The pending count finally reversed course and gained 6% this week, after dropping for the last five weeks.  Just in time to be greeted by this ZH post on the three stages of a housing bubble – hat tip to Doug for sending in:

Stage One usually ends with price spikes in the hottest markets so extreme that they generate headlines. Like these:

Phase Two of a typical US housing bubble begins when sellers read these headlines and note that prices are now above what they could have gotten in the last bubble. With the memory of how badly they’d wished they’d sold at the peak, they realize that they’ve been given a second chance to cash out, move to a cheaper, less-frenetic place, and coast on their real estate riches. So they call a realtor and list their house. As do a bunch of their neighbors. Supply, out of the blue, jumps.

That may be what’s happening now:

The most competitive, tightest housing market in decades may finally be loosening its grip, and that could put pressure on overheated home prices. The supply of homes for sale in the second quarter of 2018, the all-important spring market, rose at three times the rate of the same period in 2017, according to Trulia, a real estate listing and research company.

The inventory jump was the largest quarterly improvement in three years and could be signaling a slight thaw in today’s housing market. But it is just a start.

“This seasonal inventory jump wasn’t enough to offset the historical year-over-year downward trend that has continued over 14 consecutive quarters,” according to Alexandra Lee, a housing data analyst for Trulia’s economics research team.

The supply of homes for sale is still down 5.3 percent compared with a year ago. Still, all real estate is local, and some markets are seeing greater relief. Thirty of the nation’s 100 largest cities, including New York City, Miami and Los Angeles, now have more supply than a year ago.

Of course, the increase is a double-edged sword. Supplies are increasing because sales are slowing, and sales are slowing because prices are so high. In New York City, the median household must spend 65 percent of its income to buy a home, according to Trulia. In Los Angeles, it takes 59 percent.

“Among these unaffordable metros, San Diego posted the largest inventory growth—22 percent year-over-year,” wrote Lee. “Compare that with the same quarter last year, when that Southern California metro registered a 28 percent inventory decrease.”

Mortgage applications to purchase a newly built home plummeted nearly 9 percent in June compared with June 2017, according to the Mortgage Bankers Association. This suggests lower new home sales going forward, despite higher price.

CNBC link

Stage Two’s deluge of supply sets the table for US housing bubble Stage Three by soaking up the remaining demand and changing the tenor of the market. Deals get done at the asking price instead of way above, then at a little below, then a lot below. Instead of being snapped up the day they’re listed, houses begin to languish on the market for weeks, then months. Would-be sellers, who have already mentally cashed their monster peak-bubble-price checks, start to panic. They cut their asking prices preemptively, trying to get ahead of the decline, which causes “comps” to plunge, forcing subsequent sellers to cut even further.

Sales volumes contract, mortgage bankers and realtors get laid off. Then the last year’s (in retrospect) really crappy mortgages start defaulting, the mortgage-backed bonds that contain their paper plunge in price, et voila, we’re back in 2008.

How far away is the climax of Stage Three? It’s too soon to tell, with just one quarter of trend-reversal data on-hand. But if you’re thinking of selling (or if you own a lot of bank stocks or are thinking of shorting such stocks), now might be a good time to start paying attention and taking the appropriate steps.

https://www.zerohedge.com/news/2018-07-16/us-housing-bubble-enters-stage-two-suddenly-motivated-sellers

The UNDER-$1,000,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
Avg. DOM
# of Pendings
Jan 1
36
$477/sf
51
58
Jan 8
35
$479/sf
42
56
Jan 15
39
$469/sf
37
53
Jan 22
37
$453/sf
42
62
Jan 29
38
$459/sf
35
64
Feb 5
41
$463/sf
26
69
Feb 12
39
$461/sf
20
73
Feb 19
42
$456/sf
20
72
Feb 26
53
$451/sf
20
81
Mar 5
47
$457/sf
24
79
Mar 12
60
$434/sf
19
87
Mar 19
67
$478/sf
21
81
Mar 26
61
$477/sf
23
86
Apr 2
50
$464/sf
24
95
Apr 9
56
$471/sf
23
93
Apr 16
61
$464/sf
24
93
Apr 23
59
$459/sf
25
96
Apr 30
61
$466/sf
27
95
May 7
67
$472/sf
20
89
May 14
66
$480/sf
21
95
May 21
81
$474/sf
21
85
May 28
83
$438/sf
24
91
Jun 4
80
$442/sf
27
97
Jun 11
81
$427/sf
27
91
Jun 18
88
$442/sf
29
78
Jun 25
93
$442/sf
31
77
Jul 2
96
$443/sf
30
76
Jul 9
98
$447/sf
33
65
Jul 16
98
$445/sf
34
78

The $1,000,000 – $1,500,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
Avg. DOM
# of Pendings
Jan 1
91
$532/sf
72
68
Jan 8
99
$551/sf
64
64
Jan 15
96
$535/sf
61
75
Jan 22
107
$515/sf
63
82
Jan 29
108
$512/sf
57
91
Feb 5
110
$518/sf
49
100
Feb 12
117
$487/sf
46
106
Feb 19
107
$500/sf
45
114
Feb 26
112
$485/sf
46
117
Mar 5
111
$496/sf
45
115
Mar 12
126
$475/sf
43
109
Mar 19
125
$487/sf
47
129
Mar 26
133
$484/sf
47
124
Apr 2
139
$495/sf
47
121
Apr 9
148
$485/sf
51
119
Apr 16
145
$474/sf
45
114
Apr 23
162
$470/sf
43
117
Apr 30
162
$486/sf
42
121
May 7
180
$495/sf
40
117
May 14
182
$491/sf
41
127
May 21
184
$475/sf
40
135
May 28
188
$473/sf
40
139
Jun 4
189
$469/sf
43
148
Jun 11
199
$469/sf
45
142
Jun 18
193
$465/sf
44
143
Jun 25
211
$476/sf
39
141
Jul 2
206
$483/sf
41
142
Jul 9
201
$483/sf
45
146
Jul 16
200
$502/sf
44
145

The $1,500,000 – $2,000,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
Avg. DOM
# of Pendings
Jan 1
84
$612/sf
86
40
Jan 8
98
$612/sf
73
42
Jan 15
98
$607/sf
73
42
Jan 22
111
$589/sf
63
42
Jan 29
120
$577/sf
61
45
Feb 5
114
$586/sf
56
51
Feb 12
118
$566/sf
52
57
Feb 19
121
$596/sf
53
64
Feb 26
122
$596/sf
53
64
Mar 5
125
$593/sf
56
70
Mar 12
131
$602/sf
53
67
Mar 19
120
$598/sf
58
74
Mar 26
121
$596/sf
57
75
Apr 2
128
$593/sf
55
70
Apr 9
140
$612/sf
54
66
Apr 16
146
$617/sf
50
67
Apr 23
149
$616/sf
53
78
Apr 30
152
$605/sf
60
81
May 7
157
$618/sf
63
85
May 14
158
$614/sf
63
87
May 21
154
$637/sf
54
82
May 28
146
$633/sf
58
80
Jun 4
149
$614/sf
54
76
Jun 11
158
$615/sf
50
83
Jun 18
164
$606/sf
53
77
Jun 25
160
$606/sf
56
73
Jul 2
160
$607/sf
56
69
Jul 9
160
$590/sf
63
65
Jul 16
160
$591/sf
63
66

The $2,000,000+ Market:

Date
NSDCC Active Listings
Avg. LP/sf
Avg. DOM
# of Pendings
Jan 1
341
$1,021/sf
127
56
Jan 8
356
$1,007/sf
123
49
Jan 15
370
$991/sf
115
48
Jan 22
375
$992/sf
110
47
Jan 29
384
$1,005/sf
109
56
Feb 5
387
$1,005/sf
111
56
Feb 12
379
$1,004/sf
107
63
Feb 19
399
$990/sf
104
69
Feb 26
400
$990/sf
101
75
Mar 5
398
$1,022/sf
97
79
Mar 12
406
$1,017/sf
99
89
Mar 19
430
$1,020/sf
97
79
Mar 26
455
$0/sf
92
71
Apr 2
453
$0/sf
94
67
Apr 9
462
$0/sf
94
66
Apr 16
473
$0/sf
95
66
Apr 23
482
$0/sf
95
70
Apr 30
476
$0/sf
94
74
May 7
486
$0/sf
92
72
May 14
493
$0/sf
91
84
May 21
510
$0/sf
92
79
May 28
504
$0/sf
95
90
Jun 4
488
$0/sf
94
102
Jun 11
502
$0/sf
95
99
Jun 18
524
$0/sf
93
91
Jun 25
525
$0/sf
92
78
Jul 2
516
$0/sf
94
78
Jul 9
519
$0/sf
96
73
Jul 16
521
$0/sf
98
80

Weekly NSDCC New Listings and New Pendings

Week
New Listings
New Pendings
Total Pendings
Jan 1, 2018
18
15
Jan 8
89
31
Jan 15
87
43
Jan 22
87
43
Jan 29
81
48
244
Feb 5
77
53
262
Feb 12
74
53
280
Feb 19
89
55
295
Feb 26
87
57
318
Mar 5
84
62
328
Mar 12
107
61
339
Mar 19
88
59
350
Mar 26
99
55
347
Apr 2
87
66
346
Apr 9
106
58
336
Apr 16
98
54
331
Apr 23
108
67
353
Apr 30
98
70
362
May 7
138
68
355
May 14
99
78
386
May 21
115
63
369
May 28
92
84
387
Jun 4
91
77
410
Jun 11
100
56
401
Jun 18
103
54
376
Jun 25
105
54
358
Jul 2
83
78
361
Jul 9
74
50
342
Jul 16
109
83
361
author avatar
Jim the Realtor
Jim is a long-time local realtor who comments daily here on his blog, bubbleinfo.com which began in September, 2005. Stick around!

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