There Is No Escaping The Role Of Investors
A report from USA Today. “Riskier borrowers are making up a growing share of new mortgages, pushing up delinquencies modestly and raising concerns about an eventual spike in defaults that could slow or derail the housing recovery. The trend is centered around home loans guaranteed by the Federal Housing Administration that typically require down payments of just 3% to 5% and are often snapped up by first-time buyers. The FHA-backed loans are increasingly being offered by non-bank lenders with more lenient credit standards than banks.”
“Quicken Loans, one of the largest FHA lenders, dismisses the concerns as overwrought. Still, for some analysts, the latest development is at least faintly reminiscent of the run-up to that crisis. Non-banks, including Quicken Loans and Freedom Mortgage, comprised 93% of FHA loan volume last year, up from 40% in 2009, according to Inside Mortgage Finance. Meanwhile, the average credit score of an FHA borrower fell to 678 in the fourth quarter from 693 in 2013, according to FHA, below the 747 average for non-FHA borrowers.”
“‘We have a situation where home prices are high relative to average hourly earnings and we’re pushing 5%-down mortgages, and that’s a bad idea,’ says Hans Nordby, chief economist of real estate research firm CoStar.”
The Richmond Times Dispatch in Virginia. “A total of 1,114 houses were flipped in the Richmond area in 2016, hitting a 10-year high, according to Attom Data Solution. Flippers also benefit from the availability of more financing options in the past couple of years. ‘Hopefully, there will be restraint,’ said Daren Blomquist, senior vice president of Attom Data Solutions, referring to years of out-of-control spending that contributed to the housing bubble.”
The Washington Post. “If you’re among the many people who watch television programs such as ‘Flip or Flop’ or ‘Flipping the Block’ and think you can become a master flipper yourself, you’re not alone. The frenzy for flipping — which refers to homes that have been purchased and sold within one year — echoes the height of the housing bubble before it burst.”
“‘The housing market is in full-boom mode, with prices up and homes selling quickly and consistently, which gives flippers more confidence to jump into the market,’ says Daren Blomquist, senior vice president of Attom Data Solutions. ‘At the same time, they don’t have to compete against a flood of new construction like they did during the last spike in flipping in 2005-2006, when homebuilders were building like crazy.’”
From KDVR in Colorado. “Developers have unveiled their plans to build a new community in Aurora that could eventually provide homes for 60,000 people. The proposed development is called the Aurora Highlands and would be built on 5,000 acres south of Denver International Airport. According to the Aurora Sentinel, attached homes will start at about $200,000 and single family detached houses will start at $1 million. The development is estimated to house 23,000 families, or about 60,000 people, the paper reported.”
The Orlando Sentinel in Florida. “New-home construction in Metro Orlando spiked 25 percent from a year earlier with the biggest boost in The Villages and communities near theme parks, a new report shows. Affordability seemed to fall off the menu of new residential offerings in Central Florida, with declines in the number of homes priced under $200,000. Meanwhile, new residences in the $300,000 to $350,000 range grew by 37 percent during the fourth quarter from a year earlier, according the MetroStudy.”
“‘Resale housing activity is increasing slightly, with less inventory available for sale and increasing pricing,’ said Anthony Crocco, who oversees Central and North Florida for MetroStudy. ‘This is helping the new-home market as the gap in pricing between resale and new home pricing is closing a bit.’”
The Mail Tribune in Oregon. “There is no escaping the role of investors in Jackson County, where the inventory of homes for sale is the lowest on record and rental vacancy is hugging 1 percent. More than a third of residences, or 38 percent, are renter-occupied. In Medford, that number jumps to nearly half — 49.7 percent of all residences are occupied by renters, according to the U.S. Census Bureau 2015 American Community Survey.”
“The historical flow of Californians retiring to the Rogue Valley has resumed as well. When Californians sell tract homes for three or four times what a similar residence in Southern Oregon would command, it adds pressure on local prices. ‘It’s very typical for people selling a home for $2 million when they owe maybe $300,000, or refinance,’ says Patrick Rogers, an investor who also operates Asurent Property Management. ‘They come up here and pick up two houses to rent and buy another and turn it over to property management until they are ready to move up here.’”
The Orange County Register in California. “Longtime Irvine resident Helen Tornquist is calling Big D home now after volunteering for a transfer to north Texas. Last year, she sold her four-bedroom home of 13 years and moved to the Dallas area, where she manages a customer call center. Tornquist is one of thousands of Southern California residents who each year is throwing in the towel and moving out of state.”
“During the first 10 months of 2016, 5,706 residents of Orange, Los Angeles, Riverside and San Bernardino counties took out loans to buy a primary residence out of state, a CoreLogic analysis of mortgage applications shows. That’s not counting the number of people who paid cash for a home or who, like Tornquist, are renting.”
“Housing costs clearly are the chief factor. Southern California’s housing market is one of the most expensive in the nation, with the median house price averaging $473,000 in 2016, double the U.S. average. And the costs are even higher in Orange and Los Angeles counties, which accounted for most of the region’s out-migration. The CoreLogic study showed one out of every four Los Angeles-Orange County homebuyers moved out of their county.”
“About 8.3 percent moved to the Inland Empire, while 8.2 percent left the state altogether. ‘Generally, what you’re seeing is people in high housing cost areas are moving to lower-cost areas,’ said Archana Pradhan, a CoreLogic economist and the study’s author.”
‘It’s very typical for people selling a home for $2 million when they owe maybe $300,000, or refinance…They come up here and pick up two houses to rent and buy another and turn it over to property management until they are ready to move up here.’
Every time I turn on the radio I hear a Quicken ad for cash out refinancing.
Oh dear…
‘one out of every four Los Angeles-Orange County homebuyers moved out of their county’
Okay, no wonder why it has been so difficult to find an affordable home. Landlord buyers were sweeping every unit under 250k, making cash offers I cannot compete with. They must be all from those big cities. I live in a mid-sized city with abundant high-paying job opportunities.
California equity locusts: check.
An explosion in subprime lending by companies with no skin in the game:
‘Non-banks, including Quicken Loans and Freedom Mortgage, comprised 93% of FHA loan volume last year, up from 40% in 2009′
Check.
Underwater: Check
Cashflow negative: Check
Subrime funded: Check
Florida real estate agents worrying about another bubble. Check.
(I talked with one recently who works in N. Florida. Yikes!)
N. Florida agricultural and protected land being sold for development. Check.
Monticello, Fl owner has 500 acres of land for $2M on the market as I write this. Price isn’t bad per acre, and I’m pretty sure that this will sell for near asking. It will be developed and platted in spite of a restricted development order. The court proceedings should be interesting. Half of it will be built over with lux condos and gated developments. Then what? Tallahassee property values crater. Funny money anyway since there has been a recent run up. Sigh.
Regards,
Roidy
$2million for 500 acres of dirt “isn’t bad”? LOL. Guaranteed default at that price. $500/acre, maybe $1000 is all it’s worth.
“Collier County, FL Home Sales Up, Prices Down”
http://www.naplesnews.com/story/money/real-estate/2017/02/17/collier-home-sales-up-prices-down-start-2017/98063188/
Race Bannon,
You get the problem. What causes this to be worth $2M is the close proximity to Tallahassee and Jacksonville. These development companies are going to have a court fight for the ages so that they can build stuff on it. Epic, just frigging epic.
I wouldn’t pay $4k per for this, but developers will. They’ll shitcan the conservation agreement at the earliest opportunity, and lookout here comes another round of Walmarts. Is this a bad thing? It really all depends upon a lot of factors. One thing is for sure, the lawyers are manning their keyboards as I write this.
Regards,
Roidy
P.S. I wouldn’t pay $4k/acre unless I was assured to make money off of this. A lot of money.
I wouldn’t pay $4k/acre unless I was assured to make money off of this. A lot of money.
That’s the heart of the matter right there; with money to spread around, the developers are certain they can own the politicians, and thus get the conservation agreement “renegotiated”—for the children, of course.
Cash Call Mortgage commercial on the radio on the way to work this morning offering “Income and Credit Score solution mortgages”
585 credit score? no problem!
“Okay, no wonder why it has been so difficult to find an affordable home.”
Didn’t we predict this on HBB? House prices don’t have to fall to where the average person can afford the mortgage. They only have to fall far enough to where an investor can afford to borrow somewhere else, pay cash, and rent the place out. Even the flippers like Scott McGillivray from the flipper shows aren’t selling right away. They renovate, rent out for a few years, and wait for appreciation, which is no longer flipping. The flipper article talks about this. Years ago, Ben said that those rentier LLs were really just waiting for appreciation, and he was right.
But none of this is helping the middle class, especially the “working” middle class. They are now a class of renters.
Yep, that has been my experience…tried to buy locally (Calif. wine country) for about a year 2011/2012 and was shut out several times by all cash flippers and speculators despite having excellent credit, job, a preapproved mortgage and enough cash for a big down payment (thanks to selling my last place in early 2007). My offers at full price or slightly more were ignored since there were cash bids and plenty of those had no contingencies.
Since then prices have roughly doubled and buying would be foolish at this point, in the meantime am renting happily and at a reasonable price since I’ve been in my place since 2008 and only had one small rent increase. However if I’m forced to move will be in a tough spot as rents have nearly doubled over the last 10 years but will deal with that if and when the time comes…
Sit tight while prices crater. Then buy later for 70% less.
Your boat looks exactly like mine. In a great place now with great rent, but…..
Oxide: Didn’t we predict this on HBB? House prices don’t have to fall to where the average person can afford the mortgage. They only have to fall far enough to where an investor can afford to borrow somewhere else, pay cash, and rent the place out.
It depends on whether the house can be rented profitably versus the carrying costs. For an all cash purchase in a rising price scenario, the inflow has to cover the taxes + maintenance (if a company buys the house, I wonder how much of that can be deducted from taxes). Which doesn’t seem to be too hard to do. For a mortgage-based purchase, the math is quite different and more punishing.
• Houses have not-insubstantial carrying costs (taxes and maintenance)
• If there looks to be any sustained downdraft in housing prices, then it will push them over a cliff and investors try to get out while they can.
• On the other hand - the government has purchased nearly 100% of the new mortgages made in the US since 2008. And on top of that, the Fed has sequestered trillions of dollars of mortgages on its balance sheet. So defaults should not echo through the financial system. It’ll just be a bigger budget deficit.
• There is also a government infrastructure to boost house prices, via the GSEs, the Central Bank, and state and local incentive programs. After all. property taxes give politicians power and help them get re-elected.
So: net result: if speculators get spooked, it’ll push down house prices. How much depends on the level of speculative activity. There is however an entire government and central bank infrastructure designed to boost house prices.
Will landlords rush in to do all-cash purchases for rent then flip at an appropriate time? I suppose if there are enough landlords with enough cash.
The Invitation Homes rental-backed-security backed by Fannie Mae dropped the pretense that the GSE were there to help people buy houses, as they supported exactly the all-cash landlord business model.
Also, I think the role of speculators is often downplayed but is actually a significant, albeit hard to measure component. The fact that Mongolia, with one of the lowest population densities in the world, had a housing bubble, is informative.
Don’t wanna include any links but for further info, google:
• “Mongolia housing bubble”
• “This might yurt” (The Economist story title)
• “List of countries by population density”
Also, it’s informative to take a look at the Case Shiller index and reflect on what was going on at each of the inflection points.
Also, it’s informative to take a look at the Case Shiller index and reflect on what was going on at each of the inflection points.
I’m curious what you’ve seen at those points and how you think it might relate to today?
“All cash buyers”
A while back on an episode of that Flip Flop show on HGTV, the star flipper was an “all cash” buyer for a house purchase. His “cash” came from a mortgage on a rental and credit cards.
Rental Watch: I’m curious what you’ve seen at those points and how you think it might relate to today?
I have no great insight about the inflection points on the Case Shiller graph. The thing to do, and I have not done yet in any detail, is to look at the raw Shiller data, available from Dr. Shiller’s Yale site, and try to do just that - understand what significant events occurred at the turning points, and understand the transmission mechanism to house prices.
On his latest chart, Shiller includes population, building costs and interest rates, which are certainly drivers of price and demand: house_price = f(building cost, population, interest rate, …. n). I think there are other factors as well. I’m suspecting more and more that speculation and lending environment are larger factors than is commonly appreciated, leading to the volatility.
Some other important factors I think are:
• Creation of the mortgage backed security by Lew Ranieri in like 1979.
• Dot Com boom.
• Exemption of first 250K (single), 500K (married) profit from sale of a house in 1997.
• “Unleashing” Wall Street in the late 90s.
The turns both up and down are quite sharp, and sustained, and frequent. Staring at the chart, going to the raw data to get a specific date, and doing some research on what was going on is worth doing it seems to me. And I do plan to eventually.
understand what significant events occurred at the turning points, and understand the transmission mechanism to house prices.
I’ve long assumed that the major turning points on the graph have more to do with the madness of crowds than with any significant events or transmission mechanisms…
Neuro, one item to factor into your thinking is the Boskin Report, and the effect of that report on CPI measures.
After the report, the CPI measure was approximately 0.5% per annum lower than before the report, and so you need to make an adjustment if you want an “apples to apples” comparison.
Good ol’ locals are leaving, being replaced by foreigners.
http://www.ocregister.com/articles/movahed-500444-nowruz-iranian.html
Locals are headed to CO.
I think they’re off to Arizona and Texas.
Flagstaff, AZ is nice. But So Cal heads to PHX.
‘Merced-area experts say prices are continuing to rise because of a shortage of houses on the market. The growth of UC Merced has more and more parents of students looking for a house in town, said Merced Yosemite Realty owner Terry Ruscoe said. The median home price in Merced County is $230,000, according to Zillow.’
‘Los Banos tends to attract commuters who work in the Bay Area, where homes are two or three times more expensive than in Merced County.’
“experts”….UC Merced is not growing to original projections. Started in 2005, final enrollment to be 25k; today it’s down to 10k by 2020. As of now it’s around 7,500.
Merced was one of the first cities to fall off the cliff…January 2006 properties started dropping to an eventual 68% drop!
An average home rose to $377k. dropped to $141k and now around $222k. The commute to the Bay Area is horrible…good luck selling that fairy tale again!
+1. Thanks for the local info.
Do commuters use 152 or do you have to go north and 580?
The majority of commuters take 99/205/580. Getting more congested with construction in Tracy and Manteca adding to the Bay congestion. Inner Bay, Livermore/Dublin loads of condo construction. I visit area going to and from SFO and can say the commute either way in rush hour is horrendous.
I’ve seen the ocean of taillights going east on 580 from Hopyard overpass, and that was the 90’s before all the infill between Dublin and Livermore!
“Los Banos tends to attract commuters who work in the Bay Area, where homes are two or three times more expensive than in Merced County.”
That’s an insane commute, and probably a new car every three years.
Never even heard of UC Merced until now. Students pay $800 per room min here in SLO.
I bet Cal Poly SLO is harder to get into than UC Merced.
All of the UC’s are very competitive, sometimes called public Ivy’s.
I don’t know much about UC Merced except was told to avoid it when my oldest applied to the UC schools.
CPSLO is crazy hard to get into as it is the best school for the money in the country if you are a CA resident.
CPSLO is on of the largest land-holding universities in the nation. Cal Poly uses all of its land holdings in active support of the education of its students.
Tuition $9075 yr.
Cal Poly’s civil engineering and mechanical engineering programs were ranked third in the nation — and the best state-funded programs in the country.
Those rankings are for schools that don’t offer doctoral degrees.
“Those rankings are for schools that don’t offer doctoral degrees.”
The UC engineering programs are designed for research bound students whereas the CSU engineers are destined for operational shops that keep your lights on, water safe, roads and signage safe, etc., both necessary in the modern world.
“Affordability seemed to fall off the menu of new residential offerings in Central Florida, with declines in the number of homes priced under $200,000. Meanwhile, new residences in the $300,000 to $350,000 range grew by 37 percent during the fourth quarter from a year earlier, according the MetroStudy.”
I. can’t. even. That’s why retirement communities in this neck of the woods are seeing so much panic buying at the lower end, which inflates the more “affordable” homes. I looked at the local realtor.com today and almost everything under $150,000 is pending, pending, pending. Except for the little concrete shacks with 1 bath, people seem to be turning up their noses at those. Over $150,000, it gets sticky. It’s getting toward the end of the “season”, so the snowbirds want to get their little piece of the Florida dream before they go back to Ohio, Michigan, Indiana, Pennsylvania, etc to “be with family” for the summer.
Those $150,000 houses are really worth about half that.
Orlando sux. Why anyone would want to live there is beyond me. A fetid swamp. Can’t even breathe during the summer, you need an aqualung. God help anyone living there if the power ever goes out for any length of time.
Was in Orlando, summer 2015. It simply felt oppressive, like being in a jungle. Can’t say I’m in any hurry to go back.
‘the gap in pricing between resale and new home pricing is closing a bit’
Next thing you know, new shacks are cheaper than old ones, like Naples.
“A Florida assistant state attorney has been suspended after writing a Facebook post that denigrated the city of Orlando following the Pulse nightclub terror attack, the state attorney’s office announced Friday night.
“Downtown Orlando has no bottom,” Assistant State Attorney Kenneth Lewis wrote on his Facebook page last Sunday evening — less than 24 hours after the tragedy — according to ABC Orlando affiliate WFTV. “The entire city should be leveled. It is void of any redeeming quality…It is void of culture. If you live down there you do it at your own risk and at your own peril.” The post continued to paint Orlando and its residents in a negative light.”
http://abcnews.go.com/US/florida-assistant-state-attorney-suspended-controversial-facebook-post/story?id=39954404
He has since been fired. For telling the truth.
The actual words of the attorney can be found here. It was a explicity anti-gay:
http://amazing-amy-w.tumblr.com/post/146147940711/florida-state-attorney-suspended-for-anti-orlando
I couldn’t find the exact provisions of the SA09 policy. There’s one for the Florida bar, but only for the Florida Bar’s facebook page. I don’t know what it says about personal FB pages; however, the statement from State Attorney general Ashton says ““I can no longer defend you as a prosecutor free of bias.”
I think that’s why the guy was terminated. His FB post indicated that he could not prosecute a gay person in court neutrally, so he was unable to do his job effectively. So it wasn’t simply a free speech issue.
Since when are prosecutors unbiased? Their job is to convict you, and not “find the truth”.
I didn’t see anything in there that was anti-gay. The post was anti-Orlando, to be sure. I’m not a fan of Orlando either, but for different reasons. I get how important tourism is to this state, but the whole city seems to be an attempt to create an “experience.”
Palmetto, we can’t breathe here during the summer either! By this time next month it will be 90 degrees and humid. I am heat-tolerant, but I’m getting to an age where going for a run in that weather is profoundly enervating.
SN, evidently his post had references to zoos and debauchery. I guess it was enough to get him fired.
I’m not sure about the bias, Colo. Maybe this prosecutor would actively work for a not-guilty verdict if the offense was against a gay person. And I suppose a public prosecutor could switch to public defender.
Did you see the recent article on flipping in the Tampa Bay Times? We’re back to 2006 again. The political and policymaking failures that caused this are, in my mind, among the worst in my lifetime.
“Not since the bubble days of 2005-2006 has home flipping been as popular as it is today. Nationally, flipping hit a 10-year high in 2016, according to a new report from the parent company of RealtyTrac. Among the 117 major metro areas with at least 250 flips, Tampa Bay had the fourth-highest flipping rate. Nearly 10 percent of all bay area homes sold last year were flips.
…
Last year, 31.5 percent of flips were done with borrowed money, the highest in eight years, RealtyTrac found. Among the beneficiaries of the trend is Lima One Capital, a South Carolina company that specializes in loans to flippers.
Since Lima One began lending in Florida in 2014, “Tampa (Bay) has been a really great market for us,” founder and CEO John Warren said. “We have the most loans in Miami, but on a per capita basis, Tampa is No. 1.”
…
Among Lima One’s clients is Paloscio, who left a job as a nightclub promoter in Miami three years ago to try his hand at flipping.”
http://www.tampabay.com/news/business/realestate/flipping-houses-stays-red-hot-and-tampa-bay-remains-one-of-its-favorite/2316053
Bagholders R Us.
http://www.scmp.com/property/hong-kong-china/article/2078441/hong-kong-property-buyers-still-piling-another-9400
Hate to break it to you, ABQ Dan.
http://www.marketwatch.com/story/chinas-economic-miracle-is-over-2017-03-10
A bit late for “concern” about risky mortgages. Here we go again with the “No one could’ve seen it coming.”
http://www.cnbc.com/2017/03/12/concerns-about-riskier-mortgages-are-sprouting.html
Color me shocked.
U.S. Subprime Auto Loan Losses Reach Highest Level Since the Financial Crisis
by Matt Scully
Bloomberg
March 10, 2017
U.S. subprime auto lenders are losing money on car loans at the highest rate since the aftermath of the 2008 financial crisis as more borrowers fall behind on payments, according to S&P Global Ratings.
Losses for the loans, annualized, were 9.1 percent in January from 8.5 percent in December and 7.9 percent in the first month of last year, S&P data released on Thursday show, based on car loans bundled into bonds. The rate is the worst since January 2010 and is largely driven by worsening recoveries after borrowers default, S&P said.
https://www.bloomberg.com/news/articles/2017-03-10/u-s-subprime-auto-loan-losses-reach-highest-level-since-crisis
I wonder if there’s a government guarantee somewhere in this loan chain.
Yes ,in fact gm still owes 10,000,000,000 to taxpayers
I, for one, did not see this coming. It is simply inconceivable that poor credit risks should act like, well, poor credit risks.
I had a lunch with ex colleagues in bay area.
One engineer who has been hopping jobs and is now in startup (and is on H1) told me that Trump stopped H1-B transfer Premium processing.
What does that mean? They are stuck to wherever they are.
It means that now,without premium processing, it will take 4-6+ months for the job change while on H1 (we are talking about h1-B transfer).
In other words, most of the hiring managers, wont be able to wait for 6 months for an employee to join (if it’s H1 transfer).
That implies that effectively this master stroke, eliminated most of the H1-B workers from a job change.
Well, technically, they can still join the new company but not without a risk of getting RFE or being out of status. And with Trump in power, most are not going to take this chance.
This is a real game changer for hiring (eliminating H1-B guys) in Tech across America (not just silicon valley).
Now imagine a recession. Most H1 folks used to have 30 days to find a job if they lost one. Now there is no real chance for them.
Is there any way to find the H1/L1 visa status percentage of home buyers?
If many are on H1 or L1, this could add fuel to the fire in case of a bubble pop.
This might help.
San Francisco County, CA Rental Rates Crater 7% YoY As Housing Prices Fall
https://www.zillow.com/san-francisco-county-ca/home-values/
Time to head back home and make India great again!
Bet the DotCon insiders are selling like crazy.
Didn’t that basically make them indentured servant to their current employers? H1B is already tied to the employer…at least with premium processing they had little “freedom” to switch employers. Employers win again…not sure how this is going to help Americans looking to join tech.
This is similar effect to laws in many states where “non-compete” provisions are legal, which effectively bars (or significantly reduces) the ability for workers to change jobs in the same industry.
However, in the case of the H1-B, the choice seems to be that they need to be unemployed for a while, or leave the country. For the “non-compete” law, my understanding is that the length of time seems to be longer (1-2 years or more).
Yup, it looks like an H1-B can stay in the US for 30 days to find another job. Premium processing was something like 15-20 days. This basically prevents H1-Bs from job hopping. And if there’s a recession in start-ups, like Foo Bar says, there could be masses of H1-Bs suddenly out of a job. Even if they could find a job, they can’t wait 6 months to transfer the visa.
Note that premium processing is only being suspended for 6 months in order to “catch up” with the backlog of entrance H1-Bs. I wonder if Trump will quietly extend that when the focus is somewhere else.
Is there any way to find the H1/L1 visa status percentage of home buyers?
I know of a few at the office. Strikes me as odd to give a 30 year loan to someone who could wind up being unemployed and deported.
Berkeley(Denver), CO Housing Prices Tank 13% YoY On Cratering Housing Demand
https://www.zillow.com/berkeley-denver-co/home-values/
I would love to see China giving Big Pharma and the sickness, er, “healthcare” cartels in this country some serious competition with low-cost but effective medicines. They have some incredible talent in their scientific and medical communities.
http://www.telegraph.co.uk/business/2017/03/13/chi-med-track-launch-first-chinese-cancer-drug-market/
Will March’s accelerating crash in NYC rents be blamed on tomorrow’s big snowstorm?
http://uschnews.com/new-york-city-rents-crash-again-in-february-under-weight-of-so-much-inventory/
Answer: probably. But at best this is only a 3-4 day impact storm. The weather is supposed to warm up again by Friday and it will all melt away.
More future bagholders….
http://uschnews.com/chinese-invest-over-2-72bn-in-dubai-real-estate/
http://picpaste.com/pics/46ff65c9586ad341cac9318810981935.1489456538.jpg
Oregon Housing Demand Tanks 26% YoY
http://files.zillowstatic.com/research/public/State/State_Turnover_AllHomes.csv
Really Race? Getting desperate there? The whole entire state????
“Lots Of New Denver Apartments Mean High Vacancy Rates This Year”
https://www.denverite.com/high-apartment-vacancy-projected-denver-year-report-says-31183/
your problem is that you keep thinking. Listen to the experts.
Why would anyone want to permanently live in the land without a sun?
PB, you are apparently unaware of a thing called the Cascade Mountain Range that divides WA and OR in half. On the eastern side of those mountains, it is sunny, hot in the summers, and very dry.
Skin cancer? Cheaper housing? Affinity for cooler weather? Fewer people?
Lots of reasons.
Are you ready for another historic stock market collapse?
Don’t forget that Herbert Hoover was a businessman, too.
Opinion: This is the most overvalued stock market on record — even worse than 1929
By Brett Arends
Published: Mar 13, 2017 4:53 p.m. ET
John Hussman says run from an overvalued S&P 500
Getty Images/Keystone/Staff
Huge crowds near the New York Stock Exchange at the time of the 1929 stock-market crash.
This is the most dangerous and overvalued stock market on record — worse than 2007, worse than 2000, even worse than 1929.
Or so warns Wall Street soothsayer John Hussman in his scariest jeremiad yet.
“Presently, we observe the broadest market valuation extreme in history,” writes the chairman of the cautious Hussman Funds investment group, “with the steepest median valuations on record, and the most reliable capitalization-weighted measures within a few percent of their 2000 peaks.”
On top of such warning signs as “extreme valuations, bullish sentiment, and consumer confidence,” he adds, “market action has deteriorated in interest-sensitive sectors… As of Friday, more than one-third of stocks are already below their 200-day moving averages.”
…
“Non-banks, including Quicken Loans and Freedom Mortgage, comprised 93% of FHA loan volume last year, up from 40% in 2009, according to Inside Mortgage Finance. Meanwhile, the average credit score of an FHA borrower fell to 678 in the fourth quarter from 693 in 2013, according to FHA, below the 747 average for non-FHA borrowers.”
The race to the bottom of the credit barrel is in full swing. If this blows up on the current administration, will the same subprime bailouts as last time come into play?
But…but…Dan assured us oil was headed higher!
http://oilprice.com/Energy/Oil-Prices/New-Oil-Price-War-Looms-As-The-OPEC-Deal-Falls-Short.html
#FakeNews
http://www.thedenverchannel.com/news/local-news/with-mortgage-rates-on-the-rise-now-is-a-good-time-to-buy-a-home
And yes, I get an ad for Rocket Mortgage on this article.
You can’t fix this kind of stupid.
This should really help with Denver traffic:
http://www.thedenverchannel.com/news/local-news/aurora-highlands-5000-acre-community-plans-in-the-works
“AURORA, Colo. — Plans to build one of the largest and most vibrant communities in Colorado are underway, just south of the Denver International Airport.”
Aurora? Vibrant community?? Think great polar bear hunting.
Prairie dogs and tumbleweeds.
The only time I drive east of Colorado Blvd is when I’m going to the airport.
“The West, is the best” — Jim Morrison
Prairie dogs and tumbleweeds.
And coyotes. But you’ll hard pressed to find a bear in Aurora.
Search: “polar bear hunting”
I wrote a couple of years ago about my first time landing at DIA. I was expecting something out of a Coors beer commercial. No way! I looked out the window and thought “where are the mountains?”
Out of staters think that Denver is in the mountains. The west side of the metro area is in the foothills, places like Golden, but most of the metro area is built on the prairie.
And you don’t want your airport too close to the Rockies. Stapleton, the old airport, was closer, and that proximity caused all sorts of headaches, which is one reason why DIA is out in the boondocks.
“From KDVR in Colorado. “Developers have unveiled their plans to build a new community in Aurora that could eventually provide homes for 60,000 people. The proposed development is called the Aurora Highlands and would be built on 5,000 acres south of Denver International Airport. According to the Aurora Sentinel, attached homes will start at about $200,000 and single family detached houses will start at $1 million. The development is estimated to house 23,000 families, or about 60,000 people, the paper reported.”
I don’t know how to go about downloading photos on this site - but I can tell you another 5 k acres of homes south of here where I work - Green Valley Ranch area near DIA - this would be more of the same crap that is getting built all over the Denver area - die cut lots - dense development and on and on - the thing I wonder about is where out here in the midst of dry brush and high desert are these developers finding water to keep building this stuff?
And south of DIA - do these folk understand that this would potentially be under the approach path to a runway? Man o man.
Heckova job, Ben and Janet.
http://www.marketwatch.com/story/this-is-the-most-overvalued-stock-market-on-record-even-worse-than-1929-2017-03-13
If your buying a new home dont let the advertised price fool you. They are the stripped down prices, like a car without AC or power windows.Once the sales people are done with you can add at least 20,000.00 to the advertised price for upgrades.
You bought a house without windows? That’s called a shanty.
lol@azdonk
“San Francisco Home Prices See Big Drop In January”
http://www.sfgate.com/business/networth/article/San-Francisco-home-prices-see-big-drop-in-January-10966680.php
‘Why do poor people struggling to make ends meet leave job rich Bay Area to head east over the Altamont Pass? It doesn’t make sense if you only look at the official federal poverty rate. The official poverty rate in San Joaquin County is 19.5 percent and 20.2 percent in Stanislaus County compared to 9.1 percent in Santa Clara County, 12.0 percent in Alameda County, and 10.8 percent in Contra Costa County.’
‘But if you look at the CPM, or California Poverty Measure, a different picture emerges. The CPM rate in San Joaquin County is 18.3 percent and 19.6 percent in Stanislaus County compared to 16.9 percent in Santa Clara County, 17.6 percent in Alameda County, and 16.1 percent in Contra Costa County.’
‘The Poverty in California study conducted by the two organizations that was published last month noted California Fresh and the federal earned income tax credit (EIC) each lowered the overall poverty rate by 2.2 percent each. Why does any of this matter?’
‘It’s because the way California lawmakers approach poverty such as ratcheting up the minimum wage toward $15 an hour and letting “wealthy” counties off the hook when it comes to addressing poverty within their jurisdictions does nothing to solve the problem, arguably makes it worse. It creates unfair burdens on counties on the outer edges of the wealth ripples centered in San Francisco-Oakland-San Jose.
Once the real costs of California living — primarily Golden State housing costs — are taken into account the job rich Bay Area counties with fatter paychecks see their poverty rates skyrocket by at least 50 percent.’
Record poverty and crime in the poorest state in the US. It’s no wonder CA is losing population.
“Roughly 5 Million People Left California In The Last Decade”
http://www.sacbee.com/site-services/databases/article32679753.html
“But if you look at the CPM, or California Poverty Measure, a different picture emerges. The CPM rate in San Joaquin County is 18.3 percent and 19.6 percent in Stanislaus County compared to 16.9 percent in Santa Clara County, 17.6 percent in Alameda County, and 16.1 percent in Contra Costa County.”
The unemployment rate in Stanislaus County is steadily among the highest in the state, and realize that that’s on the good side of town.
Corelogic put out a piece called “United States Residential Foreclosure Crisis: Ten Years Later”.
There is some interesting data in there, mainly looking back. They do imply later in the report that delinquencies are leading indicators of future foreclosures…and then show a graph that shows “current-to-30″ roll rates (the rate at which “current” loans become 30-days late.
The graph goes back to January 2001. It shows a peak at about 1.6% in 2002/2003. It shows another peak at 1.6% in 2009. There is a trough in 2005/2006 at about 1.2%, and then it shows what appears to be another trough forming at under 1% now.
There are two observations that I would make on this one graph:
1. Despite the “current-to-30″ roll rates being nearly identical in the post-dotcom and post-housing boom, the number of foreclosures following the housing boom far exceeded those of the post-dotcom era. I can only attribute the difference to home price action post-housing boom. After the dotcom bust, it was easier to sell your home to get out from under your delinquency–foreclosure wasn’t the only option. After the housing bust, given price declines, selling wasn’t much of an option.
2. We seem to be forming a trough…there isn’t a tick up yet. We could have a few years before peak pain if the pattern follows the prior cycle–it doesn’t mean that the pain won’t start sooner than that.
Foreclosure moratorium like programs in effect in all 50 states tend to make conditions appear far better than they really are.
harp ended,but smelly mel had many “programs”
dept of ag had some 0 down sht
1% down ad is cute
drop them pants”
Is that a reference to “Deliverance”?
14er Mt Evans seen from the roof of 55 Cook Street, Cherry Creek:
http://www.picpaste.com/20170314_094643.jpg
Cherry Creek shopping center seen at foreground (hello walkscore). The new construction blue building near right center is actually a pair of 35 story towers on Downing Street in “West Washington Park” that generated some controversy when they were proposed because they look so out of place in the neighborhood.
No views of the downtown skyline, they’re blocked by the Coda apartment building, which is reportedly less than 20% occupied:
http://www.picpaste.com/20170314_094705.jpg
That stuff is almost ugly enough to look right in Shanghai…now they just need a thousand identical ones stretching for miles each direction.
3rd world architecture. the invasion is real!
And now the gold diggers are moving in to CC but have to pay to park over at the mall!!
“Vancouver’s Average House Price Drops By Nearly One-Fifth”
http://www.huffingtonpost.ca/2017/02/15/vancouver-average-house-price-january-2017_n_14775268.html
2 days
https://danielcompton.net/2017/03/14/uber-bombshell
This is potentially the biggest story of the year in Silicon Valley, unfolding before us.
There is certainly plenty of smoke…it would be shocking if there wasn’t fire.
Housing my friend…. housing.
Friday Harbor, WA Housing Prices Tank 15% YoY
https://www.zillow.com/friday-harbor-wa/home-values/
Picking flyover country locations to prove your point again, Housing Analyst?
Data my good friend. Study the data.
Palo Alto, CA Rental Rates Crater 9% YoY
https://www.zillow.com/palo-alto-ca/home-values/
Reminds me of the line from an old song, “nice work if you can get it.” What’s a little VC fleecing among Google alums?
Uber-trouble.
How hard is it to lose billions?
Bummer, I loved paying only 50% of the real cost for a ride home.
MT Pockitz wears overalls now?
Tightwads
Data MT Pockitz data!
Portland, OR Housing Prices Crater 15% YoY
https://www.zillow.com/portland-or-97210/home-values/
Most drivers that I’ve had drive for both Uber and Lyft. Their switching cost every second is close to zero…they literally turn off one app, and turn on the other.
In any event, the driver I last had gave me a detailed rundown of how he manages between one and the other. Long story short, Lyft consistently pays him more, but Uber pays more if he hits a certain number of rides, and during peak times.
So, he drives with Lyft mainly, but drives Uber enough to get his bonuses.
Both drivers and riders are commodities, with switching costs pretty much zero between Uber and Lyft. Drivers will flow to the provider that pays them the most, and riders will flow to the provider that charges them the least–for ANY GIVEN RIDE.
Remind me again how margins in this business are going to be strong?
I’ve seen the same. I’d say margins can only be strong if a new monopoly of some sort is established after destroying the old one. I wonder if these guys actually think they can pull that off? Or if like most everything in the new economy their real goal is simply to sell a dream to stockholders for a lot of money and move on?
I think the only way they can get expanding margins is through the network effect related to carpools, but I don’t know if the adoption of that service will be high enough for it to make a difference.
If it did, it would keep drivers from hopping back and forth, as they would more consistently have fares in the car. And if they can keep the drivers off the competitor’s app, then you might see the competitor have big problems if the quality of their service falls.
My sense though is that it’s going to be a long war of attrition…and a company like Google is going to come along with a self-driving car service while they are still fighting and buy one of them…and crush the other.
and a company like Google is going to come along with a self-driving car service while they are still fighting and buy one of them…and crush the other.
If Google came out with a self-driving car service, I’m not sure why they would buy either one; what do Uber or Lyft even bring to the table at that point? Drivers—nope; app—trivial to write; cars—nope; capital—nope; routing—um, nope, Google Maps is pretty darned great. Bankrupt them both instead.
The only reason will be to instantly grab global customers…capture all the people who already use Uber or Lyft.
The other thing that is possible is that Google goes “capital light”, and they simply license their technology to anyone who wants to create such a car service…simply charge $0.10 for every mile driven using their technology.
A 30 mile trip to the airport would generate $3 for Google, and not be all that much compared to the savings from not having a driver–and they don’t need to expend the capital for the car.
There are 3 TRILLION miles driven each year in the US alone. How many of those miles will go to autonomous vehicles over time if the cost is lower, and the cars are readily available and on-call 24/7?
Over time, and globally, $0.10 per mile would add a gigantic amount of value to GOOG.
global customers
Speaking of global customers, Didi is dominating China now that Uber was driven out. And Google isn’t welcome there. So that fight could get interesting if it goes global.
Just this week we had an FPGA guy leave to go work on a LIDAR project. Naive me, I thought he was going back to defense.
I was doing a Google search on ” how much did interest rates affect house prices in the 1980’s” and found this:
https://www.integratedmortgageplanners.com/blog/mortgage-market-updates/do-higher-interest-rates-cause-lower-house-prices/
No brainer then: higher home loan interest rates and ever increasing housing prices are not kryptonite for the consumer.
Higher interest rates are frequently correlated to stronger economies and greater consumer confidence–that is what helps keep home prices high even with rising rates.
Now, when confidence falls and the economy falters, and rates are still high…then you have a recipe for trouble.
Incorrect. Normative rates(9-12%) are directly linked to wages commensurate with affordable prices.
Let the games begin! Who does not love competition?
Oil has tumbled after Saudi Arabia says it increased production.
West Texas Intermediate crude, the US benchmark, was down by 2.% at $47.43 a barrel as of 10:59 a.m. ET. That is its lowest level since late November.
Is there any chance the Fed will walk back its backstop of the mortgage bond market?
US Housing Demand Plummets To 20 Year Low
https://1.bp.blogspot.com/-nMPjh4elR3s/VsQTRjbVWRI/AAAAAAAAmpo/9hFl5vaBvPg/s1600/MBAFeb172016.PNG
The retail death spiral continues to hit the fashion industry.
http://www.telegraph.co.uk/business/2017/03/14/french-connection-reports-loss-fifth-year-row/
I’m sure this well end well, as China’s wise and prudent central planners have things well in hand.
http://www.scmp.com/business/article/2078783/pbocs-hands-tied-because-sustained-capital-outflows
Mout