December 12, 2014

Looking For The Philosophers’ Stone To Make It Last

It’s Friday desk clearing time for this blogger. “Northern Virginia had plenty of homes on the market in November, with a 35 percent increase of active listings compared to one year ago. Suzanne Granoski, who is the 2015 NVAR Secretary/Treasurer, noted that house hunters know the sales pace has slowed. ‘Some buyers are confused by thinking that more supply should mean lower prices but the demand is there for homes that are priced accurately.’”

“A sluggish November for home sales and stagnant fall inventory has given buyers the upper hand in the Twin Cities housing market. ‘There’s kind of a hangover of inventory from the fall that isn’t selling,’ said Amy Jurek, a sales agent with Re/Max Advantage Plus. ‘Buyers seem to be back in the driver’s seat this winter.’”

“The slowdown in Las Vegas’ housing market is poised to continue next year, a new report says, as investors keep pulling back from the valley. Business is slowing valleywide. More listings are being ignored, sales volume is falling and prices aren’t climbing nearly as fast. Homeowners, emboldened by fast-rising property values the past few years, are overpricing, agents say. The median listing price of single-family homes without offers was $249,500 in November — 23.5 percent higher than what the typical house sold for last month, according to GLVAR data.”

“‘Our local housing market has been fairly stable this year,’ said GLVAR President Heidi Kasama. ‘Unless something dramatic happens in the coming months, we expect to see more of the same in 2015.’”

“Prices fell for the eighth consecutive month year-over-year, Timothy Warren Jr., chief executive officer of The Warren Group said. The median price of a single-family home in Connecticut fell 3.4 percent from $250,000 in October 2013 to $241,600 during the same period this year. Byron Lazine, a real estate agent with Seaport Real Estate Group in Mystic, said that high levels of existing housing stock ‘will continue to have downward pressure on prices’ going forward.”

“Foreclosures are on the rise again in Massachusetts, as banks begin to lower the boom on delinquent homeowners they have let slide for years. One of the biggest barriers to scooping up a foreclosure is competition. ‘We make money turning over properties,’ Nick Aalerud, principal of Woburn-based AA Real Estate Group. He fears he will wind up losing money on a three-bedroom ranch in Tyngsboro he scooped up for $109,900. Sounds like a great price, but Aalerud had to tear down the house, only to find it infested with spiders and the well pump had gone missing.”

“Home repossessions in the Tulsa area spiked upward in November. Brian Heard, civil unit deputy with the Tulsa County Sheriff’s Office and the organizer of the weekly foreclosure auctions, said they anticipate the number of homes to be auctioned will significantly increase. ‘We’ve been told by attorneys they’re about to come in, though we haven’t seen them at the sales yet,’ he said. Heard said if a surge does hit in the coming weeks, it would be unusual. ‘Usually the amount of foreclosures goes down during the holidays,’ he said.”

“November foreclosures in Oregon were up sharply over the previous year, according to RealtyTrac. The figures reflect a pent-up push by lenders to take possession of Oregon properties where borrowers had fallen behind in their payments. ‘I think what we see is the beginning signs of that other shoe beginning to drop with the Washington County numbers in November,’ said RealtyTrac VP Daren Blomquist. ‘And in fact I think we see evidence of that in Clackamas County and Multnomah County in October, when foreclosure activity was up from a year ago in both counties.’”

“John Helmick, chief executive of Gorilla Capital, which tracks foreclosure data in 24 Oregon counties, has described this fall’s surge in filings as a breaking of ‘the logjam of filings at the front end of the Oregon foreclosure system.’”

“Mortgage applications to purchase a newly built home dropped dramatically in November, signaling a slowdown in sales for the nation’s builders. ‘There was less urgency in the last quarter,’ Ara Hovnanian, CEO of K Hovnanian Homes, told analysts. ‘Given the gains we’ve seen in 2014 in employment, we would have expected housing demand to be stronger then the low levels we are currently experiencing.’”

“‘As we look at 2015, the house we sell today is going to struggle to be marginally accretive. We just don’t have the pricing power to improve the margin,’ Toll CEO Douglas Yearley Jr. said. The same is true of nonluxury builders, like K Hovnanian. ‘I’d like to say we raised prices, but the increase was primarily due to geographic and product changes,’ Hovnanian said.”

“‘The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers’ stone to make it last.’ — Ludwig von Mises (1940).”

“‘Panics do not destroy capital, they merely reveal the extent to which it has been destroyed by its betrayal into hopelessly unproductive works.’ — John Mills (1867).”

“Former Federal Reserve Chairman Alan Greenspan, who was blamed by some economists for overheating equity and housing prices in the 1990s and 2000s, said that were he in the job today, he would take pre-emptive action to tackle asset bubbles if they were financed by leverage.”

“Greenspan, who argued in office that it was better to clean up after an asset bubble had burst rather than artificially prick it, told delegates at a conference that he believed that argument is correct when a speculative boom isn’t financed by debt, mentioning the 1987 stock market crash as an example. If the overheating was caused by leverage, however, ‘then you’re going to have problems,’ he said.”

“‘Bubbles are aspects of human nature and you can try as hard as you like, you will not alter the path,’ Greenspan told the audience. ‘I still hold to the general view that unless you have debts supporting the bubble, I would just let it alone because certain things about human nature cannot be changed and I’ve come to the conclusion this is one of them.’”

Bits Bucket for December 12, 2014

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