
More Than One in Four Home-Sellers Dropped Their Price Last Month - kimsk112
https://www.redfin.com/blog/2018/09/more-than-one-in-four-home-sellers-dropped-their-price-last-month.html
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derekp7
Isn't this a side affect of rising interest rates? Two years ago (when I
bought my current house) I got about 3.25% interest. Which means a 200K
mortgage is $870/mth. With 5%, the mortgage would have to drop to 162K to have
the same monthly payments -- almost a 40K drop in house price (about 16%,
assuming the mortgage makes up 80% of the home price).

~~~
jackcosgrove
In theory, yes. In practice, no.

[https://www.calculatedriskblog.com/2013/06/house-prices-
and-...](https://www.calculatedriskblog.com/2013/06/house-prices-and-mortgage-
rates.html)

"There’s no strong correlation between interest rates and home prices,” said
Douglas Duncan, chief economist at Fannie Mae.

~~~
Erlich_Bachman
> hief economist at Fannie Mae.

So the same company that lied through their teeth during the 2008 crisis and
buildup to it, to give the banks ability to package junk loans as AAA CDOs?
The one that had to be bailed out by the taxpayer eventually? Sure, let's
listen to them, they sound like a trustworthy source.

~~~
jackvalentine
He wasn't working there at the time - only started in 2008 post subprime
crisis.

Please don't argue ad hominem, if you have an issue with the statement then
make your objection directly.

~~~
cheez
Taleb calls these people IYIs: intellectual yet idiot.

There is nothing exceptional about THIS economist that would make him right.
The OP had the right idea.

~~~
jackvalentine
What’s your point?

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cheez
The point is that it's not an ad hominem attack. The entire profession of
economists on balance do not call anything correctly.

~~~
jackvalentine
It is an argument from ad hominem. Or are economists wrong even when they say
something you'd agree with?

~~~
Erlich_Bachman
The original comment ("In theory, yes. In practice, no.") is from ad hominem.
It does not provide any actual thoughts or arguments, it simply says that
there is an economist that thinks this way, implying that it should be enough
of a reason to trust it. There was no argument except for ad hominem! Of
course the response to that can only be a defusal of such argument.

~~~
jackvalentine
Err did you click on to the link provided with that comment at all?

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jldugger
What a strange metric. It's not 'prices are falling' even though doomsayers
really want it to say that. IMO what it mostly says is 'Sellers have been
posting really high numbers and slowly walking them back.' Which is
effectively a time-based auction, so it's not a completely irrational price
discovery model.

~~~
nerdponx
That sounds to me like the market is plateauing.

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partiallypro
JP Morgan just laid off a ton of Mortgage brokers fwiw.

~~~
latchkey
Source: [http://archive.is/3psee](http://archive.is/3psee)

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ChuckMcM
In California this has become noticeable to even the casual watcher of real
estate. Per my earlier comment about people who are speculating and trying to
'flip' houses, I'm seeing pretty rapid price rollbacks on houses that were
previously sold < 18 months ago. My speculation is that these people are
trying to unwind their position because the market is softening and they don't
want all their capital tied up waiting for the rebound.

The combination of higher interest rates and tax code changes which limit
mortgage interest deductions[1]. While $750K seems like a pretty high cap for
limits to kick in, in the Santa Clara county, the median house price is over
$1.3M so that is over $500K of mortgage interest you can't deduct.

That changes the calculus of buying an expensive house and I would not be
surprised if that is reducing the number of buyers.

[1] [https://www.marketwatch.com/story/what-the-new-tax-law-
will-...](https://www.marketwatch.com/story/what-the-new-tax-law-will-do-to-
your-mortgage-interest-deduction-2018-02-09)

~~~
anonymous5133
I have a friend who works as a realtor and she says that the market is
definitely starting to cool off. There are less "mid-range" buyers and more
low-end buyers because the prices have risen too much and interest rates are
reducing the amount people can borrow. End result is previously a buyer was a
mid-range buyers but now they are low-end buyer because the bank is not
willing to lend as much anymore.

Also there is data from CAR which shows both sales price and sales rate is
declining. Inventory should start to build up going forward as home sit on the
market longer.

[https://www.car.org/en/marketdata/data/countysalesactivity](https://www.car.org/en/marketdata/data/countysalesactivity)

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olivermarks
[https://www.ft.com/content/91122596-c8c0-11e8-ba8f-ee390057b...](https://www.ft.com/content/91122596-c8c0-11e8-ba8f-ee390057b8c9)
Rana Foroohar Dark clouds gather over the US housing market

~~~
MoBattah
pay wall

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cbanek
What is with the repetitive part of the graph that almost looks like a
heartbeat? It looks like some kind of yearly cycle where around the holidays
the prices don't move so much (probably because everyone's on holiday). It is
a bit higher than the last few peaks, but not by that much. I think people
also have been raising their expectations of what they will get recently.

I have been watching Zillow price drops well for Tucson, where I've been
looking to buy, and waiting for things to hopefully cool off.

~~~
jackcosgrove
Helpful hint: Thanksgiving day is the best day of the year to buy a home
(offer accepted) in the US, provided you like what's on offer. It's the slow
season but there's less inventory.

~~~
village-idiot
I always switched apartments in winter for that exact same reason.

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Twirrim
I've noticed several houses over the last month or so that haven't sold
anywhere near as fast as expected. Around here (Greater Seattle area), houses
have been selling in a matter of days: On the market by Wednesday, open house
at the weekend, offer accepted on the Monday.

If there had been just one house not selling that fast I'd have assumed
overpriced, or something noticeably wrong with them, but even the new builds
are struggling to sell at a price that would have been market competitive back
in July / August.

~~~
donavanm
Check out [https://seattlebubble.com](https://seattlebubble.com). Numbers
started changing in May, was “obvious” in sept. Average time on market is up
to about two weeks. Was single digit days back in Q2. I still see in demand
property going same day. Inventory is up, sales flat to down, prices mostly
flat. Way beyond seasonal demand changes. Will be curious to see what happens
in Q1/Q2.

~~~
conanbatt
>. Average time on market is up to about two weeks.

Still insane.

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romed
It is interesting but be aware that expressing these figures as a fraction of
listings necessarily biases the result to weak markets, where the properties
are on the market longer and the inventories are greater. In "strong" markets
(according to the point of view of a realtor; dysfunctional markets to
everyone else) such as San Francisco inventory is currently near record lows
with only about half as many listings as we had in 2010.

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wishinghand
I've been bookmarking a lot of homes on Zillow lately within the app and I get
almost weekly emails about prices drops. This is in the San Diego, CA area.

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Xcelerate
I bought a house this past March right before accepting an out-of-the-blue job
offer across the country, so I need to sell the house. This Redfin news
worries me (although I'm happy for the buyers!)

For anyone who has been through the process of selling a house right at the
start of a market turn — what advice would you give? It seems like I need to
get rid of the house ASAP, but are there any other important steps that I
might miss?

~~~
jackcosgrove
Look at "flat fee listing" services. You can save at least 3% (seller's agent
commission) and up to 6% by avoiding realtors. These services will charge a
flat fee to list your house on the major online portals, but you're on the
hook for showing it. You'll still need a lawyer. Not really an ASAP solution,
but you can save tens of thousands of dollars this way.

Also, don't sweat a price drop as long as the market you're moving to doesn't
lag the market you're in. You might lose money when selling, but if the other
market is stalling too you'll pay less and it could be a wash.

Timing a market slowdown such that you sell before a drop and buy after a drop
is nearly impossible with a primary residence.

~~~
Xcelerate
Interesting. I'll take a look at flat fee listing services. I hadn't heard of
those before.

Unfortunately, I moved from semi-rural countryside to the Bay Area. I won't be
buying a house here any time soon haha

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masonic
I wonder about the data legitimacy on these sites.

I looked my place up on Zillow a few weeks ago, and it said $1.5 million.
There's been only 1 sale here in the past 2 years, artificially low at $950K.
A neighbor's just sold for $1.32M.

Meanwhile, Redfin has mine at $1.04M.

Zillow has my original purchase price at about 45% of what it actually was
(and publicly recorded at).

WTF?

~~~
jedberg
My family who invests in single family homes said that Redfin is far more
accurate than Zillow. In other words, he usually ends up paying close to the
Redfin estimate.

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kosei
Article seems so click-baity. Last year, more than 1 in 4 home sellers dropped
their price, according to the included chart, but the market was hotter than
ever.

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rch
This is true even in Boulder, which mostly endured the 2008 downturn. I'm
curious to see how it works out.

~~~
partiallypro
We'll likely never see a housing crisis quite like 2008, at least not a for a
while, but many cities really have overshot reality. I'm in Nashville and it's
absolutely insane what people are asking for houses in bad neighborhoods or
houses in good neighborhoods. It might not be a lot if you're moving here from
California, but if you're from the region even Atlanta or Charlotte, you're
getting a bad deal. Condos last I checked were cheaper in Charlotte and
Atlanta in good neighborhoods than Nashville. Even in surrounding cities it
has greatly outpaced rationality. Homes in East Nashville are up almost 300%
in 8 years. That's not normal.

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wil421
Do Airbnb and Vacation homes push prices higher in Nashville? Planning a trip
to Nashville and there are a lot of Airbnbs available. I’ve known a few people
with rental or vacation condos in Nashville.

I’m in Atlanta and it’s nice to see prices cooling off. Especially since I
want to buy soon. A lot of lisitings look like the sellers are way too high
especially in hot areas.

~~~
rashomon
They absolutely do like tourist-heavy cities like Barcelona or London but a
temporary drop in a white-hot housing market isn't a good sign to buy. Houses
are still ludicrously expensive.

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socalnate1
If you are interested in some really good data on the San Diego area housing
market:

[https://www.piggington.com/september_2018_housing_data_slowd...](https://www.piggington.com/september_2018_housing_data_slowdown_here)

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wstuartcl
Would also like to see this data against initial price charts -- my gut is
that the market is over pricing on the initial price point and pulling back as
the pricing was too optimistic. May just be a sign that people in the market
assume their sales could be much more profitable than reality allows.

TLDR: Sellers are trying to squeak out higher prices than in the past and the
market is not accommodating the maneuver, or it is a tactic where an initial
over inflated price + reduction is a ploy to dangle the properties at the
true-wanted initial price.

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CogitoCogito
From the article:

> We define a price drop as a listing price reduction of more than 1 percent
> and less than 50 percent.

I would like to see the number of houses that increased their listing prices
by more than 1% for a clearer picture. Without that information, I don't see
how this graph leads to the conclusion of a general price drop.

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bmm6o
Does that ever happen? As a casual observer, I don't think I've ever seen it.
When would a seller raise the asking price of a house already on the market?

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CogitoCogito
I don't know how often it happens. That was my question after all. Judging by
the downvotes I received, I guess people here either know (or assume) that
asking prices don't rise. Unfortunately their downvotes aren't as educational
as the statistics I was asking for.

