April 20, 2017

You Keep Bidding, And Then You Have Buyer’s Remorse

A report from the Citizen Times in North Carolina. “In the red hot local real estate business, it’s a little taboo to use ‘the B-word.’That’s mainly because everyone has painfully fresh memories of the last housing bubble, which burst with a near-nuclear detonation in 2008, leading to a worldwide recession with impacts that lingered for years. So pardon professionals like Mike Figura, an Asheville market analyst, who is dancing around the B-word in light of the first quarter real estate report. ‘It’s getting a little frothy out there,’ Figura said, noting that he opened his company in 2005. ‘When I started, it did feel similar to what’s going on now, in terms of bidding wars and setting new records each quarter.’”

“‘I don’t know if we’re in a situation where we’re creating bubbles, but we are seeing appreciation in selling prices of about 10-12 percent (a year), and I’m not sure if that’s sustainable,’ said Don Davies, whose firm RealSearch conducts market studies.”

From CBS Detroit in Michigan. “Home prices are on the rise for the seventh straight year with a new survey by Real Comp showing the median price of a home in metro Detroit has risen by $13,000 this year. When will it end? ‘The prices have gone straight up,’ said Jeff Glover is an agent at Keller Williams Real Estate. ‘You’ve got 2011, 12, 13, 14, 15, 16 … that’s now seven years of increases in home values. We’re at least a couple of years beyond the point where it normally starts shifting back the other way, normally every five, six years. We won’t find out how long this is going to last until six months after it’s already changed.’”

The Idaho Statesman. “Treasure Valley home values have steadily climbed since the Great Recession, and median prices have surpassed the peaks of the pre-recession housing bubble of the mid-2000s. ‘At the beginning of the year, it used to be one in a handful sold for over the asking price,’ said Mike Brown, owner of the 39-agent Mike Brown Group at Silvercreek Realty in Meridian. ‘Now, it’s three in a handful.’”

“Katrina Wehr, 2017 president for Boise Regional Realtors, said some buyers get caught up in the moment and make hasty bids they later regret, especially if they had previously lost out after offering on houses they had grown attached to. ‘You can get caught up, just like when you’re at an auction,’ Wehr said. ‘You get excited. You keep bidding, and then you have buyer’s remorse.’”

From North Fulton in Georgia. “For at least the last four years in Atlanta the job market has been on fire. People have been moving to Atlanta and homebuilders have had trouble keeping up. The story has been big, but the same – until now. Today, something very different is happening. Inventory levels started dropping again for houses priced under $400,000. And they have started rising for houses priced above $400,000. It is truly night and day.”

“Home builders may be starting to over build the luxury market. For the last several years, because of the increased number of jobs and influx of people into Atlanta, they have had no trouble building higher-end homes and selling them prior to putting a shovel in the ground. Not many builders have been building the sub-$400,000 market. A homebuilder friend of mine told me that he just finished a $450,000+ townhome community in what I consider a very desirable location. And he’s having trouble selling them.”

“If you are wondering why apartments are going up everywhere you look, go try to buy a house under $400,000 and you’ll know.”

The Lane Report in Kentucky. “The Greater Louisville Association of Realtors (GLAR) reported sales up 4.67 percent this year. ‘Our members are still working in a very strong sellers’ market for homes up to $400,000,’ said Allison Bartholomew, president of GLAR. ‘Between $400,000 to $600,000 the market becomes slightly more balanced and over $600,000 we’re in a buyers’ market in most areas due to the influx of new listings.’”

From Mansion Global on New York. “The cost of urban luxury has just gone down. A 4,254-square-foot corner duplex at the Seville has lopped about 40% off of its original asking price of $11.25 million. The six-bedroom, four-and-a-half bathroom Upper East Side apartment is now listed at $6.75 million. Listing agent Thomas Di Domenico attributes the new price to several factors, including a rise in interest rates and the shift in recent years from a seller’s market to a buyer’s market in Manhattan.”

“Mr. Di Domenico also says the property wasn’t marketed correctly when it was first listed at the much higher price in 2014. He and his team have completely restaged the space for buyers who increasingly shop online for real estate. ‘The visuals have to be strong,’ he said. ‘And the property has to match up.’”

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Comment by Senior Housing Analyst
2017-04-20 09:15:34

Boulder, CO Housing Prices Crater 11% YoY


Comment by Ben Jones
2017-04-20 09:16:41

‘At the beginning of the year, it used to be one in a handful sold for over the asking price…Now, it’s three in a handful’

Someone in that Idaho article mentions sellers are getting greedy. And why not? No one is going to put a stop to it. It’s pedal to the metal, even in Detroit where there’s a shortage, dang it! The GSE’s just lowered their lending standards - again.

Comment by PitchforkPurveyor
2017-04-20 10:16:55

What’s weird this time around is that many of the far flung areas outside the big cities aren’t even approaching peak bubble pricing, yet the cities have surpassed it.

Comment by Ben Jones
2017-04-20 10:31:11

‘The boom many of us never thought would return, to the surprise of many, has returned’

‘Just six years ago, in 2011, a recession lingered and the construction industry was having another soft year. There were a few dozen housing starts in Whitefish — most paid for by Canadians. In Kalispell, the planning director was lamenting a sluggish residential market impacted by foreclosures and vacant homes. On the commercial side, things weren’t much better.’

‘Sizing up the state of the industry, a local builder said, “We’re never going to get a boom again. But we’re still not where I think normal would be.”

‘At the time, few could disagree with him. It seemed large slabs of asphalt on the north side of Kalispell would remain vacant forever. Previously proposed subdivisions would remain fields of grass.’

‘Even when the market began to turn in 2014, the remaining local contractors were leery. By then, building in both the residential and commercial sectors had picked up significantly. But cautious optimism was coupled with a question: Could it last?’

‘Three years later, it has, so far.’

‘Contractors who were humbled by an economic downturn are now scrambling for employees as they try to keep pace. Long-vacant lots and fields are now construction zones.’

‘Just six years ago, the county’s jobless rate was well above 10 percent, and we were wondering when we were going to get back to normal. Instead, since then, another boom has transformed the valley. And, so far, there is no end in sight.’

A comment:

‘Under the supply side economic system, boom and bust is the only possible way our economy can operate. And the booms and busts must get bigger every time. Followed by some entity taking the huge debt these cycles create, last time our federal reserve went trillions of dollars in debt bailing out the perps and ignoring the victims.’

‘Speculation suggests that there is one more entity capeable of taking on the massive debt of the bubble we are building right now, the International monitary fund…..after the next bust, they will also take on the huge debt and save the perpetrators while ignoring the victims.’

‘After that there will be no way to recover from the next bust.’

Comment by Carl Morris
2017-04-20 10:38:41

‘After that there will be no way to recover from the next bust.’

What limits the Federal Reserve to only doing it once?

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Comment by PitchforkPurveyor
2017-04-20 10:59:51

With an unlimited, audit-free balance sheet, I think the Federal Reserve thinks they can carry the country’s entire economy. Why not just open the discount window for small businesses? Why can’t the Fed just buy obsolete inventory at full price from struggling businesses? Why not a discount window for homeowners? This free money system is just perfect, right?

Comment by Carl Morris
2017-04-20 11:38:18

Well of course the little people carry it. But as long as they are willing to do all the heavy lifting for small pieces of paper, no reason the important people can’t take care of managing all the valuable stuff for them.

Comment by 2banana
2017-04-20 09:26:34

It’s not about the price.

All about the visuals…


“Mr. Di Domenico also says the property wasn’t marketed correctly when it was first listed at the much higher price in 2014. He and his team have completely restaged the space for buyers who increasingly shop online for real estate. ‘The visuals have to be strong,’ he said. ‘And the property has to match up.’”

Comment by Justme
Comment by Taxpayers
2017-04-20 19:12:56

Who owns what
15% foreigner tax=dumb

Comment by Blue Skye
2017-04-20 19:54:20

It’s because they refuse to believe it’s a mania.

Comment by nolookpass13
2017-04-20 09:40:14

“Stories such as Munds’ have become commonplace across the Treasure Valley as buyers fight each other for scarce homes.

The bidding is fierce for homes priced up to around $350,000, because of record-low home inventories in both Ada and Canyon counties, said Katrina Wehr, 2017 president for Boise Regional Realtors. Wehr is also the managing broker for Keller WIlliams Realty Boise.”

In neighboring Canyon County, there are plenty of nice looking, less expensive homes.
20 miles away from Boise.

Comment by Ben Jones
2017-04-20 09:56:31

‘You’ve got 2011, 12, 13, 14, 15, 16 … that’s now seven years of increases in home values’

March 12, 2016

‘We learned nothing from the last financial crisis. The housing market is set to collapse, again, and a key culprit, again, is artificial demand created by government policies. For starters, mortgage-software firm Ellie Mae reports that the average FICO credit score of an approved home loan plunged to 719 in January (the latest month for which data is available) from 731 a year earlier, and well below 2011’s peak of 750.’

‘Meanwhile, home lenders are approving more debt-strapped borrowers. According to Ellie Mae, applicants approved for mortgages in January had an average household debt-to-income ratio of 39%, up from 2012’s annual average of 34%. Borrower debt loads have been creeping higher each year since 2012, when Ellie Mae first started tracking such data.’

‘A recent report by the Office of the Comptroller of the Currency, a federal agency that regulates the nation’s banks, warns that declines in mortgage underwriting standards are mirroring pre-crisis trends. “Underwriting standards eased at a significant number of banks for the three-year period from 2013 through 2015,” the report said. “This trend reflects broad trends similar to those experienced from 2005 through 2007, before the most recent financial crisis.”

‘Not since 2006, it noted, have lenders taken on so much credit risk, and it says the hazard will continue to grow this year: “Examiners expect the level of credit risk to increase over the next 12 months.”

‘A large chunk of the risk is coming from first-time home buyers with shaky credit and so-called “rebound” buyers who previously defaulted on home loans.’

‘This is especially true in hot spots like California, where subprime-mortgage lenders offering interest-only loans with no FICO-score requirements are cropping up from the ashes of Countrywide Financial, the bankrupt Calabasas, Calif.-based subprime giant.’

‘In another sign housing is overheating, home “flipping” is red hot again and hitting levels not seen since just prior to the mortgage meltdown. In fact, according to RealtyTrac, flipping in a dozen metro areas — including New York, Los Angeles, San Diego, Miami and Jacksonville, Fla. — exceeded peaks set in 2005.’

‘Today’s relaxation in mortgage-underwriting standards is largely a function of government housing-policy changes at FHA, Fannie Mae and Freddie Mac, which dominate the nation’s mortgage activity. As in the last easy-credit cycle, we are seeing “the promotion of policy to push firms to seek riskier products to promote growth,” Wells Fargo Chief Economist John Silvia said.’

‘Last year, Fannie Mae launched a new subprime-mortgage product called HomeReady that caters to recent immigrants with weak credit and limited income. The new loan program, which offers “income flexibility,” allows borrowers for the first time to bundle income from roommates and relatives to meet qualifications for income. They only have to put 3% down, and can use gifts from nonprofit groups to subsidize their down payments.’

“There is no limit on the number of non-borrower household members who can be present on a single transaction,” Fannie advises originators. And even then there is “documentation flexibility,” a frightening echo of last decade’s “no-doc loans.”

‘At least before the crisis, your income had to be your own. But now, as a renter, you can get a conventional home loan backed by Fannie by claiming other people’s income. All you have to do in exchange is take a four-hour online course on the responsibilities of homeownership.’

‘You don’t have to show personal financial independence. You can be maxed out on credit cards and even live in government-subsidized housing. Just as long as you round up enough income-earners and pool ­finances to help meet a debt-to-income ratio of up to 50%.’

‘And you don’t need good credit.’

‘Under HomeReady, you can even qualify for a “cash-out refinance” of your mortgage, a type of loan that led to over-leveraging and a wave of defaults during the mortgage crisis. Why would Fannie offer the same kinds of poorly underwritten loans that forced it into bankruptcy? Because HomeReady aligns “with our housing goals” set by Mel Watt, it says in its Home­Ready literature.’

‘Watt, who as a congressman once demanded Freddie Mac back loans for welfare recipients in his North Carolina district, has instructed Fannie and Freddie to come up with “alternative credit-scoring models” to FICO and approve more home buyers. “We have the pedal to the metal” on adopting a new model, Watt said.’

Comment by Ben Jones
2017-04-20 10:00:11

A graphic from the link above:

Credit scores drop while prices rise.

It’s been drip, drip ever since too.

Comment by snake charmer
2017-04-20 10:28:45

We learned nothing in part because our debauched leadership encouraged us to forget, or to re-conceptualize what happened so that responsible people and entities weren’t blamed.

If we couldn’t shake this economic paradigm after 2008, we’ll never shake it voluntarily.

And when it all falls apart, a scapegoat will be needed, badly. By people like Mel Watt, among others.

Comment by Ben Jones
2017-04-20 10:35:51

When Greenspan saw it was a bubble, he popped it. We’ve got no such restraint now. Look at the posters here: many see no limit to how high house prices can go. No negatives. Just trot out the old “not enough supply” and we’re good to go. Then you end up like Manhattan and it’s “Oh s^&*!”

Comment by oxide
2017-04-20 17:59:35

Great article Ben!

subprime-mortgage lenders offering interest-only loans with no FICO-score requirements are cropping up from the ashes of Countrywide Financial

These loans probably ask for sky-high down payments. If we go back to I/O low-Fico with zero down, then Lizzie bar the door.

promotion of policy to push firms to seek riskier products to promote growth,

Translation: Diversity.

Comment by Race Bannon
2017-04-20 19:15:23

Hey Donk….

“They only have to put 3% down, and can use gifts from nonprofit groups to subsidize their down payments.’”

That’s called subprime.

Comment by oxide
2017-04-21 09:00:14

Those aren’t the same loans, HA. The low-FICO I/Os are being offered by Countrywide. The HomeReady low down-payment loans are being offered by Fannie Mae.

I’m still not seeing loans which hit the trifecta: low FICO, low money down, and I/O low monthly nut. In the 2004-2008 bubble you needed all three to blow everything up.

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Comment by Race Bannon
2017-04-21 09:44:18

They’re out there everywhere.

It blew up with or without them anyways. It’s about the inflated price Donk.

Comment by Albuquerquedan
2017-04-21 06:21:32

“Translation: Diversity”

Yes, that is the stated defense of the policy. However, I think that the .01% know that putting people into homes they cannot afford is not good for the people regardless of their race. The .01% just want to make money and when it goes south hide behind the myth that they did it for a good reason.

Comment by Taxpayers
2017-04-20 19:16:08

Wow,smelly Mel watt will be hunted down like hoenekker

Comment by Carl Morris
2017-04-20 10:02:03

Saw a panel interview this morning with Kunstler (first learned about him here) and a few other people talking about their usual pet topics…oil, happy motoring, etc..

A topic was mentioned that I hadn’t heard or thought about before. Basically that diesel and jet fuel make the world go around and gasoline is just a byproduct. But in order to subsidize the good stuff for TPTB the masses had to be convinced and conditioned pay a lot of their expendable income for gasoline. The implication is that was the reason that automobile infrastructure was always given preference over good mass transit, and pop culture was encouraged to worship the car.

Seems a little tinfoil-ish, but it is intriguing to me that gasoline might be manipulated mostly for the purposes of making sure plenty of diesel and kerosene get produced at subsidized prices. Thoughts?

Comment by Blue Skye
2017-04-20 10:58:55

It has been a while since I was a refinery engineer, but this wasn’t even remotely true back then. The refinery can produce whatever split they need to provided they predicted the mix sort of accurately years in advance.

Gasoline is a more profitable product in the refinery because in the USA it is sold by the gallon rather than by weight. Diesel, jet and heating oil are higher density.

Comment by palmetto
2017-04-20 11:59:12

“It has been a while since I was a refinery engineer, but this wasn’t even remotely true back then”

Thank you. Kuntslur is primarily a fiction writer, it’s what he does best. He has now become a “social critic, public speaker, and blogger.” https://en.wikipedia.org/wiki/James_Howard_Kunstler.

Whenever I click on a ZH link and find out it’s a piece by Kuntslur, I hit the back button fast. After reading several of his screeds, I decided he’s nothing but a carping, bitter gadfly, who likes to point his finger at phenomena and make fun of it all, while sounding oh, so wise and witty. Screw him. He should just stick to fiction, some of which is said to be actually halfway decent.

These guys are a dime a dozen these days and I feel much better when I don’t read or listen to their crap.

Comment by snake charmer
2017-04-21 07:23:55

I’m on the other side of the fence there Palmy. It was his book “The Long Emergency” that influenced my entire thinking when it came out. That and “The Geography of Nowhere” represent his best work, although I enjoy his fiction too. Like others who believe our current way of life has no future, Kunstler’s been made to look silly by central bankers — I think he predicts a Dow crash every year, to the point where he even jokes about it now. And he does use his weekly blog posts to try out arcane words, which some may appreciate and others not.

I went to see him speak about 10 years ago, by crashing an urban planning function in Orlando where he was presenting. Very entertaining and he signed my book.

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Comment by Albuquerquedan
2017-04-20 14:06:22

Within limits, for years lighter crudes have carried a higher price just because you can produce more gasoline from them.

Comment by Albuquerquedan
2017-04-20 14:17:33

From Wikipedia which does an excellent job of explaining within a few paragraphs:

One of the most important factors affecting the crack spread is the relative proportion of various petroleum products produced by a refinery. Refineries produce many products from crude oil, including gasoline, kerosene, diesel, heating oil, aviation fuel, asphalt and others. To some degree, the proportion of each product produced can be varied in order to suit the demands of the local market. Regional differences in the demand for each refined product depend upon the relative demand for fuel for heating, cooking or transportation purposes. Within a region, there can also be seasonal differences in demand for heating fuel versus transportation fuel.

The mix of refined products is also affected by the particular blend of crude oil feedstock processed by a refinery, and by the capabilities of the refinery. Heavier crude oils contain a higher proportion of heavy hydrocarbons composed of longer carbon chains. As a result, heavy crude oil is more difficult to refine into lighter products such as gasoline. A refinery using less sophisticated processes will be constrained in its ability to optimize its mix of refined products when processing heavy oil.

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Comment by Blue Skye
2017-04-21 06:25:24

Unfortunately Dan, you’ll have to come up with another idea on why a lighter crude could command a higher price. Whoever wrote the Wiki piece has led you astray.

Comment by Albuquerquedan
2017-04-21 06:48:49

It is simple supply and demand, the internal combustion engine used by Ford etc. ran best on gasoline. Yes, diesel may be more useful but the greatest demand was for gasoline and you could only extract so much gasoline out of a barrel of oil, you would have some lighter products and some heavier products produced as almost a by-product of your desire to produce gasoline. Europe built its vehicle fleet around diesel but now is living with greater pollution. An irony there since at least one of the reasons for it was to reduce “greenhouse” emissions, it traded emitting a beneficial gas for real pollution. C’est la vie.

Comment by Albuquerquedan
2017-04-21 06:58:04
Comment by Blue Skye
2017-04-21 07:46:14

When a person is misinformed and insists on schooling others, is it fair to say that he knows less than nothing?

Comment by Albuquerquedan
2017-04-21 07:59:40

I see nothing in your posts that shows you know what you are talking about. You can say that WikiLeaks is wrong, you can claim that hundred years of history did not happen but all you are posting is your claim that you were a petroleum engineer and you know better but you have not refuted anything. As an attorney, I deal with a lot of expert witnesses on many subjects and I know when they would be effective before a jury, you are not one that would be effective.

Comment by Albuquerquedan
2017-04-21 08:05:28

Just one more article that support everything I am saying and nothing you are saying:


Comment by Race Bannon
2017-04-21 08:45:44

” you’ll have to come up with another idea on why a lighter crude could command a higher price. Whoever wrote the Wiki piece has led you astray.”

DebtDonkeys prefer to pay more for less. Why should BTU’s be any different?

Comment by Blue Skye
2017-04-21 08:59:37

The inquisitive can learn a lot, the dismissive not so much. I have an intimate knowledge of high severity GOfining and a sufficient familiarity with Reforming and CatCracking unit operations to explain to you why straight cut distillation has not been the limiting factor in refinery product mix for probably as long as you have been alive. I wouldn’t be your expert witness for nothing, much less in exchange for insults.

I also could explain why light crude can command a higher price than heavier crude. Must be hard to find that in 20 seconds on Wiki.

Comment by Albuquerquedan
2017-04-21 09:07:17

Still waiting for something to refute the arguments.

Comment by Blue Skye
2017-04-21 09:58:45

Arguments? I believe you can point out that a thing is foolish or false but you really can’t share insight with the willfully ignorant. I gave you a nudge in the right direction Dan and you’re not interested. This conversation probably has everyone bored to tears, like every other time.

Comment by Gibbon1
2017-04-21 01:17:50

Everything you said about gasoline vs diesel is true to the first order. Petroleum refining long ago went from simple distillation to complex thermal/chemical processing. The was a Soviet spy in the 50’s that earned a medal for stealing US refining technology. Kinda tells you how long that has been a thing.

Personal thought Part of what drive the highway infrastructure was two things. Roads increase the value of the land alongside them. Rail tends to increase the value of land near the stops[1]. You can see why land owners would approve of roads vs rail. The second is pure preference, the wealthy and powerful liked driving or being driven in automobiles on roads. Less so riding trains.

[1] Not to mention the feeling people had that rail companies were trying to drink their milkshake (Key supplier demands a cut of your profit instead of a fair price).

Comment by Zhang Fei
2017-04-21 19:59:23

Personal thought Part of what drive the highway infrastructure was two things. Roads increase the value of the land alongside them. Rail tends to increase the value of land near the stops[1]. You can see why land owners would approve of roads vs rail. The second is pure preference, the wealthy and powerful liked driving or being driven in automobiles on roads. Less so riding trains.

My impression is that people like their personal space. Trains not only don’t allow for that - they force you into a confined space with noisy and occasionally smelly strangers.

Then there’s the question of affordability. Mass transit can’t go everywhere because it’s expensive to build and maintain - bus and subway lines in even densely-populated New York City, where Manhattan has 70K people per sq mile and Brooklyn and Queens have 35K, require large subsidies. Google “The MTA loses six billion dollars a year and nobody cares” for an article detailing why government-owned and -operated systems also entail additional costs for political reasons. Bottom line is that the buying a home in those areas costs much more than elsewhere. That is why people move out of areas covered by mass transit. Because prices in those areas are sky-high, and they can get more space and a nicer living environment (i.e. have a garden, drive to work and so on) for less money in the burbs.

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Comment by oxide
2017-04-21 05:26:40

Total BS. How could the aircraft industry be the driver of the automobile industry? Air travel didn’t catch on for the masses until 30-40 years *after* the car did.

And no on needed to “convince” people to love their cars, believe me. If you don’t have a car, you are always running for the bus or trolley, your commute takes twice as long as costs twice as much, you’re stuck living like a sardine so you can be close to the office, and you can’t stop anywhere on the way home, for groceries or kids or whatever. It’s not hard to conduct a thought experiment and realize how true this is. I know it first hand because I started driving very late.

And that’s just modern times. Now imagine how convenient a car was compared to keeping a horse.

Comment by Albuquerquedan
2017-04-21 07:02:33

I agree with you 100% Oxide. It is just an accident of history not a conspiracy why gasoline has usually been priced higher that diesel fuel. Although that did change the last ten years when diesel in this country has been priced higher. However, that too has been supply in demand. Asia just required a lot more diesel for industrial uses, now that China is producing more and more personal automobiles that is changing again.

Comment by Albuquerquedan
2017-04-21 08:40:32

Oxide, even today the most technologically advanced refinery will produce all the products and cannot help but produce these products. Contrary to the alleged petroleum engineer’s assertion, a refinery cannot produce all diesel fuel or all gasoline, it can tweak its production to produce a little more or a little less of each but that is it. Thus, demand for each product is important for refineries and they will some times have to sell one product at a loss to produce another product. Up until around ten years ago, it was gasoline that was one of the most profitable to produce due to high passenger vehicle demand for the product, it just cannot be disputed and the EIA would agree with everything I have said:


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Comment by oxide
2017-04-21 09:22:19

I doubt that a refinery could turn a barrel of crude oil into 100% kerosene, but surely they can do better than “tweaking” a little away from the original distillable composition.

Comment by Albuquerquedan
2017-04-21 10:00:40

Yes, they have made a lot of advances but it does not change the fact, the gasoline has driven the oil markets since almost the beginning and it due to it being the preferred fuel for the automobile. No conspiracy to sell the consumers a “junk fuel” it is still the best fuel for an automobile even with advances in diesel and electric. Someday that will probably change but not now.

Comment by somedewd
2017-04-20 10:10:09

“‘I don’t know if we’re in a situation where we’re creating bubbles, but we are seeing appreciation in selling prices of about 10-12 percent (a year), and I’m not sure if that’s sustainable,’ said Don Davies, whose firm RealSearch conducts market studies.”

Stop pussyfooting; it’s a bubble.

‘Between $400,000 to $600,000 the market becomes slightly more balanced and over $600,000 we’re in a buyers’ market in most areas due to the influx of new listings.’”

Charlotte is more than frothy. Tracking one swanky school district, new listings >$1million are up over 30% year over year. The last 3 years there appears to be a very strong market up to $1.25 million, which is ridiculous (thanks BOA, WF). Quite a few of these newly listed homes were purchased within the last 5 years at 50-75% of their current list price. What remains to be seen is 1) successful sales, 2) true ratio of close/list, and 3) if listings crash into the summer as greed simply moved listings early in the year.

I enjoy when someone drops the “better get in now be priced out forever” because my response of “you mean like in 2007?” brings a quick frowny face. No one likes a party pooper.

Comment by Ben Jones
2017-04-20 10:49:53

Nobody in the media blinks at 10 or 12%. But it wasn’t that way for hundreds of years, much less in an environment of such low inflation. What most don’t know is land prices all across the US double or tripled in about three years starting approximately in 2011. Hence the 400k shacks.

Comment by SW
2017-04-20 13:08:56

400k shacks in Kentucky. Seems a bit high.

Comment by oxide
2017-04-21 05:43:51

Louisville, KY:

Houses for sale by agent: 982. Foreclosures for sale 47. Pre-Foreclosure: 1347. 272 houses for sale under $100K. They seem to be concentrated in a bad hood.

Meanwhile on the outskirts of town, there are fun listings like this. 3/1 998 sq ft, $48K:


“REO Occupied - the seller does not represent or guarantee occupancy status. NO VIEWINGS of this property. Please DO NOT DISTURB the occupant. “As is” cash only sale with no contingencies or inspections. Buyer will be responsible for obtaining possession of the property upon closing. ”

What the heck lives in a place like this? Militia guy with 10000 rounds waiting for the zombies? Family of bears?

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Comment by PitchforkPurveyor
2017-04-20 14:04:07

Thing is, houses are selling well above replacement value right now, at least in my area. You could buy a piece of land and build much cheaper than buying something complete. It makes no sense.

Comment by Ben Jones
2017-04-20 14:06:37

‘The median home price in Fresno last year hit $240,000. In 2006, it was $289,000. Home price appreciation spiked by nearly 39 percent in 2013 leading many to believe another housing bubble was ahead. But the annual price appreciation slowed to about 7 and 8 percent since 2015 which is “considered healthy and long-term sustainable,” said Patrick Prince, the 2016 board president of the Fresno Association of Realtors.’

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Comment by PitchforkPurveyor
2017-04-20 14:25:13

All of this stuff is insane. Somebody mentioned coming up with a new model for valuing houses which doesn’t rely upon “comps,” but rather values them based upon local wages or something. Was an interesting thought. A model which allows a single sale to increase the value of every single house in the area is impossibly stupid.

On a side note: In my area, the loggers are out in full force buying up 5, 10, 20 acre parcels and clearing them, then putting them back on the market for a hair less than they paid, oftentimes as stumpland. I’m not even sure they’re adhering to state and county laws.

Comment by Rental Watch
2017-04-21 09:29:53

NOTHING is sustainable long term except a rate of increase in line with inflation.

$289k in 2006 dollars is equal to approximately $354k today.

Prices may be going up at a stupidly non-sustainable rate today, but at a median price of $240k, we have a ways to go before we hit the mind-boggling insanity of 2006.

All that said, I think you would be foolish to think we are going to get anywhere close to $354k median in Fresno before we have a correction.

Comment by Race Bannon
2017-04-21 09:41:18

Again…. Household income today is right where it was in 2000.

What inflation? You’re confusing inflation with rigged prices.

Comment by Rental Watch
2017-04-21 11:44:42


Nominally, incomes are higher.


Real incomes are roughly the same.

If you are going to claim incomes are the same (ie. adjust them for inflation), it only makes sense to also adjust home prices for inflation.

Comment by Race Bannon
2017-04-21 19:50:41

Income today 30% higher. Housing prices 300% higher.

See how that works?

Comment by oxide
2017-04-21 09:24:33

I always thought it was ridiculous to spend $1M on a house just to get into a good school district. If you make enough household income to afford $1M, then you can probably afford to buy a cheaper house, have one of the parents to quit his/her job, and school the kid at home. or send the kid to boarding school.

Comment by Carl Morris
2017-04-21 09:54:30

For people who obsess about such things, it’s not just the education. It’s the connections of being in the same school and neighborhood with other like-minded people. For the child as well as the parents. It’s a club and you CAN be in it if you ante up.

Comment by MightyMike
2017-04-21 10:08:30

A family could just rent something in the expensive neighborhood and save a bunch. I have to guess that most parents would not do well at home schooling their own kids.

Comment by Carl Morris
2017-04-21 10:56:39

A family could just rent something in the expensive neighborhood and save a bunch.

And miss out on all that free money that only owners get? As if.

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Comment by Rental Watch
2017-04-21 11:55:55

“A family could just rent something in the expensive neighborhood and save a bunch.”

That is easier said than done, and may be true as long as you can rent the same kind or property that you are able to own, AND have confidence that you won’t be displaced every 2 years, needing to find another place to live.

We were renting an OK home in an excellent school district (and could still be renting it today if we wanted–the owner never wanted to sell), but it was getting a bit cramped for our family. We wanted to live in something nicer.

We looked at trying to rent a bigger, nicer house. HOWEVER, all such homes that we saw were owned by people who wanted to come back within a year or two (they were living elsewhere for a year or two). So, we knew that we would likely need to move with some frequency, and not have a guarantee of many homes to choose from when we needed to move. And in this part of town, there are two excellent schools…but you might end up in one or the other depending on which home you could find to rent.

You might save some money (and I say might because given the rents where I live, I’m not so sure at the moment that there would be any savings), but you might pay quite a bit in terms of convenience and stability of schooling for your kids.

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Comment by Sean
2017-04-20 10:53:16

Lansdowne Resort sold to Hong Kong investor for $133M

Lansdowne Resort changed hands earlier this month in a quiet sale to a foreign investor.

Bethesda-based real estate investment trust LaSalle Hotel Properties announced in early April it sold the 296 newly renovated-room resort for $133 million.

A week later, Chicago-based real estate and investment management company JLL said it helped arrange the sale of Lansdowne Resort on LaSalle Hotel Properties’ behalf to Dejia LLC, “a first-time U.S. hotel investor.”

“Investors are paying more attention to assets in the Washington D.C. Metro area due to improving market fundamentals,” JLL Managing Director Robert Webster said in a prepared statement. “The size of this resort, along with the luxurious amenities it offers guests, presented a valuable opportunity to own an iconic property in a spectacular location.”

Lansdowne Resort’s Area Director of Marketing and Communications Sarah Crisafulli told the Times-Mirror Dejia LLC is a company owned by Hong Kong citizen Ci Zhonghua.

Crisafulli said the buyer came out to the resort multiple times and fell in love with it largely for its wellness-oriented amenities.

“Mr. Ci believes with the resort and the combination of our fitness facilities and our restaurants and everything that we do from a general leisure capability and activities that it’s really conducive for developing a wellness resort,” Crisafulli said.

As part of the sale, Crisafulli said lodging management company Destination Hotels won a contract to continue running the management and operations of the the resort, which it has done since 2012. Additionally, Troon Golf will stay on board to oversee the resort’s golf club.

The sale of the more than two decades old resort came after it embarked on a series of renovations last year in a bid to compete for larger and higher-end clients and tourists.

The resort’s Director of Sales Skip James told the Times-Mirror last year that the renovations would allow them to attract more national and higher paying accounts, not just from Loudoun, but from the northeast and along the East Coast.

The Lansdowne Resort sits on 476 acres overlooking the Potomac River and features multiple restaurants, 55,000 square feet of meeting space, 45 holes of golf, three tennis courts, five pools, a fitness center and a 12,000-square-foot spa.


Comment by Lurker
2017-04-20 11:00:53

“duplex at the Seville has lopped about 40% off of its original asking price of $11.25 million.”

If you had told NYC realtors in 2014 that by 2017 listings would have price cuts of 40% and more (think Time Warner penthouse last week with a 70% price cut), they would have assumed some kind of financial apocalypse had to happen first. Interesting that we’re getting these near-unthinkably huge percentage cuts, yet no cataclysmic, tanks-in-the-street economic event beforehand. This bubble didn’t even need a pin to prick it; it is collapsing under its own weight like we always knew it would.

Comment by Ben Jones
2017-04-20 12:14:42

Back then $100 million airboxes were a safe deposit box in the sky.

I do similar thought exercises. For instance, if you had told bond traders in the 80’s or even early 2000’s that trillion$ in bonds would be sold at a negative yield (by summer of 2016), they would have assumed there would be therm o-nuclear war.

Comment by Lurker
2017-04-20 14:02:01

That’s a great example. Which is why it’s funny when people today say yields can NEVER rise or return to normal. I’m not making a prediction one way or the other, but the above shows how quickly things can turn around dramatically, even without a major catalyst.

Comment by aNYCdj
2017-04-20 15:33:06

The apartment is a condominium currently owned by the Sanford Weill Family

Russian billionaire’s DAUGHTER, 22, bought New York’s most expensive apartment for $88m (but at least it is safe from his ex-wife)


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Comment by rms
2017-04-20 20:48:52

“In court papers, Mrs Rybolovleva, 43, has accused her husband of serial infidelity and could be set to get $3.5billion in the divorce.”

A heinous crime… serial infidelity. :)

Comment by Albuquerquedan
2017-04-21 06:25:00

A heinous crime… serial infidelity
Not to be confused with cereal infidelity which I practice many mornings.

Comment by Aqius
2017-04-21 07:26:32

cereal infidelity. it goes against the grain.

Comment by rms
2017-04-21 08:21:58

“cereal infidelity. it goes against the grain.”


Comment by megamike
2017-04-20 12:25:18

The Nightmare Scenario for Florida’s Coastal Homeowners
Demand and financing could collapse before the sea consumes a single house.
When Nancy Lee sold her house last summer in Aventura, halfway between Miami and Fort Lauderdale, it wasn’t because she was worried about sea-level rise, rising insurance costs, nuisance impacts or any of the other risks associated with climate change. Rather, she worried those risks would soon push other people to sell their homes, crashing the region’s property values. So she decided to pull the trigger

Comment by 2banana
2017-04-20 15:31:53

Al Gore predicted in 10 years that our children would never see snow, multiples of CAT5 hurricanes every year and most of Florida would be under water….15 years ago.

Comment by Blue Skye
2017-04-20 20:06:52

The water is rising here and we’re 600 ft above sea level!

Comment by SW
2017-04-20 13:11:41

We’re Unaffordable homes the price signal for MFH developers to go bananas?

“If you are wondering why apartments are going up everywhere you look, go try to buy a house under $400,000 and you’ll know.”

Comment by megamike
Comment by Mike
2017-04-20 19:37:10

[...] red-hot extreme bubble situation in St. Louis housing market [...]

…just correcting the doublespeak

Comment by JSandusky
2017-05-10 17:59:46

Everyone wants to live in St. Louis.

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Comment by Senior Housing Analyst
2017-04-20 15:23:46

Danville, CA Housing Prices Crater 5% YoY


Comment by Financial Moralizer
2017-04-20 15:28:52

Well, the Ontario politicians unveiled their big plan today. As expected, it looks a lot like what Vancouver is doing. A 15% foreign-buyer tax (they say only 5% of home sales are from non-residents in Toronto though), an empty-house tax, expanding rent control, encouraging more building, and a bunch of other stuff.


I guess the point is to stop these 30% annual price increases, but they don’t say what level of annual price increases they think is acceptable. Certainly they don’t want prices going down. If they only want 10% annual price increases, then make the laws dictate the prices of houses and raise them 10% every year. If you want me to wear 37 pieces of flair, then make the minimum 37 pieces of flair already.

Comment by 2banana
2017-04-20 16:42:09

As Ben pointed out yesterday…

The 15% foreign tax in Vancouver really didn’t do much to stop the insanity.

Comment by Financial Moralizer
2017-04-20 17:12:41

Yes. And who knows what the real number is for the percentage of foreign buyers, in either place. I read today, for Toronto they say it is something like 5% of the market. That doesn’t seem like a huge amount. If it is so low, then why the special tax?

My speculative guess for Vancouver — their tax just paused the market for a couple of months while the foreign buyers figured out a way to circumvent it. They are experts in laundering money, after all..

Even still, 15% isn’t that much of a deterrent, if you’re a wealthy Chinese buyer. I doubt it matters much to them.

Toronto government just wants more tax revenue. They are not serious about popping their bubble. That’s cool, good luck to them.

Comment by Ben Jones
2017-04-20 17:24:15

It’s complicated. It’s been well established prices started coming down in Vancouver in January 2016. That was months before the tax. IMO, it works like this: I can pay some crazy amount for a shack because I can sell it to a rich (insert Chinese/Californian, etc), so I’ll be OK and rake in some sweet equity. It doesn’t matter how much of it is true as long as a sufficient number of market participants believes it. Is Vancouver back into speculation? I don’t know, these UHS are freaking liars. Especially in Vancouver which is apparently over run with REIC dogs of every stripe. There is a lot of money laundering in RE there. And when these measures were first mentioned years ago it was called racist. Now it’s a national policy.

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Comment by Race Bannon
2017-04-20 17:40:58

And the entire thing falls apart when the crime is addressed. Not just Vancouver but everywhere in the US.

And yes…. these used house pimps are blatant unrepentant liars. One will blow the whistle on the rest to save his own skin as this thing comes apart.

Comment by Blue Skye
2017-04-20 20:21:44

I was up around Perth Ontario last weekend, a very nice town many hours from Toronto. Someone who watches that market told me that listings are off this spring by 50%. Prices are still up though. Realtors are using the shortage of inventory pitch. The economy isn’t doing so well.

Chinese are not a factor in that area at all.

Rising median/ falling sales illusion all over again?

Comment by Albuquerquedan
2017-04-21 06:29:07

Has anyone any stats on how much “equity” Canadians suck out of their homes each year? I wonder much it contributes to their GDP and thus how deep their recession will be when the house prices turn south.

Comment by Albuquerquedan
2017-04-21 06:51:40

A little dated and I am sure it has become exponentially worse as housing have increased exponentially in Canada the last few year but the numbers were staggering in 2015 when you consider Canada is a tenth of our economy:


Comment by Financial Moralizer
2017-04-21 07:08:21

It is one big cash orgy. We have discovered the fountain of youth, the perpetual motion machine, and infinite wealth creation. Marvel at the genius of man.

Comment by Albuquerquedan
2017-04-21 07:23:04

Just saw an article below the article I posted and it is current, it is amazing how Toronto could be so different in price appreciation from Montreal and in fact all of Quebec and be so close to each other. It looks like the Chinese do not want to speak French.


Comment by azdude
2017-04-20 17:07:59

what do u guys thing of those signs you see on the side of the road that say:

Real estate investor seeks apprentice

Comment by Ben Jones
2017-04-20 18:11:28

So that’s your sign.

Comment by Aqius
2017-04-20 21:22:33

to the yellow “We Buy Houses ANY Condition” telephone pole signs I would say they’ve obviously never seen my kids rooms.

Comment by phony scandals
2017-04-20 21:30:15

Signs 3 and 4 got me laughing.


Comment by phony scandals
2017-04-20 21:36:08

4 being HALFWAY INN :)

Comment by Carl Morris
2017-04-21 09:57:36

Real estate investor seeks apprentice

“Always two there are; no more, no less. A master and an apprentice.”

Comment by Senior Housing Analyst
2017-04-20 18:03:19

“Real Estate Agent Accused Of Stealing $41k From Orlando Employer, Cops Say”


Comment by Mike
2017-04-20 19:48:33

Margin debt at new record - $528B.
FOMO, greed, borrowing to invest in an overvalued stock market.
Seems flipping is not limited to housing…

Comment by azdude
2017-04-21 04:22:10

who kicked the short sellers in the nut S@CK this week? I told you last week it would happen.

Short sellers are totally being manipulated to keep this sh@t show of a market afloat. They are totally being set up and then fleeced.

Comment by Mr. Banker
2017-04-21 05:10:43

“Katrina Wehr, 2017 president for Boise Regional Realtors, said some buyers get caught up in the moment and make hasty bids they later regret, especially if they had previously lost out after offering on houses they had grown attached to. ‘You can get caught up, just like when you’re at an auction,’ Wehr said. ‘You get excited. You keep bidding, and then you have buyer’s remorse.’”

Dumb ‘em down, and profit. The dumbest of the dumbed down are the ones who get the most excited, the ones who keep on bidding, the ones who eventually land the house.

Taken far enough entire neighborhoods will be occupied - I was going to say “owned” but I did not want to stretch the delusion that far - will be occupied by the dumbest of the dumb.

And then what? After all of the dumbest of the dumbed-down are “all in”, then what?

Comment by Professor Bear
2017-04-21 05:15:10

‘You get excited. You keep bidding, and then you have buyer’s remorse.’

Try to avoid becoming the winner who was cursed.

Comment by Mr. Banker
2017-04-21 06:03:33

These dumbed-down highest bidders pump up prices which is interpreted by their fellow dumbed-down neighbors as “wealth” - wealth for them in the form of increased equity - and this (choke) wealth is something that can be tapped into (aka borrowed against) and, and, and SPENT, which is all good because our dumbed-down consumer based economy depends on spending and since earnings are not keeping up with spending borrowing has to fill the gap.

So it is all good until it isn’t.

Comment by Mr. Banker
2017-04-21 06:06:34

Earnings = wages. I meant to say wages but the term earnings somehow slipped in.

Comment by Professor Bear
2017-04-22 09:58:05

The silver lining for these equity extractors is that the next time a recession sends the economy belly up and their home equity wealth gains spiraling downwards, the Fed is certain to bail them out with another round of quantitative easing designed to steal interest income from savers and hand it over to high-risk gamblers who speculate in overpriced housing.

Comment by Albuquerquedan
2017-04-21 07:37:08

More of the same, increased house sales and talk about a shortage of houses:


Comment by phony scandals
2017-04-21 07:49:42

Definition of ’sup, dawg

’sup, dawg

what’s up bud of friend.

Sup dawg, how’s it going.


Comment by azdude
2017-04-21 08:10:59

short sellers keep getting hosed in this rigged market.

Comment by Financial Moralizer
2017-04-21 08:24:54

You called the bear trap a couple days ago. Nice job. Of course they also had to wheel out Mnuchin yesterday to reassure everyone that tax cuts might still happen this year. TPTB could only stand a couple of down days. BTFD forever.

Comment by Senior Housing Analyst
2017-04-21 08:51:01

Friday Harbor, WA Housing Prices Crater 6% YoY


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