April 12, 2017

It’s Like A Little Snowball Rolling Down The Hill

A report from the Washington Post. “Cash-out refinancings, which were wildly popular during the housing boom years and which contributed to the severity of the crash, are on the rise again. National mortgage investor Freddie Mac reports that 45 percent of all home-loan refinancings in the final three months of last year involved cash-outs. That was the highest percentage since the end of 2008. Black Knight Financial Services, a mortgage technology and analytics firm, says homeowners pulled $31 billion from their equity holdings in the fourth quarter of 2016 — a jump of 50 percent over the same period the year before.”

“But when cash-out refis begin to soar, is that a positive or negative indicator for the housing market’s health? Critics such as Connecticut-based real estate analyst Keith Jurow say the trend today is reminiscent of the tail end of the boom years. ‘I consider this to be 2007′ — near the end of a multiyear string of housing price increases, Jurow told me in an interview. ‘The euphoria is similar’ — people assume that prices can only keep going up.’”

From Flagler Live in Florida. “It’s not often that a mass of ordinary people hundreds of miles from the state capital can sound like wonks down to the minutiae of legislative bill numbers. But that’s what the vacation-rental issue has made of Hammock residents. Vacation-rental companies who could cash in on the exploding popularity of using single-family homes as short-term vacation rentals, and homeowners who mortgaged themselves too much during the housing boom, overspent, overbuilt, and found their property deep underwater, so that turning them into vacation rentals was one way to avoid foreclosure or lose the properties.”

“In any case, for residents who turned out, the only allegations of water in question were the cold sort they threw on what they said was a myth: ‘There’s really absolutely no truth in the fact that these are struggling people trying to keep their house. These are investors who are preying on us, ruining our community,’ one homeowner said to applause.”

The San Mateo Daily Journal in California. “Those seeking entry to the traditionally tight and expensive Peninsula home rental market may enjoy some temporary relief according to experts who claim a cheaper home may be easier to find now than years past. Marilyn Andrews, a property manager and real estate broker with Boardwalk Investments in San Bruno, echoed a similar sentiment. ‘Rents came down somewhat I believe because the overbuilding in San Francisco,’ she said, claiming those who previously would have sought a room in San Mateo County due to proximity to the city may be choosing instead one of the new apartments in San Francisco.”

The Real Deal on New York. “It’s tough to pin down exact numbers for how many projects are paralyzed. The city’s Department of Buildings no longer keeps count. Walk most Manhattan neighborhoods and you’ll see many. One of the reasons for big delays on sites, sources said, is the market boom of 2014 and 2015. Developers eager to command the returns seen in those years launched a large number of projects, all competing for a finite number of contractors and subcontractors, and the attention of a DOB mired down in red tape.”

“Other sources said the problem in today’s market is not excess construction, but construction financing – or rather, the lack of it. Owners who received land loans or predevelopment loans 12 to 18 months ago are finding that lenders are far less open to the prospect of doling out more money for construction. ‘It’s like someone pulled out a magic wand and hit freeze on the condo market,’ said Adi Chugh, CEO of debt brokerage Maverick Capital Partners.”

“The financial toll for a delayed project can be heavy — particularly if construction is already underway. ‘A construction loan is a negative cash flow loan. You’re only spending money,’ said David Heiden, managing partner of bridge lender W Financial Fund LP. ‘Every month that the job goes over cost, you have longer until the project generates cash flow. It’s like a little snowball rolling down the hill.’”

“‘Loans are usually two to three years, and so if you’re stalled for six months and it’s supposed to be 18 months of construction, there goes your cushion. You’re screwed,’ said one developer active in the city.”

From the Southington Record Journal in Connecticut. “A review of the Multiple Listing Service shows nine bank-owned houses on the market in town. That’s fairly high, said Joshua Brown a foreclosure expert and agent with Keller Williams, but given the number of homes in the highly developed town of 43,000, not entirely surprising. ‘There is a high inventory in town and it’s a little bit pricey,’ Brown said. ‘The higher you go, the greater the risk.’”

“Brown currently has two bank-owned properties on the market. Houses can appear for months, then are taken off and reintroduced at a later time. ‘There is a shadow inventory that is inventory that hasn’t been listed,’ Brown said. If the bank has a lot of inventory, or asset portfolios get sold back and forth between banks, the properties come and go off the market. ‘Too much inventory would drive the prices down.’”

“A property at 400 Rockwood Drive is an example of the shadow inventory that emerges and disappears off the market. The property was purchased in 1999 for $100,000, developed and listed at $618,900 in April 2012. Four months later it was reduced to $514,999 and is currently off the market. ‘That’s a great one,’ Brown said. ‘It’s kind of in bank limbo. I get a lot of calls on that.’”

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Comment by Ben Jones
2017-04-12 09:30:58

‘There is a shadow inventory that is inventory that hasn’t been listed,’ Brown said. If the bank has a lot of inventory, or asset portfolios get sold back and forth between banks, the properties come and go off the market. ‘Too much inventory would drive the prices down.’

It’s crow time for the shadow inventory deniers. How many times do I have to find direct quotes like this?

Comment by SW
2017-04-12 10:47:55

Seems the only reason banks can keep a shadow inventory is that their balance sheets have been bolstered by a certain central bank…

Comment by Prime_Is_Contained
2017-04-13 00:08:24

Don’t forget the other reason: mark-to-market is still suspended, so they can value that dog of a property at any valuation that they wish.

Comment by Professor Bear
2017-04-13 07:08:25

I guess this is legal if the rulemakers say so, but is extend-and-pretend a good way to govern a financial system?

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Comment by Rental Watch
2017-04-13 14:17:27

Prime…MTM is only suspended for difficult to value/infrequently traded assets. Homes do not qualify.

What does count are things like CDO-squared tranches of crazy MBS.

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Comment by Professor Bear
2017-04-13 02:22:52

I am curious what in the Fed’s mandate makes this type of price fixing legal?

Comment by Jingle Male
2017-04-13 05:26:14

The banks don’t hold the loans. This has been demonstrated time and time again. The loans have all been sold to third party investors. The banks just service the loans from their servicing group and have a vested interest in charging exorbitant fees, once the loans defalut and go to the special servicing groups. That is why these houses are constantly shuffled on and off the market. The banks sometimes trade the servicing portfolios to other servicers, which disrupts the disposition process.

Comment by Professor Bear
2017-04-13 07:09:57

It seems like this might be a good case for changing the rules to make sales to third-party investors illegal.

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Comment by Jingle Male
2017-04-13 12:49:05

…or make the originator retain the first loss position of 5%. That would stop them from doing dicey loans, since their well being is tied to the loan.

Comment by Rental Watch
2017-04-13 14:21:47

Except the “risk retention” rules were neutered through the process. The 5% is being held by investors.

Comment by Ben Jones
2017-04-13 07:18:16

‘This has been demonstrated time and time again’

You got a link for that? Thing is, we don’t know. Wouldn’t these third parties have sued and, OH they have sued! And we’ve seen payoffs year after year. So after the multi-billion $ payoffs, who owns the paper? And the Fed bought 2 trillions, how much of that is shadow inventory? No audit. I don’t see how we can know what the heck is going on except perfectly good houses are being held off the market to limit inventory for the purpose of propping up prices.

It would be great if our media, who can take the time to investigate the most useless of celebrity shenanigans, would take a serious look at shadow inventory.

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Comment by Professor Bear
2017-04-13 07:24:36

“I don’t see how we can know what the heck is going on except perfectly good houses are being held off the market to limit inventory for the purpose of propping up prices.”

And this is not a violation of the Sherman Antitrust Act because…?

Comment by Jingle Male
2017-04-13 08:05:10

Here is a link…..

Mortgage Investment vs. Mortgage Servicing

“You mustn’t confuse the selling of mortgage backed securities with the selling of loan servicing. Often, you get your mortgage through a lender or broker. Then after closing, you make your payments to another company—typically a larger bank like Chase or Wells Fargo. This second bank purchased the servicing rights to your loan, but did not finance the full amount. The financing still came from the secondary market, whether from Fannie Mae, Freddie Mac, or another source. The investor pays the servicer for collecting the loan payments. Then the investor receives the interest income on the loan.”


“Private equity purchases of MBSs were common leading up to the meltdown in the subprime mortgage market in 2007-2008. Since then, however, private equity has been mostly absent from the secondary mortgage market. In fact, the federal government invests in over 90 percent of mortgages in the U.S.”

Comment by Ben Jones
2017-04-13 08:13:28

This is just hair splitting. Way back in the day a trustee sale notice might say Lehman Brothers FBO Trust number yadda yadda, but you don’t see that much anymore. Yes there are servicing companies like a subsidiary of Chase etc, but there is still an owner, who hires an asset manager who decides to list or not. Want more hair splitting? Fannie and Freddie aren’t banks. The REO’s I was involved in buying clearly had the sellers as Fannie Mae or some such.

Comment by Ben Jones
2017-04-13 08:31:00

‘GSE foreclosure starts jumped 10 percent in January, and third-party and foreclosure sales increased 16 percent, according to a Foreclosure Prevention Report released by the Federal Housing Finance Agency on Wednesday.’

‘According to the report, which covered GSE foreclosures and prevention activities over the course of January 2017, foreclosure starts rose from 15,133 to 16,604 between December and January. Third-party and foreclosure sales increased from 5,764 to 6,705 over the same period.’

‘The report also revealed that the GSEs completed nearly 15,000 foreclosure prevention actions for the month. To date, the Enterprises have taken 3.8 million prevention actions.’


And most of these “preventions” re-default.

Comment by Jingle Male
2017-04-13 12:37:41

How can you not understand the mortgage market after all these years?

“After purchasing mortgages on the secondary market Fannie Mae pools them to form mortgage-backed securities (MBS). MBS are asset-backed securities that are secured by a mortgage or pool of mortgages. Fannie Mae’s mortgage-backed securities are purchased by institutions, such as insurance companies, pension funds and investment banks. It guarantees payments of principal and interest on its MBS.”


You were dealing with the servicers who represent the investors in the foreclosure actions.

Comment by Bradman
2017-04-12 12:42:20

Although it is a damning quote, it’s from a real estate agent. He’s probably very loosely affiliated with the folks who actually know what’s going on. It’s probably just fluff.

Comment by Ben Jones
2017-04-12 14:58:36

These REO brokers work directly with the asset managers, and nobody knows more about what’s going on than the asset managers. Also I’ve only posted a couple hundred quotes like this over the years and I saw it with my own eyes. Watch some of my videos, this stuff is everywhere.

Comment by Rental Watch
2017-04-13 14:20:44

Which “banks” hold this inventory? The FDIC data doesn’t support there being very much OREO of single family homes held by US financial institutions. If they were simply selling them back and forth between one another, they would still show up in the aggregate numbers.

Brown…the source of the quote, is a real estate agent.

Comment by Senior Housing Analyst
2017-04-12 10:02:44

Concord, MA Housing Price Crater 11% YoY


Comment by Patrick
2017-04-12 10:41:00

Ben, I think the shadow inventory also has a shadow of ownership doubt hanging over it. Perhaps the bankers are too scared to move (legal bills) and also upset their govt payouts.

And maybe some of those bag holders will lay a whomping on them.

Comment by Ben Jones
2017-04-12 10:55:08

‘In a meeting with Geithner — this one involving fewer f-bombs than others — Barofsky says he finally realized the root of the Treasury Department’s apparent lack of interest in helping homeowners: They apparently had another goal in mind.’

‘At the meeting, Elizabeth Warren, then chair of a congressional oversight panel established in 2008 to oversee the bailouts, questioned Geithner about HAMP’s ability to help homeowners — not the last time she would grill him.’

“In defense of the program, Geithner finally blurted out, ‘We estimate that they can handle ten million foreclosures, over time,’ referring to the banks. ‘This program will help foam the runway for them.’”

Comment by Ben Jones
2017-04-12 11:00:49

I worked in the foreclosure biz. I told readers here this was going on in 2009. After the foreclosure, there is no claim. Take them to court maybe, but the law is set up to clear title so these things can move forward. Bank owned is bank owned. Listen to what the guy says: it’s to keep prices up for all the other shacks they own, and to keep payments coming in on the loans they have.

Comment by azdude
Comment by Patrick
2017-04-12 14:24:21

Ben, you certainly know a lot more about this shadow inventory than I do - but I also saw securitization on top of on top of. It is hard for me to see how a lot of banks can determine ownership, even if the law says so. Especially when they did not seem to be documenting their transactions very well.

I think this is an area, in the USA, which will only be unravelled by the municipalities seizing these properties for unpaid taxes.

When black rot, termites, and other infestations require they do something.

Yes, I read your articles about shadow inventory and I agree with you.

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Comment by Ben Jones
2017-04-12 15:02:42

I took some RE law courses in college. Regarding title there are decision trees. It doesn’t take 5 years to go through a decision tree. The logical explanation is the simplest: bankers stuffing other peoples money in their pockets. It has been known to happen, especially when there is no regulator stopping them. Have you ever heard of someone being charged with holding shacks off the market to prop up house prices?

Comment by azdude
2017-04-12 16:01:51

If these banks were actually eating all the costs of keeping these homes off the market I wouldn’t see a problem with them doing what they h@ll they want with their own property. They dont have to sell cause snowflakes want them to. They own the d@m property.

Comment by Ben Jones
2017-04-12 16:44:35

It used to be a violation of accounting rules. There had to be a valid reason for that. Now that it’s all awesome, why don’t they reinstate that rule?

Comment by rms
2017-04-12 20:11:36

“I think this is an area, in the USA, which will only be unravelled by the municipalities seizing these properties for unpaid taxes.”


Sell these properties on the courthouse steps.

Comment by Ben Jones
2017-04-12 20:22:26

It was sold on the courthouse steps, to the lender:

400 Rockwood Dr, Southington, CT 06489
4 beds 2.5 baths 3,671 sqft

Sold: Foreclosed to lender – $0 Public Record
10/26/12 Listing removed $514,999 $140
06/26/12 Price change $514,999-10.4%
05/08/12 Price change $574,900-7.1%
03/29/12 Listed for sale $618,900+519% $168
08/13/99 Sold $100,000 $27


‘listed at $618,900 in April 2012. Four months later it was reduced to $514,999 and is currently off the market. ‘That’s a great one,’ Brown said. ‘It’s kind of in bank limbo. I get a lot of calls on that.’

Comment by Jingle Male
2017-04-13 05:28:47

A Sacramento bankruptcy court judge has hit Bank of America with a $46 million judgment for the “Kafkaesque” way it handled a single residential foreclosure in Lincoln.
At the heart of the case is the bank’s decision in 2010 to move ahead with the foreclosure of a home when it was under the protection of a bankruptcy filing. But the large award was also influenced by the bank’s later ongoing treatment of its clients, Erik and Renee Sundquist of Lincoln, Judge Christopher Klein of the U.S. Bankruptcy Court for the Eastern District of California said in his ruling.
“Franz Kafka lives,” Klein wrote in a published opinion of the case, released on March 23. “This automatic stay violation case reveals that he works at Bank of America.”

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Comment by aNYCdj
2017-04-13 05:47:37

It seems to me that if the Bank of America can afford $650 million to finance the Raiders new Las Vegas stadium, they can afford $46 million as recompense to the Sundquist’s and several consumer law centers and universities.

Comment by Professor Bear
2017-04-13 07:11:16

“…this one involving fewer f-bombs than others…”

Ah to have been a fly on the wall during some of these meetings…

Comment by Ben Jones
2017-04-12 11:04:34

‘Loans are usually two to three years, and so if you’re stalled for six months and it’s supposed to be 18 months of construction, there goes your cushion. You’re screwed,’ said one developer active in the city’

You can see why a 19 month (or 19 year in 5M and up Miami Beach condos) is a big deal. Apartments are the same. Remember that Houston luxury apartment I recorded? It’s almost certainly up for refinance some short time in the future and there are reportedly 58,000 units on the way. In Tucson 80% of apartment complexes have to refinance this year alone. A squeeze can develop very quickly.

Comment by Prime_Is_Contained
2017-04-13 00:14:07

A squeeze can develop very quickly.

And if they can’t refi—then what? Why, the banks end up with more shadow inventory that the just sit on, right?

I’m not seeing what forces that inventory to end up on the market.

Comment by Professor Bear
2017-04-13 07:14:46

It seems like for the system to work efficiently, banks would have to eat losses if they opted to hold homes off the market, and not be able to use this strategy as a price-fixing tool.

I thought there were laws on the books to prevent price fixing, but I guess they aren’t enforced in this area.

Comment by Race Bannon
2017-04-13 09:56:39

Whether it ends up on the market or not, it’s still excess inventory and still a loss. The longer the duration, the greater the loss.

Comment by taxpayer
2017-04-12 11:16:04

cash out refi
what is there to get?
4% 6% ?
in 2016 my hood went up 2.5% tops

Comment by Ben Jones
2017-04-12 12:17:08

‘Why are home prices in Arlington falling?’

‘By jurisdiction, excluding Falls Church City which had just 13 closed sales in March, Arlington was the only county to show a year-over-year decline, with a median price of what sold last month at $508,500, down 6.2 percent from a year ago.’

‘But MRIS says that is deceiving, because median prices have to do with a shifting mix in what’s on the market in Arlington. “Attached housing, which is both townhouses and condominiums, the volume in relation to detached housing is up, so it’s the mix of the sales that are impacting that prices to reflect that it’s going down as opposed to actual housing prices that are going down,” Andrew Strauch from MRIS told WTOP.’

Notice they never mention this mix thing when they tell us prices are up. I’m sure they collect the data per square foot or by category. I wonder why they don’t just show us that?

Comment by Blue Skye
2017-04-12 14:58:55

I suspect you don’t wonder at all. It is a regurgitation of Realtor press and Realtors are not in the business of helping you make educated decisions, rather just to sell you.

Comment by Sean
2017-04-12 22:01:20

Because that’s all builders want to build: attached housing. No wonder that’s up.

Please, no more town homes around here.

Comment by oxide
2017-04-13 09:41:14

Good luck with “please no more townhouses.” Have you seen some of the townhomes they’re building? 4000 sq ft! With no front or back yard, and a hefty HOA, of course. For a pool that’s a couple blocks away. They would rather build 4000 sq ft attached product than build a 1500 sq ft SFH. Damn land prices, you know.

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Comment by rms
2017-04-13 08:06:52

“cash out refi… what is there to get?”

It’s called, just barely scraping along by using that home as an ATM machine. The middle class is experiencing an extinction event.

Listen to Bethany McClean explain it; fast fwd to 37:00 minutes.

Comment by Blue Skye
2017-04-12 11:29:55

“because the overbuilding in San Francisco”

RW assures us that we need to build millions and millions of additional houses to even begin to dent high prices.

Comment by Ben Jones
2017-04-12 12:19:07

It’s always some worn out reference to statistics the building industry repeats. “Why in 1990 we were building a lot more so there’s a shortage!” Uh, they were saying the same thing in 2005.

Comment by Rental Watch
2017-04-13 14:25:57

Supply/demand imbalance was the gasoline, crazy lending was the match that caused prices to explode from 2004-2008.

Why have home prices in CA been high relative to the rest of the country for the past 25 years (or more)?

CEQA and under-building.

Actually, in the 90’s there were too few homes built in CA as well.

Comment by Rental Watch
2017-04-13 14:35:41


You can find article after article noting similar tired data that is regurgitated over and over again.

Data that is based on such crazy things like the number of human beings that want to be sheltered from the elements.


Yet CA has the same thing happen cycle after cycle…home prices that exceed inflation handily, until there is some shock…and then prices fall, only to repeat the cycle again.

The boom isn’t never-ending in CA because of the supply shortage, just exacerbated.

To be clear:

I am NOT saying prices will never fall in CA.

I’m saying that lack of supply creates additional upward pressure on prices that wouldn’t exist if there was more supply.

So, prices go higher than they should each cycle, and lows don’t go as low as they should…and linger for a shorter length of time before they start going up again.

Comment by ZH
2017-04-12 11:41:39


WTI/RBOB Slide As Crude Production Hits 20-Month High, Cushing Glut Hits Record High

Comment by Professor Bear
2017-04-13 07:15:49

Another great oil dip buying opportunity in the making?

Comment by Albuquerquedan
Comment by Race Bannon
2017-04-12 12:29:15

Why? They know renting is half the cost of buying…. and has been for a few decades now.

Comment by azdude
2017-04-12 13:52:14

when u rent you dont get any free money from rising equity.

Comment by new attitude
2017-04-12 14:12:48

Renters save their money and time and use it for vacations and gold!

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Comment by BigSky
2017-04-12 14:21:13

That “free money from rising equity” is 50% of what my spouse is concerned about. The other 50% is having out buildings to work on his away from work stress relievers-woodworking, beer making. I can empathize with the the first concept and the latter desire but I can’t fathom stepping into the bloated market and handing over way too much cash and freedom.

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Comment by Sean
2017-04-12 22:09:29

Nice to see the “stigma” of renting being exposed. I know realtors see me as a loser who rents, but with my retirement fully funded, my cars paid off and my kids college getting funds I’m just not sure what to do with my extra money.

I went to visit my parents a few months ago and ran into a family friend. She asked whether we rent or bought when we moved to NoVa. I said we are renting. “Ohhhhh, it’ll get better for you soon.” She said with a sad look on her face. These Boomers are just clueless! Oh hey, another paycheck! Another $2,000 to add to the pile. I’m soooo sad.

Comment by oxide
2017-04-13 05:32:24

If you moved from Montgomery county to NoVa, no wonder you’re renting, and you should probably continue to rent. If you picked up a house in, say, Silver Spring MD and plopped it down in NoVa you may as well add $100K to the price tag. Salaries in NoVa aren’t higher enough to make up the difference. And it’s only going to be worse if Trump bloats up the DOD.

Comment by taxpayer
2017-04-13 08:25:49

SS, MD? white neighborhoods cost extra. I remember moving from MD to N VA
no one ever moves back

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Comment by Jingle Male
2017-04-13 05:39:40

I have the same conditions: no car payments, 401(k)s fully funded for many years, no college debt, no credit card debt.

The only difference is, I also bought real estate at the bottom and turned an investment of $250,000 into $1,250,000 of equity and $40,000/year of cash flow (including debt reduction of $17,000/year). Buying real estate in the downturn was the best investment of my lifetime.

Comment by Sean
2017-04-13 06:10:20

Sure, except I never was able to hit it at the low point of the market. I want to buy a place, just not at these prices.

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Comment by taxpayer
2017-04-13 08:22:56

I have friends trying to break even on a 2012 falls church townhouse purchase now

Comment by SuzeB
2017-04-13 08:23:36

Yup, renters do indeed encounter pity and condescension not only by realtors but pretty much everyone (except other renters). Is it because “misery loves company”? Even several ex-renter friends who now “own” (have a large mortgage) feel the need to pressure and make patronizing comments. Yet, I have to congratulate them and fawn all over them regarding their home “ownership”. My net worth is over one million and I’ve been self-employed for 23 years. I’ve taken 6-8 weeks off for the last several years, have taken trips abroad, and decide when I want to work. I have enough to pay cash for a property but I also want to retire before my body falls apart so I feel it is smart to wait for a “correction”. Also, I am not quite sure where I want to live out my golden years.

Yet, the prevailing wisdom seems to be “it is different this time” so buy NOW or be priced out foreverrrrr! I was also told by a relative recently that “you cannot time the market and your life will be soooo much better after you buy a house”. Oh really? As a single, well over the hill woman with a bad shoulder? Cleaning gutters, mowing a lawn, shoveling in the winter, patching a leaky roof, flooding in the basement and possibly being stuck to an obnoxious neighbor sounds wonderful! I was told “you just hire someone to do all this”. Oh yeah, that also sounds fun. Some people do not understand city living, being able to walk everywhere and the freedom of renting which is why I have stayed a renter for so long.

And yes, for the record, I do regret not buying a condo during the last downturn. Yet, condo living has it’s downfalls thus….I did not buy. I also regret not buying more stocks after 2008. Fear does create inertia.

Granted, I do have cheap rent in a very expensive city and I have chosen to live way beneath my means. I slept until 10:30AM today and it’s OK. I do get tired of the relentless pressure and judgment. A home “owner” is never asked “How long are you going to live in that condo/home?”

I have a cousin who is a well-off and respected physician. Not wanting to deal with the maintenance and because he and his wife also had a vacation home, he sold his house and they rent. He told me he encounters the same questions: “you’re a doctor, and you are renting?”

Comment by oxide
2017-04-13 09:17:44

The main advantage of buying a home is simply to have a paid-off house when you retire. And really, the only advantage of a paid off home when you retire is that your housing expenses decrease precipitously at the same time that your income decreases precipitously.

But if you’re wealthy enough that you know you can afford rent for the rest of your life, even when your income drops, then that cancels out the reason for a paid off house. Which in turn cancels out the reason to buy a house.

So keep renting and enjoy yourself. If your friends pressure you, simply tell them to pound sand. You’re retired and you can afford to rent out of choice. That’s actually a sign of wealth.

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Comment by SuzeB
2017-04-13 17:33:56

Indeed. Well then, I’ve had a cocktail on the veranda. Jeeves, please pull up the car and put the top down. It’s a pleasant spring evening and I’d so enjoy a ride around the grounds!

Oops, I”m not *that* wealthy (slinks away with tail between legs).

But, but, but….I do have fun!

Comment by sleepless_near_seattle
2017-04-13 09:39:00

Just tell them, “I like freedom.” That’s the trump card I use to quiet the rabble. First, because they have to take a moment to realize what you said (they hadn’t considered that as part of the argument before) and second to understand what it means, even if it isn’t solely a monthly payment comparison.

I’ll be diving and windsurfing in Maui in a month. Loanowners can’t do that.

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Comment by SuzeB
2017-04-13 10:37:37

Thanks for the support and for your perspective. It definitely helps to be a renter when it comes to travel. I am also planning a trip for September, perhaps to Italy.

The thing that irks me is that one’s choice to rent with the associated freedom singles one out for judgment and derision. Loanowners, by virtue of the fact that they have a mortgage, are still considered superior. Perhaps it is jealousy, plain and simple.

I must remember, as Eleanor Roosevelt said: “No one can make you feel inferior without your consent.” :-)

Comment by Apartment 401
2017-04-13 10:49:42

Listening to loanowners talk about “their” homes is so boring.

Comment by SuzeB
2017-04-13 10:57:55

Yup. I had to ditch a female friend a few years back. Over the 3 years of getting to know her, it became clear that her real estate status was indeed her identity, her “raison d’être”. Her need to compete with me at every opportunity, always coming out the winner was the death knell of our “friendship”. All she talked about was her house and other people’s homes. She lives a mile away with her 400K mortgage but she is also a landlord/lady so she is naturally, superior in every way. Boring and annoying. Thus I have no desire to speak with this woman again.

Comment by sleepless_near_seattle
2017-04-13 11:11:38

“Perhaps it is jealousy, plain and simple.”

In many cases it is. I have 2 friends who, after trying to give me the business about being a renter, confided in me that they wished they rented.

One who moved here 5 years ago and ignored my advice to rent short term until they knew where they wanted to live. Now he tells me they have a drug problem on their street. And that’s in what’s considered a well-off suburb of Portland. The other overspent on their house on a large lot and laments what they spend tending to said lot, constant interior upgrades, etc. No Maui for them!

Comment by SuzeB
2017-04-13 17:29:29

*Giggling*. Ok, guffawing. Thanks for that. :-)

Comment by Race Bannon
2017-04-12 14:03:43

“Homeownership Hits 50-Year Record Lows”


Why is this you ask? It’s simple…… Rental rates are half the monthly cost.

Why buy it when you can rent it for half the amount? Buy later after prices crater for 65%.

Comment by azdude
2017-04-12 14:54:27


Comment by Race Bannon
2017-04-12 15:21:54

Cheer up and remember my friend…… Nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels…… Nothing.

Tillamook, OR Housing Prices Crater 7% YoY


Comment by Rentor
2017-04-13 01:32:41

The link don’t work. Is this fake news.

Comment by Jingle Male
2017-04-13 05:50:45

The link works, but HA does post a lot of fake news and fake headlines. Tillamook houses have gone from $250,000 to $300,000 over the last 5 years (3.5% appreication). Rents have gone from $1,200/mon to $1,400/mon over the same period.

If you bought a house 5-years ago for $250,000 with 3% down, your principal and interest would be about $1,100/month. $50,000 in appreciation equals $800/mon, which drops your monthly cost loan cost to $300/month. It is a nice benefit if you can understand it.

Clearly, this is an oversimplification, but you can see why ownership of your home can offer you tremendous benefits, the first of which is protection against rising rents in the future.

Comment by Race Bannon
2017-04-13 07:36:38

And down 7% YoY. Not to mention falling rental rates.

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Comment by aqius
2017-04-13 00:49:15

flagler beach area is definitely nice. also enjoyed the long empty stretches on satellite beach.
the remaining mid-century architecture is really cool, with the curves of googie gas stations n such gives the area a space-age vibe if you appreciate such things.

Comment by azdude
2017-04-13 04:42:26

My equity paid the bills this month. Out looking for beer today.

Comment by Jingle Male
2017-04-13 05:54:54

My equity has gone up $50,000/year since I bought a foreclosure in 2010. My housing cost (PITI + HOA) is $31,056/year. Buy low, sell high. I’m out looking for a condo to buy in San Diego in 2020 and retire.

Comment by azdude
2017-04-13 06:00:02

so im not bullsh@tting these people?

Comment by Jingle Male
2017-04-13 08:07:36

I can’t tell you what you are doing. I am stating facts and plans.

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Comment by oxide
2017-04-13 08:31:06

Smug much? Don’t get high on your own supply…

Comment by Jingle Male
2017-04-13 13:02:12

I do feel lucky. I made some decisions and took some risks and it has worked out well. I want people on this blog to know that owning real estate can be a great investment. So many here have been saying for decades that real estate is a terrible investment and you will lose your shorts. It is not an absolute truth. Some have lost, I agree. Others who made educated choices and invested wisely and conservatively have done very well. I believe renting is a great option for many. I rented in 2006 and 2007 after finding this blog and my first purchase was a little early in 2008.

The choice is yours. It is not a “one size fits all” process.

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Comment by Carl Morris
2017-04-13 13:28:08

Others who made educated choices and invested wisely and conservatively [see below] have done very well.

And in alignment with the Fed’s and government’s manipulation of the market. Otherwise known as picking up nickels in front of steamrollers unless you have insider knowledge.

Comment by phony scandals
Comment by Professor Bear
2017-04-13 06:56:43

“But when cash-out refis begin to soar, is that a positive or negative indicator for the housing market’s health?”

Maybe I am just imagining this, but I thought for sure that when I was starting out, refinance loans were limited for reinvestment in home improvement. This makes a certain amount of sense, as the home improvement to increase the value of a property provides collateral against a refinancing.

What provides the collateral on a cash-out refinance loan?

1. Steadily rising home values?
2. Future debt forgiveness?
3. Future bailouts?

Comment by Professor Bear
2017-04-13 07:02:28

“Vacation-rental companies who could cash in on the exploding popularity of using single-family homes as short-term vacation rentals, and homeowners who mortgaged themselves too much during the housing boom, overspent, overbuilt, and found their property deep underwater, so that turning them into vacation rentals was one way to avoid foreclosure or lose the properties.”

Reading this makes me deeply curious about the financial status of the vacation rental home from which I am typing this comment.

Comment by Professor Bear
2017-04-13 07:23:07

Strictly speaking, it’s an AirBnB, and we are living for two days in the furnished basement. It’s by far the nicest place we have stayed on this trip. I am pretty sure it works for the owners, due to favorable selection: They offer a nicer experience than a Best Western can offer their guests in exchange for a price tag that most homeowner households who stay in Best Western hotels can’t afford — a win-win for the hosts and guests with household cash flow!

Comment by Senior Housing Analyst
2017-04-13 07:38:04

Miami Beach, FL Rental Rates Crater 12% YoY


Comment by Jingle Male
2017-04-13 08:12:38

I was just in Miami Beach a few weeks ago. That whole area is a fly about to meet a windshield. I saw 10,000 SF condos that went for $55 million….probably soon to be half that…..well, it will take a few years….maybe by 2020.


Comment by phony scandals
2017-04-13 09:10:15

“I saw 10,000 SF condos that went for $55 million….probably soon to be half that…..well, it will take a few years….maybe by 2020.”



Comment by phony scandals
2017-04-13 08:39:06

This guy can’t sing, how come his videos get so many views?


Comment by aNYCdj
2017-04-13 08:53:57

Children’s clothing retailer Gymboree Corp. is said to be preparing a bankruptcy filing as it faces an interest payment on its debt, a report from Bloomberg said Tuesday.

According to Bloomberg, Gymboree has more than $1 billion in debt from its Bain Capital buyout in 2010, and warned in March that it’s running short on cash.

The company has not posted an annual profit since 2011, with losses totaling more than $800 million.

The retailer was founded in 1976, growing from offering mom-and-baby classes in the San Francisco Bay Area to operating over 1,300 retail stores in the United States and Canada, along with franchises around the world.


Comment by 2banana
2017-04-13 09:25:21

A BILLION dollars in debt for a baby clothing retailer…

What idiots lent them that money with no profits in 6 years…?

Some hard lessons coming…

Especially for the Tech Bubble v2.0 folks.

Comment by azdude
2017-04-13 12:32:30

they deserve to lose all their money, dumb@sses.

Comment by Ethan in Northern VA
2017-04-13 15:04:58

Notice when they were bought, then the huge losses started? They just loaded em up with debt, killed the host?

Comment by rms
2017-04-13 18:38:51

“…it faces an interest payment on its debt…”

Like the stars in the night sky… you can still see the light, but they’re already dead.

Comment by Financial Moralizer
2017-04-13 09:36:12

I found a picture of azdude, with his home-equity machine right inside his house. (I think they come standard now when you buy a house.)


Comment by azdude
2017-04-13 12:29:04

hell yeah!

Comment by Aqius
2017-04-14 07:49:35

too funny

Comment by Senior Housing Analyst
2017-04-13 09:43:34

San Ramon, CA Housing Prices Crater 11% YoY


Comment by Financial Moralizer
2017-04-13 10:36:36

Who would have thought. Some wood, nails, a few pipes… makes us all millionaires.

We definitely need another war or three… get that DOW up to 30K.

Comment by azdude
2017-04-13 12:30:49

its insane isnt it. Something so simple has turned into a cash cow and debt imprsionment machine of wall street.

Comment by Senior Housing Analyst
2017-04-13 12:26:42

Flower Mound, TX Housing Prices Crater 15% YoY


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