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Real Estate Softens
The Market Bull 2018

 
 
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The Market Bull – January 8, 2019

Generally positive economic data helped the major averages to close with large gains. Consumer Credit beat expectations with a 22.1 billion Dollar advance in November. Nonrevolving credit essentially student and auto loans led the advance with a 17.4 billion Dollar gain, the largest in 12 months for that segment.

Revolving or credit card debt increased 4.8 billion and this series has slowed markedly of late. Will see what effect the large market declines of December have on this series next month.

Stock markets aren’t the only ones that finished 2018 with a thud as formerly hot real estate markets continue to be plagued with sharply rising inventory that is increasingly causing price declines. The latest data for the San Francisco Bay Area, including the counties of San Francisco, San Mateo and Santa Clara show inventory up 113% in December, a figure that has shot higher in the last 6-months.

As is fairly typical for real estate as inventory jumps price concessions follow. This data set is up 455% in the last 6-months. With the median price topping out just below 1.4 million in May, it has now fallen to 1.2 million or about where it was in late 2017.

Las Vegas also continues to report large gains in inventory for sale with an 82% year over year gain in December as sales fell 17%. The usual progression for real estate is sales fall, inventory for sale jumps followed by declining prices. At present it is very hard to dismiss these dynamics in a growing number of real estate markets.

Standard and Poors 500 Index closed at: 2,574.41 up 24.72
NASDAQ finished at: 6,894.32 up 73.53
Gold ended trading at: $1,285.60 down $4.30

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