Existing home sales were down again nationally (4.4%) in April (fourteenth month in a row of declining sales year on year). That is the longest stretch without a single positive month since the housing-market collapse that brought on the Great Recession.

So far as I am aware, I was the first to state that what we had seen by the start of July, 2018, was clear evidence that the housing market was going into another decline. I pointed to the Seattle/King County market as the bellwether at the time because it had been the strongest and last market to collapse during the last housing crisis, so trouble in that robust market is trouble, indeed.

Prices are now down 3.5% in Seattle YoY. Another hot market in Washington State has been the tri-cities area in Eastern Washington where the median price is now 12% lower than a year ago. Redmond, WA, home of Microsoft, prices down 18%. Pricy Mountain View, CA, (between Palo Alto and Santa Clara), prices down 2.2% YoY. Portland, OR, prices down 1.2%.

For several months, it was mostly just sales that were down. As I said at the time, it would take awhile for prices to follow because sellers are highly resistant to dropping the value of their number-one asset; so, the squeeze needs to be on for awhile for median prices or average prices to fall. Well, the squeeze has been on long enough, and sellers are starting to capitulate to the long drop in demand. Prices are falling.

There are other parts of the country where prices are going up, of course; but overall the trend is down for sales and starting to move down now for prices. Prices had risen in most parts of the country to the same housing-bubble heights of the last time around.

I don’t think prices will probably fall as hard this time because the Federal Reserve probably will jump in sooner if it can, but there is not a long ways the Fed can go to lower interest or ease credit terms either in order to stimulate the market. Credit terms are already pretty slack

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