Agents Are Crying That The Money Isn’t Coming
It’s Friday desk clearing time for this blogger. “The mansion on Fallen Leaf Road in the secluded Upper Rancho neighborhood of Arcadia has all the trappings a wealthy buyer from China could want. Yet two months after it was placed on the market, the house remains unsold. Not long ago, real estate like this would have been snapped up almost immediately. ‘It would have been gone in two weeks with multiple offers,’ said Dee Chou, the property’s listing agent.”
“Median home prices have dropped in Arcadia to $930,000 at the end of last year from about $1.1 million at the start of 2015. In San Marino, the median price for a home was $2.5 million as recently as the second quarter of last year before tapering to $2.2 million by the fourth quarter. Agents say the city is left with a surplus of luxury properties whose sellers could face pressure to reduce prices. One agent said her client had to drop his asking price for a property in Arcadia last summer to $8.3 million from $10 million because it drew no interest for three months. ‘All agents are crying that the money isn’t coming,’ said Sanne Lee, an agent for A + Realty & Mortgage in Rowland Heights.”
“The CEO of fashion retailer Theory finally sold his penthouse at the Setai Miami Beach for $8.5 million, at a 38 percent discount from its 2015 asking price. Andrew Rosen paid $8.6M for the unit in 2013, which means he sold it at a loss. It was recently renovated. The buyer’s agent Luciana Barreto said an identical unit on the 35th floor sold for $12 million in March 2014.”
“With rental vacancies in Gillette the highest in at least 15 years, local officials aren’t shocked that the housing and real estate markets also are down in a slumping economy. Campbell County saw a new 10-year low of homes sold in 2016. According to data compiled by Steve Laakso of ERA Priority Real Estate, there were 581 homes sold in 2016, the lowest since at least 2007. The drop comes after a 10-year high of 905 homes sold in 2015, he said.”
“Corresponding to low home sales, foreclosure numbers were up, from 71 in 2015 to 83 in 2016. Laakso said that number can be misleading and he expects it to be even higher in 2017. ‘Eighty-three isn’t a huge number by any means, but there’s a lot of lag time in foreclosures by the time someone turns their keys in, the bank gets around to doing their job and getting it back on the market and sold again,’ he said. ‘So I anticipate that number to be up this year.’”
“In 2016, for a second consecutive year, the glut of properties owned by banks after borrowers defaulted shrank in Ohio and some surrounding states, according to the Cleveland Federal Reserve. But the Mansfield metro/Richland County area was among a small number of locations in multi-state region that did not fully share in that bit of economic sunshine.”
“Mansfield also was the only metro in the Fourth District that had yet to regain its median value of purchase and refinance originations from before the housing crisis, still 3.51 percent below its 2005 level, the Fed report said. ‘The data suggest that banks have been more willing or more able to sell their properties of late,’ said Brett Barkley, senior research analyst with the Federal Reserve Bank of Cleveland. ‘Some may have held onto them, waiting for housing values to recover before selling them.’”
“Home owners selling their properties are being forced to slash their prices after slow growth in the housing market amid Brexit uncertainty. Among London’s more affluent areas, as many as 35 per cent of properties on the market have been reduced. A luxury townhouse in Highgate has come down by a whopping £2 million to £6.95million. Trevor Abrahmsohn, managing director of Glentree told The Times: ‘The original price wasn’t fanciful but the market started falling.’”
“Evidence is mounting that Tokyo’s housing boom is nearing an end. In the Kachidoki area facing Tokyo Bay, home to the city’s hottest market given its proximity to venues for the 2020 Olympic Games, real-estate broker Hayato Jo has a wall full of notices of apartments for sale, with a 20 percent increase in the number of people looking to sell in the area in the past year. Prices in the neighborhood, which surged 25 percent since Tokyo won the Games in 2013, have started to fall from their peak.”
“Elsewhere, more cracks are appearing. The number of unsold new apartments in the city reached the highest in seven years in 2016. Inquiries from Chinese investors, who helped fuel property market gains, have halved since August 2015, according to Noboru Takimoto, senior manager of overseas residential sales at Jones Lang LaSalle K.K. ‘Inventory is climbing and the property market has already started to deteriorate,’ said Deutsche Bank real-estate analyst Yoji Otani. ‘This year we will see the pace accelerate. There is no demand. No one can afford properties, only rich people. There is no way to help this market.’”
“The Costa Rican Prosecutor’s Office has opened up an investigation into real estate developer Homes Grupo Inmobiliario after complaints of consumer fraud have surfaced. Daniel Quesada, a spokesman for the Prosecutor’s Office, told The Tico Times in an email that Homes Grupo Inmobilario took deposits for the three development projects from clients looking to reserve a condo. However, after long delays and unfulfilled promises on the part of the company, clients would then make calls and send emails to numbers and addresses that didn’t exist or had been deactivated, the spokesman said.”
“Quesada added that the company was offering clients a discount of up to 20 percent of the property’s value if buyers paid the cost of the property’s premium right away. Would-be homeowners lost as much as $50,000, according to Quesada.”
“Almost as quickly as he burst onto the East Village real estate scene, notorious landlord Raphael Toledano is on his way out of the neighborhood. The 26-year-old’s lenders filed court papers to foreclose on all 15 of his properties there this week. Madison Realty Corp. is foreclosing to recoup $140 million — of which just under $125.1 million is in loans against the properties — according to the foreclosure statement.”
“The foreclosure isn’t exactly a surprise to the parties involved or anyone else familiar with New York real estate, according to a source familiar with the industry. It’s merely business as usual for Madison Capital, which often operates on a ‘loan-to-own’ philosophy, said the source, who requested anonymity. It’s a win-win for Madison — either Toledano pays back his loan at the huge interest rates he signed up for, or they walk away with more than a dozen new properties in the East Village.”
“‘They are lending money,’ the insider explained, ‘but fully anticipate that the loan may not be paid back and are happy to go through the foreclosure process to own the properties for the money they lent.’ On top of that, Toledano ‘did all the dirty work’ of clearing and renovating apartments, the source said.”
“Toledano’s exit from the Village doesn’t mean locals won’t be seeing more of him in the future, The Villager’s real estate source said. The real estate industry operates much differently than any other, he noted, and even after a colossal defeat, investors can rise from the ashes of a disaster like Toledano’s. ‘The beauty and horrors of real estate is that it’s more forgiving than Jesus,’ the insider said. ‘You can screw up or screw people any number of times and bankers will still throw money at you if they think they can make a buck.’”
A video:
‘Cooling Luxury Housing Market Prompts Price Cuts’
‘There aren’t any two-for-one deals or rebates yet, but home sellers across the country are offering discounts.’
‘This transcript has been automatically generated and may not be 100% accurate.’
… there is a two for one deals are really get home sellers across the country are offering discounts is a luxury market softens … a … Manhattan stressed that the neighborhood the first two penthouses and Sterling Grace and a new luxury condo building sold before the building was completed for more than twenty million dollars each … the third Reserve originally priced similarly recently came back from the market for eighteen point nine five million … and every County California agent rescinded Laclede said she encouraged her clients are breakup has three acre lot into two smaller parcels in order to appeal to buyers shopping and lower price categories … the homeowner our readership spent fourteen million dollars to buy the property into thousandnine and another four million dollars on improvements … the lower portion of the property was listed last year for five million dollars and is currently under contract … the second parcel which includes the main house or come on the market in the spring after renovations for around twelve million dollars … in Colorado such a call for it has two properties on the market a condominium at the four seasons in Denver and contemporary styles Keystone and Breckenridge that she thought were priced to sell at one point eight million to four point seven five million dollars respectively … the property went on the market in October and Breckenridge property has been on the market for about sixteen months … taking up the properties for showings and ready to move on financially this culprit decided to sell both properties at auction … there’ll be no reserve or minimum price … business Gomperts says it’s a risky process there’s no question … on the February twenty seven auction day she says that your overheating a box of Kleenex or popping a bottle of Champaign …
‘in Colorado such a call for it has two properties on the market a condominium at the four seasons in Denver and contemporary styles…that she thought were priced to sell…has been on the market for about sixteen months … decided to sell both properties at auction … there’ll be no reserve or minimum price’
But all these objective sources of statistics like NAR and Zillow will put out report after report saying Denver is hotter than rivers of lava.
Certainly not for $2 million plus condos.
I sometimes get a banner ad on this website for some schmucks trying to sell $1.2M condos in Fort Collins. I doubt they’ll sell a single one, even thought they’re in “Old Town” (big whoop). But if you put a sub 300K house on the market in Fort Collins it will get multiple offers.
‘Why Did I Ever Invest in Buy to let?
Readers Question - Published on 22/02/2017
‘My wife and I bought our one bed flat in a town in the NW of England in 2007 – the plan was simple keep it for 10 -15 years then sell using the increase in valuation as a means to diversifying our pension provision. ‘
‘We never bought with a view to growth in units we were happy as amateur investors to see a modest gain at the end after tax. My wife is not a taxpayer so we could mitigate tax cost along the way. Then came 2008, the financial crash and even now my best estimate is that the flat is worth only 60% of cost. We have generally ploughed the profit from rent back into our living costs given that cash deposits are earning next to nothing.’
‘Other than diverting funds from my pension income to assist I have no immediate means to clear the shortfall. Even if we hang on the chances are that in 10 years when the mortgage is due to be redeemed we will be well short. I am now about to finish work because of ill health and a year short of state pension and my wife is 3 years short of state pension. I have decent pension provision, but I hate the idea of this not being resolved.’
‘On the positive side we have kept the current tenant for over 4 years although we have reduced rent to keep her and have no immediate plans to increase rent.’
‘Does anyone have any sensible ideas for taking this forward?’
‘Many thanks’
‘James’
state pension
I sold my over priced townhome in 2006 to a teacher I wonder if easy state living makes you kinda dumb about money?
About 15 jobs over the years never knowing when I’ll get let go, makes you kinda edgy. we got a whole generation of engineers and other workers who traveled this road and they wonder why they can’t find any new replacments and have to hire H1B ?
That kind of stress is probably not good for your brain. There’s research that shows that it harms kids who grow up poor. In adults it could also make people less likely to engage in long term planning.
Also, UK state pension is similar to our Social Security.
It’s the new ‘gig’ economy, Mike, brought to you by the globalists. Coming soon to a white-collar job near you.
‘in 2007 – the plan was simple keep it for 10 -15 years then sell using the increase in valuation as a means to diversifying our pension provision’
As seen on TV. The thing that strikes me is the risk to return. 2007? Jeebus, you’d have to be living under a rock not to know what was going on in 2007. And for a pittance in rents, gambling on appreciation, they took on a phenomenal amount of debt.
I agree, very little if no “job security” these days.
Good luck committing to 30 yrs of debt.
Good luck committing to 30 yrs of debt.
Nobody would do it unless they thought appreciation was virtually guaranteed.
“Nobody would do it unless they thought appreciation was virtually guaranteed.”
Dreaming of that easy pink… until that timeout call.
Hurry up with the Star Trek Replicators. We need those things.
Also, UK state pension is similar to our Social Security.
And IIRC, they call the dole, what we call welfare, “Social Security”.
‘Does anyone have any sensible ideas for taking this forward?’
https://www.youtube.com/watch?v=uepFO4psgKE
The buy-to-let craze in the UK is one of the many manifestations of the bubble. I visited Portsmouth in 2006, and every residential street was cluttered with “Buy-to-let” yard signs.
When you see the buy-to-let mania die out, you will know the bubble is on the way to the annals of financial debacles.
‘A London Real Estate Developer Just Dropped Its Land Values by 20%’
‘The company, which plans to build 10,000 homes at Earls Court with venture partners, cut the value of its sites in the district to 1.1 billion pounds ($1.4 billion) from 1.4 billion pounds a year earlier, according to a statement.’
Poof.
ZH has a good one on real estate this morning:
http://www.zerohedge.com/news/2017-02-24/starwood-reit-ceo-high-end-manhattan-condo-market-catastrophe
“New York City rental market is going to be weak. It is weak. It is going to continue to be weak. You saw that in our earnings statement. Similarly, parts of South Florida, particularly only really our focus on Miami has a similar situation with a lot of condos coming online with a much different structure than any market we have seen before, because in most cases the individuals have up to half of the cost of the apartment paid for as a deposit.”
“… there is one market in the country which is quite weak, but where the weakest market is where there is almost no loans at all. So we are looking at places like Manhattan. The condo market at the high-end, you know, is a catastrophe and will get worse. The hotel market is weak, not terrible, still profitable, but you are not seeing RevPAR increases year-over-year, in part because of the dollar and also because of supply.”
Speaking of New York, Bill DeBlasio will be interviewed by the feds today with regard to NYC corruption.
But we were told the rents were going up. That chick is the NY Dan.
‘in most cases the individuals have up to half of the cost of the apartment paid for as a deposit’
Bzzz, wrong. This is what they tell the papers but everybody knows they can “refi and buy more” as one broker said.
https://www.yahoo.com/finance/news/u-house-prices-rise-analysts-wary-deregulation-reuters-125541159–sector.html
Oil will hit $100 a barrel and China’s GDP will hit $20 trillion before housing prices go back down to 2010 prices and people in glass houses should not throw stones.
Prices are going down now crow breath.
http://marketrealist.com/2017/02/munger-believes-current-prices-china-looks-better-investment/
Yep, the connection between China printing into oblivion to stimulate domestic demand - which became domestic fraud, which then spread throughout the world has been severed. Severed because the psychology has changed, and thats all it takes crush the bubble - the notion that you wont be able to at some point in the future sell your house for the same or more than what you paid for. That simple fact makes the last 20-30% of appreciation vanish. We’re already seeing it in rents and prices in some markets, the low end might still be getting chased a little from the most clueless and desperate but it wont be long for those markets to crash and burn as well.
MMMMAAAAAGGGGAAAA!
‘the notion that you wont be able to at some point in the future sell your house for the same or more than what you paid for’
More than that, buy a Miami or Manhattan air box and sell for millions more just a few years later. That’s what people were trying to do six months to a year ago. Boy that went away quick.
It’s not that hard: why the drip drip of easing loan standards? The HUD even tried to slip another one in just before Castro got the boot. Why is Mel Watt going “pedal to the metal” even as he warns the GSE’s might need another bail-out? If demand is so strong, why are we backing loans made to illegal immigrants based on their roomies pledge to rent a room or three? Why has VA lending grown 500% in 10 years so vets can own multiple shacks?
Why have the “emergency measures” of QE and ZIRP gone on for 8 years? Why this is robust, boom time stuff people, it shouldn’t need training wheels after all this time! We are supposed to believe there is a shack shortage, not just in the oh so hot coastal markets, but every little burg and wind swept corner of the nation. A 60 year high in construction in Boston: shortage! A 72 year high in San Francisco: shortage! Why all of a sudden it’s GLUT, FLOOD, OVERSUPPLY!
At some point, you have to wonder if we haven’t been feed a load of horse-hockey.
Sacramento foothills report:
I am doing my taxes this week, which includes a YoY valuation assessment. Everything is up about 7-8% over last year. These are middle class 4 BD, 3 BA houses. Rents are up too, although I never increase rent on an existing resident, only on turnovers.
The market was quieter in 2014 & 2015, but demand has picked up again in 2016 and it appears to be strengthening in 2017. Values are still 30% below 2006 ($650,00) but at $450,000, they are 50% above 2010 numbers ($285,000).
Oxy is right about middle class housing. The builders are cautious and not meeting demand. I think I’ll sell some properties over the next year or two, since we want to move to San Diego in 2018 and buy a condo in Little Italy in 2020.
The first Californian that shows up is headed for the exits. Interesting.
Exits? I guess you can say that. Another way to look at it is that my investments in real estate are doing so well, I can afford to retire and buy a condo in San Diego. $290,000 in 2008 is $1,200,000 today (before taxes, but I’m willing to pay Uncle Sam his share).
Prices are only going down now for luxury. Anything median is being snapped up.
I predict that oil prices will hit $80 before median single-family semi-detached or detached houses go back down to 2010 prices.
However, luxury apt rents *will* go down simply because there are so many of them, and because they were probably shoddily built and are likely to decay into Grade A-/B pretty fast (hot yoga or no). Just in time for the second wave of millenials to have kids and need more room, too.
‘luxury apt rents *will* go down’
A bold prediction considering it’s been ongoing for at least a year. I said it was going to happen over two years ago, complete with a CRE meltdown. More on this tomorrow.
‘I predict that oil prices will hit…’
Waiter, better send another plate of crow to the oil analyst from Maryland.
I said the Chinese money was going to dry up too:
‘One agent said her client had to drop his asking price for a property in Arcadia last summer to $8.3 million from $10 million because it drew no interest for three months. ‘All agents are crying that the money isn’t coming,’ said Sanne Lee’
‘The number of unsold new apartments in the city reached the highest in seven years in 2016. Inquiries from Chinese investors, who helped fuel property market gains, have halved since August 2015, according to Noboru Takimoto, senior manager of overseas residential sales at Jones Lang LaSalle K.K. ‘Inventory is climbing and the property market has already started to deteriorate,’ said Deutsche Bank real-estate analyst Yoji Otani. ‘This year we will see the pace accelerate. There is no demand. No one can afford properties, only rich people. There is no way to help this market.’
Think I mentioned before, but a Chinese billionaire (holds pinky to lips) bought a yuuugggeee chunk of land in my neck of the woods a few years back. Not sure if the deal is gonna happen now - rumor is hes nowhere to be found. Bastard could be face down in the river Styx for all we know.
Sum Ting Wong!
Now what we consider a high income country and what actually is a high income country is quite different nevertheless is does not suggest an imminent collapse. Hope is not a plan. If you are counting on an imminent collapse of China to make your plan work it is probably a bad plan.
http://www.shanghaidaily.com/business/Shift-to-growth-quality/shdaily.shtml
China is already collapsing.
China does not have to collapse completely and immediately for it to be a very unfortunate story. A sustainable economy can tolerate zero growth very comfortably. One built on a pyramid of debt cannot. It must grow or die. It can be a slow prolonged grinding. There are many signs that it is already well underway.
‘finally sold his penthouse at the Setai Miami Beach for $8.5 million, at a 38 percent discount from its 2015 asking price…The buyer’s agent…said an identical unit on the 35th floor sold for $12 million in March 2014′
Imagine how the 2014 buyer feels. Poof!
If he owns a condo for which he paid $12 million, he probably feels very rich! Just not as rich as he felt in 2014!
Well, you are the expert in Donkey math.
March 2014 person #1 buys a unit on the 35th floor for $12 million
Early 2017 person #2 sells their penthouse unit for $8.5 million, a unit apparently identical to the one person #1 bought in 2014
A normal human might think that means person #1 is now at least $3.5 million underwater
But Jingle Mail knows better because he has special math skills not accessible to the rest of us
Not to mention that if he’s a South American, his 4M loss is amplified by the currency loss to 6M. Would have paid for a lot of first class flights and 5 star hotels in Miami.
Oh crap that’s right.
Also, since his unit isn’t a penthouse unit, it’s probably worth even less than $8.5 million.
A world of hurt.
LOL, I agree person #1 will lose $4,000,000 if he sells his unit. The math is easy. I’m just saying if he is buying a $12,000,000 property, he is likely not going to be reduced to eating beans every night when he sells.
http://www.msn.com/en-us/money/realestate/why-american-millennials-may-never-get-to-live-alone/ar-AAnh8SX?li=BBnbfcN
Depressing.
The article states that buying a home may be cheaper than renting, LOLZ.
Sometimes circumstances indicate buying is cheaper than renting. Buying inexpensive home from a earnings ratio standpoint, not spending a fortune to update it (helps to be handy), and not moving every few years.
Looking at a family home in the low $400s. 15 year note for 80% LTV @ 3.125% paid biweekly, taxes, insurance, etc. is roughly $705k over 30 years. I can do 90% of maintenance myself, but still budgeted for 1% annual maintenance costs, which adds another $120k. Equates to roughly $2300/month for 30 years if I give the house away. If the value decreases by 50% when I sell, I paid $1736/month. Might think differently if return on savings was better than 0.0001%.
anything you can buy on payments that appreciates is a no brainer.
” Buying inexpensive home…”
You have just detailed a strategy to spend a $million more than me over the next 30 years. I’d say that’s living the mania.
I detailed the 30 year numbers above taking 100% loss and 50% loss on the house and my all inclusive cost was $825k on the high side and $625k. Explain how that’s a $million more than your housing expenses for the next 30 years. Then tell me how it’s a $million more than rental housing expenses for a family of 4.
All Donkey Math.
Now go back and include depreciation.
Foolish always get angry when you speak a simple fact. Even if I had said $825,000 he would have been angry. I have no idea what a spendthrift family of four would like to spend on rent anyway.
I definitely will spend that kind of money over the next 30 years, but it will be on vehicles, women, Delmonicos and single malt. Not “inexpensive home” [sic].
@ Mafia Blocks. can you factor in depreciation using somedewd numbers?
what do you mean by depreciation anyway? he factored in maintence which I would consider covering “depreciation” - roof / water heater / Ac etc..
I didn’t get mad, just explaining an alternate position to the “renting forever is the only option” crowd.
Young family of 4. Not worried about job change so repeat moving costs for house purchase unlikely. Renting for 30 years would result in multiple moves to chase the lowest rent.
If y’all re-read what I posted above, I assume 100% and 50% depreciation on house and land, which is extreme. I also assume much higher maintenance costs than would ever be expected. With that my range is still $1700-2300/month for 2900sqft single family home with 0.6acre land. Stable for 30 years. And since I could pay it off in well under 15 years, I’m not worried about minimal interest expenses.
Renting a 3-4 bedroom house in my market with good schools is minimum $2k,and that hasn’t changed much in 15 years. 3 bedroom apt almost impossible to locate with good schools due to demand. Considering my extreme assumptions, limited low risk products offering return in capital, and premium I place on privacy/single family living, buying seems like a no-brainer.
Again, one size doesn’t fit all, but there’s nothing wrong with buying if realistic assumptions are made about housing vs investment.
2.50-$3.00/sqft/yr…… And it eats loanowners alive.
Young family of 4. Not worried about job change so repeat moving costs for house purchase unlikely.
They can see 25 years into the future? Must work as psychics then.
“realistic assumptions are made”
That’s the shame about this biggest housing bubble in history. People start to think for sure that the mania is reality. Thinking that a $1/2 million home is “inexpensive”. Thinking that interest, taxes and depreciation are of no consequence and that paying off such a loan in 10 years or so with two rug rats on board is a no-brainer. 3,000 ft2? Hardly enough room to swing a cat around.
I wish young folks like you the best. May the value of your “inexpensive home” never drop to real prices, lest you hate it. May your 2 kids (I had four) not stay at home for another 30 years. May that stable job last longer than you have already been alive. May you never meet the unexpected and may you never change your mind or ability about career or spouse.
ALL of these things worked for my grandparents.
And hey, you’ll still pay something like a million more than me for your housing over the next 30 years. Maybe only $800,000.
And excluding losses to depreciation is a fools game.
Not sure if I’m the dense one, or everyone else.
Blue Skye - Mania is 2.5mil for a teardown that requires selling to the next idiot to avoid foreclosure and bankruptcy. “expensive” and “inexpensive” are relative terms with many qualifiers. In my view, inexpensive is lowest price per sqft in a certain school district, mildly above median home price for a city, with a note less than 1.5x annual gross family income.
Karen - fortunate to work in stable field. multiple insurance products help offset risk of unforeseeable.
Mafia and everyone else - What’s your definition of depreciation? Mine is a decrease in value due to age, decay, etc. If I say my $400k house is worthless at the end of 30 years, it’s completely depreciated. Much more than your $3sqft/year (only $270k) I get nothing back when I sell it. In my worst-case scenario of paying off the note, obscene taxes, obscene insurance, obscene maintenance, and anything else I pay $2300/month for 30 years of housing. Using depreciation of $270k and a sales price of $130k, my monthly cost over 30 years is $1897/month.
$80k down payment + $320k note + $73k interest + $170k taxes/insurance/fees + $120k maintenance + $50k fudge factor == $813k / 360 months == $2258/month. Water, gas, power are not included as they’d be paid if renting.
Let’s assume $1250/month to rent 3 bedroom apartment (not available in current school district, but maybe things get to below 2005 numbers in a severe crash) with no rent appreciation over 30 years, I’m out $1k/month more for 360 months == $360k. That’s nowhere near the supposed $1mil or $800k more than anyone will spend over the course of 30 years to be in the exact same market, district, etc. I am currently looking to buy a house in. And that’s with no money back from selling my house/land in 30 years, so highly unlikely.
If commenters want to be extreme, let’s assume everything above for the house but think a 2 bedroom tiny house at $80k is sufficient for the family. Cost over 30 years would be $80k + $30k taxes (1.25% annual) + $15k insurance + $12k maintenance (0.5%/year) + $72k land/hookup rental cost ($200/month, never goes up) == $209k. So now my 100% depreciated moneypit house costs me $604k more over 30 years. Probably not a reasonable comparison, but I guess that’s how I could pay $600k more than some on this board.
You’re gyrating.
“…I could pay $600k more than some on this board.”
I gotta say you are getting closer and you are at least trying to understand.
There is no “$72k land/hookup rental cost” in this example as it came stuck to the 2000 ft2 house at half the cost you propose. Is that “tiny”? Anyway, there is your $800K.
The flipper I bought it from was in a world of financial trouble and he removed certain key elements the banks insist upon, so cash. Perfect for me in a perfect precinct, though not probably as special as yours. I was going to build, but I couldn’t find a piece of land in the forest at a reasonable price after a few years of looking.
I did once own a beautiful 4,000 ft2 mortgaged shack. The “tall house” the locals called it. I would never do that again.
“I gotta say you are getting closer and you are at least trying to understand.”
I think it’s the condescension that helps me understand. If only I wasn’t so stupid, severely overpaying for this house instead of buying the $100k home available in the exact same area. Oh wait, doesn’t exist, even as a 1000 sqft condo or townhouse. Maybe renting until the bottom falls out of a market which only saw a 10% drop from 2007-2011 in SF homes <$400k is a valid option. Or maybe moving is the best option, focusing on the cost of housing I want to buy instead of job, schools, proximity to family and other intangibles.
Don’t start crying now SFdude. You spend what you want to spend to live near your folks, or that very very special school. I doubt your kids will care one way or the other if you spend your time with them over the next 15 years. I’m not trying to live an example for anyone. I am only an escapee. Just don’t tell us you are taking the inexpensive options.
I’ve got some young relatives in Santa Clara. I know the struggle. Life choices.
Karen - fortunate to work in stable field. multiple insurance products help offset risk of unforeseeable.
Only someone very young and inexperienced would talk about working in a “stable field”. There is not such thing. Especially since, even if that “field” continues into the future, your position in it may not.
Insurance certainly offsets risk, or at least it has in the past. But here at the zero bound, where we now live, the business model of insurance companies and pensions is untenable.
Who knows what the future holds for them (and the people who are counting on them.) Who insures the insurers?
My mother quit buying bananas when they went over $.05/pound. The only thing that happened was she never ate another banana!
She also built a new home for $172,000 in 1993. Today it is worth $600,000. It’s a good thing she didn’t feel the same way about housing as she felt about bananas!
Don’t forget to add the ,0001% “opportunity cost” to your $80k down payment!
‘In San Marino, the median price for a home was $2.5 million as recently as the second quarter of last year before tapering to $2.2 million by the fourth quarter. Agents say the city is left with a surplus of luxury properties’
I was driven around San Marino years ago. These “luxury” houses look just like the average shacks in the neighborhood I grew up in. They don’t even have garages.
“Agents say the city is left with a surplus of luxury properties”
Gasp! How could this be? What’s luxurious about the properties? Betcha it’s just the price, betcha, betcha.
‘The supposed stability being portrayed in China’s recent economic reports doesn’t look so rosy in the scope of the big picture. For example, less money appears to be fleeing the country than only a month or two ago — but looking back 12 months, the trend is still worrying.’
China bought U.S. government bonds in December for the first time since May, the Treasury reported. However, overall holdings fell by a record $188 billion last year, according to news service StreetAccount.’
‘Similarly, official foreign exchange reserves fell at a slower pace in January, but they have dipped below the psychologically important $3 trillion level. That marks a $1 trillion drop in just two-and-a-half years.’
“The faster we get to $2.5 trillion [in total reserves], the quicker the sense of eventual disarray will be,” Junheng Li, founder of China-focused equity research firm JL Warren Capital, said in an email. She estimates that about $65 billion to $70 billion leaves the country every month, including more than $80 billion in January alone.’
“Additional tightening of [capital] controls is likely,” Li said. “However, we are starting to see restrictions imposed on areas with increasing marginal cost. Therefore, one needs to wonder if they will be able to slow down much further the pace of outflows.”
“As long as the U.S. is in a tightening environment, we’ll likely see capital outflows” from China, said Francis Cheung, head of China-Hong Kong strategy at CLSA, a brokerage and investment firm based in Hong Kong.’
‘Money sloshing around inside China’s closed markets creates investment bubbles — the country has seen everything from real estate to stocks to bonds to soybeans swell in price, and then pop. When those bubbles burst, authorities rush to patch up the situation, putting U.S. investors on edge.’
‘The problem with China is “every single asset class has been inflated” or “deflated,” Cheung said. “It’s a fundamental issue.”
‘A 40 percent plunge in the Shanghai composite in 2015 and a failed attempt to implement circuit breakers half a year later contributed to market shocks that reverberated globally. When Beijing limited investors’ ability to borrow and invest in stocks, Chinese turned to speculating on Chinese commodities exchanges, which then drove prices for global assets such as iron ore.’
‘One major factor behind the worries is the sheer amount of money China has put into its system, economists explained to CNBC.’
“You have this huge amount, nowhere to go. We’re just going to get this happening over and over again,” said Derek Scissors, chief economist at the China Beige Book. “You can’t handle that size of money stock other than bubble, bubble, bubble.”
‘It came not not with a bang but a whimper. The January data from China finally confirmed that the country’s foreign-exchange reserves fell by $12.3 billion to $2.998 trillion, which compares with the all-time high of $3.993 trillion in June 2014.’
‘What the official reserve data do not show is that massive borrowings outside China have accumulated over the past 15 years, bringing net reserves down to about $1.7 trillion, according to statistics prepared by Kynikos Associates.’
‘That much smaller reserve amount is not necessarily large enough to support the yuan exchange rate, particularly if foreign-exchange outflows accelerate again as the Chinese credit bubble has now burst, in my opinion.’
‘China has a total debt-to-GDP ratio of close to 400%, if one includes the infamous unregulated shadow banking system that is habitually omitted from official statistics. In 2000, China’s total debt-to-GDP ratio stood near 100%. As Chinese GDP grew from $1.094 trillion at the end of the 20th century to $11.75 trillion at the end of 2016, the country’s total leverage ratio ballooned. China’s economy grew 11-fold, and total credit in the financial system surged by over 40-fold.’
‘If Chinese GDP continues to slow (and there are many observers, myself included, that do not believe the official 2016 GDP growth rate of 6.7%), and total credit in the economy continues to surge, then the Chinese economy will in effect be running as fast as it can just to stand still. An acceleration in borrowing with a slowing economy is the classic definition of a burst credit bubble.’
How do we know what anything is really worth in China? We don’t. We never will, and neither will they.
But here’s a little clue: if their own citizens don’t have confidence in their own country and their own money, as evidenced by capital outflows, it ain’t worth much, when you consider that fiat money is nothing more than an idea supported by confidence. Thus, confidence is the key to fiat money. If there’s no confidence, the money isn’t worth much.
Dan, I like you, too, but that right there is the key. Now, China could change and turn to improving its environment and the lives of its citizens, and see a boom in domestic prosperity that is not dependent on globalism. If that happens, then I’d support you on China. Until then…
First they need to deal with 100 years worth of debt obligations.
“She estimates that about $65 billion to $70 billion leaves the country every month, including more than $80 billion in January alone.”
That’s a lotta Sydney apartments!
New York County (Manhattan) Housing Prices Crater 12% YoY
https://www.zillow.com/new-york-county-ny/home-values/
Lost a long comment, no time to repeat. I like you to Pal.
Happy Friday Daniel Crowman….. Drink up my good friend. Drink up.
http://bit.ly/2h4KLpv
Don’t shoot the Donkey
https://www.youtube.com/watch?v=Ls-YVHO9Uzw
At least I do not have to pay the Chinese bride price:
http://www.shanghaidaily.com/feature/Bride-price-skyrockets-again-can-you-afford-a-wife-in-China/shdaily.shtml
If you think about housing costs in China and the related bridal price, it is easier to understand why the Chinese save such an extraordinary amount of their incomes, despite their incomes being low by Western standards. It also explains why they are chasing returns outside of the country where the excess savings have not knocked down the rate of return. Of course, it is like a dog or cat chasing its tail, the more every individual saves, the higher the bride price and the house price.
Or to summarize, Chinese high savings rate=Chinese chasing tail.
Bride Bubble?
Yes and it explains a lot, unintended consequence of tens of millions of female abortions.
Plus like women everywhere, the vast majority would prefer not to live with Billy Bob or his Chinese cousin in BFE if they had a choice. That’s gotta drive the price up.
Exactly, women can pick husbands in a tier one or two cities:
http://www.shanghaidaily.com/feature/Weddings-were-simpler-cheaper-in-leaner-times/shdaily.shtml
To parrot Mr. Mafia Blocks: why buy when you can rent for half the cost? Don’t have to worry about depreciation, either.
See https://www.youtube.com/watch?v=YlVDGmjz7eM for more on lease vs. buy, as explained by Mr. Dangerfield in “Back to School”…
“can-you-afford-a-wife-in-China”
Why would you even want one?
“Bride price skyrockets again — can you afford a wife in China?”
Why would anyone want to buy a bride in China, when you can get them for free here in America?
Free? Surely you jest.
save bandwidth- just post counties n hoods going up in price
……………………………..
DownZup!
Takoma Park, MD Housing Prices Crater 22% YoY
http://www.movoto.com/takoma-park-md/market-trends/
Well some reasonable apartments in LIC
Affordable rentals in Queens’s onetime tallest tower go from $913/month
The 50-story building has a total of 195 affordable rentals
http://ny.curbed.com/2016/11/22/13718006/queens-former-tallest-the-hayden-affordable-rental-launch
http://liccourtsquare.com/2016/11/16/lottery-opens-for-affordable-housing-at-the-hayden-at-43-25-hunter-street/#comments
Washington, DC Housing Demand Plummets 27% YoY
http://files.zillowstatic.com/research/public/State/State_Turnover_AllHomes.csv
Directly related to the Denver economy and housing:
http://www.thedenverchannel.com/news/local-news/marijuana/white-house-compares-recreational-pot-to-opioid-crisis-says-doj-will-be-taking-action
I see the crow buffet has lots of takers today.
Meanwhile in Australia, it’s not enough to destroy your own family, now you can take down your extended family and friends too.
http://www.9news.com.au/national/2017/02/24/18/37/mortgages-become-family-affair
“Sibling mortgages are the latest solution to the housing affordability crisis that’s locking an increasing proportion of young Australians out of the property market.”
“Angela O’Brien, who works for the Commonwealth Bank, and her sister Jacinta teamed up on a mortgage to buy a property together in Sydenham in Sydney’s inner-west.”
“”We looked for two years, every weekend for two years, it was frustrating beyond belief,” Ms O’Brien said, adding that teaming up was the “best decision ever”.”
–
Best decision ever.
A love letter to Sydney:
https://youtu.be/zqXjP4PG_k8
“Angela O’Brien, who works for the Commonwealth Bank, and her sister Jacinta teamed up on a mortgage to buy a property together in Sydenham in Sydney’s inner-west.”
Murder rate will be going up there soon. They should give people back their guns. A lot quicker way to go than being scratched to death by sharp fingernails.
I was curious based on what you said. It looks like Sydenham is right next to the airport, not close to any beaches.
Here’s a house that sold a couple days ago. 3-bed, 1-bath, 50 years old (at least), for 1.2 million Aussie bucks. That’s around 920,000 USD, I think. It doesn’t look like anything special.
https://www.realestate.com.au/sold/property-house-nsw-sydenham-124615930
Oh, I didn’t see the link at first for the interior pictures. Dang, that house looks pretty crappy. The wiring job out front looks pretty haphazardly done too, like something I’d do LOL. Maybe it is intended the new owner demolishes it and builds something else. Crazy someone paid 1.2 million AUD for it.
We are like those lab rats in the experiments, where given a choice of food or drugs, they go for the drugs every time, over and over again until they are nothing more than a twitching slab of neurons and meat.
Pure insanity.
http://www.businessinsider.com/theres-more-than-10-billion-in-demand-for-snaps-hot-ipo-2017-2
The guy’s just a college fratboy who made an app specifically designed for college kids to share pics of their private parts. And now he’s a multi-billionaire at 26. Like Zuckerberg…
Envious? Not really. More astonished, and a little disgusted our country places such a high value on degenerate behavior.
“a little disgusted our country places such a high value on degenerate behavior.”
I don’t think the country as a whole places such a high value on degenerate behavior. Hollywood does, Wall Street does, the MSM does, academia does. Also some of the deep state and definitely many politicians.
I mean, you look at Bill Gates back when he started Microsoft — yes he was quite young too and just quit college when he started his company, but it is a night and day difference. Gates built real software, based on actual engineering, and he created an entire industry out of nothing. (Yes, you can argue he was a ruthless business person also).
These new guys like the Snap guy… jeeze, what pitiful excuses for human beings.
“what pitiful excuses for human beings.”
Children of the Corn.
what pitiful excuses for human beings
That’s quite an overreaction. If you don’t like his software, no one’s forcing you to use it.
How much money laundering is going on in the housing market?
http://wolfstreet.com/2017/02/24/how-much-money-laundering-in-us-housing-market/
The Californians are quiet today. That first link in the post above must have kinda freaked them out.
Either that, or they’re “underwater”. All kidding aside, I hope they’re OK, the San Jose pics and video on line are grim, but one good thing I noticed is how green everything is now. I guess that’s the silver lining.
Yeah it’s a water world.
It’s kind of amazing, actually. If it keeps up, California will be a tropical paradise.
Weather’s been weird here in Florida, we usually get some cold during the winter months. Not this year. Don’t get me wrong, it’s not like the relentlessly hot and humid summer, but we only got one brief cold snap. That’s it. Waiting to see what the summer will bring. I have a feeling we’re in for a bad dry spell kind of like the Carolinas had.
Sunny and cold today for the end of February. In the 30s this morning.
72 here today in Western NY. The grass is greening. Some small flowers are out.
“Some small flowers are out.”
Crocuses? Seemed like those were always the first to come up in the Northeast and Mid-Atlantic. I always looked forward to them. February is a little early, though.
I guess west of the Rockies they had a winter this year. East of the Rockies, not so much.
They are called snow drops.
“…the San Jose pics and video on line are grim…”
Took a drive up to south San Francisco today, to Ft. Funston’s hang glider launch. The low dew-point meant no fog, a nice 12-mph west wind and blue skies. Beautiful. Returning to San Jose we drove south on Skyline Blvd, Hwy35, and we saw major storm damage, fallen trees, mud slides, etc., but it had all been pushed to the side of the road. The road had been shutdown for several days stranding the peeps that live above Woodside. Ellison?
“underwater”
High and dry here in San Diego, with green grass and sunny sun. Life can be a lot worse!
I found the first post intriguing. I’m seeing similar price cuts on anything priced over $800k here on the central coast. It also seems asking rents on SFR are down $200/mo or so.
how long can the central bank orgy keep stocks grossly inflated?
Natalie Merchant & David Bryne - Let the Mystery Be
https://www.youtube.com/watch?v=9Gk8JJTinUI&list=RD9Gk8JJTinUI
Thank you for this.
I never heard David Byrne playing country music. Cool stuff, and different for me. I always had the ole stuff like the main Talking Heads, you know all those, but this was different.
thanks.
And Natalie Merchant has a great voice too.
I should probably save this for a thread that’s about apartments-luxury apartments-the amenities race, but it’s on my mind now.
The apartment complex I live in spent over a million dollars last year on fancy furniture and whatnot to redo the clubhouse that no one uses (it’s only open when the office is open, and quite frankly most people who live here do everything they can to avoid the frosty/angry ladies who work in the office, whom you have to walk by to go sit in the uncomfortable, fancy chairs in the empty clubhouse.)
But they can’t properly manage the packages they receive on behalf of residents. Only one tiny closet to put them in. The rest get stuck in the middle of the office, and if you don’t pick them up the same day you start receiving phone calls with attitude.
No real tracking once packages have been delivered to the office. The management company sends emails with links that go nowhere.
I’ve received three deliveries in the past two weeks, several of them had multiple packages. Today I went to the office to pick one thing up and was handed something completely different that had been sitting there for 10 days. It was part of a multi-package shipment I had already picked up. Had to go back to the office to inquire about the package I was actually expecting today. It’s ridiculous.
Instead of spending a million dollars on an unused/unusable clubhouse, how about a decent-sized room for receiving packages and a real system for tracking them (especially multiple-package shipments).
Given how much online shopping people do these days, that is something that would actually be useful to people. They could transform the gym or the yoga room, neither of which anyone uses, into package rooms. But that would be far too practical for today’s apartment management companies. Why bother doing something people would find useful when you can design a yoga room?
I did a panic Amazon Prime gift buy, guaranteed delivery by Christmas eve. Got a text from Amazon at 12:56 saying package was delivered. I was in the middle of cooking so didn’t act immediately.
There are three places the package could be. Outside the apartment door. In the mailbox (or package box in the mailbox area). Or in the office.
The first two are accessible 24/7.
The apartment office closed at 1PM on Christmas Eve, 4 minutes after the delivery text arrived, and that’s where the package was, all safe and secure until the day after Christmas when the office opened back up.
You telling me they didn’t know that some of these Christmas Eve deliveries were presents? Yeah, my fault I waited until the last minuted, but come on, at least put the packages in the clubhouse where they are accessible. Why lock them up when they also get left outside the apartment door sometimes for days?
Our “clubhouse” is part of the office and is locked whenever it is. The office is open 10-5:30 I think. And unfortunately it’s not safe to leave packages at people’s doors. Even though I live in an upper-middle-class neighborhood, things still go missing. For a short while a new UPS driver was leaving packages at doorsteps, but there were a rash of thefts.
But I mean, seriously, with all the stupid “amenities” these places are coming up with, why couldn’t they just, I don’t know, do something actually useful to people???
Once packages are delivered to the office here, its like they fall into a black hole. I’m thinking of getting a box at a UPS store nearby. At least they’re friendly. And accountable.
Does this make San Diego a more desirable place to live?
GE, Intel, AT&T team up to put cameras, mics in San Diego
Wed Feb 22, 2017 10:36am EST
By Alwyn Scott
SEATTLE (Reuters) - General Electric will put cameras, microphones and sensors on 3,200 street lights in San Diego this year, marking the first large-scale use of “smart city” tools GE says can help monitor traffic and pinpoint crime, but raising potential privacy concerns.
http://ca.reuters.com/article/technologyNews/idCAKBN1611YU
Here is another one from Australia today, mostly about the commercial landlords. They aren’t very happy with massive land-tax increases, and may decide to sell their properties.
http://www.smh.com.au/business/property/bill-shock-for-landlords-as-land-tax-skyrockets-20170224-gukiya.html
“Many landlords, property owners and lessors, confronted with sharp increases in land tax bills this month, were reacting with “shock or disbelief”, agents and lawyers said.”
“”In many cases they think there’s a mistake,” Teska Carson agent Barry Novy said.”
“”I’ve been inundated with calls. There has been an increase in the number of people seriously looking at selling their properties as a result of land tax increases,” Mr Tisher said.”
A Toorak rental property’s bill rose from $16,915 to $31,725.
And I thought it was bad in the USA.
my county is building an office for 500 a sq ft while a similar building just sold for $65 a sq
depressing apartments
“The only difference will be that those with experience will leave the markets with the money from those whom will ultimately gain the experience.”
It has been so many years since I first predicted that the bottom would eventually fall out of California housing when the Chinese investors left the building. It seems surreal to see it actually happening.
http://www.globalpropertyguide.com/news-Is-it-impossible-to-stop-corrupt-money-flowing-through-Londons-property-market-3044
Which I don’t get. London is fine for visiting as a tourist, but I sure wouldn’t want to live there. If I had to live in England, I would choose someplace outside of London, most likely in southern England, or maybe in Yorkshire.