They Can’t Dream That Ultimate Figure Any More
A report from Reuters on South Korea. “South Korea will raise capital gains taxes on owners of multiple homes and impose fresh mortgage curbs to rein in speculators who policymakers blame for stoking a housing bubble in main regions across the nation. The latest measures — the third set of steps in 10 months — are the most stringent on record and signal government worries that rampant household debt could imperil the economy if left unchecked. ‘By far this is the strongest measure to curb buying frenzy,’ said Lee Mi-yun, an analyst at Real Estate 114 Inc., a real estate research agency. ‘Those with multiple homes are likely to stay in wait-and-see mode, as the proposed changes needs to go through the parliamentary hurdle.’”
From Newshub on New Zealand. “After years of heat the property market appears to be suffering from a winter chill, as new property listings plummet accross the country. July saw a record low in the number of houses being listed, caused by a perfect storm of market conditions. ‘What we’ve come off the back of is three or four years of a very hot market and generally what goes up must come down,’ realestate.co.nz spokesperson Vanessa Taylor said.”
“While it continues to be a sellers’ market across New Zealand, Auckland has seen a shift, now teetering on the edge of a buyers’ market. ‘Vendors have got to make sure they do list their property to sell, they can’t dream that ultimate figure any more,’ said Barfoot and Thompson director Peter Thompson.”
“So while we’re seeing a pre-election winter chill, there’s certainly no sign of the bubble bursting. Buyers and sellers are likely to continue to sit tight for the next eight weeks but after that, it’s anyone’s guess.”
Your Investment Property on Australia. “Australia’s looming apartment glut has prompted panicked developers to offer potential buyers significant incentives, including discounts with rental guarantees, free furniture and appliances, upgrades to fixtures, and significant stamp duty concessions. Towards the end of March, the Australian Prudential Regulation Authority told lenders to restrict higher-risk interest-only loans to 30% of new residential mortgages. Additionally, foreign investors were hit with new levies and buying restrictions, following the announcement of the 2017-18 federal budget.”
“Meanwhile, loan-to-value ratios imposed by the banks have fallen and interest rates have gone up. This has lead to panicky developers resorting to offering incentives to try and get apartments moving. Regulatory measures, combined with the Chinese government’s curbs on its citizens buying property overseas, has caused a dramatic slowdown in off-the-plan selling, according to developers. ‘Feedback from our Australian Property Conference and mystery shopping highlight a clear change in the apartment market, particularly so in Perth, Brisbane and to a greater extent in Melbourne,’ said Citi analysts David Lloyd, Adrian Dark, and Suraj Nebhani.”
From Executive Magazine on Lebanon. “In the absence of hard data, anecdotes and speculation become the basis of analysis. Take, for example, the question of whether or not there is a real estate bubble in Lebanon. From the results of a Google search for the terms ‘Lebanon real estate bubble,’ the sector seems like it is in real trouble. The alleged bubble has a Wikipedia entry, and plenty of news reports — both local and regional — over the past couple years have claimed that disaster is on the horizon.”
“The latest price-per-square-meter for residential units in the ground floor of a Beirut apartment building ranges from $2,180 surrounding the Beirut Arab University in Tarik al-Jadideh to $8,500 along the coast in Manara, according to Ramco Real Estate Advisors. Many advocates of the bubble theory point to these exclusionary prices as proof they are correct, although this aspect of the bubble argument often rings more of ideology than economics.”
“Developers with exposure to Beirut — such as Michel Georr, CEO of GCI — argue London and New York (or any other major global metropolis) are similarly exclusive and that the scarcity of available land in Beirut (with a surface area around 20 square kilometers) means higher prices are normal, if not natural.”
“While asking prices in Beirut have only come down 1.8 percent according to the latest Ramco figures, developers are offering 20 percent discounts, the organization wrote in Executive at the end of 2016. The increasingly loud talk of discounts in Beirut suggest the bubble has burst, with a price correction of 20 percent or more in the capital — even if the only semi-official index, Ramco’s, says asking prices have barely budged. What remains unclear and largely un-indexed is the price situation in the rest of the nation.”
“Will the country collapse? Assuming the bubble has now burst in Beirut, what will be the impact to the market overall and the country’s future? The quick answer: Who knows?”
From Reuters on Canada. “Canada’s long housing boom has drawn thousands into the sector, from realtors and home stagers to construction workers, and a looming slowdown threatens to trigger an exodus that could wipe out many of those jobs and force the economy to shift down. While housing has long been the main engine of Canadian growth, economists say a drop in home sales has already started to weigh on the economy and if price declines follow, consumer spending and jobs will suffer.”
“Realtors’ ranks in Canada’s largest city and hottest housing market have surged 77 per cent since 2008 to more than 48,000 - nearly 10 times the pace of Canadian job growth. Nationwide, that number has risen 26.9 per cent. By comparison, there are over 13,500 realtors in Chicago, according to the Chicago Association of Realtors.’To a lot of people, it is a get-rich-quick scheme,’ Toronto realtor David Fleming said about the real estate market. ‘But history shows when the market turns, half of the agents leave.’”
“Fleming believes many agents are already making less than minimum wage once license, membership and brokerage fees are paid, and it can only get tougher if sales continue to dry up.”
crushing.housing.losses.
Realtors are liars.
Bigger is better. Really!
MythBusters - Do Larger Breasts Equal Bigger Tips?
https://www.youtube.com/watch?v=6YJ91FKZHI0
Bigger is better. Really!
True.
One of our more “talented” bartenders occasionally wore blouses that served up her boobs on a platter. I’d kid her with “Rent week?” or “Big tips?” before telling her to cover up a bit.
I was surprised that the women’s tips increased at a higher rate than the men. I would have guessed otherwise betting that jealousy would be a factor. Anyway, it was an “eye opener.”
Yes, that was strange.
This particular bartender (she looked like Bo Derek, very pretty) told me that when she’d wash the glasses (machine in the sink with rotating brushes - you’d have to move the glasses up and down to do it right) - she’d look up and a cluster of guys would be in front of her to watch the resultant jiggle. I watched it one time and laughed like crazy.
Lesbians kind of freaked her out. Occasionally they would flirt with me too, no biggy, but it felt most strange when I was pregnant, about to pop (I probably just felt strange in general.) Basically they were quite nice girls. I told her what’s the big deal? Act the same way as she did with men who were hitting on her.
Sorry if TMI; in the bar/restaurant business it’s all part of the job.
__________________
It’s my birthday - huzzah - had my dinner out, filet mig-non. Really too old to make a big thing of it ;-p
Maybe when I get older I’ll get wild and crazy again.
Tarara, your story reminds me of Walt’s Fish Market; N.Trail. Sarasota, FL. circa 70’s
hot friendly waitresses/bartenders kept the snowbird seniors and locals coming back for more than just the “freshest fish caught in the bay”!
congrats on the b’day. mines friday. Leos kick azz. yessir
(last year my wife & kids told me to look out in the driveway for my present. ” There it is, right there, your long wished-for Porsche Panamera. What, can’t see it !? ” )
it was a Matchbox-sized car. parked very neatly in the center of the drive. I laughed so hard . . !!
but at least the insurance was affordable.
Ha, I’ll have to pull that Matchbox bit on my husband. I’ve been telling him we need a compact car.
Happy B to you too!
‘Many advocates of the bubble theory point to these exclusionary prices as proof they are correct, although this aspect of the bubble argument often rings more of ideology than economics’
This article is interesting in that it has some of the accusatory positions against “bubble theorists” you see some times.
‘Will the country collapse?’
Uh, probably not drama queen. A few people might have to get some boxes and apply for a real job though.
‘Will the country collapse?’
Only if the banking system collapses, which it won’t because ignorant pukes will be convinced that they must support it at all costs.
Only if the banking system collapses
Pray you can keep them believing that.
As long as we are in a global deflationary environment the main central banks can buy up the bad debt and create even more Yellen bucks looking for a place to die.
I’m certain that at some point the music will stop, what I’m not certain of is that I will live to see that day.
Not without collapsing demand.
‘Fleming believes many agents are already making less than minimum wage once license, membership and brokerage fees are paid, and it can only get tougher if sales continue to dry up’
There’s one poster here that says I caused this. My constant howling of desire for a recession made these poor UHS have to eat gruel.
I didn’t cause this situation. I don’t want a recession or a boom for that matter. I can recognize when things are out of balance. Or way out of balance into loony land like Canada’s housing market has been for over 10 years.
“While housing has long been the main engine of Canadian growth, economists say a drop in home sales has already started to weigh on the economy and if price declines follow, consumer spending and jobs will suffer.”
________________________/
I’m not from there, and only have visited a couple of times, but I don’t recall housing “long being the main engine of Canadian growth.” That’s been a relatively recent development, just like over much of the world. And of course, conventional wisdom is that bubble real estate prices must be propped up indefinitely because if they aren’t, “consumer spending and jobs will suffer.”
In my view debt creation has been the main engine of Canadian growth, just as debt creation has been the main engine of growth in the U.S.
Debt creation was the engine that powered the housing boom but it just easily could have powered a boom in tulips or some other vehicle.
Whatever it is that can be made fashionable.
If an ignorant puke is willing to bid up a price of a house by, say, $10,000 and there are a hundred houses whose values are affected by the price of this one house (aka the comps) then this ignorant puke has created a collective rise in equity of these hundred houses of one-million dollars.
Better yet: The ignorant puke does not have to pay the extra $10,000 for the house, he only has to PROMISE to pay the extra $10,000. So he, the ignorant puke, borrows a gob of money, also known as debt creation, and throws this gob of borrowed money at a house and - presto! - the house price of the house rises by $10,000 and the VALUES of a hundred other houses rises by the same amount.
PFM (Pure F*cking Magic).
Better yet (part 2): If the occupants of the 100 houses that had their values raised by $10,000 can be convinced that they are financial geniuses and as such should CASH OUT their magically-generated equity (cash out = stupidly borrow against it) then even more borrowed money will go into growth and thus the PFM will be strengthened.
er, cash out and SPEND IT.
And maybe even use the cashed-out equity to commit to buying another house, maybe even agreeing to boost the price of this second house by $10,000 and thereby creating $10,000 of equity wealth for the owners of the comps of this second house who just may possibly be himself!
Think of it! He buys (he commits to buying) a second house at a high price and in doing so he creates equity for the house he already owns (or rather the house he believes he owns). And he does not use money for this buying commitment, instead he uses PROMISES of money.
http://thehousingbubbleblog.com/?p=10158
‘Canadians have bought significantly more expensive homes in the United States over the past year, as they look to their southern neighbor for sunny, high-end vacation spots in places like Florida, Arizona and California, according to the National Association of Realtors. Between April 2016 and March 2017, Canadians doubled the amount spent in the U.S., a sum of $19 billion on mostly vacation homes and residential investment properties, according to a report…Canada’s burning hot housing market, particularly in Toronto and Vancouver, has fueled purchases in the U.S., as baby boomers cash out on their long-time family homes in Canada and use the spoils to pick up amenity-rich second homes in the U.S.’
“‘We’ve had such a dial up in prices,’ said Toronto-based broker Janice Fox of Hazelton Real Estate. ‘Canadians are are selling homes for prices they never could have imagined and that’s allowing them to buy vacation homes for prices they never could have imagined. They just have tons of free capital.’”
‘allowing them to buy vacation homes for prices they never could have imagined’
The money he uses in promising to buy is real money to the seller but it is not real money to the buyer; From the buyer it is only a promise of real money.
Please note: It is much easier to spend promised money than it is to spend real money.
If fact if one was to rely on real money from the buyer then one should not expect to see such high prices for houses as we are seeing because there is not enough real money out there to pay for these high-priced houses; There is only enough promised money to pay for these high priced houses.
‘allowing them to buy vacation homes for prices they never could have imagined’
because …
“‘We’ve had such a dial up in prices,…”
which led to …
“They just have tons of free capital.’”
Tons of free capital which was generated by huge increases in equity which in turn was powered by gobs and gobs and gobs of borrowed money.
I just got this email:
Hi Ben,
With more than 126,000 house-flipping investors in 2016 – the highest rate since 2007 – and an average gross profit of nearly $63,000, also a new ceiling since 2000, the personal-finance website WalletHub took an in-depth look at 2017’s Best Places to Flip Houses.
To help serious real-estate investors find the best markets to list their flipped properties, WalletHub’s data team compared the 150 largest U.S. cities across 22 key metrics. The data set ranges from median purchase price to average full home remodeling costs to housing-market health index.
Jump on it!
And coming in at #6 on that WalletHub list … is my fair city of Tampa. LOL.
Canadians have bought significantly more expensive homes in the United States over the past year, as they look to their southern neighbor for sunny, high-end vacation spots
I’ve never understood the appeal of a vacation home. When I go on a vacation:
1) I like to go to a different place every year
2) Cooking, cleaning and other housework is not my idea of a vacation.
3) When I’m done with my vacation, all I want to bring home are memories, pictures and maybe a few knick knacks. Bringing home a punch list of things to fix on the vacation house is not on my vacation to-do list.
Plus I’m fairly certain that for the cost of property taxes, homeowners insurance, HOA fees and utilities, plus paying some management company to take care of your house (landscaping, pest control, minor repairs, etc.) during the 48 weeks you aren’t there, I could easily fund a nice overseas trip. I could probably even upgrade to something better than coach on the airplane.
I strongly suspect that the Canucks who buy these “vacation” shacks are mostly speculators, hoping to make a quick buck when they flip them. Of course, they can brag about their Florida or Arizona “vacation home” to their friends.
I strongly suspect that the Canucks who buy these “vacation” shacks are mostly speculators
Of course. What you’re obviously not getting is that in addition to some sweet vacations it will also make you rich.
Of course. What you’re obviously not getting is that in addition to some sweet vacations it will also make you rich.
And it probably cures ED too.
Canucks who buy these “vacation” shacks are mostly speculators ??
Sure there is probably some of that but I suspect that a lot of it is fleeing the cold weather.
Homelessness in a place like Canada is probably a public safety issue with their brutal winters, so they can’t just look the other way and pretend.
Speaking of bubbles, I’d like to start a poll. We’re now at Dow 22,000, still a long way from the level predicted by the infamous 1999 book, and many years after it was supposed to occur, but closer nonetheless. What’s going to happen first, Dow 36,000 or a recession worse than the Great Recession? I consistently have chosen the latter. I’m amazed every day that this is still going on.
Not long ago, Dow 20,000 seemed like a joke. Earnings don’t even matter anymore, so the sky’s the limit.
My paper today carried an op-ed piece celebrating Amazon as a fantastic wealth creator. It has been if you owned Amazon stock. But otherwise, is what we gained from Amazon more valuable than what Amazon has destroyed? The company only intermittently is profitable. From Forbes:
“There is a new calculus in corporate boardrooms. Profits are so yesterday. Now it’s all about vision and great storytelling.
Blame Amazon.com. The online behemoth cracked the code. Despite posting just a handful of profitable quarters in its two-decade history, it’s the fourth-largest public company at almost $470 billion in market capitalization. Now, its copycats are changing the game.”
https://www.forbes.com/sites/jonmarkman/2017/05/23/the-amazon-era-no-profits-no-problem/#4aa478f7437a
Can Amazon Be a Record Breaking Wealth Destroyer?
http://cepr.net/blogs/beat-the-press/can-amazon-be-a-record-breaking-wealth-destroyer
There are a lot of unprofitable companies out there whose stock is worth zilch. The belief is that Amazon will continue to expand into new lines of (equally unprofitable) business. They’re getting into the grocery business and now there is talk of them getting into healthcare.I haven’t heard much lately from Amazon’s rocket business, I seem to recall Bezos claiming they would bury SpaceX, but I haven’t heard a peep about an Amazon rocket launch in a long time.
For some reason Wall St. thinks this will end well.
I get contacted on a weekly basis by Amazon recruiters to come work for them in Boulder, to write code for their online advertising business. The only thing I’ve ever heard is that should you accept their offer, expect to put in 60+ hours per week,
F*ck Jeff Bezos, the Amazon slave plantation, and his globalist rag Washington Post.
I give my money to Tattered Cover Bookstore.
Even Sears, the first mail order company could earn a profit. Amazon? Not so much.
I’m amused that people are supposed to entrust their retirement funds to “vision and great storytelling,” like Bezos was Scheherazade or something.
The belief is that Amazon will continue to expand into new lines of (equally unprofitable) business.
Reminds me of the SNL “Change Bank” skit.
http://www.nbc.com/saturday-night-live/video/first-citywide-change-bank/n9701?snl=1
People ask how we make money…the answer? Volume.
Tattered Cover Bookstore.
I worked a summer in Denver (as an intern) 20+ years ago….I loved that store. Still remember one of the books I bought there…A Confederacy of Dunces.
the answer? Volume ??
Yep…And market share…Once you have driven your chief competitor into the ground and you have market share then you can slowly raise your price…
The ironic part is that Amazon is driving gains in market share both through price AND convenience (both of shopping and shipping). To assume they are going to take over the world assumes that there will be no reaction from traditional retailers.
IF some large traditional retailers can make shopping just as easy/convenient, it is easy for people to compare prices…and it will be difficult for Amazon to take over the world.
I used to buy some basic household goods through Amazon prime…no more. Jet.com (WalMart) is meaningfully cheaper.
If Amazon pisses off third party sellers, will Jet open their doors to those merchants? If so, would Amazon be able to stop them? At some point, if Amazon is too big, it could be considered anti-competitive for them to try to stop such a thing from occurring…or at least stop them from selling on more than one platform.
Just read that Bezos personally funds Blue Origin, the rocket company, to the tune of 1 billion a year. Their last launch was October last year, a suborbital launch. There is yet no announcement of when they will put something into orbit.
Jet.com (WalMart) is meaningfully cheaper ??
I will give it a try…
To be clear scdave, it was meaningfully cheaper for the few items that I was purchasing…ymmv. I buy from both, my main takeaway is that Amazon isn’t necessarily the cheapest.
Even Sears, the first mail order company could earn a profit. Amazon? Not so much.
That’s a good point. What did Sears do differently?
Amazon again!
Amazon is a catalog company. Online, yet still a catalog company.
What I find fascinating is how massively successful and profitable the image and storytelling business has become. Public relations and marketing is running circles around the hard sciences these days.
Are people sure that liberal arts majors are less intelligent than STEM majors? I guess that’s how one opts to measure intelligence…..
“The ironic part is that Amazon is driving gains in market share both through price AND convenience (both of shopping and shipping).”
Amazon’s prices are almost always HIGHER than competing retailers and e-tailers, especially when you include shipping costs and/or Prime membership price. It’s popular among people who either flunked remedial math, or don’t care about price.
The only thing attractive to me about Amazon was the ability to purchase almost anything in one place and not have to give my card number to anyone else online besides them. After canceling my Prime membership almost a year ago, I haven’t even missed it.
F*ck Jeff Bezos, the Amazon slave plantation, and his globalist rag Washington Post.
Amen, brother.
Then there is all the Tesla hype. Never mind that the all electric Chevy Bolt, with it’s 200+ mile range, beat the Tesla 3 to market by almost a year, or that all the other automakers are prepping their own all electric cars.
Yes - just by looking at Tesla’s cashflow one can tell that there is no good ending for that company. Even if they sell every car they are predicting, there is no way that hole is ever going to get filled.
We truly live in bizarre world.
Rental Watch, that book has long been part of my personal library. Ignatius and his valve.
I think we will have a number of recessions before we hit Dow 36,000, I don’t think it will be a single one greater than the Great Recession.
On a side note, I think the Dow is a stupid measure…30 stocks, weighed by price? Really? The stock price movement of one company can move the index and prompt headlines around the globe? Really?
“On a side note, I think the Dow is a stupid measure…30 stocks, weighed by price? Really?”
It’s a managed index at that. As some stocks rise they edge out and replace other stocks on the list.
As an example Eastman Kodak was once a strong component of the index. Not anymore.
Johns Manville was once there, but Johns Manville went bankrupt: So long John.
American Sugar? Who ever her of American Sugar? At one time it was a Big Deal of a company and it was listed on the Dow. But now?
Poof.
If you want to compare the Dow today with the Dow of, say, 1960 should one expect to see Microsoft on the 1960 list?
If not then why not? If your answer is Microsoft did not exist in 1960 then you are entitled to one free cup of coffee at my bank.
If you think that the 1960 Dow is still comparable to the current Dow then you not only get a free cup of coffee at my bank but also get a shot at my Dotted Line Special.
I really like the idea of “Fundamental Indexing”.
Rather than weight each company’s share of an S&P 500 index by market cap (ie. the bigger the market cap, the greater the share), you weight the company’s share of the index by more fundamental measures:
Total Revenue, book value, dividends, earnings, etc.
Weighing by market cap means that you tend to add more to an index when the price is relatively high compared to the others in the index (and less when the price is low). Buy high, sell low.
Fundamental indexing means that you add of a stock when the price is lower relative to the economic footprint of the company in the economy. Buy low, sell high.
Over long periods of time, Fundamental indexing outperforms cap weighting.
‘South Korea will raise capital gains taxes on owners of multiple homes and impose fresh mortgage curbs to rein in speculators who policymakers blame for stoking a housing bubble in main regions across the nation. The latest measures — the third set of steps in 10 months — are the most stringent on record and signal government worries that rampant household debt could imperil the economy if left unchecked
There’s at least two versions of Reuters reports on this. Here’s another one:
‘A South Korean lawmaker said on Tuesday that the government will announce a fresh set of measures on Wednesday to rein in speculative investment in the housing market.Addressing speculative housing investment is a goal of President Moon Jae-in’s government after record-low interest rates helped household debt soar in the first quarter to a record high.’
‘The government tightened loan limits for home buyers in July to 60 percent of a property’s value, down from 70 percent, in regions showing signs of overheating, including Seoul. Even so, analysts including Lee Mi-yun at Real Estate 114 Inc, a Seoul-based real estate research agency, believe the measures are not enough to cool the capital’s market.’
“It’s still a hot market. There are still more buyers than sellers all across Seoul, not just Gangnam area,” Lee said, referring to an affluent southern district of Seoul. “People don’t expect Seoul to ever experience a glut in the housing market, so demand for homes for investment purposes is strong.”
Koreans, like Chinese, are compulsive gamblers.
When I was in the military, back in the day, they used to have slot machines in the NCO clubs on base. They had to remove them, since so many Korean wives were gambling away their husband’s entire paycheck resulting in domestic violence when hubby found out wifey had pissed away all his money.
This tendency extends to other Asian cultures as well. You know what the #1 vacation destination for Hawaiians is?
Any guesses?
If you said Lost Wages, you’d be correct.
I won’t go to lost wages for free=gross
This is an interesting observation, which apparently business intelligence has picked up on:
“These numbers are likely to encourage other [cruise] lines to build ships just for China, instead of using cast-offs from America and Europe. The Norwegian Joy has a much bigger casino than usual, to cater for the Chinese love of gambling.”
from:
Cruising For A Bruising
China may waste money trying to build its own cruise ships
The Economist
July 1st 2017
‘After years of heat the property market appears to be suffering from a winter chill, as new property listings plummet accross the country’
Supply and demanders want to chime in here?
‘What we’ve come off the back of is three or four years of a very hot market and generally what goes up must come down,’ realestate.co.nz spokesperson Vanessa Taylor said.’
You said a mouthful Vanessa. And it follows that what goes way, way up goes similar distances down.
‘Vendors…can’t dream that ultimate figure any more’
Goofy price expectations dashed - check.
I am equally amazed. Ponzi requires that new debt be created to service the old. BOJ and ECB are still “ponzi’ing” and thus preventing the a ponzi unravel.
As the plausible deniability about the multitude of bubbles ends, there will be political pressure to slow or even end the printing. When that happens (and I think we are almost there) the ponzi unravel will begin.
A question I puzzle over is when the downhill slide begins, will more money printing be able to arrest the slide. Since the housing bust occurred just 10 years ago, I’m inclined to think that any decline in housing prices will unleash some panic selling. Will a 2% mortgage make someone want to buy a home that declined 10% in the last year? Maybe…
Begins? It’s already happening.
Hush your mouth.
You are going to ruin a good thing I have going for myself.
Yes Sir.
I’m inclined to think that any decline in housing prices will unleash some panic selling.
Even now that everyone has been trained to buy the dip? Seems to me that it will need to be worse than 2009 to generate any panic sales. Until then it’s just a few unfortunates who can’t wait it out for whatever reason.
“What is the currency in Beirut? Currency in Lebanon. Most merchants in Lebanon accept the U.S. dollar in place of the Lebanese pound and honor the fixed exchange rate. In fact, the majority of ATMs in Beirut give out cash in dollars.”
‘The latest price-per-square-meter for residential units in the ground floor of a Beirut apartment building ranges from $2,180 surrounding the Beirut Arab University in Tarik al-Jadideh to $8,500 along the coast in Manara’
http://www.metric-conversions.org/area/square-meters-to-square-feet.htm
1 square meter is 10.76 square feet. So these cheaper air boxes are $202/square foot.
The Seth Rich coverup is collapsing, TODAY.
Seymour Hersh audio on YouTube…
Seth Rich and Kim Jong Nam are talk’n it over.
There won’t be any Panic Selling. The real estate market is famously sticky to the downside. At the peak, time on market just goes up and up, while sellers are reluctant to cut prices while they wait for that one special buyer to come along. Years later they cut their losses and sell at a deep discount.
That’s how it played out in 2007 and don’t expect it to be any different this time.
“Years later they cut their losses and sell at a deep discount.”
The cash-out refi peeps are up to their eye sockets in hoc… time to squat or rent it out and pocket the cash.
we just have generations with lost years …
I have cousins in their are paying early to mid 30’s married - still in their condos in downtown toronto without real spending money after morgage and condo fees
Of course they cannot think about having kids in this situation - so there is this weird situation where they are playing chicken with the woman getting pregnant in the mid to late 30’s - and maybe will only have 1 child.
So society like Japan will drop population unless they bring in immigrants.
Puako, Hawaii Housing Prices CRATER 18% YOY
https://www.zillow.com/puako-hi/home-values/
Here is something the MSM is avoiding
Shunned from bond market, U.S. Virgin Islands faces cash crisis
https://www.reuters.com/article/us-usa-virginislands-crisis-idUSKBN1AI0D2
More and more debt…
Not one cut to spending…
More and more insane promises to their public unions…
And we are seeing how it ends.
In misery, ruin and bankruptcy.
There is a lesson in there somewhere.
“The territory is on the hook for billions more in unfunded pension and healthcare obligations.”
Someone isn’t going to get paid.
From wikipedia:
The median income for a household in the territory was $24,704
Yet they already owe $20K per head, not per household, per individual.
Short of a Federal bailout, I see no other recourse for them other than bankruptcy.
Well, if Puerto Rico is any guide…
They will cry to Congress for help.
They will be able to screw over bondholders, who by contract PR signed, should be first in line.
No pensions will be cut.
No other spending will be cut. Women and children would be hurt.
They will then bounce from one financial crisis to another for a generation.
Eventually, they become Venezuela; but without the oil.
Talked to a guy who just came from USVI and got mugged there. Said half the island is on crack, other half stoned. Guess its like detroit, if detroit was an island.
Same as it ever was, same as it ever was. . .
Sounds like CA. I was in OC for 3 weeks recently and I was accosted by no less than a half dozen drug addled junkies in broad daylight. And this was in the claimed “nice area”.
LOL, you have that effect on people….everyone wants to mug you HA!
This is what has become of OC…
https://youtu.be/9yRZbbJ9kyg
In SoCal if you’re not buying or renting then you’re a drifter.
https://www.cnbc.com/2017/07/26/jpmorgan-points-to-low-risk-of-a-us-housing-correction.html?recirc=taboolainternal
“JPMorgan’s research found that sharp price corrections have been relatively uncommon, even following large price increases.”
what does everyone think of that? can we expect another correction as last one in 2008?
or the one in 1990-91
We had a 30% price drop from 1990-1995 and a 50% price drop from 2006-2011. Sacramento foothills.
Grossly inflated prices results in collapsing demand. Demand is already south of the south pole.
Remember….. I can ask $50k for my 10 year old Chevy pickup but where is the buyer at that price?
So it is with all depreciating assets like houses.
Where I am at (Berkeley/Albany in the Bay Area), houses are considered appreciating assests,unlike cars. The market has been hotter than ever.
my husband and I are both making decent income, but just can’t make ourselves buy a 1.5 Million home. I can’t imagine how other people are able to afford the houses around here, but the houses are selling fast! On the other hand, it’s probably a good time to have debt, or else we will just be bailing everyone out when the market collapses, no?
“Where I am at (Berkeley/Albany in the Bay Area), houses are considered appreciating assests, unlike cars.”
I’ll have to remind our hapless landlords of this, as they seem ever-more irrate over having to shoulder big ticket maintenance costs on a thirty year old house. And they aren’t exactly maintaining it to luxury standards, either. For example, they are ignoring the large cracks in the driveway that kill the curb appeal of their SoCal investment property.
So, I went through Shiller’s data to see all real and nominal declines following a peak going back to the beginning of the data for the US…I looked at 3-year peaks/troughs (the highest reading looking back or forward 3 years, and the lowest reading also looking back and forward 3 years).
Peak year / Real Decline / Nominal change / Duration to Trough
1894 / -30% / -21% / 7 years
1907 / -15% / -5% / 3 years
1912 / -36% / +33% / 9 years
1925 / -13% / -28% / 7 years
1940 / -16% / -5% / 2 years
1947 / -8% / +2% / 2 years
1955 / -11% / +18% / 13 years (long slide downward–there was a local peak before the final trough in 1965)
1972 / -9% / +18% / 3 years
1979 / -12% / +17% / 3 years
1989 / -14% / +10% / 8 years
2005/2006 / -36% / -26% / 7 years (the official 12/2005 peak was followed by a nearly as high level in summer 2006)
I had never done that exercise before…a few observations:
LONG (5 years+) and deep real declines in price are relatively rare (following 1894, 1912, and 2005 peaks). It is worth noting that while all three of those took a long time to get to trough, at least 2 probably would be characterized as a “sharp” correction…1894 was down 24% in the first 2 years of the 7-year slide…1912 was a steady and painful decline, and 2005/6 saw a pretty sharp decline over the first 3 years of the crash.
Post WWII, nearly all REAL declines from peak values came with a correspondent INCREASE in nominal values…the crash following the 2005 peak is the exception to that rule.
With leveraged purchases, it’s the NOMINAL declines that have a higher propensity to leave you homeless (you go underwater on the NOMINAL principal balance of your debt, and are screwed).
However, the REAL declines are what steal your REAL wealth.
So, the nasty corrections are those with both NOMINAL AND REAL declines–homeless AND poorer…as opposed to just poorer.
So, what flavor do we get this time around?
Do you assume that we have now made a paradigm shift in housing cycles, where a 2005 flavor of decline happens going forward (or at least more commonly going forward)?
Or do you assume that 2005 was the anomaly, and we’ll get a decline much like most the other Post WWII declines (nominal flat to up, but real declines)?
Prices will fall until they reach reproduction cost + profit or $53/sqft(lot, labor, materials and profit) which is the price where housing demand will stop falling and reverse course.
We’re a long way from that event yet.
OMG. HA raised his price per sq ft by 3 bucks. First price increase in like 6 years.
Bathhouse
HA!
When you have no idea what you’re buying, you always get ripped off.
HA, the low cost leader must be a millionaire by now, given how he can produce housing so cheaply.
Just working on my second million while watching DebtDonkeys herding into bankruptcy.
Rental Watch: Do you assume that we have now made a paradigm shift in housing cycles, where a 2005 flavor of decline happens going forward (or at least more commonly going forward)?
I do think there’s been a paradigm shift in the mortgage market: it’s been nationalized. Government has been funding the vast majority of mortgages made since 2008 (“Comradely Capitalism: How America Accidentally Nationalised Its Mortgage Market”, The Economist, 8/20/2016 - 3rd chart).
The financial sector has been steadily offloading risk onto the government (i.e. taxpayer) since the advent of the Federal Reserve system. It is reaching the form its architects have long dreamed of, it seems to me.
History echoes, but is slightly different each time.
So, the big question - what happens to house prices going forward? Existing home sales are still robust by historical standards. So prices are increasing on robust home sales.
There’s the semi-famous NBER paper showing the large majority of foreclosures occurred in prime loans (now paywalled but the Fortune link is accessible), but then there’s an argument of whether they are accurately identifying prime loans, or are they really including de facto subprime.
If they were truly prime loans defaulting at that rate, that suggests there was significant speculative demand. But that sounds fishy? Speculating in houses a) with mortgages, and b) with prime mortages? Perhaps if it’s a mania, it’s seen as a can’t lose proposition? Also, the buy now or be priced out forever types who strained to get a house suddenly realized there’s no nirvana in a house and walked away as it harmed their finances?
What would be really interesting would be a ratio of existing adult population to housing units at multiple points over the last century, in order to get an indicator of consumption demand.
Cities such as Baltimore, which has had a sustained increase in prices, while having a sustained decline in population since the 1950s. The response to this is that the ratio of population to housing units is still increasing due to the destruction of existing housing units, or thereabouts.
Remember - the tulip mania was not due to a shortage of tulips.
The ratio of population to housing units would be informative to gauge what kind of demand is behind house prices - consumption or speculative. And would provide clues to house prices going forward.
The ratio of population to housing units would be informative to gauge what kind of demand is behind house prices - consumption or speculative. And would provide clues to house prices going forward.
When I have commented on CA supply/demand dynamics, this is one of the metrics that I have quoted.
If you divide the US into two geographies, CA, and everywhere else, and you look at the population/housing units, it looks like this:
CA population (2016): 39.25MM
US (ex-CA) population (2016): 283.85MM
CA Housing Units: 14MM
US (Ex-CA) Housing Units: 122MM
In the US Ex-CA, there are about 2.33 people per housing unit.
In CA, there are 2.8 people per housing unit.
If you wanted CA to have the same number of homes per capita than the rest of the country, you would need to add…2.8MM housing units.
I’m not saying that is the actual number, there are differences among the states (family sizes, etc.), but this simple math paints a fuzzy picture of the supply/demand imbalance as I see it in CA.
If you look over time (I did this before), you see this imbalance growing over time (I, and others blame CEQA). IMHO, this was the tinder for the housing bubble…and stupid finance was the lit match.
This fundamental supply/demand imbalance is a meaningful part of the home price trajectory in CA. I don’t see how you could see it any other way in light of the cold, hard numbers.
Interesting analysis of declines, but w.r.t the Clownifornia analysis, there is another supply/demand imbalance there that is also national and that is in jobs that pay well. Lots of demand, not a lot of supply and the intellect needed to get the high paying job is in short supply as well.
Aint life a b!tch?
there is another supply/demand imbalance there that is also national and that is in jobs that pay well.
That’s totally right. And so, you end up with a shrinking homeownership rate (CA is about 55%), and lots of people doubling up to pay the rent if they don’t buy.
http://www.newgeography.com/content/005452-overcrowded-california
The author points out high prices as a culprit…but you can’t point to high prices without giving a nod to the supply issues.
Pre-1996 data is somewhat irrelevant to the discussion.
And what happened in 1996 that makes earlier data somewhat irrelevant?
I understand that the older the data the less relevant, but I’m thinking it becomes less relevant with major policy/economic events (going off the gold standard, formation of the GSEs, etc.).
I’m struggling to think of what happened in 1996 that is relevant…I mean Tupac dying hit me pretty hard too, but it didn’t alter the course of housing.
50% drop in my market (Sacramento Foothills) from 2006 thru 2011.
….and the supply demand fundamentals were similar both corrections…..thus the supply shortage did not prevent the correction.
New construction was way higher in 2006 in Sac than it is today, and demand was meaningfully juiced higher with beyond-stupid underwriting.
I agree that the fundamental shortage existed then, and now…I disagree that the conditions are the same as it relates to mortgage finance, and new construction.
The Daily Hypocrisy: Mel Watt giving an speech to the National Association of Real Estate Brokers (NAREB). He laments foreclosure among minority communities, then lauds 3% down payments and 50% debt-to-income rations now accepted by the GSEs.
They’re not really even trying to be coherent at this point.
The coherent only theme I can think of is that the minority homeownership angle is a red herring, and the 3% down/50% DTI is supposed to help more people get into the flipping game.
FHFA Director on Racial Divide in Homeownership and Reality of G-Fees
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Aug 2 2017, 12:20PM
Mortgage News Daily
The foreclosure crisis left many people wary of homeownership. Even homeowners, who avoided foreclosure, witnessed their most valuable asset decline in value, sometimes to well below their mortgage balance.
Watt said that while the NAREB’s goal for Black homeownership is ambitious, it is well worth taking on the challenge. He believes that some initatives of Fannie Mae and Freddie Mac (the GSEs) can assist in achieving those goals.
Another initiative the GSEs and FHFA took addressed what is perhaps the most difficult homeownership challenge faced by many African Americans, the lack of a down payment. An analysis showed that many borrowers were creditworthy, could sustain paying a mortgage, but lacked funds for a large down payment and closing costs. A program now allows the GSEs to purchase mortgages with only a 3 percent down payment and provides for reduced fees for borrowers with income at or below the area median income.
Watt said FHFA and the GSEs have also worked to assess the role of debt-to-income (DTI) ratios and creditworthiness. The Dodd-Frank Act “ability to repay” rule which gave rise to the qualified mortgage or QM standards established a regulation which lenders can meet in part with loans that have DTIs that do not exceed 43 percent. However, the GSEs, while they remain in conservatorship, can purchase loans with higher DTIs and do so for otherwise creditworthy borrowers with DTI rations up to 50 percent.
Progress is also continuing on an alternative credit score model.
http://www.mortgagenewsdaily.com/08022017_fhfa_gse_initiatives.asp
Alameda, CA Housing Prices Crater 10% YOY
http://www.movoto.com/alameda-ca/market-trends/
I am so glad I didn’t buy a house in Alameda last year. According to Movato, it would take me 13 days to sell it and I paid $490/SF last year and would have to settle for $550/SF this year!
HA!
well jingle, thank GOD you dodged that lifting knife. just feeding the squirrels & running an extension cord to the broke-azz strawberry pickers next door woulda’ bankrupted you.
Jingle_Fraud has enough borrowed money to repay. No sense going deeper.
An open-borders oligarch considering a run for the presidency. Seriously, America? Would you really vote for someone who like Obama, McCain, Romney, and Hillary, serves only a corrupt .1% in the financial sector?
http://www.businessinsider.com/is-mark-zuckerberg-running-for-president-in-2020-pollster-2017-8
Since you mentioned it, do you still want to pick nits against the only guy we’ve managed to get into office who opposes this crap right at the start of an epic battle with the globalists?
“Pick nits”? The issues I’ve pointed out with Trump are hardly nits, like turning over our monetary policy to “former” Goldman Sachs execs or letting Swamp Creatures Jared and Ivanka have such prominent roles in his administration. But as long as he keeps Bannon in a prime role, he’s a vast improvement on what HillaryJeb would’ve been. Although I’m not counting on anyone in Washington DC to break the oligarchy stranglehold on this country.
You are picking nits. It’s war: either we succeed or it’s back to the globalists and we’ll never get another chance. I don’t care how he does it. It’s his boat. He created it, he paid for it, it’s all on his shoulders. He’s being pulled from every side at once. He’s under attack from the entire MSM and both parties. My sharp 88 year old Mom said recently, “I don’t care what the media says, I support him because he’s the only chance we’ve got.” I hope she isn’t right, but it could be.
George Orwell — ‘There was truth and there was untruth, and if you clung to the truth even against the whole world, you were not mad.’
What Orwell said. I refuse to be blind to Trump’s faults simply because he’s “the only chance we’ve got.” I don’t agree with that, by the way. Even if he sells us out - which he might - there are millions of Americans who carry in their hearts the true country, and will never back down or compromise. And will never stop resisting the lies and avarice of the globalists, no matter how hopeless it looks or how brain-dead most of their fellow ‘Muricans are.
Well then own it if we fail.
‘there are millions of Americans who carry in their hearts’
Aren’t you the one constantly saying how stupid 99% of the people are? You are a walking talking contradiction.
95% of the ‘Murican electorate voted for Obama, McCain, and Romney in 2008 and 2012. Is there any possible way to describe those people other than stupid?
5% voted for Ron Paul in 2008. I consider those voters awake and aware. Then in 2016 millions of former sheeple voted for Trump, which indicated they, too, had become awake and aware. So while I can state categorically that everyone who voted for Crooked Hillary is as stupid as they are amoral, the fact that millions of Americans gave the middle finger to the Oligopoly status quo is enormously encouraging and gives me hope that we could still, even at this late hour, have a popular uprising against the globalists.
On that score, I think I’ve been completely consistent.
Own the nit-picking and carry on.
Then in 2016 millions of former sheeple voted for Trump, which indicated they, too, had become awake and aware.
I believe most of those votes for Trump were actually votes against Hillary, as I regularly point out to Ds. But therefore I don’t think you can conclude they are “awake and aware”. You can hate the Clintons without being “awake and aware”.
If the Ds can manage to nominate someone that hasn’t been hated for over 20 years by half the country I would expect voting patterns to go right back to “normal” or even swing the other way against Trumpism.
“actually votes against Hillary”
I think they were really votes against the status quo left.
Brewer is not unique in his perspective…
https://www.cnbc.com/2016/11/11/why-hillary-clinton-couldnt-rally-the-black-vote-commentary.html
Get on the Trump Train or be left behind standing on the platform picking your nits and nose.
“South Korea will raise capital gains taxes on owners of multiple homes and impose fresh mortgage curbs to rein in speculators who policymakers blame for stoking a housing bubble in main regions across the nation.”
It seems policymakers all around the developed world are suddenly noticing the ginormous real estate bubbles that have blown up in their backyards and are taking active measures to tamp them down.
Except not here in the USA…
Except not here in the USA…
Which implies where it was originally engineered.
Not all countries can print their way out of trouble.
Do you ever get the feeling that you are being completely ignored?
Agoura Hills, CA Housing Prices Crater 9% YOY
http://www.movoto.com/agoura-hills-ca/market-trends/
I’ve been cruising in the Thousand Islands. It’s been a few years since I’ve been there.
Despite many docks being unavailable for use due to the Flood conditions in Lake Ontario and the cheap gas, marinas on the US side are at 50% to 75% capacity. On the Canadian side I visited Gananoque. The Municiple Marina there is at 100% occupancy. A slip for the night was unobtainable. Fine for me I know workarounds. Yet the Canadians say their economy is in not so great shape.
Gov statistics say that the average length of boat registered in the region has increased by 10 ft in the last ten years. Gan is not a very prosperous town. There are two mega luxury condo projects just getting started. Half a million for a condo according to the signage.
The rich are doing fine.
“The latest price-per-square-meter for residential units in …a Beirut apartment building ranges from $2,180 …to $8,500 along the coast in Manara, according to Ramco Real Estate Advisors.”
Hey, it’s Beirut, what more could u ask for, being that the old ruins are indistinguishable from the new ruins and at $8500/square meter…[$944/sq foot]…I honestly thought it was downtown Miami for a moment.
“Hey, it’s Beirut…”
Their weather is like Houston on steroids.