patrick.net

@Ceffer - Valued or listed?

“We went to look at a 1500 sq. ft townhouse @ 1.1 million. It had been valued at 1.5 million in the summer of 2020.”

Glock-n-Load says

Ceffer - Valued or listed?

“We went to look at a 1500 sq. ft townhouse 1.1 million. It had been valued at 1.5 million in the summer of 2020.”

Comps are based on one or two car garage and single vs. two story. They listed it a couple of years ago for 1.4 million in 2023 when the market had peaked at 2022 and already started to go down. They then withdrew it from the market. A Capitola address is a couple of hundred thousand dollar bump automatically because of cachet over Live Oak. House has a shared wall off the garage aka townhouse rather than separate. Price actually 1.149 Mill asking. Built 1980, so insulation is probably poor but entire insides were renovated a few years ago and appliances/water heater etc. updated, really nice on insides and nothing to be done otherwise. They also added earthquake protection by reinforcing the studs at the foundation.

So the Zestimate was 1.4 in 2023? Sorry, just trying to understand where the value calculation is coming from.

The housing bubble is collapsing.



https://www.zerohedge.com/markets/nearly-half-700b-homes-sale-have-gone-stale-sellers-outnumber-buyers-500k

The_Deplorable says

The housing bubble is collapsing.

And where did they come up with this number? Scanned the article and it just kept repeating the same thing over and over. Houses are worth more than 2012 values, of course the number is going to be higher. No one wanted to even leave their house in 2020 because covid. That graph is trending correctly outside of the covid blip.

Also does this account for contingent houses? People buy in spring and close in June mostly once the kids are out of school.

And how do they know how many buyers are in the market? Loan applications only apply to about 70% of buyers and probably less now. Others are cash or have other means to buy so that number doesn't say much when you can't count the true numbers of buyers. There are more cash buyers than ever buying up the cheaper properties as investment than the expensive ones as primary residences. Basically they don't know.

Inventory is the only metric that matters and that only matters in your local region. National numbers simply don't matter. California is having an exodus. The insurance is going through the roof on already high property values. Say 20,000 families or seniors want to leave CA with houses valued at $1M, that's $2T. Not saying 20,000 are listed at that price, but just to show the value. There are plenty of $1M houses. That monthly nut with 17% insurance increases is gonna hurt the 60+ crowd and they might have to sell.

My point is it's senseless to track national stats. Also AI could be hurting the tech sector on the west coast and people are getting laid off and can't afford their expensive homes anymore. CA is the 5th largest GDP state or country (I know not country) in the world. It has too much influence on national stats and should be removed from any analysis and just analyze just CA alone. Do just the other 49 and these graphs are significantly different in the article.

These doom and gloom articles are click bait. Considering it's Redfin, they're just trying to get leads saying the classic "it's a good time to buy" mantra in the Realtor world because there are more sellers. They make more money off buyers, they're a low listing commission brokerage. There's a lot that's non-sensical basically in the article. Reading about RE and doing it for over 15 years like myself are two different things.

The_Deplorable says

The housing bubble is collapsing.

The median home sale price rose 1.6% year over year to $431,931 in April.

It must be due to the inflation that the article missed to mention!
This is after mortgage rate more than 6%, still not a good news for the buyers yet so far.

WookieMan says

California is having an exodus.

I saw your remark and typed this AI query into the browser on my computer: "population change of california in past year". Here is the AI generated response:

"In 2024, the population of California was 39.43 million, a 0.59% increase year-by-year from 2023. Previously, in 2023, California's population was 39.2 million, an increase of 0.14% compared to a population of 39.14 million in 2022."

I wish you were right about the exodus as it's too crowded here. Maybe you think the AI on my computer is a liar and you know more. Whatever.

I do agree with your premise of your point because I know some of the exodus folks you speak of. But for the time being they're being replaced by new folks who either arrive by birth or immigration.

Many of the exodus folks you referenced are retirees who will sell their homes to fund their out-of-state retirements. I know some of those, my homies who left for Cheaper Pastures. If they purchased decades ago for a fraction of what they sold for, who thinks they stress if the gain on the sale of their home is only 300% instead of 350%? Then they are either replaced by younger folks who have a lot of cash from their RSU's in tech companies or got ill gotten cash from "back home" in Asia, or else over-borrowed to over-pay for the "privilege" to pay an ownership premium of 80-100% over renting.

Readers of this blog may recall posts by a tech worker with the handle "BayArea" who bellyached on this site about the high cost of housing here till he became such a privileged homeowner in the leafy Tri-Valley who "bought at the peak" a couple of years ago. Since then he dropped off the blog.

Blue says

The median home sale price rose 1.6% year over year to $431,931 in April.

In a nation of over 300 million that spans the continent it's kind of a meaningless statistic.

Patrick is here in the Bay Area. His blog was originally focused on Bay Area housing.

Here is a recent blog post by Bay Area resident Wolf Richter: https://wolfstreet.com/2025/05/21/as-tech-jobs-plunge-in-san-francisco-silicon-valley-housing-reacts-condo-prices-drop-back-to-2015-single-family-home-prices-back-to-2018/

According to the real estate websites Z*llow and R*dfin, the value of my sh*tbox in San Jose is down about 10 - 15% from the peak of a couple of years ago.

Do I care? Sort of. It's not down enough. I'd like to see values in these parts go down 50% from here to make life less miserable for working class folks.
But that's a fantasy because unless some laws are changed, we know what would happen in that case. Like in the 2008 crisis, the Rentier Class of folks like iwog and Eman will jump in and scoop up to exploit working class folks.

https://fortune.com/2025/05/30/housing-market-more-sellers-than-buyers/

There are 500,000 more people selling their homes in the U.S. than those looking to buy them

zzyzzx says

https://fortune.com/2025/05/30/housing-market-more-sellers-than-buyers/

There are 500,000 more people selling their homes in the U.S. than those looking to buy them

How do they know? We all know how the polls went in 2016. Not good for pollsters.

I have no pony in the race. A small but good percentage of Boomers have a lot of cash. My uncle bought all 3 of my cousins properties cash. Other uncle bought two, all cash.

One person posts an article like this and everyone runs with it as click bait. NO ONE knows how many buyers there are out there. It's not like they announce when they're in the market and fill out a form "hey I'm buying." Not how it works. They're looking at search data and 90% of that is tire kickers. I search for used cars all the time. Haven't bought in 12 years.

If inventory, NOT NATIONALLY, is under 6 months it's 100% a sellers market. The worst I saw in my market during the OG bust was 12 months. We're not remotely close to that. In my town the 3x's rule or up to 5x's median family income gets you a new build. Would I buy it, hell no, but a young family would and are.

Cities and coastal areas are gonna skew any reductions in NATIONAL values. Makes for easy clickbait. People are moving out of cities and as BACHA says even certain suburban/city areas are getting too crowded. Toss in big changes in big markets and you have flight. A home in certain parts of CA is close to being uninsurable or cost as much as the mortgage payment. Seniors and younger people can't afford that. So that leave 70's and 80's born people to buy up expensive inventory or foreigners as he mentioned.

People are going to move to more rural areas. Urban areas is where a "crash" might happen. If you bought 5 years or more ago there's still probably equity in the property. If you move to a low cost region or area, it's still a win even if you didn't get as much as you wanted on your sale.

zzyzzx says

There are 500,000 more people selling their homes in the U.S. than those looking to buy them

I wonder if that includes Builders?

Going to hit the 40 million mark any day now. Just two more weeks...
Between July 2023 and July 2024, California experienced a net out-migration of 239,575 US citizens. This means that more residents moved away from California to other states than moved into the state from other states. This out-migration was partially offset by a net gain of 361,057 international immigrants.

B.A.C.A.H. says

Then they are either replaced by younger folks who have a lot of cash from their RSU's in tech companies or got ill gotten cash from "back home" in Asia, or else over-borrowed to over-pay for the "privilege" to pay an ownership premium of 80-100% over renting.

Is there an endless supply of those with "ill gotten cash from Asia" ? what is the breakdown of this as far as country ? is it mostly China ?

I look at how well tech stocks are doing to gauge the supply of younger folks with cash (from their RSU's in tech companies).

And when the S&P 500 has a lackluster year, that tells me its not good for California's economy especially its state government finances.

California is projected to have at least a $47 billion deficit this year. I hope that grows larger if Trump cuts more to Medicaid and other social services. About 40% of Californians are on Medicaid.

.

The 3 bedroom, 2 car garage townhome unit at 1610 Annabellas Way Panama City Beach is no longer listed at $1800 as it looks like it may have a tenant based on Zillow

estimated cost per month to lease is around $1080 
$420 HOA 
$160 insurance
$150 taxes 
$150 maintenance and repair
$200 property manager 

so based on 90% occupancy the monthly profit is $540

($1800x0.9) - $1080 = $540

or $6480 annual profit 

divide that $6480 by 4% and the estimated home value is $162,000

so a 4% annual ROI on $162,000 is $6480

assume home annual appreciation of 3.5%, add that 3.5% to the 4% and the worst case annual ROI is 7.5% 

and if done right with depreciation and other tax advantages, that 7.5% annual ROI can easily be 100% tax free 

If rent was $2000 then the estimated home value would be $216,000

3 bedroom units in the Annabellas Townhomes HOA were easily renting for $2000 in 2022

EBGuy says

Going to hit the 40 million mark any day now. Just two more weeks

EBGuy, I wonder if you are Eman

California is like Illinois as far as population growth rate. New home construction accordingly should be at a slow rate unless there is a considerable supply of +75 year old homes that cannot be refurbished/modernized and salvaged.

2011 37,636,311
2012 37,944,551
2013 38,253,768
2014 38,586,706
2015 38,904,296
2016 39,149,186
2017 39,337,785
2018 39,437,463
2019 39,437,610
2020 39,538,223
2021 39,142,565
2022 39,142,414
2023 39,198,693
2024 39,431,263 (estimated)

AmericanKulak says

zzyzzx says
There are 500,000 more people selling their homes in the U.S. than those looking to buy them

I wonder if that includes Builders?

Yeah, I think number of sellers is based on number of housing units (single detached, townhome, condo) for sale, so an independent builder that may have 20 units unsold and that counts as 20 sellers

.

a lot of you guys count appreciation, which works in blue states and big cities. best part about country though, is no appreciation. keeps all the speculators from buying to rent because it barely pencils out. otherwise it would be same rat race and government policies that want renters instead of owners like they have in blue states.

Fortwaye says

a lot of you guys count appreciation, which works in blue states and big cities. best part about country though, is no appreciation. keeps all the speculators from buying to rent because it barely pencils out. otherwise it would be same rat race and government policies that want renters instead of owners like they have in blue states.

Yes, appreciation of housing value just means more housing inflation.

But even at a rate of 3% that is sustainable assuming overall annual inflation is around 2%.

It all costs down to affordability and living standard or living conditions. This would mean less illegal immigrants overcrowding of homes such as in Manassas Park, Virginia.

Hopefully we are not in a spiral down as far as quality of life or standard of living.

.

california was illegal haven, and it had massive housing inflation. i do think 2 are related. it doesn’t keep them out.

WookieMan says

"And how do they know how many buyers are in the market?"

From Real Estate Agents/offices. Is that rocket science?

Fortune: There are 500,000 more people selling their homes in the U.S. than those looking to buy them

WookieMan says

"How do they know?"

From Real Estate Agents/offices.

The_Deplorable says

Fortune: There are 500,000 more people selling their homes in the U.S. than those looking to buy them

WookieMan says
"How do they know?"

From Real Estate Agents/offices.

The number of buyers is not reported. No one ever asked our office about buyers ever. Listings are the only metric that can be tracked mostly via entry into MLS systems. Plenty of agents get buyers at open houses how could they be reported if they don't follow up?

There's no way to track the number of buyers. It's likely based off search result algorithms and loan applications. I built my house so technically a buyer. My mom bought my house. At what point were we counted as buyers? Never. Cash buyer. Never counted.

It's clickbait. I wrote our monthly newsletter for 15 years. I participated in the clickbait. They might do a sample of randoms and extrapolated from there, but that's inaccurate no different than election polls. We have no idea how many buyers there are.

Links for zerohedge, Redin and Fortune all saying the exact same headline means nothing. SHOW me where the data comes from. No one can. Not links with copied articles. The actual data, not random analysis and guessing with no proof. That's what these articles are.

AD says

Is there an endless supply of those with "ill gotten cash from Asia" ? what is the breakdown of this as far as country ? is it mostly China ?

Only about 0.3% of homes are bought/sold in California each year. It doesn't take a tsunami of Rich Kids from Communist China to prop up the insane house prices here, - only a trickle.

There's plenty enough of those from Taiwan and the diaspora in Southeast Asia if not a single one of them ever comes from Communist China again. And you didn't even mention India. Yes, yes, I know: India is a poor country. Because of its massive population the tiny fraction of rich over there is a massive number. It is particularly even more massive for the housing market here when their Rich Kids aspire to live in a postage-stamp size slice of the US where only 0.3% of homes are sold/bought each year.



AD says

I look at how well tech stocks are doing to gauge the supply of younger folks with cash (from their RSU's in tech companies).

And when the S&P 500 has a lackluster year, that tells me its not good for California's economy especially its state government finances.

RSU is treated by federal and state as ordinary income (not capital gains) when vested. When I was "awarded" those, I never put the unvested ones on my balance sheet because they go "poof!" if I got laid off.

A member of my household gets RSU a few times a year in one of the household name companies. The vesting period is staggered over multiple years. Do you think he cares if the value of the stock goes down when the "value" of some of the older RSU's are up hundreds of percent? This is in a state where only 0.3% of homes change hands each year.

You can hate me and (and Patrick and the rest of us) for choosing to stay here with family and friends. Sticks and Stones.

Fortwaye says

california was illegal haven, and it had massive housing inflation.

For rentals, where they pack in like rats. Not for buying.

I assume they could/would estimate the number of buyers out there by using polls/questionnaires. Or using some kind of average based on first time buyers and age of move up buyers?

GNL says

I assume they could/would estimate the number of buyers out there by using polls/questionnaires. Or using some kind of average based on first time buyers and age of move up buyers?

I guess they statistically sample the real estate offices to Century 21, Coldwell Banker, etc and ask them how many listings (sellers) they have and how many clients their buyers agents have.

.

AD says

GNL says

I assume they could/would estimate the number of buyers out there by using polls/questionnaires. Or using some kind of average based on first time buyers and age of move up buyers?

I guess they statistically sample the real estate offices to Century 21, Coldwell Banker, etc and ask them how many listings (sellers) they have and how many clients their buyers agents have.

.

Statisticians can be pretty damn accurate and highly paid to be.

B.A.C.A.H. says

You can hate me and (and Patrick and the rest of us) for choosing to stay here with family and friends. Sticks and Stones.

I don't hate Patrick and the rest of you all in California. I do not like its politics including the Chicom-funded propaganda coming from Hollywood.

I have some connection to Patrick since he and I graduated from UM Ann Arbor and we are both engineers (as he was an computer/electrical engineering major and I was a mechanical engineering and industrial engineering dual major).

That was a pleasant surprise to know after I signed up for Patrick.net after seeing Patrick on ABC Nightline.

I loved visiting California for work and visiting places like Truckee and Laguna Beach.

.

And I got all over Eman cause he constantly was hyping California and his landlord portfolio in that state.

And the way he presented was he was exploiting the housing shortage and crisis there, which just makes it economically intolerable for the working class.

B.A.C.A.H. says

Sticks and Stones.

Please comment on this: 40% of Californians are on Medicaid

.

AD says

GNL says
I assume they could/would estimate the number of buyers out there by using polls/questionnaires. Or using some kind of average based on first time buyers and age of move up buyers?

I guess they statistically sample the real estate offices to Century 21, Coldwell Banker, etc and ask them how many listings (sellers) they have and how many clients their buyers agents have.

99% of agents don't count the number of ACTUAL buyers they have. They might be under reporting because of tire kickers and people that can't get pre-approved. A buyer agent might have 30 buyers in their CRM pipeline but don't count them. We still live in our current house and people still keep asking us they can buy our place because they see us building.

Cities that's more difficult. That's where there's a lack of buyers. It's an impossible metric to track. At least 20 people have asked us when we're selling. Those 20 buyers didn't get counted that asked us. This is a town of 2k people (including kids). The buyers are there.

As I've said cities and major metros bring the numbers way down if there's a way to even track the amount of buyers in the first place. It's highly likely this 500,000 number for sellers outnumbering buyers is simple city homes and people leaving. I've got a ton of 25-35 year old electricians, plumbers, construction workers with good wages living around me. Those guys don't want to be in the city. Most get work in suburbs 30 minutes away commute. They live here for half the cost.

It's not that I know more, but it's what I witness in surrounding towns. A lot of white collar professionals as well. They'd rather commute than pay double the price for say a place like Naperville or Crystal Lake, IL. Chicago is still slowly dying as a city and that's the majority of the states population loss or movement. For every 1 person moving in I'd guess 5 move out. Could be in state still. Big factor is Chicago schools suck and crime. That's most cities though.

@Wookieman

That doesn’t make sense in regards to my comment. Unless you thought they = realtors.

Loan Applications, good measure.

Applications for mortgages to purchase a home fell again in the latest reporting week, having collapsed by 39% from the same week in 2019, according to data by the Mortgage Bankers Association today. Mortgage applications are an early indicator of demand in the housing market, preceding “pending sales” and “closed sales” for this period.

https://wolfstreet.com/2025/06/04/demand-in-the-housing-market-just-got-even-worse-as-supply-piles-up/

40% down from pre-COVID is a sign of serious buyer disinterest.

WookieMan says

"The number of buyers is not reported. No one ever asked our office about buyers ever. Listings are the only metric that can be tracked mostly via entry into MLS systems."

So who is buying the houses your office is selling? The Easter Bunny or the Great Pumpkin?

AmericanKulak says

Loan Applications, good measure.

Yeah the Wolfman at Wolf Street website warned all the way back in 2021 about another housing bubble

The current purchase mortgage application level is at 1995 levels and worse than the housing bust of 2009-2012

See below graph from Calculated Risk Blog , and the 2020-2022 run up was about 40% below 2005 levels :-/




,

AD says

Please comment on this: 40% of Californians are on Medicaid

Sanctuary state.

AD says

GNL says

I assume they could/would estimate the number of buyers out there by using polls/questionnaires. Or using some kind of average based on first time buyers and age of move up buyers?

I guess they statistically sample the real estate offices to Century 21, Coldwell Banker, etc and ask them how many listings (sellers) they have and how many clients their buyers agents have.

.

As long as the collection of the information is consistent across time, the change in the statistic is likely accurate even if the absolute value is wildly off. For example, if the collected data double-counts every buyer, the absolute value of the statistic is off by a factor of 2; however, to say the number of buyers went up 20% or down 20% would still hold completely accurate.

AD says

EBGuy, I wonder if you are Eman

Given our out migration problem, two more weeks is the joke (how about 25 years?!)...
State planners don’t see a turnaround in the offing, either. Consider that in 2007, demographers projected that California’s population would grow from 36.5 million to 60 million by 2050. But today, the 2050 projection is for just 40 million Californians.
https://www.governing.com/workforce/californias-long-term-population-slide-threatens-its-economy

EBGuy says

AD says

EBGuy, I wonder if you are Eman

Given our out migration problem, two more weeks is the joke (how about 25 years?!)...
State planners don’t see a turnaround in the offing, either. Consider that in 2007, demographers projected that California’s population would grow from 36.5 million to 60 million by 2050. But today, the 2050 projection is for just 40 million Californians.
https://www.governing.com/workforce/californias-long-term-population-slide-threatens-its-economy

That means any "new residential construction" in California is likely demolition of old residential units, like at least 75 years old. California's median and average age is about 1 year less than the national average.

And it could be the birthrate of those born in California (as well as rich Asian migrants and poor Latin American immigrants) compensates for the exodus so that the population remains fixed around 40 million for the next 20 years.

.

AD says

And it could be the birthrate of those born in California (as well as rich Asian migrants and poor Latin American immigrants) compensates for the exodus so that the population remains fixed around 40 million for the next 20 years.

Population seems to have leveled off at about 40 million. My guess, though, is that people generally reporting high (taxed) incomes are leaving and being replaced by those who report low or no income. Despite ever-increasing state income taxes, California is finding it hard to raise the revenue to feed the wasteful spending as well as the 50% that are leeching off the government system. On the corporate tax side... are booming silicon valley businesses growing fast enough to compensate for the companies fleeing the state?