A report from the Wall Street Journal. “U.S. home builders benefited from low interest rates this year as housing starts climbed to levels not seen in a decade. Home builders cranked up volume partly by focusing on homes more buyers can afford. In the third quarter of this year, the average price of a Meritage home fell 4.4% while the number of home orders rose 24%. ‘You’re seeing shifts down in average price,’ said Jonathan Boise, a home-builder analyst at Fitch Ratings.”
From Bloomberg. “In a year when the 10 most expensive homes in the US sold for an average US$100 million each, sellers of superluxury properties had reason to be confident. But some were too confident, at least on paper: Many sellers of luxury real estate listed properties for millions of dollars more than their ultimate sales price.”
“The offering price of a Los Angeles mansion once owned by Tony Curtis, and later Sonny and Cher, has swung radically in the last few years. It’s currently listed for US$115 million after being offered at US$180 million in 2017, showcasing a price cut of US$65 million. According to the Los Angeles Times, it was purchased in 2016 for US$90 million.”
“And, after an original asking price of US$110 million, a New York City penthouse in the ultraluxury Woolworth Building was relisted earlier this year at US$79 million, a 28 per cent cut. Each of these super-high-end sales ‘shows you how extreme the aspirational pricing was to begin with,’ says Jonathan Miller of Miller Samuel Inc.”
“Homeowners in luxury residential communities have a ‘herd mentality,’ that if everyone wildly overprices their properties, perhaps they’ll sell at a higher price, Miller says. One example is a spec house in the Bel Air neighborhood of Los Angeles. Originally priced at US$250 million, it sold for US$94 million in October, according to the Wall Street Journal, about a 62 per cent cut.”
“‘Superluxury sales are a real phenomenon. The question is how much or how often are we going to see these asking prices that have no connection to the actual value,’ Mr Miller says. ‘I suspect that will diminish, at least in the current cycle.’”
From Mansion Global on New York. “Manhattan’s luxury housing market recorded a steep drop-off in the number of new pending sales this year, even as buyers slashed their asking prices, according to a year-end report from Olshan Realty. In the past 50 weeks, total new pending luxury sales rang in at $7.651 billion. That’s nearly $1.5 billion less than the same period last year and the lowest total since 2012, when the city was still in the depths of the Great Recession housing crash.”
“‘One submarket that was desperately trying to hang on to its lofty prices was new development, as sponsors seemed locked into models that are no longer sustainable,’ said Donna Olshan, president of Olshan Realty and author of the report. Deals for newly developed homes plummeted 35% in 2019 compared to a year ago, even amid a historic build-up in new condos.”
“Meanwhile, sellers had to grease the wheels of the city’s stalled market with some of the biggest price cuts in years. The average seller in 2019 lobbed 10% off the asking price before going into contract, up from 9% last year. It also took the average seller 496 days to go into contract, around 50 days longer than a year ago, according to Olshan’s figures.”
“‘The luxury market showed clear signs of strong buyer resistance, prompting ongoing price corrections that ignited more activity in the final two months of the year,’ Ms. Olshan said. ‘It’s a fragile market by any measure, and it seems obvious that a sustained uptick in sales can not be realized until the market resets its prices.’”
The Bay Area Newsgroup in California. “The Bay Area home market remained sluggish in November, as buyers searched for cheaper homes and sales slowed entering the holiday season. The median sale price for a single family home in the Bay Area fell 2.4 percent to $803,200 in November from the previous year, according to Zillow.”
“‘More than anywhere else in the country, the Bay Area has hit an affordability ceiling,’ said Zillow economist Jeff Tucker. ‘Once a price gets high enough, it’s out of reach.’”
“Prices in the nine-county region have slumped through most of 2019, after a record-breaking, seven-year streak of rising home prices. The Santa Clara County median single family home price fell nearly 2 percent to $1.11 million, the 11th straight month of year-over-year declines in the once red-hot market.”
From Curbed San Francisco in California. “San Francisco might finally be adding new homes faster than new residents—but don’t break out the champagne and housing bonds just yet, because even if this turns out to be true it has less to do with new housing construction and more to do with the fact that the city’s population growth is now a fraction of what it used to be.”
“Across the state, the California Department of Finance cited ‘higher domestic out-migration, lower immigration to California, and fewer births’ as reasons for dwindling gains. Per the city’s own annual housing inventory, in 2018 SF gained about 2,600 new homes, but the inventory for 2019 won’t be out for months yet.”
“The San Francisco Planning Department projected a net gain of about 4,700 new homes in San Francisco for 2019, and at the beginning of the year the city estimated that more than 9,700 homes were under construction already.”
From WTOP in Virginia. “In frothy, Amazon HQ2-driven Arlington County, prices showed signs of leveling off. The median selling price in November was $537,500, down 4.9% from a year ago, and sales in Arlington County were down 12.6%. The number of sales in Alexandria dropped significantly from year-ago levels, down 25.8%, with the median selling price down 2.5% to $539,000.”