August 15, 2017

Everybody Thinks They Are Rich Priced Off The Top Bid

A report from the News Tribune in Washington. “What goes up will — eventually — come down, bubble or no bubble. A recent national survey by ValueInsured, which sells policies to guard against falling home values, put the spotlight on our red-hot housing market and the question, ‘Are we approaching a housing bubble?’ Washington topped the list of those worried about that question, at 71 percent, closely followed by New York at 68 percent. Also in the top 5 of concerned states: Florida, California and Texas. Dick Beeson, principal managing broker with Re/Max Professionals responded via email to questions seeking his view of what’s happening on this side of the county line, away from King County’s meteoric rise in median home prices, up more than $100,000 in one year.”

“‘This survey is a good example of how a small sampling of people, whose opinions are based on personal beliefs, extrapolates into a fearful and fretful story of eminent doom in the housing market,’ he said. Beeson says, hang on. ‘There will be a slowdown in price increases; nothing lasts forever. I think price increases will continue to rise through 2018 throughout Pierce County. The pace will be half of the 12 percent we’ve experienced in the last 3 years. After that, we’ll probably see a reduction in the rate of price increases.’”

From CNBC. “It feels like deja vu in mortgage land all over again. In the past 12 months, 1.5 million borrowers bought their homes with down payments of less than 10 percent, marking a seven-year high, according to Black Knight Financial Services. ‘The increase is primarily a function of the overall growth in purchase lending, but, after nearly four consecutive years of declines, low down payment loans have ticked upward in market share over the past 18 months as well,’ said Ben Graboske, executive vice president at Black Knight Data & Analytics. ‘In fact, they now account for nearly 40 percent of all purchase lending.’”

“The growth in this sector is likely due to new programs offered by Fannie Mae and Freddie Mac that are actually gaining market share from the FHA, which was the only low down payment game in town during the recession. The government-sponsored enterprises brought back 3 percent down payment loans in late 2014.”

From Bloomberg. “After deleveraging in the aftermath of the last U.S. recession, Americans once again have taken on record debt loads that risk holding back the world’s largest economy. Household debt outstanding — everything from mortgages to credit cards to car loans — reached $12.7 trillion in the first quarter, surpassing the previous peak in 2008 before the effects of the housing market collapse took its toll, Federal Reserve Bank of New York data show. To put the borrowing in perspective, it’s more than the size of China’s economy or almost four times that of Germany’s.”

“People are borrowing more not necessarily because they’re confident about their financial prospects. They’re doing it for necessities like education or transportation and, in many cases, just to get by. On the surface, liabilities at an all-time high aren’t alarming when the assets side of ledger is taken into account. Household net worth stands at a record $94.8 trillion, thanks to rebounding home values and soaring stock portfolios. But that increase has primarily benefited the nation’s wealthiest, said Lance Roberts, chief investment strategist at Clarity Financial LLC in Houston.”

“For most Americans, whose median household income, adjusted for inflation, is lower than it was at its peak in 1999, borrowing has been the answer to maintaining their standard of living. ‘When you look at net worth, it’s heavily skewed by the top 10 percent,’ Roberts said. ‘The average family of four is living paycheck to paycheck.’”

From Curbed San Francisco in California. “Blaming a ’severe lack of homes for sale and high demand,’ the California Association of Realtors (CAR) claims in a report released last week that it now takes almost double the income to qualify to buy a home in California as it did in 2012. The situation is even worse in the Bay Area. CAR now recommends ‘“a minimum annual income of $110,890′ (before taxes) in order to purchase a single-family home in California selling for the median price of $533,260, based on a $2,770/month mortgage payment after 20 percent down and an interest rate of just over four percent.”

“That is if buyers stick to the time-honored (but for many unreachable goal) of only paying 30 percent of monthly income to housing. In the Bay Area, the association recommends bringing in $179,390/year, which would come out to nearly $15,000/month.”

“To put that amazing sum in perspective, computer programmers in the Bay Area are averaging only $106,710/year, according to the Occupational Employment and Wage Estimates from the Bureau of Labor Statistics from May 2016. Software developers are bringing in about $133,500/year. Cops somewhere around $105,540. And teachers $43,340.”

From KRIS TV in Texas. “Take a drive around Corpus Christi, and you will see plenty of ‘for sale’ signs. Right now there is a peak in housing inventory. There have not been this many houses on the local market in years. That means it is a buyers market right now. Dr. Jim Lee, Professor of Economics at Texas A&M Corpus Christi, says housing prices have not yet dropped, but if this trend continues he expects they will. ‘The local housing market is overheated,’ Dr. Lee said.”

“This June there were 3,331 active listings on the market, according to a Coastal Bend Economic Briefing study. That’s up 19 percent from June of 2016. Dr. Lee says supply and demand in the housing market is tied to the oil industry. ‘A lot of homeowners who benefited from the last oil boom are selling their houses because they want to downsize,’ he said. ‘It’s not we’re lacking demand, but we have a lot of supply.’”

“It is the first time the market has seen a surge like this in years. ‘It’s a record in seven years. The last time was 2011,’ Dr. Lee said.”

The Real Deal on New York. “Barry Sternlicht sees doomsday waiting at the end of Billionaires’ Row. And that could be a good thing for him. Speaking on a second-quarter Starwood Property Trust earnings call, Sternlicht called the development of the high-end residential strip on West 57th Street an impending ‘debacle.’ He noted the out-of-balance mezzanine loan at JDS Development and Property Markets Group’s 111 West 57th Street project and predicted more distress in the luxury residential market, including at 53 W 53, a supertall condo being developed next to the Museum of Modern Art by Hines, Pontiac Land Group and Goldman Sachs.”

“‘We are beginning to see the cracks of the high-end residential market in Manhattan,’ he said. ‘The building on 57th Street just went through it’s B-lender. Those deals, and the building going up next to MoMA, those deals are going to be a disaster. So high-end resi in New York really is in trouble.’”

“Sternlicht, who was quick to point out that Starwood is not exposed to that market, said it won’t be banks licking their wounds in the event of a luxury condo slump. Rather, it’s the hedge funds, private equity firms and alternative lenders chasing high returns who backed projects asking prices of $7,000 to $10,000 a foot.”

“‘There’s a hedge fund that made $1 billion mortgages against some of these properties out of Europe and we will see how that fares,’ said Sternlicht, appearing to refer to the Children’s Investment Fund, which has backed the likes of 432 Park Avenue and 76 Eleventh Avenue. ‘Maybe they like the return, but they will lose capital. They can’t get paid off and they find out their basis is accreting because they are not getting paid currently, obviously….That is not going to end well.’”

“Sternlicht also said there’s concern among commercial real estate investors about foreign investors leaving the market amid turbulence in Washington. Property sales have declined and the gulf between asking and selling prices has widened, he said.”

“Those foreign investors, particularly those from Asia, bid up the price of assets dramatically and affected underwriting. ‘All the markets price off the top bid and the top bid has been an Asian bid, whether it was the sale of the Waldorf or the bailouts of a Strategic Hotel deal. Everybody thinks they are rich when the guy pays the 2 percent cap for an asset, or a 1 percent cap. If there are six bids at $1 billion and one guy is at $1.5 billion, I would ask you to tell me where the loan-to-value is of the loan, right?’”




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80 Comments »

Comment by Ben Jones
2017-08-15 09:10:34

‘Sternlicht also said there’s concern among commercial real estate investors about foreign investors leaving the market amid turbulence in Washington. Property sales have declined and the gulf between asking and selling prices has widened, he said. Those foreign investors, particularly those from Asia, bid up the price of assets dramatically and affected underwriting’

Isn’t this how it always goes? What was the bedrock strength of the market becomes its weakness.

Comment by 2banana
2017-08-15 13:46:37

Investors leaving because of “turbulence” in Washington…???

There has been turbulence in Washington since Ike.

They are leaving because they can’t make easy money anymore.

 
 
Comment by alphonso bedoya
2017-08-15 09:36:33

“Household debt — reached $12.7 trillion”

$39,563/person.

Comment by Mr. Banker
2017-08-15 13:27:53

A nation of dummies.

Comment by 2banana
2017-08-15 13:54:30

And when you consider a small but significant percentage have no debt.

The average debt goes way up if you have any debt.

Wonder what the median is?

 
 
Comment by oxide
2017-08-15 20:08:27

But that includes mortgages, which isn’t all that bad. You know what, that debt would be even *higher* if we included all the “debt” that renters are in. Or have all the renters pre-paid, in cash, the next 30-40 years of rent?

Comment by Lower Forever
2017-08-15 20:46:35

I guess I shouldn’t be surprised after reading all your posts here that you don’t know the difference between debt and an expense.

Gosh maybe they should include the “debt” you have for all the food you’ll eat over the next 50 years.

Comment by butters
2017-08-16 05:48:46

One word, government employee.

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Comment by oxide
2017-08-16 06:02:42

I know the difference between debt and an expense. For practical purposes, a mortgage payment is an expense just like rent is an expense.

Eh well, no point in arguing. I have this view that debt is actually okay as long as you’re solvent.

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Comment by Blue Skye
2017-08-16 07:29:52

There is a difference between debt and expense.

With debt you get whatever house you choose now, pay double for it and end up with a depreciated house 30 years later. Debt is an obligation, with some limited ability to change.

Rent is extremely flexible and significantly cheaper. You can pay rent for 10 or 20 years and bank enough money to purchase said house for cash after that. If you so choose you can go frugal renting and shorten the time horizon dramatically. When kids leave home was my opportunity to change things up. Most here know how that worked out.

Choosing the debt approach is a bet on numerous wild cards never turning up and also a bet on rocketing house prices perpetually. Sure, you may remain solvent, but stable or falling house prices will impoverish you significantly.

Not understanding this will cost you hundreds of thousands of dollars in the long run.

 
Comment by Rental Watch
2017-08-16 09:58:20

You can pay rent for 10 or 20 years and bank enough money to purchase said house for cash after that.

It all depends on how you want to live those 10-20 years. If you want to live in a very small residence, you could very well be right. Living in a small studio pales in comparison to the cost of owning a large house.

However, when you do the math on the same home, the numbers are a lot closer than you think.

Simple example: I just pulled down a random condo in Glendale CA (1201 Viola Avenue, #113). Asking Price: $575k, HOA: $240/month

Monthly cost (not monthly payment) would be $1,800 per month in interest, $520 in taxes, and $240 in HOA. Total cost per month is $2,560. Built in 2002. Sure there will be some maintenance, but the HOA at $240 deals with a lot of the common areas. (if you are counting the principal payment as a “cost”, well then, we need to have a discussion about that)

If you look for a rental within 5 miles of that zip code (attached, or detached–and no, don’t go to Palmdale for cheaper rent), minimum 3 bedroom, 3 bath on Craigslist, the CHEAPEST rental is $3,010 per month.

You can go farther away, or rent a smaller place to pay less, but not the same thing in the same area.

So…where exactly are the savings?

And no, I’m not advocating buying today, but for a different reason than the rent/own math. Today is a bad time to buy for one simple reason…prices are at a level consistent with prior peaks. There will be a correction at some point, and prices will come down.

I just don’t know if you’ll be waiting 6 months, or 6 years for that to happen.

 
Comment by Blue Skye
2017-08-16 12:11:58

God forbid we should consider a payment on principle part of the cost of buying a house!

Let’s agree that California is not part of the same logical universe. I rented a farm house for many years for $400/mo. The price to purchase the house was $80,000.

You will find what you are looking for I guess.

 
Comment by rms
2017-08-16 12:29:32

My 3/2 rancher has been paid-off since 2011. I have a daughter in college and a son starting next year. I couldn’t pay their way and make rent payments simultaneously. Not sure how others do it.

 
Comment by Rental Watch
2017-08-16 14:23:29

God forbid we should consider a payment on principle part of the cost of buying a house!

Of course, it is part of the cost of BUYING a home. But ultimately, you own the home if you make all the payments.

Every dollar of rent goes into your landlord’s pocket, you just have the right to reside in their property for that money for that month.

Every dollar of interest paid goes into the bank’s pocket. Like a landlord renting you their money, you’ll never get it back. You just get the right to continue to be a debtor, and reside in the loan’s collateral.

Every dollar of principal goes into the bank’s pocket. However, there is a reasonably good chance that money comes back to you at some point in the future (maybe even upwardly adjusted for inflation).

And FWIW, I didn’t hunt for a home that “worked”, I just picked a market in So Cal, and a home within that market.

Incidentally, I pay less in interest/taxes/upkeep on my home than I could rent it for. Friends of mine moved out of the area, but are renting their home…which covers all of the cost of the rental (including principal payment), AND the mortgage on their new home…

California may be different than other markets, but it’s different because rents are really damn high…why? The only logical explanation is that there are too many renters, and not enough rentals.

 
Comment by Blue Skye
2017-08-16 17:43:57

“Incidentally, I pay less in interest/taxes/upkeep on my home than I could rent it for.”

Yes and apparently the rent is too high.

Incidentally, my house is paid off and the taxes and upkeep are pocket change. It’s my retirement setup.

 
 
 
Comment by Taxpayers
2017-08-16 15:42:54

Oxide,can we get an inside the beltway report ?
Anxiety level
Etc

 
 
 
Comment by justme
2017-08-15 09:52:29

Bloomberg is wrong about the US debtors “deleveraging” after the 2008-2009 crisis. Almost all of the reduction in loan balances was through DEFAULTS, not DELEVERAGING. t is a complete myth that US debtors somehow paid down their debts in any significant way after 2008-2009.

Comment by 2banana
2017-08-15 13:56:43

But, but….eight years of obama.

Hope and change.

Yes we can.

He must of fixed something with trillion dollar bailouts and adding more to the deficit than ALL other previous administrations COMBINED and accounting for inflation.

 
Comment by SW
2017-08-16 08:56:43

Good insight. This means that the American consumer sentiment towards debt didn’t change either.

Comment by GuillotineRenovator
2017-08-16 13:01:23

If you provide it, they will come….for Mr. Banker’s “dotted line special.” There is an endless supply of suckers willing to blow OPM (other peoples money).

 
 
Comment by rms
2017-08-17 01:14:39

“Bloomberg is wrong about the US debtors “deleveraging” after the 2008-2009 crisis.”

These Bloomberg distortions are Yellow Journalism.

 
 
Comment by Carl Morris
2017-08-15 10:07:30

Went to an intro class last night in San Jose with Keller Williams to investigate the details of getting a real estate license for California. It was mostly what you’d expect, but they did show some interesting charts for the last maybe 20 years on sales licenses versus broker licenses versus transaction. At the last bubble peak there were many more sales licenses than broker licenses and then it crashed about a year after the market peaked. It’s never really recovered since. So it’s mostly the die hard long term people who made the money the last few years…apparently the general public has not gone back to seeing a sales license as the key to riches like they did back in 05.

Comment by ibbots
2017-08-15 10:24:27

‘ die hard long term people ‘

The 20%’ers, i.e. 20% of the realtors make 80% of the commissions, while the other 80% scrap for the remaining 20% of commissions.

Comment by Carl Morris
2017-08-15 11:02:36

Yeah, I was looking at the KW reviews on Glass Door last night. It was kind of sad and funny to read all the new agent complaints about how the agency doesn’t give you any leads and there is no base salary or benefits. They seem to have a fundamental misunderstanding about why the agency wants to work with them.

Comment by 2banana
2017-08-15 13:49:06

Always be closing….

My name? F*ck you, that’s my name.

Should be required viewing for anyone in sales.

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Comment by Montana
2017-08-15 16:07:43

A long time realtor here Missoula went on Facebook today and pretty much said things were cratering and that the 200+ new licensees should update their resumes.

Yet we got a call looking for listings. I guess all the mini McMansions in the ads aren’t selling.

Comment by snake charmer
2017-08-16 07:20:44

I was in Missoula for a few days last year. I saw that the want ads almost exclusively featured jobs paying from $11 to $13 per hour. Real estate listings did not correspond to those incomes, needless to say. The alternative independent newspaper commented that the median house price in Missoula exceeded the median income by a factor of around six, and described the town as becoming one where Californians bought houses and rented them to locals. Is that accurate?

Moose Drool Brown Ale, five stars.

Comment by Carl Morris
2017-08-16 10:09:23

Could be accurate. Sounds kind of like where I’m originally from in Wyoming. But I don’t know if I’ve ever actually seen one get rented to the locals. Usually they just sit empty except summer and Christmas. I suppose these days with Airbnb other options might be possible. But most locals than need a place to stay don’t have enough money to even be worth the hassle of renting to.

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Comment by Montana
2017-08-16 12:25:47

Yes most the ads in the paper ate for high end luxury houses, 400-600k. Ridiculous, they aren’t even trying to meet real demand.

I know it’s the realtwhores who jack the prices up. Owner: “really? You think I can get that much? Go for it!”

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Comment by GuillotineRenovator
2017-08-16 13:05:59

“I was in Missoula for a few days last year. I saw that the want ads almost exclusively featured jobs paying from $11 to $13 per hour.”

Montana has, historically, some of the lowest wages in the entire nation, at times running neck and neck with Mississippi. I’d argue that house prices in certain areas of Montana, Wyoming, Idaho are worse given local incomes than the Bay Area.

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Comment by puggs
2017-08-15 11:46:38

“People are borrowing more not necessarily because they’re confident about their financial prospects. They’re doing it for necessities like education or transportation and, in many cases, just to get by. On the surface, liabilities at an all-time high aren’t alarming when the assets side of ledger is taken into account.”

I wonder how many are taking money out of their homes to buy RV’s? Good golly, we drove to Glacier for a week vacation in our little pop-up and I was amazed at the number of shiny new RV’s in the campground and on the road. The thing with RV’s though is they only go DOWN in value.

Comment by scdave
2017-08-15 12:35:09

The thing with RV’s though is they only go DOWN in value ??

No different than many other personal items…The difference is that you receive real inherent value for your RV if you use it…I have owned my current one for 12 years…

Comment by Taxpayers
2017-08-15 13:39:21

Why don’t tiny house hunters just buy rvs,travel trailers

Comment by Carl Morris
2017-08-15 13:57:39

Or mobile homes. Yes, those are obvious questions. I can only assume it’s because for those people all of the above choices have a negative stigma when living full time, while “tiny homes” are something they can still feel cool and trendy about? Sometimes 90% of the challenge of the cramdown is finding a way to make people forget their humiliation.

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Comment by MacBeth
2017-08-15 15:45:33

Don’t underestimate your comment.

It’s exactly why people buy tiny houses. So they can feel all trendy, precious and good about themselves. All eco-friendly, too. Which is a crock in itself - if one were truly eco-friendly, he or she would use what already exists, not create more possessions that take hundreds of years to return to dust.

 
Comment by Montana
2017-08-15 16:09:38

Mention mobile to the hipsters and see the blank stared.

They don’t connect the two at all.

 
 
Comment by scdave
2017-08-15 14:49:34

Why don’t tiny house hunters just buy rvs,travel trailers ??

Not sure but Carl has a point about the “Cool Factor”…You ever been in a full size 5th Wheel trailer ?? They make a “Tiny House” look like a dog Kennel and they cost about the same amount of money…As far as full time RV’rs, I must say that after the great recession I have seen a significant spike in full timers…Even a very old RV can function quite well parked in a RV park as long as you don’t have to drive it and the space rents are quite cheap…I seen decent parks around $400. per month which includes water, sewer & garbage (No Electricity..You pay that separate)

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Comment by scdave
2017-08-15 14:52:50

Sometimes 90% of the challenge of the cramdown is finding a way to make people forget their humiliation ??

Yeah…I have seen a lot of it on the road….Some self inflicted and others not so much…Great recessions have that type of impact….

 
Comment by MightyMike
2017-08-15 16:32:58

It depends what these tiny house people are looking for. In a lot of trailers or mobile homes, the whole place shakes if slam the front door. Sometimes, the faucet handles in the bathroom are cheap little things. Maybe, for whatever reason, a very small number of people want tiny houses, not trailers.

 
Comment by Carl Morris
2017-08-15 16:42:34

But is a “tiny house” going to actually be more solid? Seems to my the biggest difference is psychological.

 
Comment by MightyMike
2017-08-15 17:19:10

If you built a tiny house out of the same materials as an ordinary-sized house, I would think that it would feel more solid than a mobile home. I visited some family who were renting an old 1,000 square foot house through AirBNB a few weeks ago. It felt pretty solid. It should be possible to build half that size that felt nice and solid. Of course, it would cost more than a mobile home.

 
Comment by scdave
2017-08-15 18:45:37

It should be possible to build half that size that felt nice and solid ??

Until you trailer it down the hyway for several years.

 
Comment by nhtransplant
2017-08-16 06:15:49

It doesn’t matter how nice a tiny home looks, most of the time the people living in them still have to poop in a bucket. Or “composting toilet” which seems to be a fancy bucket.

 
Comment by Blue Skye
2017-08-16 07:50:38

As long as you keep the house and the mortgage, these are just expensive ways to go camping.

 
 
 
 
Comment by junior_kai
2017-08-15 14:18:17

And trucks - I cant count the number of broke-ass surf buddies who have upgraded their 10-20 year old trucks in the past year to shiny new toyotas. Some of them, their rides looked like an old jalopy, I had to do a double take when I saw them in a new whip - almost didnt recognize them!

Straight out of Poe’s masque of the red death, these times. And yellen is prince(ss) prospero.

Comment by Ethan in NoVA
2017-08-15 16:24:55

There comes a point where you have to roll over to a new vehicle because the old vehicles will not meet safety inspections. Also, if you price out a used truck the prices are insane — so it makes sense to buy new (unless you want to save $2000 and buy a vehicle with 70,000 miles on it.)

Comment by junior_kai
2017-08-15 17:59:45

Safety inspections are not a problem in these parts - particularly if you look like youre broke. The used/new price imbalance holds here, especially for used toy trucks - insane is a good way of putting it. The dealers know they have you by the huevos. If you have cash and the seller doesnt want to go through a dealer you can make out - its what I did just over 3 years ago.

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Comment by MacBeth
2017-08-16 04:26:56

I’m surprised there are states out there that still insist on inspections. Inspections are so 25 years ago.

 
Comment by Hi-Z
2017-08-16 09:47:00

I’m surprised there are states out there that still insist on inspections. Inspections are so 25 years ago.

I suspect it is the nanny states that retain auto inspections.

 
 
 
Comment by snake charmer
2017-08-16 07:25:42

Definitely a +100 for the literary reference.

 
 
Comment by Jessica
2017-08-15 18:45:47

Yeah - was at my bank and the teller was telling me about the home equity loans. I groaned - she said “everybody’s doing them” to pay for other stuff. She is using her house to pay for her kids education.

It is the new American way for so many people.

Comment by oxide
2017-08-16 06:31:16

FWIW, using the house the pay for kid’s college isn’t new. 30 years ago one of our neighbors did that. At the time, it was only discussed in hushed whispers, that “daddy didn’t have enough money and had to take out a second mortgage.”

What’s new is using the equity to pay for boats and boobs and trucks and cruises and other toys. Or even daily expenses. That’s risky as heck.

Comment by Rental Watch
2017-08-16 10:00:44

My parents used a HELOC to help pay for college…mainly because when determining student loan “need” universities counted home equity toward the money available to pay for school.

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Comment by Lower Forever
2017-08-16 22:55:00

What’s new is using the equity to pay for boats and boobs and trucks and cruises and other toys. Or even daily expenses. That’s risky as heck.

How is it more risky to pay for plastic surgery than college for your kids with a refi or HELOC?

It matters not WHAT you took the money for. You signed on the dotted line and you now owe it.

Is there literally nothing about money that you understand?

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Comment by snake charmer
2017-08-16 07:30:46

I first noticed the new American way around 2004 or 2005. I thought “Tampa is a low-wage city. How can so many people afford to send their kids to private school here?” (I also thought “there’s an awful lot of Escalades on the road.”) I had no idea how these expenses could be taken on, until I learned of the equity withdrawal phenomenon on this blog.

 
 
Comment by GuillotineRenovator
2017-08-16 13:07:37

“The thing with RV’s though is they only go DOWN in value.”

This is actually not true. Used RV’s rocketed UP in price as did used cars. For instance, a 2005 vintage truck camper is much more expensive this year than it was 5 years ago.

 
 
Comment by cactus
2017-08-15 12:39:26

Looming housing slowdown clouds Home Depot’s strong results

poor headline here is some of the article below , got it off yahoo finance a mostly worthless site now

“The U.S. housing market has been facing supply constraints, which has been pushing prices up. Higher lumber costs and shortages of labor and land have hampered home builders’ efforts to meet the rising demand, underpinned by a strong labor market.
“As positive as the housing market has been, there is a risk that activity will wane,” GlobalData Retail analyst Håkon Helgesen said in a client note.
“The latest numbers suggest that transactions are down slightly - not because demand has dropped off, but because there is a shortage of housing.”
Home Depot, however, allayed fears of a slowdown seeping into demand for its products, citing higher spending on home improvement.
“We expect to see continued growth in the repair and remodel market as the U.S. has experienced solid wage growth, faster home price appreciation, and the re-emergence of first-time homebuyers,” CFO Carol Tomé said on a conference call

Comment by Goolag escapee
2017-08-16 07:57:02

I went to the local HD to look for some rosemary. The garden section looked like a bomb went off - small selection, and what there was was in very poor shape. Oh, and no rosemary! They used to have a lot of herbs.

To be fair, it was still head and shoulders above the garden section at the local Kmart - yeah, we still have one of those. Maybe a handful of plants, all dead or nearly so. Fortunately the local nursery is still going, crossing my fingers that it survives.

 
 
Comment by aqius
2017-08-15 13:24:28

so Sternlicht had to justify his salary & blather-on to essentially say:
“we don’t worry. we’re the smartest guys in the room.”

 
Comment by 2banana
2017-08-15 13:52:26

Thank you Mel Watts. One of obama’s many legacies.

40% of all loans….

We schlonged some folks.

******

From CNBC. “It feels like deja vu in mortgage land all over again. In the past 12 months, 1.5 million borrowers bought their homes with down payments of less than 10 percent, marking a seven-year high, according to Black Knight Financial Services.

‘In fact, they now account for nearly 40 percent of all purchase lending.’”

“The growth in this sector is likely due to new programs offered by Fannie Mae and Freddie Mac that are actually gaining market share from the FHA, which was the only low down payment game in town during the recession. The government-sponsored enterprises brought back 3 percent down payment loans in late 2014.”

Comment by scdave
2017-08-15 14:58:16

Thank you Mel Watts. One of obama’s many legacies ??

Quit crying 2-fruit…Tell the “gas bag” to fire him then if he is so bad…Ditto with Yellen…

Mel Watt said to tell FHFA employees of plan to remain in job…

https://www.bloomberg.com/news/articles/2016-12-15/fannie-freddie-regulator-said-to-plan-to-stay-on-under-trump

Comment by Ben Jones
2017-08-15 15:45:54

‘Watt, a Democrat who was a member of Congress before taking the FHFA job in 2014, is in a unique role. Because the FHFA is an independent regulator, its leadership isn’t supposed to be subject to the will of the president.’

‘At the same time, the agency’s decisions can have an almost unrivaled effect on a broad swath of the economy. It can affect mortgage rates by lowering or raising the fees Fannie and Freddie charge. It can also make loans easier or harder to get by changing the companies’ credit standards.’

Comment by steadykat
2017-08-15 16:14:32

Youtube of an honest man, Mr. Armando Falcon (Ofheo Director), vs some of our elected “Representatives” over the issue of whether Fannie and Freddie are “sound” or not.

This is from 2004. It’s presented in a bit of the red vs blue perspective. However, it is well worth watching to see just how violent the reaction was to anyone who dared to question these two GSE’s in relation to their solvency.

https://www.youtube.com/watch?v=UIjoW_IXos4

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Comment by Ben Jones
2017-08-15 17:21:04

Thanks for posting that video, very telling. A bit over a year later they were broke and shack prices hadn’t even started falling.

 
 
Comment by scdave
2017-08-15 16:28:22

its leadership isn’t supposed to be subject to the will of the president ?

Ben. So President can’t fire Watt ?? Just clarification.

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Comment by Ben Jones
2017-08-15 17:15:11

That’s what the article says. I’m glad you found this because I hadn’t seen the matter addressed.

 
Comment by oxide
2017-08-16 07:06:57

That’s correct. There are 19 “independent regulatory agencies” which are not cabinet level. The leadership doesn’t serve at the pleasure of the President, and therefore the President can’t fire them.

For fun, here are the 19 agencies as listed in the Paperwork Reduction Act. Trump can’t fire ANY of these folks, except for cause:

Board of Governors of the Federal Reserve System
Commodity Futures Trading Commission,
Consumer Product Safety Commission
Federal Communications Commission
Federal Deposit Insurance Corporation
Federal Energy Regulatory
Commission,
Federal Housing Finance Agency, <— Mel Watt
Federal Maritime Commission,
Federal Trade Commission
Interstate Commerce Commission
Mine Enforcement Safety Health Review Commission
National Labor Relations Board
Nuclear Regulatory Commission
Occupational Safety and Health Review Commission
Postal Regulatory Commission
Securities and Exchange Commission
Bureau of Consumer Financial Protection,
Office of Financial Research
Office of the Comptroller of the Currency

Almost all of these agencies are labeled as Boards or Commissions because they are headed by a 3-5 member panel. Members serve a set term, such as 5 years.* Since the terms are staggered, any President will get to replace 1-2 members during his tenure. And since the panel is usually made of folks appointed by different Presidents, the Board is a bipartisan mix.

However, FHFA isn’t a board, it appears to be a dictatorship.
Mel Watts has a huge amount of power! The only way to get ride of him is to fire him for cause (unlikely). Other than that, Congress does have the power to pass a law to override any single regulation.

————-
*Note that the 5-year term refers to the position, not to the person. (Congress is the same way. If a Congressman resigns mid-term, his replacement only finishes out the current term.) If the member wants to stay beyond the end of a current term, he has to be reconfirmed to the next full five-year term.

 
Comment by taxpayer
2017-08-16 07:21:55

mel watt wanted welfare recipients to get morts
dat be sweet

 
 
 
 
 
Comment by Taxpayers
2017-08-15 13:56:50

Maybe Zillow needs a re tax increase predictor. My county is spending up a storm.

Comment by 2banana
2017-08-15 14:08:28

Do you have strong public unions?

Do you have democrats in power?

Is there a large free sh*t army present?

Yes + yes + yes = $$$$$

 
Comment by aqius
2017-08-15 14:23:58

speaking of govt services I can’t help but wonder if any govt drones read th

Comment by oxide
2017-08-16 07:25:16

Read what?

 
 
 
Comment by redmondjp
2017-08-15 14:25:44

Interesting article on the increasing numbers of foreign buyers in Texas:

https://www.dallasnews.com/business/real-estate/2017/08/15/foreign-homebuying-binge-drives-187b-texas-sales

Comment by scdave
2017-08-15 16:35:39

Nice post

 
Comment by Lower Forever
2017-08-15 17:59:41

This has been true of Texas for the last decade. But they have been juking the stats by counting as “domestic migration” people who are foreigners but first entered the US in a different state and then moved here.

Comment by butters
2017-08-15 18:36:49

Didn’t know Appu and Manjula were considered foreign money?

LOL

 
 
 
Comment by AbsoluteBeginner
2017-08-15 21:33:26

just in case the world ends next monday:

https://www.youtube.com/watch?v=ocHpxhgm92k

 
Comment by 2banana
2017-08-16 01:55:51

Oh my….

*********
Trump tried to save their jobs. These workers are quitting anyway
The Washington Post - Danielle Paquette - August 15, 2017

INDIANAPOLIS — Kipp Glenn grew tired of standing for eight-hour shifts, assembling steel furnace doors. His knees ached from 25 years on the concrete factory floor. So even after President Trump made his job at Carrier a symbol of American prosperity and vowed to save it, the Indiana native took a buyout.

Of those who left jobs at Carrier, one worker took the buyout last month to launch his own concierge business. Another chose to focus on his homemade talk show. Another aims to work as a caregiver, placing her faith in lottery tickets.

Comment by aNYCdj
2017-08-16 07:22:17

I’ve been noticing that lately, companies are hiring only young people because they are forcing everyone to stand their full shift, even when there are no customers in the store..

Also ive notice some possibly illegal job ads wanting you to have a lot of social media friends so you can drum up business by getting your friends to show up and buy something.

 
 
 
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