The Risk They’re Not Making Money On Their Homes
A report from the Seattle Times in Washington. “Seattle’s real-estate market, already the hottest in the country, is now seeing prices rise faster than at any point since the housing bubble last decade — and even some wealthy foreign buyers are apparently starting to get priced out. For the past few years, a small but growing portion of homebuyers had been coming from overseas, especially from China — targeting mostly upscale homes, and often paying cash, sometimes sight unseen. But now, a new annual survey from the National Association of Realtors shows foreign home sales across Washington state dropped to $1.55 billion for the year ending in March, down 24 percent, from $2.05 billion, in the previous year.”
“Foreign homebuyers have themselves contributed to rising prices in some ZIP codes here. In some parts of West Bellevue and along the Lake Washington waterfront, Realtors have reported that half or more of their business now comes from foreign homebuyers. Juwai’s data show 38 percent of Seattle buyers from China purchase the home primarily as an investment. Some of those buyers might also live in their new home or allow family members to live there, but in other cases, they sit empty.”
From WBUR in Massachusetts. “The median selling price for a single-family home in Massachusetts has crossed $400,000 for the first time, according to a new report. The state’s median price was $410,000 in June — an increase of $30,000 over June 2016, according to the Massachusetts Association of Realtors. A separate housing snapshot found a similar trend in prices, though not quite as high. The Warren Group said the median selling price for a single-family home in Massachusetts rose to $395,000 last month — 6.2 percent higher than the price of $372,000 in June 2016.”
“‘[T]he fact that the median is just a hair under $400,000 is unprecedented, and perhaps worrisome,’ Warren Group CEO Timothy Warren said in a statement. ‘The growth in the number of home sales has slowed due to the the fact that so few homes are for sale. Prices are being driven up, but are they sustainable?’”
From ABC 11 on North Carolina. “For a city known for its oak trees, Raleigh’s reputation has a solid foundation for growth. Add in an explosive real-estate market, and the Triangle seems to have strong footing in the event of an economic downturn … or does it? Overall, the numbers are staggering - at least 653 new subdivisions have been approved in the past seven years, amounting to at least 40,888 new homes built or approved for construction. In Raleigh, the county’s largest municipality, the Development Services Department approved 279 subdivisions (4,438 homes).”
“Home prices are growing even faster in Wake County, fueling worries about an out-of-control seller’s market. ‘I do think the risk on the horizon is that we see slowing home-value growth and even flat home values,’ Aaron Terrazas, a senior economist at Zillow, told ABC11. ‘People shouldn’t plan on making hundreds of thousands of dollars on their home looking five to ten years down the line. You’re seeing that already in places like San Francisco. Home values have been flat in that upper segment over the past year. The real risk there isn’t that people are losing money on their homes - they’re just not making money on their homes.’”
The Orange County Register in California. “It may be the time of year when home buying typically slows down, but it didn’t look like it a Fountain Valley open house in last weekend. As many as 150 house hunters streamed through the 53-year-old, four-bedroom house on Ash Street after a $50,000 price drop to $749,000. That’s a steal for that neighborhood, some said, even though the kitchen and bedrooms need updating, the spa doesn’t work and a two-room addition out back is unfinished. As of Monday, the home had five offers, the property’s agent said.”
“‘It’s a seller’s paradise,’ said Lynn Redwater, a house hunter who stopped by on Saturday. ‘You list your house, and you have one or two offers.’”
“Agents interviewed reported the market has cooled since April and May, with slowing most pronounced for homes priced at $1 million or higher, which make up more than a third of the Orange County market. A seller’s market, for sure, but only for the savvy sellers, said Ron Miller, a broker-associate with Star Estates in Mission Viejo. Every neighborhood has its sweet spot — the price buyers are willing to pay. Homes priced higher, Miller said, will sit and miss that golden 30-day window when buying frenzies are most likely to occur.”
“‘The buyers today do not want to overpay because they think we’re at a peak,’ Miller said. ‘They all think we’re going to have a correction in the real estate market.’”
The News Press on Florida. “Monthly foreclosures in Lee County bottomed out in October 2005, when 127 were filed. That was near the end of the boom. They reached a high of 2,665 in October 2008, when the county represented one of the nation’s ‘foreclosure capitals.’ Fast-forward to today. The numbers pale in comparison, though they may be higher than readers might expect.”
“Denny Grimes, a real estate expert and also a presenter at The News-Press Market Watch, said ‘every market should keep an eye on foreclosures,’ but ‘it is in the healthy range. It’s something to talk about, write about, however it’s nothing to worry about.’ ‘There’s a sliver of the population out there that believes there’s going to be another crash,’ he said. ‘Barring something catastrophic, I don’t see it happening.’”
“Meanwhile, Grimes sees foreclosure opportunity for investors in homes priced above the median, and in luxury properties: ‘The opportunity is in the nicer homes, 300 plus, a million plus. That is where the success stories are going to be written.’”
2banana’s Law:
Long term democrat rule + public unions + free sh*t army = misery, ruin and bankruptcy
+++++
Why people are getting the hell out of the Northeast
NY Post - 7/26/2017
Last year, three states in the Northeast — New Jersey, New York and Connecticut — landed in the top five places people were moving out of fastest, according to 2017 data from United Van Lines. (The other two states on the list were Illinois and Kansas.) And data from Pew Charitable Trusts found that while people are all about moving to the South (their population grew by nearly 1.4 million people from 2014 to 2015) and the West (866,000 more people), the population growth in the Northeast is “sluggish.”
The Northeastern exodus is particularly acute in many big cities like New York City. Since 2010, more than 1 million people have moved from the New York area — which includes parts of New Jersey, Connecticut and Long Island — to other parts of the country.
So why are so many Northerners packing their bags?
The insanely high cost
Having to spend so much just to get by can make getting out of debt seem much harder. And housing costs and taxes in many of these states are also sky-high.
Many companies are setting up shop in warm and less expensive places, which means that people pondering getting out of the Northeast can now find work. Texas, for example, has seen massive job growth since the recession — and some of these jobs are in fields you wouldn’t normally think of as being in Texas. For example, tech: Google, Apple, Dropbox and Oracle all recently built or expanded offices in Austin, along with many others.
Sweet! Have fun down south! Y’alls don’t come back now, y’hear!
Besides southern states gaining power through electoral and congressional districts (and the NE losing)…
You can’t see how this is going to end, can you?
I work for a company with several bases around the US, including one in Houston, and the story is always the same: “It’s so expensive in the NE so I’m moving to Houston”, then they move there. They buy a house in North Houston which is just as expensive as one they could have bought in the NE, except they have worse schools with the same amount in taxes. They don’t make friends down there because nobody will associate themselves with ‘them damn Yankees’. They are miserable and it ends with a divorce because the wife hates it down there. She leaves, he sells the house and rents a 1BR apartment. He buys a 3 series Bimmer and spends his days off cruising up and down the strip clubs of I-45 trying to pick up methed out girls who have no future. I’ve seen this story played out at least 5 times.
It’s a joke up here to say to a co-worker “Why don’t you move to Houston?” because everyone talks about how great it is but in actuality they are miserable. They NEED to justify it by talking about it nonstop and trying to brag about it. Seriously, I’m not trying to hate on the south - I’ve been there and done that, and the true southerners are some of the nicest people you’ll ever meet. What I’m saying is that the grass isn’t necessarily greener on the other side of the Mason-Dixon.
The weather is what concerns me. I can’t handle that sort of relentless heat.
Yes, the heat, but it’s the humidity level that does one in.
But the biggest negative for me - insects (crawling, flying, you name it) are YUUUUUGE down south! Plus snakes that will kill you if bitten.
No one seems to move back to the n e
taxes up the booty
Texas isn’t the home of low taxes either.
Google, Apple, Dropbox and Oracle all recently built or expanded offices in Austin, along with many others.
Isn’t Austin just as liberal as the places they came from?
Sure, but isn’t that the point? It’s the one place in Texas where they can feel comfortable while not carrying the financial burden of what would happen if that town were to control the whole state. Similar to Boulder.
They opened offices there because it’s an important city for the industry. It’s the same reason that they have offices in places like Seattle, Pittsburgh and Cambridge, MA.
Problem is they move down there and then vote straight “D”. Virginia is now deep blue. NC is light blue, trending blue, Georgia is pink, trending purple.
That’s not a problem. It’s great.
No, it’s a problem. For one the newcomers are acting to displace the local culture, and additionally they ultimately vote for the sort of things that ruined the places they came from.
Those places must have some great things going for them if the people who grow up there are able to move in and take over like that. Also, those cheapo southern states should be more grateful. The federal government transfers vast amounts of wealth from the more prosperous states in the northeast and elsewhere.
“Seattle’s real-estate market, already the hottest in the country, is now seeing prices rise faster than at any point since the housing bubble last decade — and even some wealthy foreign buyers are apparently starting to get priced out.”
It’s like the last bubble on steroids. Seattle has blown through the previous peak long ago. Prices in outlying areas are now approaching their previous peaks, or have recently reached them.
With the stock market bubble raging on, and this out of control housing bubble inflating away, it’s anyone’s guess how long it can go on, or what will puncture it. I certainly didn’t expect this. All bets are off as to how/when this ends.
How it ends - that is easy.
When it ends -that is the hard part. Usually it has mucho to do with running out of greater fools.
“It’s like the last bubble on steroids”
Amen. Been trying to help a friend of ours from up Nawth find a rental in the 55+ market, whoooo-boy. What a scene it is all the way from Crystal River down to Ft. Myers in Florida. I was joking about all the panic buying at the lower end and just discovered panic-renting at the lower end as well. I can’t even believe what people are asking for a run of the mill dump. They’re all gonna get rich on their rental property, lol.
I’m going to be interested to see what happens this year to the whole pension thing. I think people are going to be wondering why they can’t get the rental prices out of the snowbirds.
“All bets are off as to how/when this ends.”
I’m thinking October. Maybe it’s because that’s what the doom pundits are predicting. And maybe that won’t even be the end, but the beginning of the end.
“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
– Winston Churchill
interesting reading how money is now a prime factor in the northern exodus.
as a teenager in Tampa / Sarasota FL during the 70’s, I’d often ask many new arrivals from Michigan “how was it back home”?
they always answered with same word: “cold”
every single time.
Paging Al Gore and the rest of the AGW frauds
Can I haz muh globull warming?
“they always answered with same word: “cold”
And my answer right now for Tampa Bay would be “godawful hot”. Started in May and no relief in sight until October, if we’re lucky. Seems to get worse every year, too. OTOH, they’re having a bit of a cold snap up in Connecticut right now.
I moved from the northeast to St. Petersburg about 25 years ago, driven mostly by the high cost of living in the metro NY area. I moved down in July and once Labor Day rolled around I was eagerly awaiting the weather to cool off a bit, just like it did up north. By November it was still warm enough to wear shorts. Yes, it was “godawful hot”.
Palmy - despite your comments about panic renting at the low end on the Gulf Coast of Florida, I’d bet you a grouper sandwich that those rents are half of what rents are back in the tri-state area.
And I bet you a lobster roll at Legal Seafood that those rents are 33% of the monthly cost of buying the same structure.
Statistically speaking - that’s unpossible amazing.
A 2000% increase in three years.
In an environment where banks ate their bad loans, borrowers need a 20% downpayment and every detail of a loan application is reviewed - it just doesn’t happen.
But we are far from that.
We have learned nothing.
++++++
“Monthly foreclosures in Lee County bottomed out in October 2005, when 127 were filed. That was near the end of the boom. They reached a high of 2,665 in October 2008, when the county represented one of the nation’s ‘foreclosure capitals.’ Fast-forward to today. The numbers pale in comparison, though they may be higher than readers might expect.”
The article says 56% of foreclosures there are 2009 loan or earlier. That means 44% were originated later.
But that 44% represents a relatively few (i.e. low foreclosure rates):
“Blomquist said “legacy loans,” those originating between 2004 and 2008, account for 56 percent of Florida’s foreclosure filings during the first six months of the year. In contrast, he said, foreclosure rates on loans originating from 2009 to present are “extremely low.””
————-
On a related note, I had a nagging question that perhaps 2nd loans were making a comeback, which was allowing so many purchases with Jumbo loans. In other words, was excessive leverage allowing purchases above GSE loan levels?
I was sent a long presentation put together by one of the large banks on various real estate related topics, and one slide they showed was the % of buyers who had a 2nd mortgage at the time of purchase in California.
I appreciated the fact that the graph started pre-2000 to provide some longer-term perspective.
In 1998, 10% of both first time and repeat buyers used a 2nd at purchase.
Both groups grew in percentage terms over time, but first time buyers got to 62% at the height of the bubble years…repeat buyers peaked at 36%.
From 2009 onward, the highest percentage for either group (first time or repeat) for any year was 6.4%…the most recent year was about 5%.
In other words, it doesn’t look like “piggie back” loans have made any kind of comeback, but they were a HUGE part of the market from 2004-2007.
‘foreclosure rates on loans originating from 2009 to present are “extremely low.”
‘Monthly foreclosures in Lee County bottomed out in October 2005, when 127 were filed. That was near the end of the boom’
“Filings from the first six months of the year: 1,632 in Lee”
About 275 per month as compared to 127 in October 2005.
Your point isn’t lost though…low foreclosures are a sign of a strong market…and strong markets often happen right before a bust.
Lee county wasn’t a strong market in 2005. It was months away from complete disaster, at times as bad as anywhere in the US. And now Grimes says foreclosures are on the way. I’ve probably posted hundreds of quotes from that guy in this same newspaper.
With foreclosure moratorium actions in effect across the land, of course foreclosures are low.
Why doesn’t anyone in the media bring up the fact that we still have foreclosure moratoriums as prices are their highest ever? Something’s NOT adding up.
When it comes to housing, it never does.
“Realtors have reported that half or more of their business now comes from foreign homebuyers. Juwai’s data show 38 percent of Seattle buyers from China purchase the home primarily as an investment.”
Which lenders are approving all these fools?
The “myth” is they are all cash deals.
However, looks like they borrow heavily too. From foreign banks at higher interest rates.
Actually, the rates might be lower, but not 30 year fixed.
For instance, you can get a mortgage in the UK in the mid 2% range, but it’s only fixed for 5 years.
So says a real estate “expert”
+++++
“Meanwhile, Grimes sees foreclosure opportunity for investors in homes priced above the median, and in luxury properties: ‘The opportunity is in the nicer homes, 300 plus, a million plus. That is where the success stories are going to be written.’”
Get out now. You are a pig to the democrat/public union slaughter.
Not ONE public union pension will be cut while property taxes can still be raised higher and higher.
Owning a house (even 100% paid off) in Chicago or Illinois is a massive LIABILITY.
+++++
Why Illinois Is In Trouble - 63,000 Public Employees With $100,000+ Salaries Cost Taxpayers $10B
Forbes | 07/26/2017 | Adam Andrzejewski
Illinois is broke and continues to flirt with junk bond status. But the state’s financial woes aren’t stopping 63,000 government employees from bringing home six-figure salaries and higher.
Whenever we open the books, Illinois is consistently one of the worst offenders. Recently, we found auto pound supervisors in Chicago making $144,453; nurses at state corrections earning up to $254,781; junior college presidents making $465,420; university doctors earning $1.6 million; and 84 small-town “managers” out-earning every U.S. governor.
Here are a few examples of what you’ll uncover:
20,295 teachers and school administrators – including superintendents Joyce Carmine ($398,229) at Park Forest School District 63, Troy Paraday ($384,138) at Calumet City School District 155, and Jon Nebor ($377,409) at Indian Springs School District 109. Four of the top five salaries are in the south suburbs – not the affluent north shore.
10,676 rank-and-file workers and managers in Chicago – including $216,200 for embattled Mayor Rahm Emanuel (D) and $400,000 for Ginger Evans, Commissioner of Aviation – including a $100,000 bonus. Timothy Walter, a deputy police chief, made $240,917 – that’s $146,860 in overtime on top of his $94,056 base salary. Ramona Perkins, a police communications operator, pulled down $121,318 in overtime while making $196,726!
Some of Illinois’ K-12 schools are spiking salaries and padding pensions. Data reveals nearly 30,000 teachers and administrators earned $100,000+ incomes. However, just 20,295 of those educators are currently employed; the other 9,305 are retired, resting on six-figure pensions.
Here’s how it breaks down in two of 900 school districts. Just 1,236 of the 2,147 educators with $100,000+ incomes are currently working.
In Township High School District 214, there were 500 retirees receiving six-figure annual pensions in addition to 640 working educators.
In Palatine Township High School 211, while 596 educators earned a six-figure salary, 491 retirees received six-figure lifetime pensions.
It’s not just Illinois, the county assessor is getting greedy the land over. Property taxes are skyrocketing. And local planning and land use departments, from their cushy digs, are really ratcheting up their fees and charges.
‘Should we encourage more residential development in Chicago when our population is declining?’
What could go wrong?
++++
“I want to see a rebound in the population and new growth in every sector. I just hope that any plans for expansion are well-thought-out, lest the city get ahead of itself and its best-laid plans fall short of what was anticipated.”
are really ratcheting up their fees and charges ??
About three years ago I transferred the utilities into my name on a rental I had to get ready for next tenant. $25. to change into my name. $25 again to change into new tenants name. I just had to do it again this morning. Now $60. Each time.
agree that outrageous fees & charges are out of control.
eagerly anticipating throwing Starbucks tea into the harbor while in disguise as govt union workers. ha!
Los Angeles has had their pension costs explode. In 2002 pension costs were 5% of the budget. In 2015, it was 20%.
Pension cost problems are not unique to Los Angeles.
So, where can they get more revenue? They can’t raise property taxes (Prop 13).
The answer is fees, fees, fees.
I bought Cubs tickets to visit Wrigley while in Chicago next month. have you seen the fees and taxes, it’s outrageous. I liked their Sports and Entertainment fee , then ballpark fee, the city tax and state tax on top of some other fees.
It’s amazing that taxpayers haven’t revolted yet.
Insert “peasants are revolting” joke here.
It’s amazing that taxpayers haven’t revolted yet ??
It’s hard to revolt against something when you have no choice in the matter. Utility fees for instance. Water & Sewer more specifically. They raise ours every year like clock-work.
I have a cemetery plot in Cook county Chicago Illinois and once my cremated remains are sent to the cemetery my estate will have to pay (at the time of this writing) just under FOUR THOUSAND dollars to have some union digger dig the hole and plop me in. And that nearly four thousand dollars includes all the county city state fees.
Haha, combat pay for working in ghetto schools.
Maybe that’s the only way anyone’ll go there.
My wife knew a freshly minted Latina school teacher who accepted a teaching gig in a south Los Angeles school district. A couple of years later the district made her $50k student loan disappear.
17% raise for sainted teachers in Chicago rotates to all gov employees eventually
And your point is? Pointing out the outliers while ignoring the average employee’s situation is obnoxious.
You prefer defaulting on promised pensions? Fine. Then state it.
It might be the most fair thing to shave off some of the pension benefits for the survival of the city - but state that you advocate breaking the deal if that is what you mean.
I think most complainers are jealous they didn’t get in on the ground floor of pensions - public or private. It was a nice concept. Some of them undoubtedly do not deserve such high wages - perhaps not for the rest of their lives. Some of those jobs, however, are highly paid positions in the private sector so those wages are relatively low.
The problem is that the math doesn’t work, the unions know it, but despite that, they are still pushing for the status quo at the expense of the taxpayer (which was never the intent).
When I’ve had this discussion with my MIL (who is a retired teacher), she’ll say “but I’ve paid into the pension my whole career”, which is absolutely correct. HOWEVER, her pension benefit is not based on what she paid in. It’s not even based on the blended average of her salary over her career. It’s based on some of the highest earnings years of her career (which may only represent a few years), PLUS a boost for selling back unused vacation/sick leave as though it was salary earned each and every year.
And while the math doesn’t work on the whole (the “high three” alone screws it up), it really gets egregious with the “pension spiking”. The “high three” encourages practices that allow a revolving door or management…everyone gets their turn to be the “manager” just before retirement, in order to get the high salary on which to base their pension.
In CA, Jerry Brown “reformed” the pension system to reduce pension spiking…but ONLY for new employees.
It would be like the government finding an egregious loophole in tax law that is enriching a few at the expense of many, but deciding that they are only going to close the loophole for people not already exploiting it, noting that by changing the loophole for those already exploiting it would be “breaking the deal”.
If the pensions were separate from the rest of the government, and they stood on their own, I’d have little issue with them. HOWEVER, the government is the backstop, and so it is fair and appropriate to eliminate practices that are clearly taking advantage of poorly conceived pension formulas, enriching a few at the expense of the many—even for current employees.
It might be the most fair thing to shave off some of the pension benefits for the survival of the city - but state that you advocate breaking the deal if that is what you mean.
Who made the deal? And who is actually on the hook for paying the consequences of a deal they never agreed to?
One group of people agreed to the deal and another group is stuck with the bill.
Or maybe it is the beginning of the end…
+++++++
Risk has been Abolished, According to Institutional Investors
Wolf Richter • Jul 26, 2017
“Covenant-lite” loans – risky instruments issued by junk-rated borrowers, with few protections for creditors – set an all-time record at the end of the second quarter.
They’re part of the risky universe of “leveraged loans,” and they’re secured by some collateral, but they don’t come with the protections and restrictive maintenance requirements in their covenants that traditional leveraged loans offer creditors.
Even leveraged loans with more restrictive covenants are so risky that banks just arrange them and then try to off-load them to institutional investors, such as pension funds or loan funds. Or they slice and dice them and package them into Collateralized Loan Obligations (CLOs) and sell them to institutional investors. Leveraged loans trade like securities. But the SEC, which regulates securities, considers them loans and doesn’t regulate them. No one regulates them.
The amounts are not trivial. Total outstanding leveraged loans in the US reached nearly $1 trillion ($943 billion) at the end of the second quarter, according to S&P Capital IQ LCD. And covenant lite loans made up 72.5% of them, the highest proportion ever.
That’s up from 69% at the end of the fourth quarter.
So what’s the big deal? When there is no default, there is no difference. And since there is apparently no longer any risk of default, it’s, well, no big deal. That’s what investors are thinking.
Why do investors do this? They’re chasing yield, little else matters, and companies take advantage of that. LCD about the covenant lite loans:
This refusal to acknowledge the existence of risk has become a pandemic. This of course has been the explicit strategy of the Fed since the Financial Crisis – to push investors out ever farther toward the thin end of the risk branch, while getting paid less and less compensation for the risk of falling off.
In other words, investors are delusional about the risks. And they’re delusional about it because Wall Street firms sell more financial products and generate “more profits when investors are bullish,” and in the end that’s what matters to Wall Street. And to heck with the retirement portfolios that are loaded with bond funds that will take the hit when the next recession hits.
tell ya what, the detailed summations on this blog make for interesting reading. I have learned quite a bit about real estate, bankers, strawberry pickers, and more.
if there is ever again a meetup I will buy everyone a round.
and try to avoid marrying that waitress that I don’t even know her name. get me outta here boys.
You mean Millie?
Suzanne….
“Homes priced higher, Miller said, will sit and miss that golden 30-day window when buying frenzies are most likely to occur.”
If I’m a prospective buyer of anything, a “buying frenzy” is sure to turn me off, period.
Note to self. Do not look to buy any house until day 31…
Realtors are liars.
You can say that again.
‘Agents interviewed reported the market has cooled since April and May, with slowing most pronounced for homes priced at $1 million or higher, which make up more than a third of the Orange County market.’
A third? Didn’t we recently hear of an “over-supply” of luxury shacks down there? I’d bet these are ordinary places that have seen prices run up to where they are called luxury.
As long as a third of the homebuyers are making $333,000+
It is perfectly sustainable.
Exactly. When luxury is no longer luxury, what happens to today’s non-luxury? Uh-oh!
“I’d bet these are ordinary places that have seen prices run up to where they are called luxury.”
And that’s precisely what it is. A minor adjustment to the happy talk narrative to keep the crime wave going.
I grew up on Labrador Drive across from this very house in Costa Mesa. My folks bought their property for 30K in 1970. The homes were built in the late 50’s. You can’t get into the neighborhood for less than 700K today.
The 1600 sq ft house listed on Zillow below sold for $630,000 early last summer then flipped for $790,000 in Dec. Zillow claims the “value” is now around 900K. I can’t imagine paying out around $8,000.00 a year in property taxes to live in what we local kids referred to as the “slums of Mesa Verde” because of our distance from the more expensive area next to the Golf course/Country Club.
https://www.zillow.com/homedetails/1710-Labrador-Dr-Costa-Mesa-CA-92626/25246665_zpid/
House prices in this neighborhood only got to around a 600K peak last bubble and I can’t imagine where the buyers willing to pay these remarkably high prices today are coming from. However, the fact that the local Market Basket grocery that was in the neighborhood for decades is now a Tokyo Central Asian market might help to provide a clue.
https://www.tokyocentral.com/t-costamesa_ad.aspx
Am I the only one that finds people spending 750K on a 50 year old shack awesome? I honestly think you could convince these people to line up and pay money to get kicked in the crotch. Repeatedly!
I live near LA: you can’t sell them anything because the house leaves them too broke to afford anything but the painkillers they need to get through the day!
It is way more Ghetto than 2008 here in San Bernardino. Zillow has the local drug dealers neighbors house at like half a million.
I’d bet these are ordinary places that have seen prices run up to where they are called luxury ???
+1 Ben. Good point.
https://www.bloomberg.com/news/articles/2017-07-26/the-best-way-to-increase-housing-supply-build-more
The relative differences are interesting…home building is a bigger deal to overall number of homes available than, say the negative effect of having more homes owned by investors.
And the link to the study:
https://www.trulia.com/blog/trends/inventory-myth-busting/
With record high levels of new, excess, empty and defaulted housing units out there, there’s no need to build more.
What are we up to? 24 million? 26 million? 30?
As home inventory sits near post-recession lows, there are many hypotheses on why there are so few homes for sale today. Here are the five leading theories:
Who decided these were the “five leading theories”? Nice way of creating self-serving arguments and then knocking them down.
(1) investors bought up too many foreclosures during the bust and are hording them as rentals,
When I worked at a law firm during the boom of the early-2000’s, most “investors” lied and said it was a primary residence on their paperwork, so where is Trulia getting the data informing them which and how many buyers are “investors”? Not to mention that most buyers in general are buying because they believe prices will continue going up, which makes all current buyers speculators/investors. And plenty of so-called investors just leave the properties empty. They are not listed for rent anywhere.
(2) rising prices have made buying a home unaffordable,
What does that have to do with how many houses are available for sale? Nothing.
(3) owners don’t want to sell if they don’t think they can buy another home,
Many actually do try to sell their home and “trade up”, because buying an even more expensive house and getting even deeper into debt means in the end you will get richer!
(4) too many home-owning boomers can’t or don’t want to move, and
I dunno, not sure I have anything to say about this one, except that as more and more of them become incapacitated and need care or kick the bucket, there will be a lot more inventory coming online.
(5) owners who want to trade up can’t find an affordable home at the next level.
See #3.
Hey Trulia, how about the nationwide foreclosure moratoriums that are still in effect? How about all the bank REO’s that are sitting out there? Don’t see that referenced anywhere in your five leading theories (which you made up).
And as far as the “hypotheses” Trulia says they tested with this “study” (is a regression analysis a study?), all I can say is garbage in = garbage out.
And then Bloomberg goes and gives legitimacy to this by basing a story on it.
incapacitated and need care there will be a lot more inventory coming online ??
No. Not at least under current tax rules. I sat with my next door neighbor recently. Her husband passed away a year ago. Big house and worth a lot of money. They bought it for 47K. Her tax consequences in a sale would be over $300,000.
kick the bucket, there will be a lot more inventory coming online ??
Yes. At least under current tax code. Stepped up basis. No tax.
(3) owners don’t want to sell if they don’t think they can buy another home,
Many actually do try to sell their home and “trade up”, because buying an even more expensive house and getting even deeper into debt means in the end you will get richer!
That’s not the point here.
My parents own their home free and clear (and have for 10+ years). A few years back, they wanted to DOWNSIZE further, but liked the neighborhood where they lived. They only wanted to sell their existing home in conjunction with buying another….and inventory was so low that they delayed listing their home.
What good was selling their home if they couldn’t find another place to live?
A certain amount of vacancy/homes on the market is healthy…without those things, the market works less well.
The point is, you posted and quoted a fraudulent “study” done by members of the real estate crime syndicate which was then laundered by other members of the syndicate (bloomberg) giving it the air of legitimacy.
1. The data doesn’t support your comment that people are buying homes and keeping them vacant in large numbers. The big institutional investors have 90%+ occupancy rates, and you can see home rentals being listed every single day on Craigslist by mom and pops. Even if the rationale for buying a home was speculation that the price would go up (and not rental income), it is stupid to keep a home vacant (for lots of reasons).
2. If the reason for there being too few homes available for people to buy and/or live in is some grand conspiracy (foreclosure moratoriums and banks holding onto REO), the ONLY reason for the conspiracy is to drive up the price of homes so they can get their loan repaid.
Right? Right.
So, now that home prices on a nominal basis have reached their prior peak, why is the conspiracy continuing? Shouldn’t all these homes be getting sold back onto the market? After all, as we’ve been told (over and over again), the longer you hold a home, the more it deteriorates.
If not, what’s the endgame for the conspirators? To hold the homes vacant indefinitely without leasing them? To what end?
These two comment defy logic AND the available data. Time for a new tinfoil hat.
Housing Bubble 2.0: Making America More Unstable, Again
With low inflation and continuing stagnation in median wages another housing bubble is just what the doctor ordered as a cure for the last financial crisis, caused in part by the rampant financial fraud associated with Housing Bubble 1.0.
And it looks like we have yet another tech stock bubble well underway.
Meanwhile the public is distracted by the corporate media’s endless coverage of clown car antics and foreign plots to pollute our precious bodily fluids.
Well done, elites, well done.
And no one could have seen it coming, again.
http://jessescrossroadscafe.blogspot.com/2017/07/housing-bubble-20-making-america-more.html
The Fed doesn’t like competition when it comes to creating “money” backed by nothing.
https://www.bloomberg.com/news/articles/2017-07-25/u-s-signals-clampdown-on-red-hot-digital-coin-offerings
Heckova job, central bankers.
https://www.theguardian.com/uk-news/2017/jul/24/bloated-london-property-prices-fuelling-exodus-from-capital
Australian home affordability worst in 130 years. Still wondering which housing bubble will burst first: Canada, Australia, UK, or China. My money is on Australia.
https://renegadeinc.com/australian-housing-affordability-worst-130-years/
Is Hillary Clinton still paying online trolls?
I think Soros was actually funding that effort.
Yup. The paid poster on our local RE blog disappeared after shilling for Hillary for two years up to the election (on a real estate blog - go figure). Always got quiet when I accused them of being a paid poster.
Is Hillary Clinton still paying online trolls ??
To serve what purpose ?? She lost. She is home enjoying her two grandchildren. Seems like the winners still have the mental problem not her. Maybe it’s due to winners remorse.
More likely she’s seething, wrapped around the bottle, hurling various heavy objects at her skulking, most chaste husband, blaming everybody but herself for her loss, and plotting some sort of comeback. I mean, you can’t peddle influence unless you hold some bankable public office.
No doubt she’s pizzed. It was “her turn”, after all.
But let us not forget, she was just another pawn, a stooge for the globalist billionaires and bankers. The real PTB are the ones doing everything they can to derail the Trump presidency, and they have the financial resources to do it.
Soros is doing everything he can to bring defiant Hungary to its knees.
I wonder if she had to toss a box of new CINC stationary?
Send me your huddled money launderers yearning to escape with their ill-gotten gains.
http://www.zerohedge.com/news/2017-07-26/spot-outlier-seattle-home-prices-go-vertical-laundered-chinese-money-flows
She’s gonna blow!!
You mean Millie??
What Recovery? The Case for Continued Expansionary Policy at the Fed
By J.W. Mason | 07.25.17
Today’s dominant story, told by the Federal Reserve, the media, and many prominent economists, is that the economy has recovered from the recession and is growing about as fast as it can without overheating. This outlook has led the Fed to increase interest rates four times since December 2015, ending the historically low rates it maintained for nearly a decade. As evidence that the economy is at potential—i.e. is utilizing all productive labor, capital, and resources—many cite the unemployment rate of 4.3 percent. This is the lowest it has been since 2001, and it’s expected to continue falling, although inflation remains below the Fed’s 2 percent target.
However, Roosevelt Fellow J. W. Mason, among others, questions the premise that we have achieved full employment and GDP is currently at potential. In this report, we show that output in 2016 remains well below pre-recession expectations. Low demand and reduced investment, he argues, have kept labor and capital on the sidelines. To achieve the kind of high pressure economy that promotes investment, raises wages, and increases work force participation, the Fed should pursue much more expansionary policy.
http://rooseveltinstitute.org/what-recovery/
Strive for relevance, Mikey.
The Fed’s “expert redistribution” has been quite good for employment in certain sectors. However the expected “trickle down” effects have yet to materialize.
After nearly 40 years of trickle-down economics, it’s still not trickling. What do you say, should we give it another 40 years?
Some Captain Obvious “expert” informs us the Fed is dragging its feet on interest rate hikes.
Of course it is. Yellen the Felon wants to go on bilking savers out of interest income for as long as possible, while forcing yield-seekers to play in Wall Street’s rigged casino. When the bond vigilantes eventually force Yellen to hike, it’s game over for the Fed’s asset bubbles and Ponzi markets, and she knows it.
http://www.cnbc.com/2017/07/26/federal-reserve-dragging-its-feet-on-raising-interest-rates-expert.html
It is true that an inexpensive, paid-off house helps build net worth. It’s a lower expense than renting, after it’s paid off (provided the house doesn’t require a lot of maintenance, i.e. it’s not a money pit).
However, this does not hold true for expensive houses. Saddling people with mortgages they can’t afford is not a path to riches. It’s a path to foreclosure and financial hardship.
Specifically, this is a zip code right outside the Baltimore city limits (21207). Of 142 houses for sale, 22 are foreclosures. Okay. But, there are 325 houses which have been foreclosed or are in the process, which are not for sale. That is a primarily minority community. They’ve heard that buying a house is a “way to build wealth”, it’s the right thing to do, and it’s almost assuredly an improvement in schools and lifestyle from Baltimore City. Well-dressed, unctuous people, pretending to care about these folks are telling them they can afford mortgages well beyond their means, and documenting the loans just well enough so the government will buy them.
And in Maryland, the foreclosure process is byzantine and glacial. So a foreclosure takes that house off the market for years, again limiting inventory.
This is not doing the minority community any favors, and if anything, could be contributing to the unrest in the city, once these folks realized they’ve been screwed by the system again.
“Saddling people with mortgages they can’t afford is not a path to riches.”
Could Mr Banker kindly weigh in?
Touche
While it is a path to riches for those doing the saddling, I should have clarified and said it is not a path to riches for those being saddled.
It’s kind of a farmer-cattle relationship.
Master-slave… except at least the slavery is voluntary in this case, which makes it legal.
Will the Fed’s current efforts to trash the dollar through benign neglect breathe new life into the Housing Bubble?
Dollar sinks to 13-month low.
http://www.cnbc.com/2017/07/25/dollar-steady-above-13-month-low-ahead-of-fed-verdict.html
http://www.marketwatch.com/story/bitcoin-isnt-real-and-markets-are-darn-hot-warns-howard-marks-2017-07-27
London’s landmark ‘Walkie Talkie’ building sold for record $1.7 billion
http://money.cnn.com/2017/07/27/news/companies/walkie-talkie-london-building-sold/index.html
The 38-story skyscraper in London’s financial district was completed in 2014. Designed by Rafael Viñoly, the building at 20 Fenchurch Street was dubbed the “Walkie Talkie” because of its distinctive shape.
In May, British Land and Oxford Properties completed the sale of The Leadenhall Building, informally known as the “Cheesegrater,” to Hong Kong-based CC Land Holdings. The purchase price was £1.15 billion ($1.5 billion).
The mega purchases run counter to a marked deflation of central London’s property market
Remember the discussion about low cost of capital allowing employers to buy technology rather than give raises?
https://youtu.be/6NN8kXh-Tpk
In grocery stores, where margins are super-thin, how quickly do you think the owners will shave jobs with this robot rather than give raises?
And to think that cost of capital doesn’t come into play is akin to putting your fingers in your ears, singing “la la la”.