"I’ve Never Seen Anything Like This Before" - The Housing Markets In The Hamptons, Aspen And Miami Are All Crashing

Tyler Durden's picture

One month ago, we said that "it is not looking good for the US housing market", when in the latest red flag for the US luxury real estate market, we reported that sales in the Hamptons plunged by half and home prices fell sharply in the second quarter in the ultra-wealthy enclave, New York's favorite weekend haunt for the 1%-ers.

Reuters blamed this on "stock market jitters earlier in the year" which  damped the appetite to buy, however one can also blame the halt of offshore money laundering, a slowing global economy, the collapse of the petrodollar, and the drastic drop in Wall Street bonuses. In short: a sudden loss of confidence that a greater fool may emerge just around the corner, which in turn has frozen buyer interest.

A beachfront residence is seen in East Hampton, New York, March 16, 2016.

We concluded this is just the beginning, and sure enough, several weeks later a similar collapse in the luxury housing segment was reported in a different part of the country. As the Denver Post reported recently, high-end sales that fuel Aspen’s $2 billion-a-year real estate market are evaporating, pushing Pitkin County’s sales volume down more than 42 percent to $546.45 million for the first half of the year from $939.91 million in the same period of 2015.

The collapse in transactions means that Aspen’s high-end real estate market "one of the most robust in the country, with dozens of options for buyers ready to spend more than $10 million" finds itself in its first-ever sustained nosedive, despite "dense summer crowds, soaring sales tax revenues and high lodging occupancy."

Like in the Hamptons, the question everyone is asking is "why"? There are many answers:

Ask a dozen market watchers why, and you’ll get a dozen answers. Uncertainty around the presidential election. Fear of Trump. Fear of Clinton. Growing trade imbalances with China. Brexit. Roller-coaster oil prices. Zika. Wobbling economies in South America. The list goes on.

“People are worried about all kinds of stuff these days,” says longtime Aspen broker Bob Ritchie. “I’ve never seen anything like this before.”

The speed of the collapse has been stunning. Until just last year, the local market was beyond robust, with Pitkin County real estate sales hitting $2 billion in 2015, a 33% annual increase driven largely by sales of homes in Aspen, where prices average $7.7 million.

This year, however, "a slowdown in January turned into a free fall." Sales volume in Pitkin County is down 42%, according to data compiled by Land Title Guarantee Co.

Almost all of that decline is coming from Aspen, where the market is frozen. Sales in the Aspen-Snowmass market in the first half of the year were the bleakest since the first half of 2009, and inventory soared to levels not seen since the recession.


High-end sales that fuel Aspen’s $2 billion-a-year real estate market  are evaporating

The statistics are stunning: single-family home sales in Aspen are down 62% in dollar volume through the first-half of the year. Sales of homes priced at $10 million or more — almost always paid for in cash — are down 60%. Last year, super-high-end transactions accounted for nearly a third of sales volume in Pitkin County.

“The high-end buyer has disappeared,” said Tim Estin, an Aspen broker whose Estin Report analyzes the Aspen-Snowmass real estate market.

"Aspen has never experienced such a sudden and precipitous drop in real estate sales," according to the post.

Worse, it's not just the collapse in the number of transaction: even more disconcerting for brokers who have always trumpeted Aspen as a safe and lucrative place to park a huge pile of money: Prices are dropping.

In the first half of this year, the average price per square foot of Aspen homes dropped 22 percent to $1,095 from $1,338 in 2015. Recent Aspen sales also closed at more than 15 percent below listing price, a rare discount.

Some brokers suspect that the frenzied sales and pricing pace of 2015 was not sustainable. The present decline is a correction, they say. “I think a lot of people thought we would go to the next level in 2016. Take the next step up and that step got resistance from buyers,” said longtime Aspen broker Joshua Saslove, who just put an Aspen home for more than $10 million under contract. If it closes, it will be just the fourth sale above $10 million in Aspen this year, compared with more than a dozen by this point last year.

“I think a lot of developers thought they would push their, say, $5 million properties to $6 million this year, but no one is buying,” Saslove said. “I don’t see that nonchalance or cavalier attitude any more.”

To be sure, Saslove is hoping that a rebound is coming; that however, may be overly optimistic and first far more pain is in store especially if one considers what is taking place in yet another formerly red-hot housing market, where suddenly things are just as bad.

As Mansion Global reports, Luxury condo sales in Miami have crashed 44%, with residential sales down almost 21% from the same time last year, while transactions for properties of $1 million or more in July shows just 73 single-family home sales, a drop of 31.8%, according to a new report by the Miami Association of Realtors. The number of closed sales for condos in the same price range fell even more, or by  44.4%, to just 45 transactions.


Number of closed sales for Miami condos priced over $1 million fell by 44%

Making matters worse there luxury inventory is building up, with Mansion GLobal reporting  that luxury condo inventory is up 47.8% from last year as some 2,482 units worth $1 million or more are currently on the market; this means that sellers of high-end condos will continue to face stiff competition, prompting even fewer transactions and/or lower prices.

So far, the collapse at the luxury end has failed to transmit to the broader market, less impacted by lack of foreign demand, however as we documented two weeks ago, it is only a matter of time before the overall US housing market suffers as well. The only question is whether the NAR and the US Census Bureau, who tabulate the "goal-seeked", seasonally adjusted data, will admit it before or after the presidential elections. The likely answer: it depends on who the next president is.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
The Duke of New York A No.1's picture

Open up the markets to the Chinese - now that Vancouver is taxing them away.

knukles's picture

 3 areas I'd never ever buy a home in.

y3maxx's picture

..Everyone is moving to Canada....especially Vancouver

J S Bach's picture

No worries.  The next round of QE will bring the bloated criminal fat-cats right back into the market.

KickIce's picture

But the TV and Obama claim this is a time of prosperity.

Here2Go's picture
Here2Go (not verified) KickIce Aug 27, 2016 8:50 PM

I have a nice 'fixer upper' under the interstate that I'd like to flip.

TeamDepends's picture

Let's cut to the chase and let the rapefugees stay in these palacial villas. It's no stupider an idea than Obamacare or "common sense" gun laws. Because when you are circling the drain, ya might as well go for the gusto.

FEDbuster's picture

The rich are going rural and underground in anticipation of the winds of shit that are coming.

Handful of Dust's picture

Hey, Mr Wong, better but that $8 million house before it drops to $4 million.

Bokkenrijder's picture

Question for the American voters: which presidential candidate is heavily invested in real estate and needs the big Wall Street banks to keep his 'empire' afloat?

Here's a few hints for you; he claims to be very successful and has fake hair.

....and NO, I'm NOT a fucking Killary fan! (same shit, different name)

bamawatson's picture

bernie ?

limp johnson libertarian ?

jew jill ?

Bokkenrijder's picture

Hehe, nothing like trolling the dumb masses. Keep on hoping that a politician will be the panacea for all ills.

What we need is LESS nutcases like Hitlary and Trump, not more!

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) Bokkenrijder Aug 28, 2016 11:56 AM

"Jew Jill" is the only one who has a sane policy towards Israel.

sharonsj's picture

And no policy for the rest of the Middle East.  Try reading their platform and you'll find out the Greens are only interested in criticizing Israel, but nary a peep about beheadings in Saudi Arabia or blasphemy killings in Pakistan.

RaceToTheBottom's picture

"which presidential candidate is heavily invested in real estate and needs the big Wall Street banks "

Redundant trick question.  All residential candidates are reliant on WS banksters.

Stop thinking there is a difference.

stocker84's picture

That's what he said... The R is silent.

Ca-wight... Party of 4?

cheka's picture

remember that nyc.dc recently demanded to know who was behind the shells paying cash for these things

coincidence?

Raymond K Hessel's picture

That's what I was thinking might be a better reason behind the drop.

dexter_morgan's picture

It'll be a regular shitstorm boys, they'll be hanging on the shitrope........

Randy, get me another drink......

PT's picture

I seriously don't understand.  Does this mean there really IS a limit to how many shares you can buy back?

Bunghole's picture

You know what you get when two shit-tectonic plates collide?

Shitquakes, Julian. Shitquakes. 

Faithdefender's picture

Meanwhile in Oz..

Demand for homes is booming in Sydney. Last weekend, the NSW capital posted an auction clearance rate of 84.3 per cent, its highest in 14 months, and raising expectations that banking regulator APRA would have to step in again to force lenders to tighten credit to investors making the most of ultra-low interest rates.

-- Why housing demand in Sydney is so strong - http://www.afr.com/real-estate/residential/nsw/why-housing-demand-in-syd...

Handful of Dust's picture

The $350k to $700k houses are completely stagnant also in most areas esp those energy cities. My relative lives in Houston and says the former two most popular areas---Katy to the west and The Woodlands to the north---are getting hit hard with dozens of houses for sale on the market for a long time with zero lookers let alone buyers

 

847328_3527's picture

House sales down over 8% in the Houston area and rental vacancy rate soaring....and it's a bloodbath in Calgary too.

CPL's picture

What's that teach you about the macro situation?   As a person there are defensive positions you can take to buttress your financial situation in the event the ownership of house drops and rentals are jumping.   If you have been saving money or have been saving,  it will be the time to buy in a couple of years.  So if you aren't saving you'll miss the reset window.  House prices in these areas do, have and will shit bed in a regular cycle.

You want to start getting in front of that soon.  Took about a year for it to shit the bed last time in 2008.  Oh and if you are saving,  use a credit union.   The banks are not places to keep your money during these situations. 

duo's picture

I asked my real estate agent friend whey I never see for sale signs in N. Dallas anymore.  He told me that when he gets a listing, he makes a few calls, and offers come in that day.  Almost nothing except fixer-uppers get to the point of having a sign in the yard.  Having Toyota and a dozen other companies move from CA has created a frenzy.

All that I get out of this is a doubling of my property taxes.

Okienomics's picture

Same here north of Dallas.  Have been looking at real estate for three years (with a thick folder of flyers to prove it), watching prices ratchet up during that time.  That's why we've been looking and not buying, despite being ready, willing and able.We look at what our money will buy and just move on, thinking, "this is crazy."  We've kind of gotten used to everything being $100k or more over what we think it should be.  What kills me, though, is the idea of paying $2k per month in PROPERTY TAXES for as long as I "own" the home. There have been houses we've considered buying, but I can't get over the property tax.

That said, some of the houses we've been to are still on the market and it appears (appears) that maybe the frenzy has peaked.  We're seeing more houses "discounted" from listing prices, but again, it's less a collapse than it is leveling out.  We're still looking, but patient.  

Max Cynical's picture

As much as everyone raves about Texas, it isn't the panacea (just because it doesn't have a personal income tax). It's OVERRUN with illegals and imposes usuerous property taxes approaching 3%...on top of assessed values going up every year.

saveUSsavers's picture

DON'T buy the hype ! or TOP ! Here coastal San Diego 30s something paying $900K+ convinced "better get it before someone else... PARMANENT HIGH PLATEAU ! "

$15K/yr prop taxes, THEY'RE IN WAY OVER THEIR HEADS!

SELL THE TOP AND RENT ! If ur single position, top-tick this fraud.


StockProdigy's picture

If you live in S.D. you're screwed either way rents are off the charts.

samiam6's picture

i rent in pb. we should hang out. lol

gimme soma dat's picture

Homes have been selling like that where I live as well.  The big question is this - if homes sell like that, and the real estate agent does not even imput the listing to MLS, how accurate is NAR's statistics?  Someone call Mr. Yun. 

onewayticket2's picture

it's rough here.   houses sitting....after huge/multiple price reductions ...bedroom community to major eastern city. 7 figure avg price.

 

we were going to buy this time last year.....decided to hold off and watch....same house is down 25%(40% from its high water mark)....and we're still not reaching to catch the falling knife.   baby boomers trying to get out is a big factor (and just at the leading edge).

RiverRoad's picture

Boomers voting with their feet for low taxes and Climate Change.....heading South.

Git while the gittins' good.

847328_3527's picture

I am not sure where locals get that much money there. in fact, I see several Australians now moving to my town saying they can no longer afford to live in Australia!

Paul Kersey's picture

HOA dues on high-end condos ought to be enough to scare off any buyer with at least a modicum of intelligence. 

chubbar's picture

Well, the author managed to separate the data points far enough in that article to lose the impact of them. In case you didn't catch it, 1 mil condos saw a drop of 40+% to 45 actual transactions for July (let's call them sales for the sake of consistency). Later in the article he states that there are around 2500 1mil+ condos for sale in that area. So my math says that right now, if sales stay at the same number/month and NO FURTHER condos are built or come on the market, there is over 4 years of inventory sitting and waiting to be sold. I smell a blood bath down there.

Okienomics's picture

"In July, townhouses and condos of $1 million or more waited, on average, 162 days for a buyer, a 1.9% increase over a year ago"...

A 1.9% increase in sales time?  Oh the humanity!

de3de8's picture

If you gave me the place I couldn't afford the taxes

neidermeyer's picture

Learn how to pick the key "lockbox" and move in...

Chris Dakota's picture
Chris Dakota (not verified) 847328_3527 Aug 28, 2016 7:09 AM

Australia and New Zealand filled with Chinese, they strip mined both countries to stay afloat.

Never One Roach's picture

Much of Dallas is dangerous ghettoe. Flower Mound is nice and pretty safe. Plano is still ok but surrounded by some awful neighborhoods. I hear Corinth is the next Flower Mound but traffic along I-35 is horrendous. If you work in FM it's probably ok but if you are a commuter, forget it.

Further west from FM they are building like crazy...used to be nice farmland over there. People want safe neighborhoods which means they keep moving further out far away from public transportation which is a sure killer. Look at Dallas' public DART system---homicide rate along the DART line may be higher then south Dallas.

BabaLooey's picture

Check the comments section of any Hillary article on Yahoo.

The amount of stupids defending Hillary and slamming Trump is off the charts dumb.

The sheer amount of sheeple bleating and yammering on is sad.

Lost in translation's picture

Sounds like my workplace environment...

Four chan's picture

they have been hypnotized by the jew and its media. also the communist education system also designed mentally by engles marx both jew.

Handful of Dust's picture

Yahoo is now a major propaganda tool of Hillary and the DNC. All spin and twisted information, and anti-white very racist articles.

RiverRoad's picture

Comcast is shilling for Hillary day and night.

Never One Roach's picture

There's a reason why China banned Yahoo over there---it's all DC left wing and necocon propaganda. They also banned Google. MSN is much better and unbiased (for the most part) as you can see and it is not blocked in China.