April 9, 2017

The Financialisation Of The Housing Sector

A report from the Courier Mail in Australia. “The problems in Australia’s overheated housing market are only partly the well-documented stresses related to rising prices, affordability and soaring household debt. This is actually a product of the countervailing market, regulatory and political forces at play. On one hand you have a market where demand is high, driven in large part by investor hunger for a slice of some of the huge capital gains that have been made, and in part by access to cheap credit with interest rates at record lows.”

“On the regulatory front you have the likes of the Reserve Bank warning about the risks a housing bubble poses to the stability of the banking sector (and thus the wider Australian economy), while at the same time the Australian Prudential Regulation Authority has moved to clamp down on investor lending. At the same time Treasurer Scott Morrison – and some of the shills in the property sector – has been floating the idea that first-home buyers should be given a leg-up into the market by being allowed access to their superannuation savings.”

“In short you have regulators trying to hose down a fire, while Government policy throws more fuel (presumably lumps of coal) at the blaze. Quite simply, the way to deflate a bubble is not to pump more air into it, yet that is the only thing that providing more cash and financial capacity on the demand side will achieve.”

From Bloomberg. “Jonathan Tepper, the founder of a London-based research firm who a year ago warned that Australia had one of the biggest housing bubbles in history, has attacked regulators for acting too late to cool the market as they ignored their own warning signs and were hostile to suggestions property was too expensive, according to the Weekend Australian. The nation’s banking system was ‘unstable’ and Australians were living in ‘fantasyland’ about the impact of slowing construction on the economy, the newspaper quoted Tepper.”

“Demand from China would not stave off a housing downturn as demand for ‘vastly overpriced’ houses in working-class suburbs across the nation was questionable, the paper quoted Tepper as saying. Meanwhile, Ralph Norris, former chief executive officer of Commonwealth Bank of Australia, told the newspaper he doesn’t believe in the ‘doomsday scenario’ as banks have ’sophisticated risk-management processes’ in place. There was no evidence of mortgage stress in the banks’ provisioning, he said.”

“Home loans account for more than 60 percent of domestic bank lending in Australia.”

The West Australian. “The number of West Australians falling behind on their mortgages is skyrocketing, with more than 5 per cent of people in some Perth suburbs at least 30 days in arrears. In a sign of how the State’s weak job market and stagnant wages are hurting the broader economy, Moody’s ratings agency said the mortgage arrears rate in WA was the worst in the country and growing. Across the State almost 3 per cent of all mortgages are now 30 days in arrears, a jump of more than 60 per cent over the past year.”

“The latest Urban Development Institute of Australia State of The Land 2017 confirms Perth land prices have plummeted — and more falls are likely. The paper paints a dire picture for WA developers and the building industry, with an oversupply of land and a collapse in sales, lot prices and new releases. The slowdown in Perth land sales is also highlighted by the ‘cancellation rate,’ which refers to the number of lots that were due to come on to the market but were delayed or scrapped altogether by developers. Perth’s cancellation rate was more than a quarter of all land sales last year, compared with just 4 per cent in Melbourne.”

“Report author Robert Harley said land prices would remain sluggish as Perth developers faced ‘excess capacity relative to weak demand.’ ‘With developers competing to protect market share, prices are likely to fall further,’ he said.”

The Australian. “More than half the apartments bought off the plan in Melbourne’s CBD, Docklands and Southbank since 2011 have changed hands at a loss, while many inner-Brisbane unit buyers are also out of pocket from the resale of new apartments. The rash of losses sets a lower bar for valuers, meaning banks are willing to lend less on the next sale, according to BIS analyst Angie Zigomanis. ‘The risk is that this cascades down, setting lower benchmarks for the next round of apartment projects,’ he said.”

From Domain News. “Prosper Australia has for years been conducting research into how many of Australia’s 9.8 million homes are left vacant. Its major finding is that of the 1.7 million homes in greater Melbourne alone, about 82,000 are vacant, or 4.8 per cent. That research has been cited by a recent United Nations study on the pernicious effects of the financialisation of the housing sector, and has likely been a key reason for the adoption of a vacant housing tax, and probably in Canada as well.”

“The next question is to ask how many homes may be vacant primarily because of this speculative motive. Prosper uses water meter data to asses whether a property has been vacant. By looking at properties that have used no water over a 12 month period (25,000 dwellings), and those that used less than 50L per day over a 12 month period (82,000 dwellings), they make a judgment that these extremely-low-water-use homes are vacant.”

“As a ballpark, about 300,000 our of 9.8 million dwellings are likely to be sitting vacant each year, or about 3% of them. For the last five years the country has built about 153,000 net new dwellings each year, so these vacant homes represent about two years of new supply at our recent historically high rates of dwelling construction.”

From The Guardian. “A new penalty regime targeting foreign investors has seen 500 overseas property buyers issued with penalty notices and told to pay the Australian Taxation Office $2.7m in fines. The majority of breaches occurred in Victoria, New South Wales, Queensland and Western Australia. The Australian Taxation Office confirmed on Sunday that since then, 500 penalties were issued for 700 offences, including failing to get Foreign Investment Review Board approval before buying. Penalties were also issued to those who breached a condition of previously approved applications, for example temporary residents failing to sell their properties once their visa expired.”

“The treasurer, Scott Morrison, has also approved the required sale of 61 foreign-owned properties, worth over $107m. Overall, 20% of the properties and offences investigated resulted in a required sale or self-divestment.”

The Australian Financial Review. “Ask respected property analyst Martin North what form the coming downturn in the housing market might take and ‘orderly’ is not the description he uses. Instead North anticipates a much more significant downturn in the investor-driven, debt-laden markets like Sydney and Melbourne. ‘Orderly’ is how S&P Global Ratings director Sharad Jain described the likely unwinding of the overheated housing market, where annualised house price growth is running close to 20 per cent in Sydney and Melbourne.”

“‘Regulators have come to the party three or four years too late. They should have tackled negative gearing, not cut rates as much and focused on mortgage underwriting standards. Had they done so we would be in a position to manage the situation,’ said Mr North, who runs research house Digital Finance Analytics. ‘I have a nasty feeling we are passed the point of being able to manage this. There are not enough levers available to regulators to pull it back in line.’”

“Corelogic’s head of research, Cameron Kusher, said the ‘great unknown’ in how the current house price cycle will play out is what investors will do when the growth is no longer there. ‘If investors stay, the correction should not be too bad. But if they go away like they did in Adelaide, Brisbane and Perth and dump property for other asset classes, it could be much worse.’”

“But, Mr North sees things differently: ‘We have about 22 per cent of households in mortgage stress, which will continue to rise. There’s flat employment growth and no wages growth. I can’t see how you can hold all those elements together.’ And he believes the wealthier end of town could be most at risk: ‘My data shows the highest levels of immediate problems are not in the suburban fringe, but in the affluent suburbs, where people are really geared up with multiple properties.’”

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Comment by Ben Jones
2017-04-09 09:29:41

‘The great housing bubble arse-covering begins’

Comment by Race Bannon
2017-04-09 09:50:36

“The RBA warned that household debt levels and house prices are endangering financial stability and damaging the economy”

Gee whiz….. Is someone suggesting falling prices to dramatically lower and more affordable levels is good for everyones economy?

Comment by azdude
2017-04-09 10:51:13

If you are producing a lot more fiat than wealth guess what happens?

Comment by Race Bannon
2017-04-09 13:07:10

Cheer up AzDonk….. cheer up.

Santa Monica, CA Housing Prices Crater 6% YoY


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Comment by Financial Moralizer
2017-04-09 09:54:29

-> “We look to be approaching the final panic stages of the last blow off in this epic bubble, as the kitchen sink is thrown at the market in a desperate attempt to avoid the inevitable.”

Comment by rms
2017-04-10 01:13:16

“…arse-covering begins…”

I had to work today, and I saw this piece on my phone. I don’t read any of the blogs at work since I’m convinced that 2/3 or more of the workforce is buried in debt, fixed and revolving. The next step down will likely be something drastic like nationalizing all private pensions.

Comment by Apartment 401
2017-04-10 05:39:20

No “pent-up demand” for $500,000 starter homes happening here:


Comment by oxide
2017-04-10 06:50:42

Idiots, all of them. Degrees in photography? $37K for an associates degree? These folks are nuts.

I know a guy in his early 20’s who has a useless associates’ degree. He’s saving up to go back for a bachelor’s. He likes working with his hands in construction but wants to do IT Admin because he has connections which would get him the IT job.

I told him to go into the building trades — electrician or HVAC. Sure, a connection can get him an IT job, but the chances of him keeping it as a long-term career are small. Better to go where there’s real demand.

Comment by taxpayer
2017-04-10 08:21:34

and trades can get paid in cash, trade for goods etc

ac w some of the old freon and you’re the “ROAD WARRIOR”
“want to cool off,you got to come to me”

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Comment by rms
2017-04-10 07:47:20

Rebecca (36) better get on the betabux program before her skin turns dry and rubbery looking; sorry Victoria (52).

Comment by butters
2017-04-10 14:33:26

I bet that’s an old photo.

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Comment by rms
2017-04-10 21:22:03

Yeah, it could be. That said, it’s time to check that pride and go hunt-down some lonely soul who studied the difficult stuff that makes real money, make him happy and satisfied; they’ll both win.

Comment by Ben Jones
2017-04-09 09:34:01

‘The slump in Perth’s luxury suburbs is continuing with multimillion-dollar homes in WA dropping in value by up to nearly $6000 a week over several years. Statistics compiled by the Real Estate Institute of WA show median prices in several swanky suburbs in February were not only lower than the same time last year but also below the median in February 2008.’

‘A house on Grant Street in Cottesloe sold for $7.65 million in December 2007 and is now on the market for $4.95 million, representing a drop of $2.7 million over about 91/2 years, or about $6000 a week.’

‘A townhouse on Victoria Avenue in Claremont sold for $4.35 million in July 2007 and again for $3.1 million in November. It represents a weekly drop in value of about $2800. A house on Hobbs Avenue in Dalkeith sold for $2.6 million in September 2014 and again in November last year for $2.4 million — a drop in value of about $1900 a week in just over two years.’

‘REIWA president Hayden Groves said the wealthier suburbs had borne the brunt of the property downturn. He said the market held up remarkably well given Premier Mark McGowan this week labelled WA’s fiscal position the worst since the Great Depression.’

‘Mr Groves said there was clearly an underlying robustness in the property market which had prevented price drops in the order of 20 to 30 per cent. He implored the Reserve Bank to consider WA when considering increases in the cash rate.’

“If the Reserve Bank were to pull the clunky lever of interest rates to try to quell speculative behaviour in Melbourne and Sydney, WA would be collateral damage,” he said.’

Comment by rms
2017-04-09 17:21:51

“If the Reserve Bank were to pull the clunky lever of interest rates to try to quell speculative behaviour in Melbourne and Sydney, WA would be collateral damage,” he said.

Good thing those Aussies have large cans of beer.

Comment by Ben Jones
2017-04-09 09:37:06

‘Falling rents or loss of tenants could seriously jeopardise the financial stability of nearly 36,000 investment portfolios around the country, according to Digital Finance Analytics (DFA). With so many investors relying on tenants to pay borrowing costs, more than one in three portfolios with Sydney property would be at risk. In Melbourne, one in four properties could be impacted, said the DFA.’

“These are investors who would not have income or savings to pay for their investment property mortgages if rent were to stop,” said Martin North, principal of the DFA.’

‘North puts the number of property portfolios that may be affected at 36,000, based on analysis of household surveys, as well as public and private data used to model the nation’s property market.’

‘The increasing supply of houses and apartments (particularly a looming apartment glut in Brisbane), as well as falling rents are creating pressures for many investors, said North. Approximately 20% of investors with Brisbane property in their portfolios could be at risk, compared with less than 10% in Adelaide, Perth, and Canberra.’

‘Christopher Foster-Ramsay, principal of Foster Ramsay Finance, said borrowers need to take into account the current lending environment, including higher interest rates, bigger deposits, and much closer scrutiny of borrowers’ finances and ability to repay.’

“There is going to be an upheaval for property investors. Obtaining interest-only loans is going to get very hard,” he said.’

Comment by Senior Housing Analyst
2017-04-09 09:37:40
Comment by AbsoluteBeginner
Comment by Financial Moralizer
2017-04-09 10:30:24

The Raging Grannies, lol.


They don’t like Caterpillar because they make bulldozers used to kill Palestinians.

Comment by palmetto
2017-04-09 11:01:55

Wow, this is interesting. I totally missed this one. Not only can’t some of the Chinese get their money out, but it appears neither can others.


“The Chinese have made it next to impossible for multi-national corporations to remove money from China. Many have been unable to since NOV.”

Unable to get your $$ out of a communist country? Suck it up, buttercups. You should have known better.

“All your fiat are belong to us, the Chicoms”.

It’s not often I read something about China that makes my day. WHEEEEEEE!

Comment by Mr. Banker
2017-04-09 11:43:36

“You should have known better.”

They probably (deep down) did know better but they did it anyway because they get paid to do it anyway.

(I’m talking about the use of Other People’s Money here.)

The chickens are approaching the roost.

Comment by palmetto
2017-04-09 11:57:38

I’d be really curious to know what is the dollar figure of money that is, effectively, frozen in place, that “belongs” to multi-nationals.

The Chinese have passive-aggressiveness down to a science. “Velly solly, prease be patient while we make some adjustments.” LOL, it’s just a massive version of “the check is in the mail”. No wonder Google is making China their very own version of a censored internet.

WTF, I rove China now.

Comment by Mr. Banker
Comment by palmetto
2017-04-09 12:54:20

What do you want to bet there will be a sudden surge of corporate “nationalism” led by “multi-nationals” that want “their” money back?

Boots on the ground to liberate the fiat!

Don’t fall for it, boyz and girlz.

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Comment by palmetto
2017-04-09 13:15:51

And just to add, I think it’s very protectionist for the multi-nationals to expect to get their money out. Shame on them.

Comment by Financial Moralizer
2017-04-09 14:55:00

They say for US multi-nationals, there’s appx $2 trillion in “overseas cash” stored. Apple is one of the largest with something like $200 billion (the headlines say “cash hoard” but it’s mostly in short-term securities of some kind). The only vague reference I could find was that Apple keeps it in Ireland. Supposedly, to repatriate it back to the US, they would have to pay a 40% tax, which they aren’t going to do.

Comment by Race Bannon
2017-04-09 15:34:54

In other words, it doesn’t exist.

Comment by palmetto
2017-04-09 16:16:11

So what’s the guy whining about then?

Comment by Blue Skye
2017-04-09 12:53:27

It was unclear to me whether the companies were being asked not to withdraw their own profits or not to participate in the fake invoicing con.

Comment by palmetto
2017-04-09 13:04:20

There’s a difference?

Comment by Blue Skye
2017-04-09 15:04:13

I think so. In one case Ford makes a buck in profit and wants to send it home. In the other case Mr. Tiger has some hot cash that he wants to hide outside China.

If China will not let foreign investors take a profit home, they might get the same in return. Probably wouldn’t fit with their dreams of world domination.

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Comment by phony scandals
2017-04-09 12:00:39

I started looking at ted’s sheds after reading MacBeth’s “Why not just buy a 10 X 12 shed at Home Depot for $3500?” comment and ended up here…

The Construction of a Custom Log Home

adrian T 8 months ago
How much ? Can I get a ballpark price ?
Reply 3

Timberhaven Log & Timber Homes 7 months ago
Turnkey ballpark estimate for zone 1 shipping would be approximately $204,800. (That’s an estimated $200 per square foot; this home is 1,024 sq. ft.)

Jack Hubbard 1 month ago
Yanni Pavlou, I’m the owner/builder of this custom log home. The turnkey cost, not including land, is approx $200 per sf. For this home you’re looking at around $220,000. This varies based on interior finishes, type of foundation, actual well and septic costs, and excavation costs.


Comment by Blue Skye
2017-04-09 13:05:06

I’ve gone into this in depth, starting with the books my grandfather’s best friend wrote about building log cabins. They are a lot of work and if you aren’t doing all yourself a very expensive method of construction.

An Amish crew here can put up a sheet metal sided, wood frame building on concrete for something like $10K more than big enough. It’s called a pole barn. I’ve seen several that had living spaces in one part and workshop in the rest, or a motorhome inside. Low tax impact. I was headed in this direction except that all the land I looked had gold buried on it, or some such.

Comment by AbsoluteBeginner
2017-04-09 13:15:20

Made the error of giving my home phone number to a log cabin seller’s website out of Montana a few years ago. Every year they would call me up and leave a message about whether I was interested in info about their models. Probably would be still calling me but I cut the phone cord since then and strictly have a cell phone now.

Comment by phony scandals
2017-04-09 15:09:12

“Made the error of giving my home phone number to a log cabin seller’s website out of Montana a few years ago.”

Here is a video you really need to watch.


Comment by AbsoluteBeginner
2017-04-09 16:46:22


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Comment by Financial Moralizer
2017-04-09 12:32:50

Buckle your seatbelt and get some popcorn ready. We all are about to witness a worldwide property crash.

Comment by azdude
2017-04-09 14:32:40

Dont fight the FED! Why cant u listen?

Comment by Professor Bear
2017-04-09 19:11:00

The Plunge Protection Team will come to the rescue at the first sign of price declines.

Comment by Financial Moralizer
2017-04-09 13:27:29

They were saying recently that a lot of the VC money has dried up in the Bay Area. Just in time for the tallest new office building on the west coast to open this summer.


And more to come. They don’t appear to be particularly concerned about finding tenants.

“The company has competition from other new buildings rising. There is 5.9 million square feet of offices under construction in the city, with about 38.8 percent pre-leased, according to data from property brokerage Savills Studley Inc.”

“Rod Diehl, Boston Properties’ senior vice president for leasing, said the company is seeing demand from a mix of businesses. Touring activity by potential tenants has increased fourfold in the past 60 days, Pester said.

“I can tell you that I don’t lose sleep at night at all about that space,” he said. “This is not on my radar screen as something to worry about.””

Comment by 2banana
2017-04-09 15:13:15

Sounds mucho like the Chelsea Clinton quote:

“I tried to care about money but I couldn’t”

Comment by Albuquerquedan
2017-04-10 08:15:11

What Chelsea meant to say is: As I Clinton, I tried to care about something other than money but I couldn’t.

Comment by Blue Skye
2017-04-09 15:16:49

Tallest buildings ever tend to be a curse. Hopefully it will survive the next earthquake and stand as a lasting monument to our generation’s Great Mania. Salesforce Tower? LOL. Let’s all feel good about managing our contacts!

Across the street from Millennium Tower, the leaning disaster waiting to happen.

Comment by Financial Moralizer
2017-04-09 16:34:00

Amazing isn’t it? I checked on a map and indeed, it is directly across the street from the Sinking Tower. You can’t make that s**t up, that’s got to be a sign of something. This plot takes so many twists and turns. hehe.

Comment by rms
2017-04-09 17:28:45

“Across the street from Millennium Tower…”

Scheming to get the repairs done at taxpayer expense.

Comment by MarkinSF
2017-04-09 20:40:10

Ironically the moment the tallest building is constructed the real estate market is at the top. I read this when I was researching the infamous 18 year cycle of American boom and bust. It’s pretty amazing.

Comment by oxide
2017-04-10 07:02:31

Even during the dot-com boom and bust, people were wary of see-through buildings — see-through meaning they were all glass but you could see right through them because there were no interior walls or finishings or tenants to block the light. The rule of thumb was that if when your darling start-up’s shiny new building was going up, it was time to sell the stock.

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Comment by goedeck
2017-04-09 20:59:38

Domino effect?

Comment by butters
2017-04-10 08:29:31

How long before they will convert to apartments and condos?

Comment by butters
2017-04-10 08:34:50

At the core it’s a mall-investment. There’s just no such demand for more office space. More and more people are telecommuting and visit “office” once a week or less. Every company I visit has floors of empty spaces and what’s worse is they are cramming more and more employees together while there’s space all over the building.

Comment by Financial Moralizer
2017-04-10 09:38:13

Yes. And that guy Rod Diehl — I think he’s panicked and *is* losing sleep about the prospect of filling those spaces, which is why he is feigning an extreme level of bullishness publicly.

The “four fold increase” of people browsing the new inventory — I think they are probably lookie-lou’s… just checking out the new fancy construction, with no real intent of leasing… But who knows…

Rod Diehl…. Raw Deal?

Comment by Senior Housing Analyst
2017-04-09 14:45:41

Essex, CT Housing Prices Crater 11% YoY


Comment by azdude
2017-04-09 15:27:26

collect yourself my good friend. There is a lot of cash on the sidelines!

Comment by AbsoluteBeginner
2017-04-09 17:42:00

I read stuff like this time to time and I just wonder how they expect the newer graduates to ever afford financing a house:


Comment by Albuquerquedan
2017-04-09 18:01:31

It is just the opposite of China where the young can and do buy homes:


Comment by Carl Morris
2017-04-10 10:05:11

It does mention the help of the parents at the end of the article. I can definitely say no Chinese young person with a tech degree and no family wealth is going out and buying girlfriend-approved Shanghai property to live in with only his salary to pay for it. The ability to do that would be my definition of real middle class in a functioning market economy.

Comment by Albuquerquedan
2017-04-10 10:33:15

It is not like families in the US do not try to help buy the first home.

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Comment by Carl Morris
2017-04-10 11:40:40

True. But an American middle class young professional has generally been able to do it on their own in most areas of the USA at least prior to the bubble.

Your comment on the article implied to me that it was easier for Chinese young people than Americans, but it seems like lots of things have to be carefully explained and defined before it’s an apples/apples comparison.

With enough family help it’s easy in either place.

Comment by Albuquerquedan
2017-04-10 12:06:20

I agree for the most part but in China the older blue collar generation worked for 10 cents an hour most of their lives but the new generation of factory workers are working for 2 to 5 dollars an hour. The new generation clearly has it better than the older. In United State,s millennial blue collar workers clearly are not doing as well as the previous generations, that is my point. Even if wage growth continues to slow in China, retiring workers will still have far better pensions than their parents whose pensions are based on the very low wages of the past. China will continue to get richer as the old generation dies off.

Comment by Carl Morris
2017-04-10 13:41:24

Yes, in China the new generation has it better than their parents, in contrast to our new generation.

My point was just that without family wealth the new generation in China is still very far away from buying middle class housing in Shanghai due to the bubble.

Comment by Professor Bear
2017-04-09 18:19:16

Desmond Brown has been buying and selling real estate in Toronto for 19 years. In all that time, he has never seen a market like this.

It’s hot enough to melt ice. In October, he sold a unit in a townhouse complex in a traditionally working-class neighbourhood a few kilometres northwest of the downtown core for $586,000. Last month, he sold a virtually identical unit for $765,000 – a 30-per-cent price jump in just a few months.

“This January, February and March, we’ve seen numbers like we’ve never seen before, and especially for a winter,” said Mr. Brown, a sales representative for Royal LePage Estate Realty. “All of us are blown away.”

“I’m not sure what people are doing, why the prices are going wild. Are people feeling that they have to buy today, in fears that prices are going to go up even higher tomorrow?”


Comment by Professor Bear
2017-04-09 19:08:46

It’s gonna crash good and hard…

Comment by azdude
2017-04-10 05:06:21

folks will claim they were duped by somebody. Always an excuse when they get caught holding the bag.

Comment by Albuquerquedan
2017-04-10 07:59:31

Yes, at the end of any bubble there is the parabolic rise and we clearly have it here, but they will say no one saw it coming.

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Comment by Albuquerquedan
2017-04-10 08:43:28

Speaking of bubbles, we sure have one in fracking. The data shows soaring expenditures to keep the oil flowing but the wells are showing half the profits they generated in 2014. Meanwhile the frackers hedged their production to the hilt so higher oil prices will not save them, added to that they are using up very quickly all the geological sweet spots, the frackers are going to have a massive cash flow problem very soon, as they try to pay their massive debts:


Comment by Race Bannon
2017-04-10 08:54:05

If you can’t profit at $10/bbl you’re in the wrong business.

Comment by Albuquerquedan
2017-04-10 10:36:25

If you can profit at $10 a barrel in the U.S., it means you are stealing the oil from the field. Good luck with that HA, just remember that you probably will not be pitching in prison.

Comment by Race Bannon
2017-04-10 10:51:23

It simply means you don’t know the business Mr. Crowman.

Comment by Professor Bear
2017-04-09 19:07:27

I think I may have just sighted the world’s largest white elephants, at least outside of China.

Posted February 28, 2016 - 9:06pm
Large industrial project breaks ground
Las Vegas Business Press

The heat turned up on the valley’s speculative industrial market with the groundbreaking of one of Southern Nevada’s largest projects to date.

Northgate Distribution Center near Lamb Boulevard and Interstate 15 in North Las Vegas will bring more than 1 million square feet of space to the speculative industrial market in phase one of the project.

Kansas City, Mo.-based VanTrust Real Estate LLC is the developer of the project that will bring two buildings to the 120-acre site.

A 558,000-square-foot building, the larger of the two, will be expandable up to 785,520 square feet. The clear height on the building will be 36 feet, and its divisible down to 139,500. Other features include 128 trailer parking stalls and a cross-dock configuration.

The second building is pegged to be 247,750 square feet at build-out with divisibility down to 62,000 square feet. Clear height is set to be 32 feet, and there will be 77 trailer parking stalls.

Both buildings are set to be available by late 2016 and have office space built to suit. Martin Harris Construction is the contractor on the current phase.

In total, VanTrust is planning 2 million square feet of space when the entire area is built out. The organization has offices in Dallas, Houston, Phoenix, Columbus, Ohio, and Fort Lauderdale, Florida, and offers a variety of real estate services to its clients including acquisition, development, asset management, construction management and consulting.

Comment by Professor Bear
2017-04-09 21:48:57

Spending the night at the St. George Inn and Suites, in the middle of a ginormous hotel complex in St. George, UT. There is a plethora of new hotel construction on every horizon. It is hard to imagine ever having enough tourists visiting this sleepy burg to fill all these rooms. It is hard not to envision a massive crash when it dawns on investors that they won’t be able to keep all this hotel space utilized at a high level without squeezing margins to the extreme.

Comment by Professor Bear
2017-04-10 10:09:18

Judging from the crush of children at breakfast this morning, these low-budget hotels may be saved by the throngs of large Utah families.

Comment by Carl Morris
2017-04-10 10:18:01

If only it could be spring break year-round. Although the obvious solution is that eventually they become the cheap working class housing that’s currently missing from the market. So maybe in that case.

Comment by Albuquerquedan
2017-04-10 10:42:59

There is a plethora of new hotel construction on every horizon. It is hard to imagine ever having enough tourists visiting this sleepy burg to fill all these rooms.

There is a lot of road and not many towns between Las Vegas and Nephi.

Comment by Professor Bear
2017-04-10 01:54:40

What’s the point of all of these policy announcements, soon to be followed by no follow up action?

US Fed could end reinvestment policy this year: Fed’s Bullard
2 Hours Ago
James Bullard

The U.S. Federal Reserve could begin winding down its massive balance sheet sometime later this year in a shift that would make it less necessary to raise the official funds rate, a central banker said on Monday.

Talking to reporters in Australia, St. Louis Federal Reserve President James Bullard said opinions differed within the Fed on ending its balance sheet reinvestment policy and it would take some time to agree on, but he felt it could start later in the year.

Bullard emphasized that the central bank would not be actively selling assets from its $4.5 trillion balance sheet, but rather not replacing them as they mature.

This could be well accommodated by markets, he said, and would put limited upward pressure on Treasury yields.

Markets were wrongfooted somewhat last week when minutes of the Fed’s last policy meeting showed policy makers were considering shrinking its assets later this year.

New York Fed President William Dudley said on Friday that the Fed could begin shedding bonds from its portfolio as soon as this year.

The comments temporarily pushed the dollar lower and raised yields on longer-dated bonds.

Comment by butters
2017-04-10 08:49:45

They will get another Fed guy to make contradictory statements.

It’s a fukushima!

Comment by Professor Bear
2017-04-10 02:08:56

Does it seem like long term rates have no where to go from here but up?

A Foreign Threat to U.S. Treasuries That Dwarfs Fed’s Debt Hoard
by Liz McCormick
and Brian Chappatta
Sun Apr 9 16:00:00 2017
Trillions of dollars in negative-yielding bonds turn positive
International buyers may shift away just as Fed pares holdings

These days, it seems like everyone in the bond market is obsessed over what will happen when the Federal Reserve starts whittling down its mammoth, crisis-era investments in U.S. government bonds.

Yet lost in the hullabaloo is one little-noticed fact: there’s an even bigger debt pile that could draw buyers away from Treasuries at just the wrong time.

In overseas markets, more than $3 trillion of negative-yielding government bonds — which all but guarantee losses for buy-and-hold investors — have turned positive in recent months. And analysts say that number may grow over the next few years as brighter economic prospects and shifts in monetary policy lift trillions more out of sub-zero levels in Europe and Japan.

The consequences for the U.S. bond market could be significant. Simply put, foreigners who have poured vast amounts of money into higher-yielding Treasuries may be less inclined to do so now that they have more viable fixed-income options at home. Any sustained retreat could lead to painful losses, particularly at a time when Fed officials are suggesting the central bank may finally be ready to pare its holdings, which include $2.46 trillion of Treasuries.

“There may no longer be a tsunami of money coming from Europe and Japan,” said Torsten Slok, the chief international economist at Deutsche Bank.

Comment by Professor Bear
2017-04-10 02:25:11

Fascinating discussion on Seeking Alpha. Makes me wonder if the Trump administration might finally achieve those elusive Affordable Housing objectives the Obamanites could somehow never quite muster.

Douglas Adams
The Fed And The Housing Squeeze
Apr. 10, 2017 4:19 AM

The Federal Reserve, the biggest player in the mortgage-backed security (MBS) market, is buying a good deal less agency debt this side of the US election. This is hardly earth-shattering news, given the uptick in long-term interest rates since the US election in November. The average 30-year fixed mortgage came to 3.58% for the 10-months leading up to the election. The benchmark jumped to 3.77% through the end of November and jumped again to 4.20% in December, where it remains through the end of March.

The impact of rising mortgage rates not only slows the pace of mortgage originations as home buyers that have to use the credit markets to finance their purchases start pulling out the market. It also means refinancing existing debt slows in lockstep. When refinancing of existing mortgages slows, so too does the rate which MBS mature because less principal is now flowing back to investors in the form of loan pre-payments. The impact on the Fed’s portfolio is already being felt. The Fed’s Open Market Trading Desk plans to acquire $18 billion MBS as a part of its repurchase program for maturing MBS on the Fed’s balance sheet through the 30-day period ending 12 April. The purchase is the lowest total since the period of 12 June through 11 July 2014 and well below the average $28.15 billion 30-day purchase level for the period. The decline of purchases means less liquidity flowing back into the credit markets for home buyers to tap to finance their purchases. It also means the home financing credit markets are tightening due to the upward drift of interest rates and declining demand for mortgages and refinancing in the credit market. The trend will continue for the foreseeable future.

This presents an interesting dilemma for Fed policy makers moving forward. The Fed is now in the midst of a short-term interest rate hike cycle, having completed the first of three projected rate hikes for the year. The cycle continues to be data dependent, a well-worn criterion. Yet now another continuing agenda item is on the table. Since the Fed’s MBS program began in December of 2008, the program has amassed a staggering $1.769 trillion in agency debt that now resides on its balance sheet through the week ending 6 April. Even when the Fed did finally stop actively adding to its portfolio, reinvestment of maturing securities, both Treasuries and MBS, continued unabated. While the Fed discontinued actively adding to its MBS pile, the balance sheet line nevertheless continues to grow, albeit at levels much reduced from the January 2009 through December 2014 period. In the last six months alone, the Fed’s MBS portfolio has grown by roughly $26 billion or about 1.5% for the period.

That said, with the publication of the Fed’s March Open Market Committee meeting minutes, Committee discussions will now include dealing with the logistics of both withdrawing these last remnants of accommodation and actually shrinking its balance sheet. The details about when, how much and how fast are still to be sketched out. While nearly all the participants to the discussion agree with the premise that the US economy is at or nearing maximum employment - a not insignificant assessment in the strength and durability of the recovery process thus far - an equal number readily recognize that the economy had not achieved the Committee’s inflation target of 2% on a sustained basis. Headline PCE inflation hit 2.1% through the end of February for its highest post since March 2012. Meanwhile, core PCE inflation - a good indicator of future headline inflation - remained largely unchanged through the end of the 4th quarter at 1.7%. While opinions on the subject differed, the Committee’s consensus view appeared to gravitate toward a gradual rather than a sudden removal of existing accommodation for the very good reason of avoiding a sudden surge in volatility around rising rates that overwhelm the ability of markets to readily absorb. At the fore of the Committee’s thinking is sidestepping a replay of the taper tantrum of 2013 that saw interest rates soar while bond markets and currency valuations sank across the emerging markets space on the announcement. The calamity stayed the Fed’s hand for another year before it finally was able to end its purchase program to its conclusion in December of 2014.

Of course, when the Fed backs away from its current role of primary market maker, some other buyer(s) will have to step up to the plate to keep market liquidity flowing. While much of the MBS in the Fed’s portfolio in theory matures well past 2040, most analysts believe a large chunk of the total will likely be paid earlier through refinancing activity and accelerated premium paydowns. One advantage that appears to be working in the Fed’s favor: while term premiums across the developed world will most certainly be rising over the course to time, the Fed will be the first central bank out of the block with its program of shrinking its balance sheet to more historical dimensions. The Banks of Japan, England and the European Central Bank are still actively buying assets, therefore, pumping large quantities of liquidity into their respective, and indirectly into the global financial system.

The question now arises: what will be the impact on housing with the Fed plotting its hoped-for orderly retreat from the MBS market?

Comment by Professor Bear
2017-04-10 02:30:27

It’s been over five years since the Fed announced plans to go all in on reflating the Housing Bubble. Can anyone see any signs on the horizon that these Obama-era market interventions may soon end with Republican control of the White House and Congress?

Comment by butters
2017-04-10 08:25:54

Not gonna happen. My fear is they will reflate it even more.

Comment by azdude
2017-04-10 05:07:56

Does anyone have any good numbers on how much money central banks around the world have created to prop up stock markets? It has to be in the tens of trillions. More phony wealth?

Comment by taxpayer
2017-04-10 05:48:04

this makes sense

Other features include 128 trailer parking stalls


Comment by Senior Housing Analyst
2017-04-10 07:43:57

Fernandina Beach, FL Housing Prices Crater 5% YoY


Comment by phony scandals
2017-04-10 09:31:29

Fernandina Wants Me, Lord, I can’t go back there.


(I went the extra mile and found the version that made people pull over.)

Indiana Wants Me

From Wikipedia

It was released on the Rare Earth label, formed by Motown in an attempt to establish itself in the rock music market. The police siren sounds at the start of the record were removed from some copies supplied to radio stations after complaints that drivers hearing the song on the radio had mistakenly pulled over, thinking that the sounds were real.[

The sirens are also heard during the instrumental section in the middle of the song. At the climax of the song, soon after the narrator has sung, “Red lights are flashin’ around me,/ Yeah, love, it looks like they found me”, and the chorus, the voice of a cop on the bullhorn is heard, commanding: “THIS IS THE POLICE. YOU ARE SURROUNDED. GIVE YOURSELF UP. THIS IS THE POLICE. GIVE YOURSELF UP. YOU ARE SURROUNDED.” However, the narrator apparently ignores the command, and a gun battle ensues between the narrator of the song and the police, as the song fades out. An alternate version of the song fades out at the end without the gunfire sound effects.

Comment by Rental Watch
2017-04-10 08:15:56


Census Vacancy data should be out at the end of the month. If homeowner vacancy is down, it would support NAR’s numbers.

Comment by Blue Skye
2017-04-10 08:53:29

There aren’t suddenly fewer houses. Realtor “inventory” means houses being actively marketed, which is an indication of wishing prices being realized or not. I don’t think vacancy rates are much of a factor.

Comment by Albuquerquedan
Comment by Albuquerquedan
2017-04-10 15:42:17
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Comment by Rental Watch
2017-04-10 11:21:04

There aren’t suddenly fewer houses. Realtor “inventory” means houses being actively marketed, which is an indication of wishing prices being realized or not. I don’t think vacancy rates are much of a factor.

I of course recognize that inventory levels are not the same as supply of homes (physical number of homes) relative to demand (people who want to live in them). I’ve said so on numerous occasions.

HOWEVER, low inventory can be a symptom of actual supply shortages, which is why I note waiting for the Census data…specifically as it relates to owner-occupied homes.

That particular metric has been relatively stable over the prior few quarters, so it will be interesting to see whether the metric continues to be stable, or if it has moved (in either direction).

As I’ve noted before, absent an external shock (leading to job losses and recession), I don’t think we’ll see pressure on prices letting up until housing starts have reached 1.5-1.6MM and been there for a while–regardless of what happens with rates. We shall see…

Comment by Blue Skye
2017-04-10 13:05:27

Housing starts exceed household formation.

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Comment by Professor Bear
2017-04-10 10:02:54

Just wait until this Fed-induced short squeeze ends with falling prices and investors dumping inventory. We are looking forward to an epic reversal from inventory squeeze to flood when this historic financial episode ultimately unravels. Last one out is a rotten egg.

Comment by Carl Morris
2017-04-10 10:16:39

But we’ve been looking forward to that for years and the only thing we’ve seen so far is that if it begins the political pressure to stop it will be so high that all stops will be pulled out to prevent it for as long as possible. Do you think this is when the ammunition finally runs out?

Comment by Blue Skye
2017-04-10 10:48:42

It’s not just about the ammunition. Ready and willing targets are required for there to be more and bigger loans. They can bail out the banks but they will have a smaller army of FBs after every wave crashes.

The credit bubble of the 20s didn’t resolve until 1950. This one is much bigger.

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Comment by Albuquerquedan
2017-04-10 10:20:24

Or all the reserves that have been created by the Fed and just sitting finally turn into bank loans and it ignites inflation before the Fed can reduce its balance sheets. Right now the big boys do not seem to be selling so maybe they are counting on that.

Comment by Albuquerquedan
2017-04-10 10:52:10
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Comment by Albuquerquedan
2017-04-10 10:57:41
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Comment by Professor Bear
2017-04-11 04:11:59

Wouldn’t winding down and resolving F&F go a long way to restoring the roles of local demand in keeping housing prices aligned with incomes and rents? The central planners have a way of mucking up the ability of free markets to do their jobs.

Comment by Race Bannon
2017-04-10 11:03:23

“ignites inflation”

Do you really believe wages are going to triple or quadruple to meet grossly inflated prices?

Of course not.

Prices will continue falling to dramatically lower and more affordable levels meeting wages.

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Comment by Senior Housing Analyst
2017-04-10 09:16:24

Kensington, MD Housing Prices Crater 14% YoY


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