogic. It marked the slowest September sales pace since 2007 and twice the annual drop seen in August.

If a new real estate crisis is really happening, these are precisely the kinds of numbers that we would expect to see.  If you still need some more convincing, here are even more distressing numbers from the California real estate market that Mish Shedlock recently shared…

• The California housing market posted its largest year-over-year sales decline since March 2014 and remained below the 400,000-level sales benchmark for the second consecutive month in September, indicating that the market is slowing as many potential buyers put their homeownership plans on hold.
• Existing, single-family home sales totaled 382,550 in September on a seasonally adjusted annualized rate, down 4.3 percent from August and down 12.4 percent from September 2017.
• September’s statewide median home price was $578,850, down 2.9 percent from August but up 4.2 percent from September 2017.
• Statewide active listings rose for the sixth consecutive month, increasing 20.4 percent from the previous year.
• Inventory reached the highest level in 31 months, with the Unsold Inventory Index reaching 4.2 months in September.
• September year-to-date sales were down 3.3 percent.

Of course a similar thing is happening on the east coast as well.  At this point, things have cooled off so much in New York City that it is being called “a buyer’s market”…

New York City’s pricey real estate has become a “buyers market,” new data suggests, characterized by lowball offers and a rise in the number of properties staying on the market for longer.

The latest figures from Warburg Realty show that among higher-priced homes, New York City is in the throes of a “major shift” that reflects a cooling market, the likes of which hasn’t been seen in almost a decade.

“Offers 20 percent and 25 percent below asking prices began to flow in, a phenomenon last seen in 2009,” wrote Warburg Realty founder and CEO Frederick W. Peters in the report, which surveys real estate conditions around the city.

In the final analysis, it is no mystery how we got to this point.

During the Obama era, the Federal Reserve pushed interest rates all the way to the floor for years, and this caused “Housing Bubble 2” to become even larger than the original housing bubble.

Now the Federal Reserve has been aggressively raising interest rates, and this is now busting the bubble that they created in the first place.

So if you want to blame someone for this mess, blame the Federal Reserve.  The Federal Reserve has created huge “booms” and “busts” ever since it was created in 1913, and hopefully the American people will be outraged enough following this next “bust” to start calling for real change.

I have been calling for the abolition of the Federal Reserve for years, and there are many others out there that also want to return to a free market financial system.

History has shown that free markets work exceedingly well once you take the shackles off, and as a nation we desperately need to return to the values and principles that this nation was founded upon.

From down in Australia

Falling house prices now hitting retail sales

ABC,

2 Decembe8, 2014

If retailers were not in enough strife already, it now appears falling house prices have joined low wage and price growth, as well as declining household savings, in their increasingly large list of worries.

Monthly retail sales figures have disappointed again, rising just 0.2 per cent in September on a seasonally adjusted basis.

This compared with the more bullish, but still fairly insipid, forecast of 0.4 per cent growth by market economists.

More disturbingly, sales were up just 0.2 per cent across the three months of the September quarter.

It was also below forecasts and a marked stepdown of the 1 per cent growth recorded in the June quarter.

Falling house prices hit discretionary retail

While the broad measure of house prices has been falling for the past year, the downturn in the September quarter coincides with the more affordable, bottom quartile of the property market turning negative.

With the exception of cafes, restaurants and takeaway, the other key discretionary sectors such as household goods, clothing and department stores reported either flat or negligible sales growth.

"The subdued rise in real retail sales in Q3 suggests that households are starting to feel the pinch from rising petrol prices and the slowdown in the property market," Capital Economics analyst Marcel Thieliant said.

"With the full effects of falling house prices yet to be felt, we think spending will slow further next year."

Food was one of the few sectors which recorded any growth, up 0.4 per cent — largely due to price rises rather than increased volumes.

"Sales of household goods were unchanged in September relative to August," Mr Thieliant said.

"Given that home sales fell to a fresh 23-year low in October we think that weakness will continue."

RBC's Su-Lin Ong said weakening consumer sentiment will start being an even bigger drag on the broader economy.

"Despite a reasonably healthy labour market, it is likely that the persistently soft pace of wages growth, declining savings buffer, and weaker housing market are finally catching up to the consumer," Ms Ong said.

"This remains consistent with our base case for some rotation in activity as we head into 2019, with household consumption set to move to a sub-2 per cent pace and housing construction set to turn into a drag on activity next year."

Ms Ong said this will flow into other sectors and may temper the continued growth in public spending, net exports and business investment.

"Overall activity may well remain above-trend next year, but momentum seems set to moderate and there remains a considerable degree of uncertainty over the unfolding housing moderation, the cost of funding and global growth."

Falling house prices spread across more of New Zealand

Falling property prices are becoming a feature of more parts of the New Zealand housing market.

QV has reported a significant increase in the number of properties being listed for sale in September – but value growth remained modest.

Five of the 15 main centres reported a drop in values in the September quarter: Auckland, New Plymouth, Napier, Christchurch and Queenstown-Lakes. That's up from four the month before and three in July.

Among smaller regions, Hauraki prices fell 6.4 per cent, Kawerau 5.1 per cent, and Otorohanga 4 per cent.