July 12, 2017

Exuberance Infers Frivolity

A report from King 5. “San Francisco, one of the nation’s hottest real estate markets is becoming one of the coolest, and that’s concerning some experts who wonder if that trend could spread to cities like Seattle. The Bay Area is seeing many buyers no longer interested in chasing overly inflated home prices. Jon Bye, with Jon Bye & Associates, is a broker who has tailored his business to help families navigate through such a competitive housing market. He also agrees that the market still has a long runway of growth ahead, because he still sees so much demand. ‘All of the loans right now are real loans with real people and real money,’ said Bye. ‘That’s what our market is built on. But that being said, you’ve got to plateau sometime.’”

From Mansion Global on California. “San Francisco’s luxury market was burning hot during the housing market recovery between 2012 and 2015. But a confluence of global and local economic and political events—from a drop in start-up IPOs to wealth constraints in China—cooled the market for high-end homes in the Bay Area starting in 2016. Despite the record number of condo sales in the second quarter, there are pockets in the city where condo resales have plunged due to a flood of new development.”

“There’s been a dramatic drop, nearly 50% year-over-year, in luxury condo sales reported to the multiple listing service in greater South Beach, South of Market and the Yerba Buena district. ‘This is the area where large, very expensive, high-rise projects continue to come on market, and, to some degree, they may be cannibalizing MLS sales in the resale market,’ wrote Paragon’s chief market analyst Patrick Carlisle in a breakout report on the luxury market.”

From Dow Jones Newswire. “A labor shortage that has hampered the construction industry for most of the housing market’s five-year recovery is showing signs of easing. The decline in open jobs suggests employers are having a slightly easier time finding workers to hire. It could also be partly the result of a slowdown in multifamily construction activity as the apartment market becomes saturated. Developers have been pulling back on starting new projects, although there is still a fairly high volume of projects in later stages of construction.”

“Robert Dietz, chief economist at the National Association of Home Builders noted the decrease also could be a sign that some builders have put projects on hold. ‘You can have job openings fall because some employers have simply given up,’ he said.”

The Port Townsend Leader in Washington. “Where have all those housing plans gone? Earlier this year, more than 700 housing units were proposed to be moving forward in the Port Townsend area. Now, one project has been scaled back, and others are not moving as fast as some had thought they would. The largest of the proposals that city staff had been contemplating in January was a 500-unit housing development that consisted of three different properties near the intersection of Discovery Road and Rainier Street.”

“Suzanne Tyler of Chimacum, who was behind the proposal, said July 5 that the proposal had not been canceled, but had been scaled back for now. ‘After doing some research, we decided that a project of that size would have too long of an absorption time. In other words, you can only sell so many houses in Port Townsend in a year,’ Tyler said.”

The News Observer in North Carolina. “Good news for homeowners: The average sales price of Triangle homes continues to show healthy gains from a year ago. A continued shortage of inventory is helping to drive the increased sales prices. But that inventory shortage isn’t across the board. Homes priced below $400,000 are in short supply, while there’s an oversupply of houses priced above $700,000, said Stacey Anfindsen, a Cary appraiser who analyzes the MLS data.”

“When it came to pending listings during June, the average list price fell 6 percent while the average price per square foot declined 2 percent. Although that can be a leading indicator of future sales prices, Anfindsen is assuming for now that the June declines were an anomaly. ‘It’s almost economically impossible when you have an undersupply’ for sales prices to go down, Anfindsen said.”

From Miami Community Newspapers in Florida. “If you drive around Pinecrest, you’ll see lots of FOR SALE signs enticing passersby to dream of their next home purchase. The somewhat sad story of today’s market is that there are far too many signs up. In industry terms, we talk about inventory levels. This is done by looking at the number of homes currently on the market in an area and then dividing it by the number of homes that went under contract in the last 30 days. The result is a number that estimates how many months it would take for all homes currently on the market to be sold. In Pinecrest for $1M+ homes, the answer is 18 months. Not good for Sellers!”

The Washington Post. “Home flipping has slowed across the country, but it’s booming in the District and Maryland. The District had the highest number of home flips in the nation in the first quarter, according to ATTOM Data Solutions. Maryland ranked fifth. In the District they were up 10.7 percent from the previous quarter and up a whopping 32 percent year-over-year. Only Hawaii with its 36 percent jump had a bigger annual increase. Home flips in Maryland were up 8.5 percent from the previous quarter.”

“Daren Blomquist, senior vice president at ATTOM, says the uptick in foreclosure activity in both jurisdictions is leading to the increased number of home flips. ‘I believe in both areas it’s remnants of the last crisis,’ he said. ‘It’s not a new crisis. In the District, where there were all these delays, we’ve in the last year been seeing dramatic increases in foreclosure activity.’”

The Forsyth Herald in Georgia. “Since I’m a mortgage banker, people are asking me more and more if we are in a housing bubble. Values have risen sharply over the last six years, but it’s hard for me to see that we are in a bubble. The actions that led to the dramatic rise in home values leading up to the financial crisis of 2008 were born of greed and the lust for easy money. Today’s rise in home values, while dramatic, are based more on sound economic principles: high demand, low supply.”

“Exuberance infers frivolity. To buy a house under $400,000 these days requires grit determination. Inventory is as low as it has ever been in the metro area in that market. And those who want houses in that price-range are fighting off multiple bidders to win the deals. If you go over $500,000, however, you see the opposite. It’s a buyer’s market. There could be some vulnerability there should the bottom of the economy fall out.”

“If a recession came and demand for homes dried up, inventory levels would have a long way to go before we got to a place where there were too many homes on the market. That is at least true for the under-$400,000 market. The above $500,000 market is a different story. When people lose their jobs and need to sell their homes, they downsize. The over-$500,000 range already has too much inventory. If a recession arose, you might see those homeowners try to sell.”




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83 Comments »

Comment by 2banana
2017-07-12 10:22:43

So a few questions:

Just where did the $5.5 million plus deposits go? By the photo - there are only a half dozen or so half finished townhomes. Plus subcontractors were stiffed.

Stages of a FB. 1.Waiting 2.Waiting 3.I just want my money back.

“It’s going to open,” means just the opposite. Same with getting deposits back.

+++++++

Island View Crossing development files for bankruptcy
Peg Quann - 7/12/2017 - Bucks County Courier Times

Developers Renato J. Gualtieri and affiliated firms Americorp Homes Inc., Island View Crossing II LP and Island View Properties Inc., of Newtown Borough, purchased the Island View Crossing development in 2011 and planned 73 townhomes and 96 condominiums for the 17.5-acre site along the Bristol Borough riverfront on Radcliffe Street. The first group of townhomes has been constructed but not completed and two buyers who put deposits of $25,000 or more down on homes were supposed to have their deposits and related costs returned last winter by order of Bucks County Court.

The developer also is tied up in a court case in Philadelphia Court of Common Pleas involving the Prudential Savings Bank in Philadelphia, which had lent the developers $5.5 million, according to court documents. But that case has been deferred pending the bankruptcy hearings, the documents show.

When he first heard that the development was facing financial difficulties, Del Grosso said he was willing to wait to have his home built in a reasonable amount of time because he liked the riverfront development and Bristol Borough, but now, he said, “I just want my money back.”

Attorneys representing Island View Crossings II in the bankruptcy proceeding could not be reached for comment Tuesday. However, a man who answered the phone at the AmeriCorp office in Newtown but declined to give his name said all the people who put deposits down on homes in the community and want their money back will get their deposits returned and the community will be built.

“It’s going to open,” he said.

 
Comment by 2banana
2017-07-12 10:25:22

That is not a drop - that is a crash.

I will put a streak dinner that there will be an article, in a month or two, on how “sticky” and slow the drop in prices has been despite the near evaporation of buyers…

“We are not going to give it away…”

+++++++

“There’s been a dramatic drop, nearly 50% year-over-year, in luxury condo sales reported to the multiple listing service in greater South Beach…”

Comment by Raymond K Hessel
2017-07-12 17:12:03

That is not a drop - that is a crash.

Inconceivable! Had there been a crash of that magnitude, surely the MSM would’ve alerted us to that fact.

Bitter renters and their fantasies….(shakes head, makes clucking noise).

 
 
Comment by 2banana
2017-07-12 10:29:26

Why is this a sad story?

Why is it sad that more buyers will be able to afford a place when prices come down?

Is it sad because the entire economy is built on ever appreciating housing prices to paper over the massive corruption of government and lack of a real economy?

+++++

“From Miami Community Newspapers in Florida. “If you drive around Pinecrest, you’ll see lots of FOR SALE signs enticing passersby to dream of their next home purchase. The somewhat sad story of today’s market is that there are far too many signs up.”

Comment by Sean
2017-07-12 14:07:38

Not sad on my end. As a matter of fact, I saw today a “Hot Home” in my neighborhood that was estimated to sell within 7 days (according to Redfin) just dropped the price $25,000. Still no buyers in sight. Nice place too!

Comment by oxide
2017-07-13 05:37:40

Meanwhile, two houses in my neighborhood went pending at list price within days of listing. I guess it’s because my neighborhood has an easy commute to some places and because the houses are small enough to price realistically. The only ones that sit are the cosmo-flips that commanded too high of a premium.

Comment by MightyMike
2017-07-13 05:58:22

Usually that’s the result of sellers choosing their list prices sensibly.

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Comment by Ben Jones
2017-07-12 10:33:36

‘resales have plunged due to a flood of new development’

Huh? More supply, fewer sales?

‘After doing some research, we decided that a project of that size would have too long of an absorption time. In other words, you can only sell so many houses in Port Townsend in a year’

Wa…?

‘the average list price fell 6 percent while the average price per square foot declined 2 percent. Although that can be a leading indicator of future sales prices, Anfindsen is assuming for now that the June declines were an anomaly. ‘It’s almost economically impossible when you have an undersupply’ for sales prices to go down’

You’re right there Stacey. Could be your assumption is off. This appraiser has a habit of questioning things:

July 17, 2015

It’s Tulipomania All Over Again

“Triangle home sales picked up in the second quarter, surging 22 percent in June alone, as buyers jockeyed for a dwindling supply of listings. One thing that isn’t going away despite the hot market is the payment of financial concessions by sellers. Financial concessions, such as paying a buyer’s closing costs, were paid on 65 percent of all the existing homes that sold in the second quarter, up from 48 percent during the same period last year. Stacey Anfindsen, a Cary appraiser, said the continuing payment of concessions remains one of the most baffling aspects of the local housing recovery.”

“‘With a two-month supply of housing, it’s economically illogical that somebody should have to incentivize someone to buy something when there’s a shortage of something,’ he said.”

http://thehousingbubbleblog.com/?p=9132

June 20, 2016

The Frantic Pace Of Sales Has Abated

“Stacey Anfindsen, a Cary appraiser who analyzes MLS data, said the Triangle remains very much a bifurcated market. While demand is far outstripping supply at lower price points, it’s a different story at the upper end of the market. Sellers above $500,000 in many areas of the Triangle are having a much harder time selling their home. Anfindsen said a wave of new construction in the Falls Lake area is expected to make it even more challenging. ‘The re-sale market for $700,000 to $800,000 and above is going to get worse in the next six months to a year because there’s really nothing they can do to compete with new construction but lower the price,’ he said.”

http://thehousingbubbleblog.com/?p=9667

Comment by 2banana
2017-07-12 10:41:42

Or walk away from the 1% down payment shack.

Or stop making payments.

This reminds me of the 80s song:

Here I Go Again (Whitesnake)

https://www.youtube.com/watch?v=Gin-l4LDdXQ

++++

“there’s really nothing they can do to compete…but lower the price”

 
Comment by palmetto
2017-07-12 10:44:17

“While demand is far outstripping supply at lower price points, it’s a different story at the upper end of the market.”

That’s happening in a number of markets. Panic buying at the lower end. One of the worst is Hendersonville, NC. Anything under $200,000 is gone in 60 seconds unless there’s something wrong with it. Listings come on with a “pending” notice already attached to the listing. In Hendersonville, they’ve a little more fancy than down our neck of the woods. Listings say “For Sale — Under Contract — Show”. Which I guess means even though there’s a contract, show it anyway in case it doesn’t go though.

Stupid. I’d never bother looking at a house under contract.

Comment by 2banana
2017-07-12 10:55:11

Might be worth it.

It gives you leverage if they call you back letting you know the house is back on market. Obviously, the contract fell apart.

I would cut 20% off the price and let them know it has a 24 hour time limit to expiration.

+++++

“I’d never bother looking at a house under contract.”

Comment by In Colorado
2017-07-12 12:02:11

I’m guessing that they would already have backup offers in the wings.

That of course could quickly change as the markets continue to sour, even at the “low end”.

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Comment by palmetto
2017-07-12 12:19:05

“even at the “low end”.”

At some point the “low end” gets pushed up to where it’s not worth it.

Hendersonville’s not doing well, in reality. Here’s the Zillow “Blue Measles” map of foreclosures and pre-foreclosures. Proving that it’s already unaffordable.

https://www.zillow.com/homes/make_me_move/Hendersonville-NC/pmf,pf_pt/25092_rid/35.531946,-82.182198,35.163424,-82.705422_rect/10_zm/

What a joke.

 
Comment by In Colorado
2017-07-12 13:12:24

In my little burg houses priced around 200K -250K still get multiple offers in one day. Houses over 500K are languishing. Guess which type of house the local builder boys have been slapping together during this bubble?

I wonder how long until the local Ford and Chevy dealers are overflowing with repo’d pickup trucks? No later than 2019, I think, and maybe sooner.

 
Comment by Carl Morris
2017-07-12 13:56:53

At some point the “low end” gets pushed up to where it’s not worth it.

And here we are.

 
Comment by Raymond K Hessel
2017-07-12 17:20:20

I wonder how long until the local Ford and Chevy dealers are overflowing with repo’d pickup trucks? No later than 2019, I think, and maybe sooner.

I’m car-shopping for my oldest daughter, who just got her permit. Noticed quite a few Craigslist adds saying things to the effect of “price firm because this is what I owe on the car.” Sorry, debt donkey, Mr. Market doesn’t care what your loan balance is. Or, “don’t lowball me, I know what my car is worth” when from the price they are delusional. Of course I lowball them on general principle, with no intention of buying a car from some FB who probably skimped on maintenance to make his car payment.

 
Comment by butters
2017-07-12 17:27:09

200K -250K still get multiple offers in one day. Houses over 500K are languishing

Don’t worry. Houses over 500k will be offered for less than 350K in near future

 
Comment by butters
2017-07-12 17:28:15

There’s no Mr. Market. He retired around 2012.

 
Comment by Raymond K Hessel
2017-07-12 17:33:49

He’s been spotted lurking on the margins. Yellen the Felon knows he’s out there, and she’s terrified.

 
Comment by rms
2017-07-12 18:26:10

Noticed quite a few Craigslist adds saying things to the effect of “price firm because this is what I owe on the car.”

I remember those freeway “Park-n-Ride” lots began to fill with FOR SALE signs that say, TAKE OVER PAYMENTS and the registration tab was frequently expired too. I used to call-in the license plate and VIN to our office because I just knew some lender was looking for it, and they would quickly fax us the repo order. Low hanging fruit!

 
Comment by In Colorado
2017-07-13 08:18:09

Don’t worry. Houses over 500k will be offered for less than 350K in near future

Yup, that’s what happened last time.

 
 
Comment by palmetto
2017-07-12 12:14:29

I didn’t say I wouldn’t look at a house that had been under contract, just not one that’s currently under contract. I’d let the realtor or owner know I was mildly interested and to contact me if things don’t work out. Then I’d look at it. Maybe.

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Comment by aqius
2017-07-12 13:35:27

would it be too much of a hassle to step away from the real estate frenzy & just have a house built ?!

if the cost of lot + misc fees + construction = less or about the same as buying, then I’d certainly give it serious consideration, just to have more control over the whole process and outcome.

 
Comment by oxide
2017-07-13 05:50:31

Try finding a single plot of land anywhere. Probably won’t happen in this area. Developers snapped up swaths of land for packed-in developments long ago. And anytime “grandma finally dies” and leaves her 1920-1930 homestead on 3/4 acre on what used to be the edge of town, developers swoop in to build a small PUD of 15-20 pack-in row-houses.

At best, you can buy something decrepit for the tear-down value and use the lot, but everyone has that idea. Prices for those have soared, and individuals can’t compete with Auntie Janet.

 
Comment by aqius
2017-07-13 06:46:25

that’s a damn shame. I remember back in 2005 there were still some open infill areas around the Sac burbs, as I refused to take part in the monthly price increase & looked outside the traditional pathway to home ownership.

after the bust in 2009 there were a lot of price drops in existing homes. the eye-popping reductions, especially for the fixers didn’t last long.
I’d harangue my wife daily about all the “great deals” in the area . . . even prestigious Granite Bay fell dramatically for awhile!

but then you’d still have the never ending prop tax bill & Mello Roos in some areas. no thanks.

of course, now the area has “recovered” and then some.

also noticed quite a few laid-off housewives have now migrated to the Realtor profession.
one was a 20 year veteran of HP. another a leasing agent for downtown plaza & then countryside plaza.

 
Comment by In Colorado
2017-07-13 08:23:51

Try finding a single plot of land anywhere.

Yup, this is what I’m seen in my little burg. Unlike last bubble I’m mostly seeing PUDs carved from acreage by either some national builder or a large regional, and they immediately fill them up with 400-500K spec homes. What is also interesting is that many of these PUDs are in not so great locations. Why would anyone pay 450K for a 2000 sq foot duplex that backs onto a busy road is beyond me.

 
 
 
 
Comment by Rental Watch
2017-07-12 11:43:04

‘resales have plunged due to a flood of new development’

Huh? More supply, fewer sales?

More homes built (new supply) means that fewer existing homes are sold.

In other words, new supply is having the expected result of decreasing demand for older homes. This should result in less upward pressure on prices for existing homes (maybe even prices go down).

Comment by Rental Watch
2017-07-12 11:47:05

‘This is the area where large, very expensive, high-rise projects continue to come on market, and, to some degree, they may be cannibalizing MLS sales in the resale market,’

Of course they will cannibalize resales…duh. Econ 101. Add supply to a market, and the prior supply will be effected (negatively). That’s the friggin’ point.

 
 
Comment by PitchforkPurveyor
2017-07-12 11:53:49

“Suzanne Tyler of Chimacum, who was behind the proposal, said July 5 that the proposal had not been canceled, but had been scaled back for now. ‘After doing some research, we decided that a project of that size would have too long of an absorption time. In other words, you can only sell so many houses in Port Townsend in a year,’ Tyler said.”

You’d have to drive through Chimacum and Port Townsend to understand how laughable an idea like this is. There are NO JOBS, and it is WAY FAR from the Seattle area, commutable only by ferry or helicopter as there are several water bodies to cross.

Comment by 2banana
2017-07-12 12:16:47

But Suzanne researched it…

The Nastiest Wife on Television

https://www.youtube.com/watch?v=20n-cD8ERgs

Comment by Raymond K Hessel
2017-07-12 17:24:21

That might well be the most unintentionally honest Century 21 ad of all time.

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Comment by aqius
2017-07-12 13:41:23

if I recall correctly, An Officer & A Gentleman, on my top 10 list, was filmed in Port Townsend, WA.

the depicted residential area was pretty hardscrabble, even back then in the 80’s.

 
 
Comment by Professor Bear
2017-07-12 18:20:02

‘resales have plunged due to a flood of new development’

That reminds me: They are building like there is no tomorrow along the SR56 corridor, which happens to be my normal daily commute route.

Saw the same thing back in 2005, leading up to Housing Bubble Meltdown 1.0.

Comment by Professor Bear
2017-07-12 18:22:17

As I looked at these newly-constructed tract home dumps this morning, I thought of a potential name for a new blog:

ButtUglyHouse.com

 
 
 
Comment by Ben Jones
2017-07-12 11:02:06

‘He also agrees that the market still has a long runway of growth ahead, because he still sees so much demand. ‘All of the loans right now are real loans with real people and real money’

Remember what I was saying about “it’s not going to slowdown, look at the frenzy!” Jon, that’s why it will slow down. All this “real” business applied to these loans too:

‘It’s not a new crisis. In the District, where there were all these delays, we’ve in the last year been seeing dramatic increases in foreclosure activity.’

Comment by 2banana
2017-07-12 11:26:19

All the debt is real debt with real people…

All the leverage is real leverage with real people…

All the speculation is real speculation with real people…

All the defaults will be real defaults. But now the people with be “victims”

 
 
Comment by JT
2017-07-12 11:29:30

I am in Berkeley, CA, and we are not seeing any drops this summer. most houses are still having overbids of 25%-50% above asking. I agree that luxury apartments and condos may face some buyer challenges, but for places where there is no new construction, the competition among buyers are fierce. I am not sure other than a job market crash, anything would change this picture much. Any thoughts?

Comment by Ben Jones
2017-07-12 12:16:08

‘overbids of 25%-50% above asking’

You realize this is by UHS design, right?

‘I agree that luxury apartments and condos may face some buyer challenges’

That’s where it always starts.

 
Comment by Rental Watch
2017-07-12 12:48:50

Your guess of recession leading to a drop is probably the most likely in the People’s Republic of Berkeley. Because the likelihood of development restrictions easing there is close to zero.

 
Comment by butters
2017-07-12 17:22:57

having overbids of 25%-50% above asking.

Lie lie and more lies.

Comment by butters
2017-07-12 17:25:11

Nobody is offering offering to pay 750k for 500k asking price.
No one.

Comment by Blue Skye
2017-07-13 06:28:01

It’s a setup. Realtor says it will sell for over $700K. If you don’t want to get out your wallet, don’t waste their time.

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Comment by SuzeB
2017-07-12 19:22:45

No real drops either in Cambridge, MA. Many properties routinely selling for 50K, sometimes 100K over asking price. LOTS of “luxury” apartment building all over Cambridge, Boston and metro Boston, even once considered gritty and undesirable blue collar towns all now have “luxury” apartments.

 
 
Comment by megamike
2017-07-12 11:32:58

Local companies face shortfall of skilled workers (Manatee county FL)
http://www.bradenton.com/news/business/article160118069.html

Comment by 2banana
2017-07-12 12:20:45

Just a wild guess to help solve this problem…

OFFER A HIGHER SALARY

 
Comment by In Colorado
2017-07-12 13:07:09

Best Home Services has a large sign in front of its location at 7216 21st St. E., advertising that it is hiring air conditioning service and installation technicians for $50,000-$125,000 a year with full benefits included.

I wonder what percentage of employment offers are for $50K and how many for $125K? Because if they are truly offering up to 125K to an good HVAC guy I’m sure they wouldn’t have any unfilled openings.

Comment by aqius
2017-07-12 14:03:13

working outside in July in Florida? NO THANKS!

(heat oven to 120 degrees: take a quick warm shower, do NOT DRY OFF, then go stick your face in said oven . . .)

there’s a REASON why these manual labor companies have so many openings.

and the inflated title at the small bucket shop employment office makes me laugh: “Director of Communications.” Seriously?!
probably a 2-person office in a former subway shop trying to punch above its weight class.

no offense intended, Palmetto.
beaches great. humidity, not so much.

 
 
 
Comment by megamike
2017-07-12 11:49:00

Also from Manatee County
It’s a start: First two models open in Lakewood Ranch Waterside, which will have 5,000-plus homes
http://www.bradenton.com/news/business/article160949514.html

Comment by palmetto
2017-07-12 12:41:36

There are pockets in LWR that have some major construction defect issues that have been ongoing for a while.

Also, my experience working in the area brought me into contact with quite a few people who lived there, but didn’t have a pot to pee in or a window to throw it out of. Seemed to be full of economic refugees from up Nawth. Smug but starving, lol.

Comment by oxide
2017-07-13 06:19:49

————–
Waterside is destined to have 5,144 homes on 1,425 acres.

Shoreview, so named because it sits on West Teal Lake and Middle Teal Lake, will have 246 homes, ranging from a base price of $484,990 to $625,990.

Amenities planned include a heated resort-style pool and spa, clubhouse, catering kitchen, kayak launch, fitness center, tennis court, pickle ball, outdoor barefoot bar and more.
————–

“Pickleball” is the new shuffleboard. When I’m an old fogey, somebody shoot me before I agree to spend my final days paying a $500K mortgage and a hefty HOA fee for the privilege of watching other old fogeys’ bare feet.

 
 
 
Comment by Rental Watch
2017-07-12 12:14:33

Following up from recent comments on retail:

https://blogs.wsj.com/moneybeat/2017/07/12/sign-of-the-bottom-new-etfs-will-bet-against-beaten-down-retail-stocks/

May be behind a paywall, but the gist:

There are new niche ETFs being formed to bet against brick-and-mortar retail.

Prior niche ETF offerings have been an indicator of a market turn in the other direction.

I think there is more pain to be felt, and the brick and mortar transition will take a while…in other words, I believe in a quick upturn for retail. However, I don’t believe in complete catastrophe either.

Comment by Rental Watch
2017-07-12 12:53:16

Should say I DON’T believe in a quick upturn in retail…proofread fail.

 
Comment by butters
2017-07-12 17:21:20

Never. I looked at my spendings for past few months. The gf and I order crap load of stuff from Amazon. It was still less than 20% of my overall spending on ‘craps.’

Bricks and Mortar are going nowhere. Amazon however is going nowhere but down from here.

Comment by Rental Watch
2017-07-13 08:43:31

Bricks and Mortar will change though. “Multi-Channel” is the new black. If you are a retailer with a weak online presence, you will suffer.

 
 
 
Comment by dandroidz
2017-07-12 12:38:39

Yep the San Francisco luxury condo price dip is no surprise to me. As I stated previous times on here, when I was there in the Mission Bay and South Beach area for work in 2012 and 2013, I saw rapid development. At the base of the Bay Bridge was a HUGE luxury tower (Ricon Hill) finished in 2014(?). Then in Mission Bay, I’d say I saw 4-5 condo/apartment units going up. Thats just off my head, I’m sure there were more than that. Also in south beach,a long King St there was all newly built condos and apartments finished in 2010-2012.

Now that I’m in Portland for work, the same is happening here just 3-4 yrs later. Around the gentrified/yuppified Pearl District in the Northwest part of town, I see about 2 huge units just starting construction, another 3 or 4 near 60-70% complete. Then in the South East part of town, in a small 2 block radius, about 2 new buildings finished, and another 2 or 3 starting construction.

Sorry for the lack of details regarding structure sizes, I’m not good at estimating amount of floors/units. Needless to say, lots of Yellen buxx looking to die, and my millennial brethren are buying into it hook line and sinker, cheers **with $8 beers of course

 
Comment by redmondjp
2017-07-12 12:44:46

Meanwhile in Seattle - that same KING5 reported on the 11pm news last night that Seattle is leading the nation in the number of construction cranes.

Watch out below for falling rents!

Comment by Ben Jones
Comment by PitchforkPurveyor
2017-07-12 14:36:44

The free rents are to try to not drop the price - the price which nobody can afford. People are leaving before paying those lofty asking prices.

Comment by butters
2017-07-12 17:17:29

But it’s dropping the price, isn’t it?

Do they think Americans are stupid? They might be correct on this one. Bravo! Bravo!

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Comment by PitchforkPurveyor
2017-07-12 19:37:27

Easy, butterball, I wasn’t saying their income wasn’t taking a hit or that rents weren’t falling, my point was that if they can keep the monthly rent the same, they maintain an illusion that rents aren’t falling.

 
 
 
Comment by Raymond K Hessel
2017-07-12 17:22:55

I’ve left messages at a few of those places I have no intention of actually renting from, asking them to call me back “if and when you drop your price 20 percent.”

PSYOPS, I believe the military calls that.

 
 
 
Comment by butters
2017-07-12 17:11:49

an Francisco, one of the nation’s hottest real estate markets is becoming one of the coolest,

How’s this even possible? One day it’s the hottest and everyone wants to live here and this is a demand and supply. Suddenly everyone realized that this is not as good as some people might have thought? Weather sucks, people suck, traffic sucks…smells bad…..
What happened?

Comment by butters
2017-07-12 17:13:27

Could it be there was no real demand at all? All speculative buys stemmed from bad monitory policies perhaps?

 
Comment by butters
2017-07-12 17:14:53

Oh I get oh I get it. Russians meddling here?

Actually I have met few Russians here…they all hate Putin. LOL

Comment by Professor Bear
2017-07-12 18:18:14

I noticed that amongst the Russians I personally know. Presumably that helps explain why they are here instead of Moskva.

 
Comment by palmetto
2017-07-12 19:05:56

The commie Russians come to the US. On account of it gets more like the USSR every day, except with more diversity.

 
 
Comment by Raymond K Hessel
2017-07-12 17:37:42

You’re paying for all the intangibles, like that edgy urban vibe you get in any progressive utopia. Makes the insane housing prices and property taxes SO worth it. No, really….

http://www.zerohedge.com/news/2017-07-12/bart-withholds-video-attacks-over-concern-about-stereotypes

 
 
Comment by Professor Bear
2017-07-12 18:17:13

“Exuberance infers induces frivolity.”

Fixed.

 
Comment by California Renter
Comment by @AltFacts
2017-07-12 23:08:33

Saw a similar dynamic in Bay Area prices leading up to the 2007-2009 collapse. East Bay sales and prices continued to bubble after relatively more stratospheric South Bay prices reached the breaking point where sales completely dried up.

 
Comment by taxpayers
2017-07-13 03:42:33

cause everyone wants to live in oakland

 
 
Comment by alphonso bedoya
2017-07-12 23:18:34

Homes in Miami’s Pinecrest :

No ocean views, sparse landscaping ….

No ambience.

One acre estates in search of a neighborhood identity.

 
Comment by Professor 🐻
2017-07-13 02:41:20

“If a recession came and demand for homes dried up, inventory levels would have a long way to go before we got to a place where there were too many homes on the market.”

Utter nonsense. Between lender and buyer fears about making loans or buying homes when unemployment is rising and speculators trying to cash in before prices collapse, the onset of recession can quickly turn a perceived shortage into a glut.

Comment by oxide
2017-07-13 06:25:25

Aaaack! :shock: Where’d you get the bear? Do they have donkeys too?

Comment by Professor 🐻
2017-07-13 07:50:04

I don’t know if this would work

https://www.smileysapp.com/emojis/donkey.png

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Comment by aNYCdj
2017-07-13 05:36:31

is this the end of peak oil for a while?

Investors Find Major Oil Deposit in Gulf of Mexico
Premier Oil, Talos Energy and Sierra Oil & Gas uncover ‘world-class’ formation in boon for Mexican government

https://www.wsj.com/articles/investors-find-major-oil-deposit-in-gulf-of-mexico-1499872771

 
Comment by aqius
2017-07-13 06:54:01

utter nonsense.

wow!

if it gets to “balderdash”, “stuff n’ feathers” or “Katy bar the door” I’ll know it’s go-time & I’m declaring Defcon 5 in my basement bunker.

 
Comment by taxpayer
2017-07-13 07:18:52

DC flip
did they notice w/o the FBI mega complex CRE just lost a quick 2-3 billion?

 
Comment by Professor 🐻
2017-07-13 07:34:52

RUNAWAY BUBBLE!!!

FINANCIAL TIMES
Chinese Economy
China property tax languishes as vested interests block reform
Wealthy homeowners in big cities resist efforts to deal with runaway prices
Appartments in Shenzhen, where the average home price last year was 41 times the average income
© Bloomberg
June 19, 2017
by: Gabriel Wildau in Shanghai

As Chinese authorities struggle to contain runaway home prices, a long-awaited plan for a property tax has stalled, the latest sign of entrenched interests impeding efforts to transform the country’s growth model.

The average price of a Shenzhen home last year was 41 times the average income, against 29 in London, 23 in Tokyo and 15 in New York, according to Macquarie Securities. Since late last year, 45 Chinese cities have introduced purchase limits and other measures in an attempt to cool rising property prices.

For years, economists have advocated for China to move away from administrative tools like purchase bans in favour of a property tax. Top Communist party leaders committed to imposing a property tax in a landmark blueprint for economic reform approved in November 2013.

By imposing an annual levy on home ownership, a property tax would reduce the appeal of housing as a speculative investment. While the merits of property taxes in general are a matter of debate among economists, few doubt that is sorely needed in China, where 50m homes lie empty, according to the China Household Finance Survey conducted by researchers from Southwestern University of Finance and Economics in Chengdu.

Yet market observers say there is little prospect of the government implementing a tax within the next few years — at the annual session of China’s rubber-stamp parliament in March it was announced that legislation for the levy was not on the agenda this year.

“Among well-informed economists in the government, establishing a property tax has been consensus for a long, long time,” says Gan Li, director of the CHFS and professor of economics at Texas A&M University. “The concern is politics. No one wants to be blamed for bursting the housing bubble.”

 
Comment by cactus
2017-07-13 10:10:18

Barrons Article “New Internet Winners: Broadcom, Finisar”

The previous internet boom was a cruel joke on the telephone companies, an orgy of spending on fiberoptics with slim hopes of a return on investment—and whose punchline was the bankruptcy of WorldCom.

The current boom is driven not by telcos, but by the biggest companies on the planet: Google parent Alphabet (ticker: GOOGL), Amazon.com (AMZN), Baidu (BIDU), Facebook (FB), Microsoft (MSFT), and Apple (AAPL). This wave is the opposite of the last one. These companies aren’t hoping for demand, they’re creating it. And they’re spending like mad to keep up with each new streaming-video offering and each new artificial-intelligence computing cluster.

The result is rampant spending that will be a boon to many of the classic “arms merchants” for years to come, including chip makers such as Broadcom (AVGO) that make the fastest network components, and fiberoptic suppliers like Finisar (FNSR) and Lumentum Holdings (LITE).

It’s no secret that Google and the rest have been investing in a second wave of internet infrastructure for some time. But to understand just how intense it is, one must talk with those on the front lines. “We have never seen this pace of change,” says Andreas Bechtolsheim, a serial entrepreneur who helped found workstation maker Sun Microsystems in the ’80s and is a co-founder and chairman of Arista Networks (ANET), a networking equipment vendor that competes with Cisco Systems (CSCO). Arista is a supplier to many of the internet giants.

http://www.barrons.com/articles/new-internet-winners-broadcom-finisar-1499493768

Comment by Ben Jones
2017-07-13 10:50:58

I abbreviated this post and added the link. Please do not post entire articles.

 
Comment by Carl Morris
2017-07-13 10:53:26

co-founder and chairman of Arista Networks

Hahah…I drive by their building once in a while and wondered why a record company would have a big building here. Dang I’m old :-).

 
 
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