Left High And Dry
A report from CBC News in Canada. “A record-breaking number of homes were listed for sale in the Hamilton area last month, according to new data from The Realtors Association of Hamilton-Burlington (RAHB). In a statement, RAHB CEO George O’Neill said that two months ago, realtors were talking about the low inventory of listings — yet now, they’re already talking about a record for new listings. In April, the provincial government announced measures to try to help cool Toronto’s extreme housing market growth, with an additional focus on the Greater Golden Horseshoe. He wonders if even just the talk of controls contributed to people deciding what to do. ‘Our members reported seeing a shift in the market even before the announcement,’ O’Neill said. ‘It’s possible that sellers read and heard that changes were coming and decided to act sooner rather than later.’”
The Canadian Press. “Home sales in the Greater Toronto Area plunged 20.3 per cent last month compared with a year ago, according to the latest data from the country’s largest real estate board, a sign that recent efforts to cool the searing market are having the desired effect. The average selling price for all properties in May was $863,910, up from $752,100 the same month last year, the Toronto Real Estate Board said. But that was down from $919,614 in April, the first month-over-month drop this year. The move came as listings rose 42.9 per cent from a year ago, when they were at a record low, according to the real estate board.”
“‘Certainly there are a lot of people sitting back right now wondering what’s happening with the new housing plan and kind of taking a breather just to see how it affects the market,’ said Brian Elder, a sales representative with Royal LePage Real Estate Services. ‘It definitely will pick up again. But to the degree it was before? I don’t know. I suspect it won’t get quite that heated.’”
The Edmonton Journal in Canada. “Growing supply and decreasing demand are helping create a buyer’s market for new homes in the Edmonton suburbs, show new figures from a real estate consulting firm. The number of ’spec’ homes built before they’re sold rose to 2,430 last winter from 2,156 in the summer of 2016, while sales dropped about 20 per cent to 1,263 over the same period, according to Intelligence House research.”
“That gave the city an oversupplied 2.3-year backlog of new homes, Intelligence House co-owner Alex Ruffini says. ‘Technically, if you have too much supply in the market, that tends to drive prices down or you see lots of promotions … Builders are more willing to give more discounts or give deals,’ he says. ‘(Having 2.3 years) is not tremendously oversupplied, but the power is on the demand side right now.’”
The Sydney Morning Herald in Australia. “Here’s a simple graph that tells an amazing story – the owners of Sydney’s housing don’t want to sell. The graph, by analyst Peter Wargent using SQM Research figures, effectively blows away much of the wishful thinking by wannabe Sydney buyers that prices are about to be significantly lower. Barring international calamity causing global financial markets to seize up, we would only get markedly higher interest rates if the economy was growing markedly faster and unemployment markedly lower. Mark that down when it happens, but no one would advise holding your breath.”
“As for the state government’s efforts to toss a few grand the way of first home buyers – it increases their buying power, increases demand when supply remains the key issue. Vendors will be pleased. SQM’s Christopher warns that prices are pushed around by relative movements – listings being up or down a bit can be felt – but the scale of the shortage of listings means the fundamentals of the market aren’t about to change enough to matter. Yes, Sydney housing is very expensive, but people who want to live here are prepared to pay it.”
From The Australian. “Singapore’s Banyan Tree has slashed the price of entry-level apartments in its Australian flagship development by more than $100,000, as stresses show in the Brisbane unit market. Prices of the ground floor eastern-facing apartments in the $150 million development have been cut from the original price of $900,000 to $795,000 in a bid to spur sales. Construction on the 76-apartment complex is expected to start midyear, about a year later than the initial timeline.”
“CBRE Brisbane managing director Paul Barratt said there was strong ‘investor caution’ that would lead to further price adjustments. ‘Buyers are cautious about their belief in capital gain so unless a project represents compelling value a lot of investors are in sit and watch mode, but they risk missing out on the best buying in many years,’ he said.”
The Daily Telegraph in Australia. “Desperate landlords in the Queensland capital are increasingly resorting to desperate measures to secure tenants, as the impacts of the city’s long-predicted apartment oversupply is finally being realised. Theresa Fitzgerald, principal of Theresa Fitzgerald Property Management, in the exclusive inner-northern riverside suburb of New Farm, said it was not uncommon to see apartments of a decade or so old sitting vacant for six weeks.”
“‘Some of them just cannot accept it. If the average rent they were getting was $520 a week and they get an offer of $490, some just can’t accept it,’ Ms Fitzgerald said. ‘They were getting good money a year ago but rather than accepting less, it sits empty for weeks.’”
From Smart Company on Australia. “Hundreds of creditors are owed $12 million following the appointment of liquidators to Brisbane-based apartment builder CMF Projects, with real estate analysts warning more SMEs could be caught up in future troubles that are looming in the property sector. Managing director at Market Economics Stephen Koukoulas tells SmartCompany there’s already a ‘time risk’ building apartments due to approval processes, and with negative stories and developments starting to emerge about the apartment sector in cities like Melbourne and Brisbane, it’s likely SME suppliers will be left ‘high and dry.’”
“The prospect of more tough times for apartment builders across the country will have a broader macroeconomic impact, says Koukoulas. ‘But there are going to eventually be people left high and dry, and you get that downward spiral occurring. You get this cascading down the chain,’ he says.”
“While some have clearly ‘made a fortune’ from the apartment boom, sub-contractors and suppliers who might be caught up in the slowdown are largely powerless to the prevent the possibility they might lose jobs or payments, Koukolas believes. ‘That’s their bad luck, really… just bad luck,’ he says.”
I don’t have a subscription to this Globe and Mail report, but here’s the lead in:
‘With a new home and a baby on the way, this summer was meant to be joyful for Pickering teacher A.J. Smith. Instead, he’s found himself squeezed by the Greater Toronto Area’s housing-market slowdown, watching tens of thousands of dollars evaporate from the value of a house he needs to sell by Aug. 3. Otherwise he’s facing the frightening prospect of having to carry two mortgages to the tune of $6,000 a month.’
Good. The housing bubble would never have reached such insane proportions without fools like Mr. Smith buying into the bubble. Now let him become a cautionary tale for what happens to bubbleonians. Maybe somebody more prudent can pick up his house for a sane price at the foreclosure auction.
“Now let him become a cautionary tale for what happens to bubbleonians.”
Yeah, right. You write as if you believe in the existence of a learning curve.
‘watching tens of thousands of dollars evaporate from the value of a house he needs to sell’
This is happening in the US, a re-post of something from yesterday:
“Comment by Ben Jones
I just got an email about this listing:
13210 Haney Pl, Los Angeles, CA 90049
5 beds 9 baths 6,863 sqft
For Sale
$6,499,999
Price cut: -$500,000 (6/3)
Zestimate®: $6,641,224
https://www.zillow.com/homedetails/13210-Haney-Pl-Los-Angeles-CA-90049/20538637_zpid/
06/03/17 Price change $6,499,999-7.1%
05/23/17 Back on market $6,999,999
05/10/17 Pending sale $6,999,999
03/18/17 Price change $6,999,999-5.4%
03/07/17 Listed for sale $7,399,000+12.1%
05/13/16 Sold $6,600,000-3.8%
04/18/16 Pending sale $6,859,000
03/16/16 Listed for sale $6,859,000+123%
08/04/15 Sold $3,079,000-2.5%
06/02/15 Pending sale $3,159,000
05/07/15 Price change $3,159,000-8.4%
03/19/15 Listed for sale $3,450,000+1.5%
07/30/13 Sold $3,400,000+61,383%
09/10/02 Sold $5,530
The email says,
“Price Reduced $500k!”
“Seller Bought Another”
http://thehousingbubbleblog.com/?p=10112#comment-2616854
Some FB is popping Xanax by the handful.
On this:
03/07/17 Listed for sale $7,399,000+12.1%
05/13/16 Sold $6,600,000-3.8%
The email says it’s now staged. What are the chances these people moved in and moved out within a year? I’d bet they are flippers.
‘05/13/16 Sold $6,600,000-3.8%
04/18/16 Pending sale $6,859,000
03/16/16 Listed for sale $6,859,000+123%
08/04/15 Sold $3,079,000-2.5%’
It doubles in a year? OK, so maybe a rehab, but still looks kinda fraudy to me.
How does a rehab add $3 million to a $3 million property?
Does it come complete with gold bar floors?
Live-in butler and live-in toilet scrubber for life?
Daily, scabbies-free sex with Kathy Griffin?
Damn you MacBeth - some of us read this blog when we’re eating!
Used house sales by Dutch auction are the new black.
Why does he have to sell? Sounds like he got stucco…real stucco. There’s gonna be a lot of puckering in Pickering.
I just came across this article dated 24 Feb 2017:
‘A state policy on housing affordability will be announced in the “very near future”, says new Planning Minister Anthony Roberts, who has given a robust defence of the strength of Sydney’s housing market and the need for those who do not own property to get their foot in the door.’
“This is about fairness, and this is about enabling people to get into the Sydney housing market,” said Mr Roberts. “Once you are in the Sydney housing market you are pretty well set then for the rest of your life,” said Mr Roberts.’
‘The minister also stressed that he was focused on providing ways to allow people to enter the property market as buyers, so they could benefit from higher prices.’
“We are not dealing with a bubble in the Sydney market,” he said. “There is no bubble here. There might be a slowing down of growth. But the way the population is moving, and the population trending, which is upwards, you will find house prices will continue to rise. What I want to do is to get people into the market place and then they can be beneficiaries of the increase in the value of their property.”
‘Under Mirvac’s “Right Start” package for its Olympic Park development, up to 60 apartments priced from $575,000 to $749,000 will first be offered to home buyers who qualify for first home owner concessions.’
‘First home buyers will also be able to pay a 5 per cent deposit on exchange, before paying the remaining 5 per cent deposit on settlement about two years later.’
‘Once you are in the Sydney housing market you are pretty well set then for the rest of your life’
But seeing bubbles is soooo hard if not impossible.
“‘Once you are in the Sydney housing market you are pretty well set then for the rest of your life’”
Bahahahahahahahaha … so am I.
Once you are in the Sydney housing market you are pretty well set then for the rest of your life
Dang…wish I was in the Sydney housing market.
Nice multiple posts yesterday on the restaurant business (or the lack there of) Ben…
lamer el culo
Those post by Ben likely took a hour or two…I appreciate what the time that Ben takes making bringing lots of information to the blog go so Go f– yourself Phony..
Now now, no need to get testy on a Sunday morning. As I was putting this together I saw yet another article about a retail downturn in Australia. My point is this may be just exactly what it should be seen for: an early sign of recession. As we see in the Globe and Mail link, these things can turn fast.
From the first link:
‘RAHB CEO George O’Neill said that two months ago, realtors were talking about the low inventory of listings — yet now, they’re already talking about a record for new listings’
this may be just exactly what it should be seen for: an early sign of recession ??
I agree…What could be more impacted by disposable income than the resturaunt business…Even more so than retail…
Around here its a bit hit & miss…Some places are very busy while others languish…If lots of people were flush then I suspect you would see everyone being busy…Thats not the case…
“two months ago, realtors were talking about the low inventory of listings — yet now, they’re already talking about a record for new listings”
That’s an eye catcher. How did this happen without building hundreds of thousands of new houses? It seems unpossible based on what Rental Watch says.
https://www.google.com/amp/s/www.thrillist.com/amphtml/eat/nation/american-restaurant-industry-bubble-burst
I read this piece about restaurant bubble in the US a while back. Very insightful.
“I agree…”
Now there’s a shocker.
Internet punk
My lunch money is on you Dave!
That Dawg won’t climb.
The controlled media, as usual, assures us that all is well and there will be no bubble implosion.
http://www.macleans.ca/economy/economicanalysis/a-national-real-estate-crash-isnt-in-the-cards/
How many of these “no bubble implosion” articles have appeared in the past month? A few hundred?
“The controlled media…”
I don’t see much about Canadian Housing Debt in the U.S. media other than the blogs or industry specific outlets.
Oh dear…heat map shows spreading bubble trouble in Toronto.
http://www.huffingtonpost.ca/2017/06/08/toronto-housing-bubble_n_17003822.html
Climate change is coming to Canada’s housing market with a nuclear winter on the way.
Looks like the last of the lemmings have plunged into the housing bubble and now the psychology is suddenly shifted as buyers balk at signing on the dotted line for overpriced shacks. Has the Greater Fool pipeline suddenly run dry?
Be afraid, FBs. Very very afraid.
http://wolfstreet.com/2017/06/11/americans-suddenly-sour-on-the-housing-market/
‘Minneapolis Fed President Neel Kashkari was the latest Fed official to claim that “spotting bubbles is hard,” that the Fed cannot see them, and that if it could see them, it shouldn’t do anything to stop them.’
Sure. Spotting bubbles is hard when your oligarch patrons are benefiting from them. Otherwise the evidence of an iceberg ahead is proliferating and highly visible.
http://wolfstreet.com/2017/05/30/u-s-house-price-crash-predictions-federal-reserve-cannot-see-bubbles/
Bubbles are God’s Gift. Suck ‘em in, shake ‘em out.
Suck ‘em in with rising prices so as to get schmucks to sign dotted lines agreeing to terms and conditions that in normal times these schmucks would never agree to.
Shake ‘em out when prices drop and the only tangible thing that these schmucks end up holding is lots and lots of debt that they will for years and years struggle to pay back.
God’s Gift, God’s Plan.
Rinse, wash, repeat. Works like a charm every 8 years or so. And while the lemmings yell to high heaven about Wall Street bailouts, 95% of them vote for the self-same Wall Street water carriers who enabled the bailouts.
It’s hard feeling sorry for “victims” who are complicit in their own financial destruction.
I especially enjoy the “Save the Homeowners” movements that spring up that result in prolonging the suffering of many thousands of FBs and at the same time save the banks - as is their intent.
‘Sure. Spotting bubbles is hard when your oligarch patrons are benefiting from them. Otherwise the evidence of an iceberg ahead is proliferating and highly visible.’
I sense a bubble simply because even I am thinking that house prices will keep going up, just like stocks and bitcoin. A thing that bothers me the most is that everything is based on the last round of greater fools buying into the mania. As price go higher, how many savvy bargain hunters are coming out of the woodwork to acquire real estate?
Bill must be kicking himself really hard. Bitcoin over $3,000. Was $230 a year ago. To the moon!
Bubbles are easy to describe: When speculative demand (demand to purchase an asset for resale later) is the driving force in the market, as opposed to consumption demand (desire to use the asset).
Of course, the demand can be a hybrid as well.
The difficulty of course is separating the two. And because that’s difficult from an office while poring over spreadsheets, theorists pretend there is no difference, and thus “bubbles are impossible to spot.”
Oh my…
It’s seller’s market, suddenly.
So a Bad Time to buy.
There’s never been a better time to buy… always.
In the end…
There will be cities that are fiscally sound with affordable property taxes and a stable economy/population.
And there will be cities that are bankrupt with insane property taxes and thousands upon thousands of abandoned homes.
And as a FYI - what a scam on homeowners….
“DROPs, allow employees eligible to retire to continue working but accumulate benefits as if they are retired. When they decide to retire they get the money plus interest on top of the benefits they would otherwise get.”
+++++
Texas’s tough pension laws may not apply in other states
Claudia Lauer - Associated Press - June 10, 2017
DALLAS (AP) — One by one, Pete Bailey, Clint Conway, Julian Bernal and a half dozen other retired police officers and firefighters stood up in December and told the Dallas Police and Fire Pension Board that they had been counting on their deferred retirement accounts to supplement their pensions. They had medical bills. They had mortgages. They had college tuition to pay. And they had played by the rules of the fund.
Now they faced severe restrictions on fund payments after a number of officers retired and fears spread that a generous provision allowing retiring workers to take a large lump sum payment would be stopped. In about four months last year, more than $500 million — or about 20 percent of the fund — was withdrawn, pushing it within a decade of insolvency. Dallas police staffing fell below 3,000 officers even though there is funding for 3,600 positions.
The Dallas pension fund is a worst case example. But experts say the crisis was no surprise amid a national malaise of public pension funds. The unfunded liability — amount that pension fund assets fall short of commitments to workers — surpasses $1 trillion, according to several recent studies.
The tough cure applied by Texas may not be possible in many other states. Only Texas and Indiana can adjust past and future benefits for current employees, according to the Boston research group. The state constitutions of Alaska, Illinois and New York specifically prohibit past or future changes to current employee benefits. Sixteen other states prevent such changes through contract, property or other laws. All other states bar reductions in past benefits, and some have ambiguous language about reducing future benefits in their laws.
Illinois has the worst-funded public pension system of any state, with an unfunded liability approaching $127 billion. Like Texas, legislators tried to create a plan that sought to reduce benefits, put a cap on pensions for the state’s highest paid employees and limit future cost of living increases. The Illinois Supreme Court ruled the changes violated a state constitution provision that benefits cannot be diminished. So the state’s pension system limps on while lawmakers there try to figure a way out of the dilemma.
States and cities may be able to learn from some major errors Dallas made in designing and managing its pension fund. The pension invested in risky real estate ventures that didn’t pan out — this week its board voted to sell several properties in Idaho and Napa Valley. The Dallas pension also approved unsustainable benefits including a guaranteed 8 percent return on deferred retirement funds. Deferred Retirement Option Plans, commonly called DROPs, allow employees eligible to retire to continue working but accumulate benefits as if they are retired. When they decide to retire they get the money plus interest on top of the benefits they would otherwise get. During the rush to withdraw money from the Dallas fund, some beneficiaries were able to take out millions of dollars each in DROPs earned over time, with interest.
During the rush to withdraw money from the Dallas fund, some beneficiaries were able to take out millions of dollars each in DROPs earned over time, with interest.
I believe it was MacBeth that posted about ethics (as in, lack of) recently? I enjoyed those posts and observations. I have zero respect for people that benefit from a system that they must know is unethical and unsustainable but justify doing so with a “hey, these are my benefits and I earned them.”
It’s the “I got mine” attitude. So what if it’s at someone else’s expense? As long as you’re insulated from the other person’s pain by a layer or two of bureaucracy you’ll be able to sleep easy.
It’s the “I got mine” attitude backed up by the full force of government with public union goons with guns that will take everything you own if you miss one tax payment.
It’s for the children…
A promise is a promise.
“A promise is a promise.”
So is a dotted line. An enforceable promise at that.
Oooops, I meant to say a signature on a dotted line.
I supply the dotted line, the schmuck supplies the signature.
It’s a partnership of a sort.
(chuckle)
“A promise is a promise.”
Not so in bankruptcy court.
“Not so in bankruptcy court.”
A concept public unions fail to comprehend.
If there’s no money, there’s no money. It’s as simple as that.
“It’s the ‘I got mine’ attitude. So what if it’s at someone else’s expense? As long as you’re insulated from the other person’s pain by a layer or two of bureaucracy you’ll be able to sleep easy.”
Works for me.
Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
I have zero respect for people that benefit from a system that they must know is unethical and unsustainable but justify doing so with a “hey, these are my benefits and I earned them.”
We all must benefit in some way from systems that are unethical and unsustainable. If you’re thinking of pension plans specifically, the people involved mainly just took a job and then went to work a couple of hundred days a year for decades.
For free or did they get a pay check?
Presumably there were paychecks.
When we look back on the coming implosion of Tech Bubble 2.0 and Housing Bubble 2.0 in a supernova of wealth destruction, what do you suppose we will identify as the proximate catalyst of what started the dominoes tumbling?
I suspect Uber might be a prime contender for “Lehman moment” status.
http://www.zerohedge.com/news/2017-06-11/uber-imploding-chief-business-officer-resigns-kalanick-plans-leave-absence
My guess…
It will be a plan, ordinary day.
Nothing crazy in the news. Nothing really happening internationally.
There will be a moderate selloff. Nothing we have not seen before. A tiny percentage will panic and keep selling. Algos will then sell with the hammer down.
Then mass selling hits.
Websites unable to handle the traffic. Brokers take the phone off the hook. Circuit breakers kick in.
And then car hits the wall.
On both housing and stocks.
I love that article about Uber going under. Actually what it looks like is management is deserting the ship in a mad scramble for the exits. Then what happens?
I also noticed they hired Eric Holder to help get them out of trouble. L.M.A.O.! Yep, that’ll work.
No worries though. If Eric can’t rescue Uber, I understand James Comey might be available.
Recently looking over Tesla’s financials, it struck me that its a black hole of shenanigans that seems to eclipse even the other tulips. Really quite amazing that we find ourselves neck deep in bubbles so soon after previous ones wrecked havoc on the country and the world.
Can you drive a Tulip? Go for a test drive, then you will get it. No other car like it out there.
Even China gets it./
So good, it can’t survive without subsidies.
http://www.zerohedge.com/news/2017-06-11/its-confirmed-without-government-subsidies-tesla-sales-implode
The people who want an amazing ride should pay for it themselves. Not me.
Yeah, and tennis camper complains endlessly about government subsidies and corporate hand outs.
Once Tesla can make an electric car with a 400-500 mile range, that can be recharged in 5 minutes and that sells for the same price as a mid sized sedan and turn a profit, then it will be a viable company.
Until then they just make toys for rich people.
My own take on Tesla: look at the history of their cashflow and it’s a sea of red. However, unlike Uber, they actually make a product and I see several each day during my commute.
I think that their fatal mistake will prove to be the hundreds of millions of dollars spent on the Model X - that model isn’t selling well and that was time and money ill-spent.
If they had applied that time and money to the Model 3 development instead, they would already be in full production with it today.
That’s an interesting and I assume valid point, I see a fair number of model Xs in the bay area but not nearly as many as model Ss. But with the popularity of high end high performance SUVs and crossovers it seems like it would have been more successful. I can see why they built it, I would have expected it to be an important part of the product line. I wonder what the psychology of those models is that makes Tesla less attractive than it is in the sedan market?
Until then they just make toys for rich people.
just like Porsche and Ferrari
Here’s some interesting reading: It’s an email the chief of Uber sent out to his employees a while back …
https://www.recode.net/2017/6/8/15765514/2013-miami-letter-uber-ceo-kalanick-employees-sex-rules-company-celebration
Very interesting list of Uber investors. I see some of your colleagues in there, Mr. Banker.
https://www.crunchbase.com/organization/uber/investors
“I see some of your colleagues in there, Mr. Banker.”
Curses! I move we socialize the losses. As always.
“Qatar Investment Authority”
So nice to see terrorist organizations speculating in US stocks…
Bankers have government bailout protections. There are no consequences to their poor decisions. They will even get their yearly bonuses.
An honest contractor is just in a world of bad luck. Their bad luck.
And we wonder why some houses have cement flushed down the toilet and feces spread on the walls.
++++
“While some have clearly ‘made a fortune’ from the apartment boom, sub-contractors and suppliers who might be caught up in the slowdown are largely powerless to the prevent the possibility they might lose jobs or payments, Koukolas believes. ‘That’s their bad luck, really… just bad luck,’ he says.”
“Bankers have government bailout protections. There are no consequences to their poor decisions. They will even get their yearly bonuses.”
Bahahahahahahahahahahahahahahahahahahahahhahaha.
And yet schmucks continue to willingly give their business to bankers.
A nation of dummies.
Even the lemmings of Hong Kong - the most compulsive gamblers on the planet - are hesitating before throwing themselves into the abyss of “investing” in a grotesquely overpriced housing bubble.
http://www.scmp.com/property/hong-kong-china/article/2097853/hong-kongs-apartment-hunters-find-cause-pause-bearish
Victims, victims everywhere. But it’s never their fault.
http://www.mercurynews.com/2017/06/11/evicted-cautionary-tale-costs-retired-couple-san-mateo-home/
To add to the housing and stock bubbles popping…
+++++
Pop Goes The Car Bubble . . . And It May Not Be a Bad Thing
Eric Peters Autos | 09 June 2017
The seven year loan.
“Free” money (zero or very low interest).
Give-away leases.
The car industry is riding a bubble that’s proportionately as large as the housing bubble of a decade ago. And it is going to pop. For the same reason that a wave has to crest and wash ashore, once set in motion.
As new car prices rise, the cash back offers, dodgy leases and other “incentives” necessary to move them off the lot also rise in frequency and inanity. Examples include the leasing of electric cars for less than the cost of a monthly cell phone contract (Fiat made just such an offer; see here) and “below invoice” transactions that rely on the manufacturer (e.g., Ford) paying a dealer to “sell” a car (e.g., manufacturer to dealer incentives) for the sake of getting rid of it, getting it off the books.
Or rather, onto someone else’s books.
And that problem is written off, in its turn, when it becomes necessary to do so. The bank makes up the loss via interest and fees on other debt. Or by re-selling the repo’d vehicle at exorbitant interest to another debtor.
Rinse, repeat.
The used car market is cratering – and that is a sure sign the fat lady is clearing her throat.
Remember: Interest rates on new cars are lower (even nonexistent) and the loan/debt can be extended over a preposterously long period – seven years is now routine – while the loan/debt on the used car must be of shorter duration because of the greater and faster depreciation on the used car. The typical three-year-old car is worth about 75 percent of what it was worth when new – and will only be worth about 50 percent after another three years. Writing a loan/debt on an asset that will almost certainly be worth less than the balance due on the loan before the loan can be paid off is what you call a bad deal.
The loan/debt limit has probably already been reached. Seven years is a kind of Event Horizon for car loans because after seven years, almost every car – regardless of make or model or what it sold for when it was new – will be worth less than 50 percent of what it sold for when it was new. They can’t keep pushing off the paid-for date in order to keep “sales” from wilting, permanently.
This is why the bum’s rush to ride-sharing; to the rent-by-the-hour (via an app) business model that GM (Maven) and Ford (the firing of Mark Fields) and pretty much the entire car industry have embraced as their only possible savior. The people running major companies are many things but idiots they are not – some superficial evidence to the contrary notwithstanding.
“And that problem is written off, in its turn, when it becomes necessary to do so. The bank makes up the loss via interest and fees on other debt.”
Say what?
“Or by re-selling the repo’d vehicle at exorbitant interest to another debtor.”
There. Much better.
The typical three-year-old car is worth about 75 percent of what it was worth when new – and will only be worth about 50 percent after another three years. Writing a loan/debt on an asset that will almost certainly be worth less than the balance due on the loan before the loan can be paid off is what you call a bad deal.
Actually, it doesn’t so bad if the interest rate is close to zero. After three years the car will be worth 75% of its original value and the loan balance will be down to 60% of its original value.
Not if they rolled their previous negative equity from their three year old car with a seven year loan into their new car’s seven year payment, which is part for the course.
I’ve heard that some people do that. I haven’t seen anything that indicates that most people do that. Sometimes you read statistics that the average car on the road is 11 years old or something like that. The snippet posted by 2banana above didn’t mention debt from previous vehicles.
I think I see the problem.
They wanted to modify their latest loan of $770,000.
On a house they bought for $49,000 over 42 years ago…
Well played Mr. Banker. Well played.
++++
Evicted: Loan scheme costs couple their San Mateo home
San Jose Mercury | June 11, 2017 | Tracy Seipel
The couple says they quit paying their mortgage and started paying a Southern California company that promised to work with their bank to renegotiate their loan. But the company disappeared, the bank foreclosed and now an eviction notice demands the Sextons pack up and leave by 6:01 a.m. Tuesday.
The saga began in the summer of 2015, after they sought to remodel the master bathroom in the 1,670-square-foot house they’d bought for $49,000 in the summer of 1975. Like many Bay Area homeowners who have seen their property values soar, the Sextons had borrowed multiple times over the years against their equity in the three-bedroom, two bathroom home, where they had raised their two daughters.
They wanted to modify their latest loan of $770,000 to lower their 7.8 percent interest rate, but this time, they said, their bank — Wells Fargo — balked.
Not long afterward, Robert Sexton said, a letter arrived in his mailbox from a loan modification company based in Los Angeles. Sexton, who admitted he did no research on the company, called the firm, Endeavor Resources Group, and got in touch with a man who laid out a plan to modify their loan.
By then, Sexton estimates, he had paid the Southern California company $30,000 to $40,000 — for nothing. Records show they had a $70,000 default on their loan, and their house was placed into a public auction in Redwood City in January.
“It’s sad,’’ Pitts said. “They string them (homeowners) along, charging them for as long as they can. By the time a lot of these people realize the business is not doing anything for them, they are so far behind in mortgage payments that they are in foreclosure.”
“Well played Mr. Banker. Well played.”
Yeah, well the schmuck played himself.
He buys a house for $49,000 in 1975 and now he owes $770,000 on it, owes $770,000 on the same house. What a dummy.
“Like many Bay Area homeowners who have seen their property values soar, the Sextons had borrowed multiple times over the years against their equity in the three-bedroom, two bathroom home, where they had raised their two daughters.”
Rumor has it that the Bay Area is filled with a bunch of really smart guys.
(snort)
It would take a heart of stone to read their tale of woe without laughing.
Raymond and 2banana getting their schadenfreude on.
https://youtu.be/idoV2trd0m0?t=36
$770,000 to lower their 7.8 percent loan rate….!!!!
Well played, Mr Banker. Well played.
Nuthin’ to it.
A nation of dummies.
Crime, fraud and more crime. That’s the way we do it in CA.
“The couple says they quit paying their mortgage and started paying a Southern California company that promised to work with their bank to renegotiate their loan”
https://www.youtube.com/watch?v=QOkSvLqkafU
“…started paying a Southern California company…”
A sunny place for a shady company.
This land was previously accumulated by the city to secure a site for the relocation of the Oakland Athletics to downtown…Since the SF Giants and major league baseball put the Kabash on that, these guys have stepped in…Its next to a major rail transportation Hub…Currently with Rail and light rail…Soon to also have BART…
Its on a massive scale…
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&cad=rja&uact=8&ved=0ahUKEwiv0OufhKrUAhUXwWMKHRaUBEgQFghDMAQ&url=http%3A%2F%2Fwww.bizjournals.com%2Fsanjose%2Fnews%2F2017%2F06%2F06%2Fgoogle-diridon-station.html&usg=AFQjCNF5YdXvpgTi5zigMPHlBX-0tKu-zg&sig2=fVS5WN4KsZhqttDQQrqgnA
A bell ringing at the top?
+++++
If all 6 million square feet of office space is built out for Google, the property could potentially accommodate 15,000 to 20,000 employees, according to a city press release Tuesday morning.
Heh, they won’t be needing all those employees. Ghost offices.
Ghost offices ??
My guess is that Google can afford “Ghost Offices”.
Probably. But just because they can afford it, should they have it? After a while, broken windows and stuff like that happen. Although google ghost offices would probably be awesome for squatters.
https://qz.com/1002655/the-company-behind-wordpress-is-closing-its-gorgeous-san-francisco-office-because-its-employees-never-show-up/
“Wordpress’s owner is closing its San Francisco office because its employees never show up”
It’s a trend that I hope continues. I love working remotely and being able to expect all communication through email. It’s frustrating in the current job in an old school 1990s cube farm (still beats open floorplans) that so many ignore email and you have to stand in front of them to get a response.
I find it much easier to manage tasks and priorities when everything that counts is in my Inbox and I never have to worry about getting hijacked or ambushed by someone wandering by. I’m the kind of person that needs a few minutes to prepare before I can respond intelligently to someone who wants to talk about something totally different than what I’m currently working on.
“I love working remotely and being able to expect all communication through email.”
I still frequent an office cube, but most of my working group are spread far and wide. The preferred communication tool is Slack, which uses an event sorted attachment whiteboard that keeps the group up to date and brings newcomers up to speed easily. It’s way better than email, IMHO.
BTW, I love working from home when I’m not feeling well… stay in touch without spreading the misery.
Should they install suicide nets?
Are you smoking thinking that’s off? People are dying trying to get INTO Google.
Oh my. The greedhead sellers of London are having to swallow serious markdowns on their wish prices.
http://www.mouseprice.com/property-for-sale/kensington+and+chelsea+(royal+borough)?SortBy=5
The stupidity … it burns.
http://www.zerohedge.com/news/2017-06-11/central-bankers-real-legacy-pension-funds-panic-reach-project-finance-yield
Talk about a text book bubble implosion in Toronto. Remember Tony Robbins “motivating” these rubes into real estate just a few months ago? Geez, thanks Tony… Pretty awesome way to fack the last few fools at the last second before the air gushes out…. Yeah for mindless motivation…
“Geez, thanks Tony… ”
I’ll second that. Great job, Tony.
“Pretty awesome way to fack the last few fools at the last second before the air gushes out….”
A work of art.
“Yeah for mindless motivation…”
A mindless mind is a terrible thing to waste.
Tony got paid. If dupes and marks choose to get their investment “advice” from a “motivational speaker” that’s on them.
It’s the ZeroHedge club at work again. They kept people out of the stock market for the rise and advised people into gold ten percent from the top. That’s as hard to do as picking bottoms for stock markets. Then they wheel out Doug Casey again to tell you after an hour of talking babble, to put your money in gold. Endless drivel.
Last week you had the exponential curves for a few stocks crack. They’ll retest their highs and then good luck. Avalanches start with a noise. And the acceleration of money growth has stopped. A Recession is here. Two more quarters to acknowledge it.
It’s heresy to say that money is an asset class unto itself. Central Banks have done everything they can to drive savings out of banks. When governments tell you to get out of money you know the top is in for “things.”
P.S.
So where did all these mighty pension funds(CALPERS) place their money for higher returns? Answer: Commercial Real estate. The ROI for future obligations is running now on fumes.
Speaking of pension funds and commercial real estate:
http://www.zerohedge.com/news/2017-06-12/madoff-whistleblower-harry-markopolous-has-uncovered-new-fraud
“Markopolos called what is left of the MBTA’s pension a “Tender Vittles retirement plan,” meaning (sarcastically) that its participants would be eating cat food.”
BWA-HAHAHAHAHAHAHA-HAH! Tender Vittles retirement plan!
Its all about the tooth detergent. Blind them with a giant set of pearly white choppers and people will line up like lemmings to follow you off a cliff. Invest in tooth detergent, it will never see a recession thanks to all the schemers and their CONfidence games.
‘Remember Tony Robbins “motivating” these rubes into real estate just a few months ago? Geez, thanks Tony… ‘
I am out of the loop. Did Tony Robbins do a real estate seminar in Toronto ? Something does not compute. When did he start shilling RE?
Tony and others …
http://realestatewealthexpo.com/
Real Estate Wealth Expo with Tony Robbins - Toronto Tickets
https://www.eventbrite.com/e/real-estate-wealth-expo-with-tony-robbins-toronto-tickets-31113178354
Check this out: A ticket for the Tony Robbins Real Estate Wealth Expo that was held in Toronto cost $2,495 per schmuck.
More about Tony and the Toronto Expo.
A correction of the previous post: The ticket prices ranged from $50 to $2,500 per schmuck.
http://torontolife.com/real-estate/think-going-go-even-sky-high-wealth-expo-attendees-talk-torontos-housing-market/
US Housing Bubble 2017 Crash Begins in New York with 25% Drop
Published on May 23, 2017
https://www.youtube.com/watch?v=x4LZlMMESCM
And it’s spreading…
Published by a Realtor?
http://www.zerohedge.com/news/2017-06-11/its-confirmed-without-government-subsidies-tesla-sales-implode
It’s Confirmed: Without Government Subsidies, Tesla Sales Implode
Chinese FBs tend to react badly to crushing housing losses.
Just wait till it happens on a grand scale and China’s Keynesian central planners lose the Mandate of Heaven.
http://www.scmp.com/property/hong-kong-china/article/2097913/sun-hung-kai-properties-halts-sales-converted-apartments
Yeah, the gov’t has been cracking down in multiple areas this year. They have also gotten much more strict about things like phone use in cars and and cafe seating on sidewalks and parking spots outside of the businesses. Last fall I saw them tearing down a bunch of small business storefronts that were built on the front of commercial buildings where there was supposed to be parking and sidewalks. For many years it was a free for all and none of those things mattered. Suddenly the rules matter more and it’s causing a bit of confusion and concern.
Keynesian central planners
At this point Keynesian has become a word akin to socialism, devoid of meaning.
I don’t recall gold ever dropping $300 in a single hour.
http://www.coindesk.com/bitcoin-drops-300-one-hour-price-falls-abruptly-rebounds/
Didn’t know this……….
Casey Anthony’s parents could lose their house, after allegedly failing to make a mortgage payment in more than six years.
http://www.crimeonline.com/2017/06/11/casey-anthonys-parents-are-about-to-foreclose-on-infamous-florida-home-where-2-year-old-caylee-anthony-once-lived/
“after allegedly failing to make a mortgage payment in more than six years.”
I wonder how many Robo-signed residuals there truly are.
Tens or hundreds of thousands?
Millions?
“…allegedly failing to make a mortgage payment in more than six years.”
True grit… another real American family. Heros!
Undercapitalized Chinese banks with liquidity issues - I’m sure China’s central planners have matters well in hand.
http://www.scmp.com/business/markets/article/2097973/its-buyers-market-chinese-banks-scramble-cash-offer-7-pc-yields
I’ve been in Vietnam for two years and get 6.5 pcnt on a 6 month CD. I’m betting on a rising Dong…vs Dollar.
housing?? nah church
“I’ve never seen so many young people at a church before”: parishioners talk about why they attend C3, Toronto’s “hipster church”
http://torontolife.com/city/life/c3-church-easter-streeters/