August 23, 2017

Aspirational Pricing Is On The Wane

A report from the Orange County Register in California. “No money down. Three words that unnerve many real estate observers who wince at ugly memories of risky loans and the mortgage-making disaster of the previous decade. Lending industry logic suggests the more money any borrower puts into a loan the more likely they’ll make the house payments. So why is Orange County’s Credit Union offering to finance homebuyers who put zero down?”

“Carlos Miramontez, the vice president for mortgage lending, says zero-down financing targets the house hunter with good credit history and a steady job but lacks the funds for a down payment. Often, it’s the classic first-time buyer. Yes, Miramontez knows non-traditional lending like no-money-down mortgages helped create last decade’s housing bubble. But he also notes that many of the loan styles used in that risk-taking era were actually historically solid mortgage options … but only when prudently used by lender and borrower alike.”

“‘We’re looking at sensible and responsible products that help solve affordability challenges,’ he said.”

The Houston Chronicle in Texas. “The Houston Association of Realtors last week announced its August home sales report, which reveals Houston’s hot housing market is starting to balance itself out, with some areas demonstrating sales slow downs. ‘Overall, the Houston housing market had a strong July, although we are seeing slower sales in some outlying areas like The Woodlands and Cypress,’ HAR Chair Cindy Hamann said in a prepared statement. ‘That is why we always emphasize that real estate is local. The combination of moderating pricing and growing inventory should make conditions even more appealing for prospective home buyers.’”

From Metrostudy. “Dallas remains the top new home market in the country, with builders starting 31,049 homes in the twelve months ending in 2Q17. With the median new home price in DFW at $320,600, new homebuyers are stretched to the limit of what they can afford. While resale home prices continue to increase, new home prices are stagnant, as compared to 2016.”

“‘The increase in second quarter closings reflects stronger sales during the first quarter than the end of 2016; however, many builders and communities have hit a price ceiling,’ says Paige Shipp, Director of Metrostudy’s Dallas-Ft Worth market. ‘With the median new home price in DFW at $320,600, new homebuyers are stretched to the limit of what they can afford. While resale home prices continue to increase, new home prices are stagnant, as compared to 2016. In an effort to spur sales, some builders are either reducing prices or minimizing price increases all while costs, including land, labor and materials, march higher. The difference in median price between a new home and resale home in DFW decreased to 30.7% from a high of 48.6% in 2015.’”

The Idaho Business Review. “Ada County home prices took a breather in July, but median home prices in Canyon County hit a new record high at $185,750, according to Boise Regional Realtors. Ada County median prices in July settled at $271,000, a slight dip from the June record high of $273,950. So far, no year has seen its highest prices after August – but 2017 for the first time had record highs in February and May before they were eclipsed by the existing record in June, according the Intermountain Multiple Listing Service data.”

“‘It’s kind of a freak of nature,’ Woyak and Company Realty owner Cindy Woyak said of the February record prices. ‘It’s probably because we had more cash buyers than we’ve had otherwise.’”

“Since early 2016, the same pattern has been in play: low supply of homes, increasing prices and no slow-down in the number of homebuyers willing to pay those prices. ‘The data is clear — demand is up, inventory is down, and this is impacting home prices,’ BRR President Katrina Wehr. Wehr said. ‘That is the difference in our market today versus the market ten years ago when speculation was driving home prices.’”

From 27 East in New York. “As summer winds down and the final sales numbers for the first half of 2017 are crunched, The Press asks Hamptons real estate industry experts to offer their insights into the state of the market and the indicators they watch to predict future performance. How does the mood of the Hamptons housing market differ from last summer?”

“Kenneth Smallwood: I think sellers are starting to acknowledge that the market is soft and that home price and condition do matter to sellers. Buyers in this market do not want to feel they are overpaying. If a home is priced too high, it can sit for a year or more unless the price is reduced. If you are selling your home, and you have not received any offers after 60 to 90 days—your home is overpriced.”

“Are most listing prices seen right now aspirational or on target? Paul Brennan: Aspirational. The sales that you see transferring are sellers who read the market and understood that prices in most markets are not appreciating.”

“Kenneth Smallwood: Aspirational pricing is on the wane. You see many listings in the $10 million-to-$70 million range slashing their asking prices.”

“Philip O’Connell: The asking prices are, for the most part, aspirational.”

“Judi Desiderio: This is specific to the market and the price range: Certain segments of the market are way off—crazy listing prices, sometimes driven by brokers, sometimes misguided sellers.”

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Comment by 2banana
2017-08-23 07:43:49

I blame the Russians AND Confederate monuments.


New Home Sales Crash In July Following Plunge In Household Formations
zerohedge - Aug 23, 2017

New Home Sales crashed in July (down a shocking 9.4% MoM compared to expectations of unchanged) following the collapse of household formations in June.

The 8.9% year-over-year plunge in home sales is the worst since June 2014.

As it appears higher mortgage rates, stagnant wages, and soaring prices have finally caught up to one another.

Comment by jeff
2017-08-23 08:15:40

“I blame the Russians AND Confederate monuments.”

Don’t forget the Russian monuments.

Comment by palmetto
2017-08-23 10:01:07

Love that article on zh. Crasherooooooo! Some of the comments are interesting:

“If you own a home, they will tax it until your eyes water and they know where to find you.

CRM114’s picture
CRM114 JohnGaltUk Aug 23, 2017 11:21 AM
Move to the countryside. Get far enough away that there is no municipality. Then they may know where you are, but they don’t come looking, as they haven’t the taxes to support the inspectors. Remember that the bureaucrat would rather have 3 secretaries and 1 inspector than 1 secretary and 3 inspectors.

Nobody For President’s picture
Nobody For President CRM114 Aug 23, 2017 12:33 PM
You are correct. I haven’t had the tax man come by this century - I think they use aerial survey to check for new construction, and if nothing changes, the assesment stays the same. Also, nobody has sold a nearby parcel this century - we are homeboys for sure…

Dr. Richard Head’s picture
Dr. Richard Head Aug 23, 2017 10:20 AM
The house price appreciation in my shitty little cluster home neghborhood is ridiculous. 2250 sq/ft, 4 bedroom, 2.5 bath, with granite everything and upgraded flooring homes sold for $211,000 back in August of 2013 are now going for $289,000, and this is in an township that is 20 minutes away from pretty much everything. #frothy”

Just a sample.

Comment by Rental Watch
2017-08-23 10:50:37

I knew a guy growing up who’s actual, legal name was Richard Head.

The guy was a walking punchline.

Comment by GuillotineRenovator
2017-08-23 12:56:51

His parents had to be incredibly stupid with poor judgment. There’s really no other way something like that happens.

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Comment by steadykat
2017-08-23 13:35:48

It could have been much worse.

Johnny Cash, A Boy Named Sue (live in Denmark):

Comment by Rental Watch
2017-08-23 13:41:29

IIRC, he wasn’t a strong student, and if intelligence is hereditary, at least half of your conditions were likely met…probably both conditions.

When we named our kids, my wife used to marvel at how I could take a pretty tame name, and contort it into how others would make fun of the name on the playground.

And now she’s quite happy that I did so, as we see what others named their children.

Comment by Carl Morris
2017-08-23 15:23:08

When we named our kids, my wife used to marvel at how I could take a pretty tame name, and contort it into how others would make fun of the name on the playground.

I’ve noticed that men seem to have a lot more experience with that.

Comment by Rental Watch
2017-08-23 16:16:45

Yes…we had an easy time finding girl names.

Boy names, not so much.

Comment by Mafia Blocks
2017-08-23 16:28:00

Neither boys nor girls names go well with Crowman.

Comment by toast on the coast
2017-08-23 16:40:39

I had a neighbor in long beach named Richard Dick and his father was Milo Dick.

Comment by Professor Bear
2017-08-24 19:48:32

We also know a young man, who is friends with one of our sons, whose father is a Mr. Nixon. Naturally the young man’s given name is Richard.

Comment by Professor Bear
2017-08-24 19:49:33

Luckily the Richard in our circle does not go by the nickname “Dick”.

Comment by Ol'Bubba
2017-08-23 19:25:44

Years ago I worked for a real estate investor who canvassed commercial real estate brokers across the country, and I did a lot of telephone work. One was a man named Richard Head.

Even though I was only a 21 year old intern, I had the good sense to address him as Richard.

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Comment by Professor Bear
2017-08-24 19:45:56

A friend of ours is Mr. Jack Hammer. What motivated his parents to pick the name Jack is unknown to me, though I have to suspect that Mr. Hammer senior drove the decision.

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Comment by Tarara Boomdea
2017-08-24 19:51:04

Jeez, life is hard enough. Did you know his parents? Obviously, they must have been jerks.

Comment by Professor Bear
2017-08-24 20:01:27

I don’t know his parents.

However, I can cite a few interesting facts about our friend:
1) He played football in high school.
2) He is a capable professionally-trained violinist.
3) He has a PhD in chemistry from an Ivy League university.

Who knows: Maybe having an odd name helps build character?

Comment by rms
2017-08-24 23:03:18

“Who knows: Maybe having an odd name helps build character?”

A military tour would have been tough with that name.

Comment by Carl Morris
2017-08-25 10:01:30

A military tour would have been tough with that name.

I saw people survive much worse. Imagine basic training with a last time that sounds just like a homosexual slur. The best drill sergeants (like the best comedians) will actually avoid taking the insults that are too easy…but the rest won’t.

Comment by palmetto
2017-08-23 10:11:50

Behold! The new statues have arrived!

Comment by Rental Watch
2017-08-23 10:41:45

Aren’t Household Formations effectively defined as people moving into a place and striking out on their own?

So…aren’t things like new home sales HIGHLY correlated to household formation?

Said another way, if you have no growth in the housing stock, and no vacancy, I don’t think it’s possible to have any household formation…even though there may be an increasing number of people who wish to move out of mom’s basement.

The whole thing sounds to me like builders aren’t building homes that meet the needs of those who wish to move out of mom’s basement.

I suspect we will see smaller homes built in 2018 than 2017…seems like the main way builders can build cheaper is by building smaller.

Comment by Mafia Blocks
2017-08-23 11:37:12

With 25 million excess empty and defaulted housing units, rampant over building and another 35 million on the way as boomers die off, there’s no need to build more houses.

Comment by Professor Bear
2017-08-24 19:59:09

I’m guessing there is lots of Keynesian “ditch digging” work in store for those employed in the operation of tearing down tens of millions of unneeded, unwanted housing.

Bump up the number to hundreds of millions of housing units in China!

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Comment by Carl Morris
2017-08-25 10:03:09

But that would require us to admit it was unneeded and let the prices fall. Which would endanger the masters of the universe. We’ll find another way.

Comment by oxide
2017-08-23 11:43:10

New homes don’t necessarily correlate to household formation. I think what we’re seeing is existing households moving to another location: entire families packing up and moving to hotspots like Denver, Austin, Seattle, etc. So the new location needs new housing. A smaller number are households which form but still rent — like Prof Bear.

Smaller houses? Maybe. I think we’ll just see more and more attached product PUDs, like stacked condos with HOA pools and the like.

Comment by Rental Watch
2017-08-23 11:47:49

But, when that family moves, it is highly likely that they sell their old home. To whom?

Overall, the market they exit has one more vacant unit of housing…unless the overall number of vacant units stays +1, it will be filled by a net new household.

This potential creation of a new household is allowed because of the new housing created in the “hot spot”.

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Comment by 2banana
2017-08-23 07:50:48

The obama legacy of Mel Watts will be in his job until 2019.


“No money down.” Three words that unnerve many real estate observers who wince at ugly memories of risky loans and the mortgage-making disaster of the previous decade.

Comment by oxide
2017-08-23 08:39:17

The credit union which is offering those no-down loans are keeping the loans themselves, not selling them to the GSEs. So this has nothing to do with Mel Watt (unless the credit union needs a bailout…)

Comment by 2banana
2017-08-23 09:06:50

Pay no attention to the man behind the curtain…

I am quoting a very far left newspaper too!


Mel Watt Lowers Mortgage Down Payment Requirement
Dec 8 2014 - Marc H. Morial - The Seattle Medium

Federal Housing Finance Agency (FHFA) Director Mel Watt is taking action to turn the American dream of homeownership into reality for many more people. Director Watt recently announced that Fannie Mae and Freddie Mac, which he regulates and which are linchpins of the nation’s residential mortgage market, will reduce down payment requirements from 5 percent to 3 percent. This will enable many more low-income, but credit-worthy, consumers to become homeowners while helping the nation’s faltering housing market regain its traction.

We enthusiastically applaud this move and believe that as a result, more African American, Latino and working class borrowers of all races, who face an especially tough time securing mortgages, will have greater access to conventional loans, which are more affordable than other financing options. We are also encouraged that Director Watt’s plan will allow housing counseling in lieu of costly mortgage insurance to be a compensating factor to help make up for low down payments or low credit scores.

Comment by palmetto
2017-08-23 10:32:39

Why is Mel Watts still there?

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Comment by 2banana
2017-08-23 10:47:33

Because he was appointed by obama into a “non political” government commission and cannot be fired until 2019.

Comment by oxide
2017-08-23 11:52:26

It still doesn’t matter. The bank is holding the loan themselves. If they aren’t selling to F&F, Mel Watt is irrelevant. Mel Watt could requirement 20% down, and this bank could still offer a zero-down loan.

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Comment by Rental Watch
2017-08-23 13:44:02

But it does matter.

The “no money” down loan is in part to steal market share from the GSEs. They are trying to look more attractive.

If Mel Watt had a 20% down payment requirement, while the credit union COULD offer 0% down loans, they wouldn’t need to in order to be competitive vis-a-vis the GSEs, and so it is highly likely that the 0% would be much higher.

Comment by Professor Bear
2017-08-24 20:05:37

I’m guessing the bank is a limited liability corporation, creating moral hazard for the directors to goose profits today through increased subprime lending and exit with golden parachutes when the scheme blows up in the next crash. I can almost hear the chorus of banksters saying, “Nobody could have seen it coming!”

Comment by Professor Bear
2017-08-24 20:02:29

“…(unless the credit union needs a bailout…)…”

Which doubtless they will in a few years.

Comment by rms
2017-08-24 23:05:52

“Which doubtless they will in a few years.”

That’s what FDIC is for, IIRC.

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Comment by Mafia Blocks
2017-08-23 12:29:32

Zero Down Mel is the king of subprime vintage, 2009-2019.

Remember…..3% down payment mortgages are subprime by definition.

Comment by Professor 🐻
2017-08-24 04:02:17


Comment by 2banana
2017-08-23 07:55:22

Is aspirational a code world for the “price of the house is too f*cking high you greedy seller?”


“Are most listing prices seen right now aspirational or on target? Paul Brennan: Aspirational. The sales that you see transferring are sellers who read the market and understood that prices in most markets are not appreciating.”

Comment by Jingle Male
2017-08-23 08:33:47

I am selling a rural property in Oregon. The price started at $539,000 and dropped $90k so far and still no offers. I guess the Oregon pot growers are running out of money and finding the market flooded with product. Just like all farmers, depending on a single crop can be tough!

Comment by scdave
2017-08-23 16:11:33

What area JM ??

Comment by Jingle Male
2017-08-25 02:44:58

Medford Oregon.

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Comment by GuillotineRenovator
2017-08-23 20:51:13

Considering rural Oregon’s wages, you’re going to be waiting quite some time…

Comment by rms
2017-08-23 23:05:01

+1 No kidding.

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Comment by oxide
2017-08-24 07:03:11

Maybe it’s one of those McLogMansion vacation homes. 10 years ago they were on the covers of all the log cabin magazines. You know the type, with the wall-of-glass double-story triangular bump-out great room with a view. Ugly and huge and who knows how expensive to heat.

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Comment by Jingle Male
2017-08-25 02:26:09

Yes, Oregon is very poor and the rural areas are subsistence level.

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Comment by 2banana
2017-08-23 08:15:24

A 4.5-5% increase in sales doesn’t sound that bad but they are missing their expected numbers.

I do remember, Lowes and HD struggled right before the last crash…


Lowe’s Earnings, Lowered Guidance Disappoint Investors
Paul Ausick - 24/7 Wall St. - August 23, 2017

Lowe’s Companies Inc. (LOW) reported second-quarter 2016 results before markets opened Wednesday. The home improvement retailer posted diluted earnings per share (EPS) of $1.68 and $19.5 billion in revenues. In the same period a year ago, Lowe’s reported EPS of $1.31 on revenue of $18.3 billion. Second-quarter results also compare to consensus estimates for EPS of $1.61 and $19.53 billion in revenue.

Same-store sales increased 4.5% in the quarter and rose 4.6% for U.S. stores. Net income rose 21.6% in the quarter to $1.4 billion. Net income includes a $96 million gain from the sale of the company’s sale of its interest in an Australian joint venture. Excluding one-time items, Lowe’s earnings totaled $1.57 per share, missing the consensus estimate.

In its guidance, the company pegged full-year 2017 sales to rise about 5% year over year. Same-store sales are expected to increase 3.5% as well. Diluted earnings per share are forecast at in a range of $4.20 to $4.30. The consensus analysts’ estimate for EPS is currently $4.62 and the revenue estimate is $68.25 billion. The revenue estimate reflects an increase of 4.96% year over year.

The company also lowered its estimate of operating margin from a prior forecast for an increase of 120 basis points to a new range of 80 to 100 basis points.

While our results were below our expectations in the first half of this year, the team remains focused on making the necessary investments to improve the customer experience and drive sales. This includes amplifying our consumer messaging and incremental customer-facing hours in our stores which will put pressure on our operating margin. We believe this is the right strategy to more fully capitalize on strong traffic trends in what we believe is a supportive macroeconomic backdrop for home improvement.

Comment by Carl Morris
2017-08-23 11:34:02

Just got out of a quarterly all hands meeting to discuss financial results. I’m in electronic components testing and we tend to feel the pain fairly early in the tech business cycle. At this moment we’re predicting continued profitability for the year, but the profit margin is falling. An October black swan and a few big canceled or delayed orders would probably be enough to push us into the red for the first time in the last few years. There seems to be higher differentiation than normal between product lines with some product lines making just as much as before and some falling off kind of hard.

One interesting chart showed the industry earnings smoothing out a lot the last few years after 2009. It was presented as evidence that the industry was bigger and more diversified and more critical to daily life for everyone. I interpreted it more as Yellen bucks filling in the holes for a while.

Comment by In Colorado
2017-08-23 11:49:21

I know that om premise hardware is not doing well these days. Of course, everyone (IBM, HP, etc.) is leaping into the cloud, but that means that the cloud providers have to make all the infrastructure investment themselves as opposed to selling the HW to customers for a profit (along with a juicy service contract). It seems like a race to the bottom. I wouldn’t be surprised if the remaining on site sales generate more profit than the cloud sales do.

Comment by Ethan in NoVA
2017-08-23 22:21:27

I work in the data center space in Northern Virginia. While there are indeed tons of facilities run by AWS, there are many more data centers going up that cater to smaller co-location customers. The sheer size and number of data centers under construction in Loudon County VA is insane. Not sure how they will power it all. No shortage of self-hosted customers apparently.

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Comment by rj not in chicago anymore
2017-08-23 09:23:02

“July US new home sales 571K vs 610K expected
Seven month low
Prior was 610K (revised to 630K)
Sales pace -9.4% vs 0.0% expected
Prior sales pace +0.8% (revised to +1.9%)
Big drops in the Northeast and West regions
That month-over-month drop is sparking a few cringes but the story is supply. Builders want to build but they’re saying they can’t find the land.”

I think it is MafiaBlocks who intones that land is not the issue - tend to agree - there is a ton of land. Builders can’t find the land - where are they looking - on Mars. Sheesh.

Comment by Jingle Male
2017-08-23 10:16:17

This is actually pretty good news for existing home owners. You need to worry when new units coming on line exceed 1 million or more. Overproduction leads to the crash. Underproduction leads to the bubble.

What we really need is balanced production. It is a hard mark to hit!

Comment by Rental Watch
2017-08-23 10:45:49

I saw some recent data where the spread between new home prices and existing is narrowing…in other words, the “new home premium” is falling. Existing homes have prices rising faster than new homes.

I think we’ll see builders start to shrink the sizes of homes.

Comment by In Colorado
2017-08-23 12:06:32

Builders can’t find the land - where are they looking - on Mars. Sheesh.

On thing I have noticed, at least in my neck of the woods, is that land that is “in town” but for whatever reason was passed over (next to a busy road, in flood plain, too small to subdivide, etc.) during the previous bubble is being built on. Why? I have no idea.

On an unrelated note, I helped talk a young couple out of “upgrading”. They bought their place, a very modest older duplex in a humble neighborhood after the previous crash for about 100K, and even got one of those tax incentive rebates. It would fetch probably 250K now and sell in just a few days. To get a meaningful upgrade they were looking at the 350-400k range, meaning that their monthly nut would increase significantly, at least 100%, probably more. I reminded them that their current payment is less than renting a dilapidated apartment (and a lot less than renting a new apartment). “what if one of you loses your job or becomes disabled and can’t work?” I suggested that if they have spare cash that they should make extra payments and pay it off early. In the end they agreed with me.

Comment by scdave
2017-08-23 16:22:39

I suggested that if they have spare cash that they should make extra payments and pay it off early ??

Great advise. I would add that after that they could seek a larger home and use the rental income to help offset the cost of the new mortgage. I started exactly that way. A duplex.

Comment by scdave
2017-08-23 16:17:03

where are they looking - on Mars ??

Might as well be. Without zoning, entitlements and most importantly infrastructure close by it’s only farm land.

Comment by cactus
2017-08-23 09:44:49

“affordability challenges” yea I bet

Comment by palmetto
2017-08-23 11:04:13

You can’t make sense of crazy. Crazy is what the painstream media constantly regurgitates, whether it be about transgender monuments or howsing. Even some of what Ben posts is contradictory and makes no sense when you read some of it, but that’s because he has to rely on what little, vaguely accurate information can be found and he has to dig down deep to even find that.

So here’s a “What do you see in your market” post:

This is the new lennar development in our area. Don’t believe the pretty pictures. We drove by there. Depressing, barfy gulag stuff.

Comment by In Colorado
2017-08-23 12:11:02

All that tropical landscaping on those model homes looks cool, until you remember that it comes with hot, humid weather and bugs galore.

Of course, they don’t deliver them like that. And I suspect that few buyers will hire a professional landscaper to make their yards look like that.

Comment by scdave
2017-08-23 16:24:39

and bugs galore ??

Big bugs. BIG !!

Comment by Ol'Bubba
2017-08-23 19:49:48

Did y’all notice the models are named after northern cities? Dover, Harrisburg, Hartford, Providence, Trenton, plus Richmond and Raleigh. It gets cold in Richmond and Raleigh in the wintertime. Cold enough to freeze the palmetto bugs.

Comment by 2banana
2017-08-23 11:19:42

We are hitting some mass publications on the poor housing market on websites that are usually 3-4 weeks ahead of the fake legacy media.


“Winter Is Here” For Housing - Whalen Warns “The Crowd Of Buyers Is Thinning”
ZeroHedge - Aug 23, 2017

One of the interesting facts about the mortgage sector in 2017 is that even though average prices have more than recovered from the 2008 financial crisis, much of the housing stock away from the desirable periphery has not really bounced. This is yet another reason why existing home sales at a bit over a million properties annually have gone sideways for months. The 600,000 or so new housing starts is half of the peak levels in 2005, but today’s level may actually be sustainable.

We had the opportunity to hear from our friend Marina Walsh of the Mortgage Bankers Association at the Fay Servicing round table in Chicago last week. Mortgage applications have been running ahead of last year’s levels, yet overall volumes are declining because of the sharp drop in refinancing volumes. We disagree with the MBA about the direction of benchmarks such as the 10-year Treasury bond. They see 3.5% yields by next year, but we’re still liking the bull trade. But even a yield below 2% will not breath significant life into the refi market.

During our conversations over the past several weeks, we confirmed that the whole residential housing finance industry is suffering through some of the worst economic performance since the peak levels of 2012. The silent crisis in non-bank finance we described last year continues and, indeed, has intensified as origination margins have been squeezed by the market’s post-election gyrations.

As one colleague noted at the California Mortgage Banker’s technology conference in San Diego, “every loan is a different problem.” But nobody in the regulatory community seems to be concerned by the fact that the cost of servicing loans has quadrupled over the past eight years. The elephant in the room is compliance costs, which accounts for 20% of the budget for most mortgage lending operations.

Like the army of the dead in the popular HBO series “Game of Thrones,” the legacy portion of the mortgage servicing industry somehow continues to limp along despite hostile regulators and unforgiving markets. Profits are failing, equity returns are negative and there is no respite in sight. Even once CFPB chief Richard Cordray picks up his carpet bag and scuttles off to Ohio for a rumored gubernatorial run, business conditions are unlikely to improve in the world of mortgage finance. Winter is here.

Comment by anonym-house
2017-08-23 11:55:46

I hope you guys can offer some collective wisdom here. I’m a long-time reader/infrequent poster, posting anonymously today for reasons that will become apparent below.

Brief history: conservative family financially, SHF prices exceeded 4X income and vastly exceeded rent ($1800) from 2004-2010. Downturn happened, partner’s job insecure, so didn’t buy in 2012. Now, VERY solvent, but partner’s job would still be iffy in the kind of downturn that would result/be caused by the drop in housing prices we’ve been waiting for.

We’re expecting a third child, but not sure we want to go through with it. Wife (38) wants the baby, but with two kids in childcare, we’d burn $24K in daycare next year; we can afford it.

$1800 Rental is too small for three kids (2 BD, 800sf SFH), two adults, and a much-loved GS mix. Please advise if you have experience that says otherwise.

Husband (40) concerned we’d be forced to buy this year at inflated prices; no 3-beds available for rent for less than $3,000 except in kid-unfriendly neighborhoods. Buying would tie him to a job he considers insecure; he has a very specialized skill set with narrow application and is not sure he could find another position in OC; likely would have to move to another high cost area to regain employment or take a vastly decreased salary.

PITI on house we could live in would be approximately $3300. 20% down buyers with plenty of capital to use for another DP on a better house at a better price if the correction is as significant as we think it will be. If that happens though, it will have cost us $186,000; DP plus 12 months PITI (if my timing is right).

Wanted to wait to buy until winter Jan 2019, but with a baby, a 4 yo and a 7yo, that would be incredibly difficult.

If this housing bubble costs our family a child, wife will resent it. She is already furious (the words “incandescent with rage” come to mind) about the ongoing (never-ending?) financial shenanigans pulled by our crony overlords.

Obvious disclaimer: children are an incredibly personal decision. But we would like some feedback from the only group of people who, regardless of political persuasion, all seem to have their heads attached firmly to their shoulders. Bluntly put: have third kid or terminate? Still early enough in the pregnancy to do it pharmaceutically.

The fact that the housing bubble forces a decision like this on an otherwise fully functional, productive, successful, debt-free American family is a symptom of exactly how sick our society is. Then again, maybe it’s just us and our priorities are farked.

If nothing else, thank you for reading this and sending your kind thoughts our way. Tactful criticism of our cranial-anal inversion on this issue is also welcome if you all think that may be the case.

Comment by Mafia Blocks
2017-08-23 13:00:24

Why buy it when you can rent it for half the monthly cost? Buy later after prices crater for 75% less.

Comment by hllnwlz
2017-08-23 19:59:00

My wife loves you.

Comment by Mafia Blocks
2017-08-23 20:08:55

As much as Housing Hens adore me?

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Comment by Professor Bear
2017-08-24 20:07:22

Suzanne does not love you.

Comment by Carl Morris
2017-08-23 13:54:03

I think we can all give opinions, but it seems to me like you know what you want but are just frustrated by the way things are. If you want to have the child if conditions were better I’d say have it and deal with whatever happens. Otherwise the terrorists win…or something like that.

If I’ve learned one thing it’s that you definitely shouldn’t assume you can always do it later.

Comment by Rental Watch
2017-08-23 14:07:36

We have three kids, and I wouldn’t change it for the world (however, if our third ended up with the temperment of our second, I might have a different answer).

Your situation is similar, but different from ours. We were renting when we had 2 kids, and bought before the third came along. HOWEVER, we bought in 2011 (after a downturn), and both my and my wife’s job were/are quite secure, so we weren’t really worried about losing income.

Personally, I would have the child and continue to rent…continuing to look for upgraded rental digs in good school districts–consider non-traditional set-ups (two families renting one large house, buy a double-wide and live in a mobile home park, etc., etc.).

Yes, 2BD is tight for 5 people…very tight, but people live in more cramped quarters elsewhere in the world…it would be uncomfortable, but you would survive. I don’t know your relationship with your spouse, but your marriage would be under serious pressure if one pushes for termination, and then you have a hard time getting pregnant again given age/circumstances.

We know people who waited to have kids because “it wasn’t the right time”, and then once they decided that it WAS the right time, they were unable to conceive. May have been something other than age, but then again, it could have simply been that they waited too long.

I’d wait to buy a place until you are confident that:

1. It can last your family for at least 10 years; and
2. You can easily make it work on one income.

This means you need to keep saving the down payment.

I don’t envy your position–sounds like a rough spot. HOWEVER, spouse and family comes first. Make the decision as a team, but don’t put yourself in a tough financial position. Money stress destroys health and tears family apart. Avoid that money stress if you can…and it sounds like you can. Good luck.

Comment by Carl Morris
2017-08-23 15:26:34

2BD is tight for 5 people

I know a family of 6 doing it right now in Silicon Valley. But all 4 kids are boys and under 10. They were planning to move last month but the landlord let them go month to month for a very reasonable fee so they took that deal. Normally month to month is very expensive around here from what I’ve seen.

Comment by Sean
2017-08-23 14:33:58

Move around some of the numbers just slightly and I am in the same boat you are, minus the choice of having the third kid. We had the third kid and haven’t regretted it. I’ll never let a job or house stop me from living my life and doing what I want.

As for buying/renting/waiting - I’d wait. We are looking also January 2019 and saving up for a good DP. We want to be sure we can pay it off, and I’m not talking “Can we survive the monthly nut” - but when will this thing get paid off if we do buy it.

You’ll have a bunch of people give you advice, and here’s mine: Step back and look at who or what is pressuring you to buy. Usually it’s the In Laws or friends trying to push RE as such a great investment. You need to keep these in check and ignore the shoeshine boys advice. After all at the end of a day, it’s just a house.

Comment by tired_of_manipulation
2017-08-23 14:53:44

Which is more likely if you have the kid?

Option 1. Whatever happens money wise your family will be happy to sacrifice, share, and pull through it together.

Option 2. You resent the ‘newcomer’ and hold the associated expenses against it.

Comment by anonym-house
2017-08-23 20:01:26

Option 1.

Comment by Prime_Is_Contained
2017-08-25 00:01:03

Option 1

I think you have your answer, right there.

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Comment by OneAgainstMany
2017-08-23 15:12:52

The housing market can stay irrational longer than your wife can abide postponing another child. I think if your going to have another child, you have to realize that financially it’s not going to make sense. But then again, children don’t ever make sense, but we love them anyway!

Unfortunately I see things getting worse for housing affordability before they get better. I would rather buy in 10 years from now than in 2019. I’m willing to bet that as the baby boomers begin to pass away en masse (e.g., deaths of despair = opioids, alcoholism, depression, suicide), the housing stock will start to shift. By that time electric vehicles will have entered mainstream and level 4 or even 5 autonomous cars might have created more affordable housing options that are further away from urban centers (i.e. jobs) but where land prices are lower. Affordability might increase at that point.

It’s not clear to me what forces will act on the near term to make housing more affordable or lower prices. You’d need some tightening at the Fed, increased focus at the starter home market by builders, and higher down payment requirements for mortgages. You’d probably also need a shift in tax policy to eliminate mortgage interest deduction to see a meaningful dent in the housing bubble.

Comment by Taxpayers
2017-08-23 16:04:14

Winter 2019 should be sweet spot
Try bunk beds for now

Comment by palmetto
2017-08-23 16:45:16

taxpayers, I always love your posts. Wish I had your talent for packing so much wisdom into so few words. And I’m sure there are a number of HBB members who wish the same thing.

Comment by anonym-house
2017-08-23 20:02:57

Agree. Bunk beds are a simple and good logistical solution. CL is full of them.

Comment by scdave
2017-08-23 16:46:25

I read all the advise responses before I posted so I will offer a alternative thought that I have seen work in the past. Try to network through friends, church etc. Find someone in similar circumstances hopefully in the same general age range. Consider buying a duplex together in a partnership or if in California a LLC. The cost for your 1/2 the duplex is likely 50% lower than the equivalent SFR. You can also do the same thing with a rental investor. They would basically own the othe half as a rental investment whereas yours would be owner occupied. I have seen it work many times successfully. Agreement should be minimum for 5 years but my preference would be 10. Good luck and all the best.

Comment by dwkunkel
2017-08-24 18:25:16

I don’t know about OC, but here in Santa Clara it’s very rare to find a decent duplex for sale. I know, my wife and I have looked one for our daughters.

Comment by Mafia Blocks
2017-08-24 18:29:50

With everyone underwater, it’s no surprise. They’re better off just taking the hit or walking away. How anyone can fool themselves by borrowing through HELOC’s just to make their mortgage payments is a mystery to me.

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Comment by elmer goo
2017-08-23 19:44:33

I have a decent 3bd condo for rent near south coast plaza. 2car garage. 2k/mo
Previous tenant lived there 25 yrs..

Comment by elmer goo
2017-08-23 19:59:07

I have a decent 3bd condo for rent near south coast plaza. 2car garage. 1066 sf… 2k/mo.
Previous tenant lived there 25 yrs..

Comment by oxide
2017-08-23 20:02:45

I’ll be honest and say that I never did like elective termination of a healthy pregnancy, especially if you can easily afford the baby. This will be crass, but it sounds like you’re choosing lifestyle over life.

The same downturn that crashes housing would crash hubby’s precarious job… Hm.. then it seems to me that you can never afford to buy in the OC. What good is it for house prices to drop 30% if your household income could be cut by 50%+ at any second?

“Wife wants the baby.” This is the key here. If you terminate the baby, even with pharma, wife will dream about the baby forever, and she will resent husband forever. The marriage will be so weakened that the next crisis, even minor, will likely break it. Then you WILL be in a financial sh!thole.

“If this housing bubble costs our family a child…” You make it sound like the only option out there. It’s not. If anything, this housing bubble should cost your family California. Which if you ask me isn’t much of a loss. Move somewhere cheaper, even if hubby needs to stay home with the kids.

Comment by anonym-house
2017-08-23 20:10:49

Wife’s income is big enough to pay mortgage and meet other budgetary needs with no additional income, but budget would be at Defcon 5.

Enough cash to put a huge pile of money down.

Husband’s job survived last downturn; in software.

Definitely concerned about resentment and affect on marriage; wife: lost baby; husband: lost skiing, backpacking/nature with other boys b/c baby is too young. Both concerned about college tuition X 3.

Agree that loss of CA is not a big one. We are odd ducks here.

Leaving altogether is definitely on the table. Could buy outright pretty much anywhere else. Drawbacks of leaving: distance from family, significantly decreased income. Shelter covered, but all other budgetary items, including funding college, travel, etc. would be difficult as other states are nowhere close in pay/pension/benefits (teacher).

Thank you, Oxide.

Comment by oxide
2017-08-24 13:58:56

If you can buy outright anywhere else, then the extra $3000/month (after taxes!) that you’re not putting toward rent or a mortgage will go a long way toward offsetting whatever benefits you’re getting from the state.

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Comment by Neuromance
2017-08-23 20:10:14

Honest advice from a long-time renter: If you can find a decent house that needs a bit of work, in a decent school district, at a price you can comfortably afford, I’d say go for it.

Remember a house is an expense. It’s going to be more expensive in the short and intermediate term than a rental. But in twenty years, with inflation, it’ll probably be a bit more affordable. Once you pay it off, the equation changes completely. You’ll still have a monthly expense but significantly less than renting - I’ve only ever seen rents increase.

However, if all the desirable houses are high and increasing, I’d say wait and try to upgrade your rental in the interim.

I’ve been waiting for fifteen years for house prices to return to historic levels. It’s not clear to me that’s going to happen. I think there will be cycles of higher and lower prices, and everything right now looks like a bubble, with the indices showing skyrocketing prices. If there is a house price plateau at least, speculators might start bailing out leading to a decline. Based on this current house price cycle, I’d say we’re a couple-three years away from a downturn. But… who knows really.

This country is run by powerful business interests intertwined with politicians who have been bought, all backed up by the central bank. It’s an oligarchy of many different sorts of people, similar to what you see in other countries. And it’s not going to loosen its grip until some kind of cataclysm, which I don’t see on the horizon. And they’ve set the system up so that increasing house prices gives them more power and money. So they’re going to do everything they can to keep that system propped up. And they’re very smart and have a lot of resources. And figuring out ways to extract wealth is what they do full time. It sucks but it is what it is. Deal with reality.

Realize though that renting has been quite good to me financially. A paid off house is cheaper than renting, but renting is cheaper than a mortgage in the short and intermediate term. Renting also provides a measure of mobility. However, with a family, an adequate house in a good school district is probably your best choice.

In buying a house you need to ask yourself, what’s the minimum you’re willing to accept and what’s the maximum you’re willing to pay for that, and why?

Also realize you don’t want to be house poor with a family. You should be able to buy your kids school supplies and computers and decent clothes instead of eating ramen noodles and servicing an overpriced house that will be paid off when they graduate.

Some food for thought. Don’t get house-crazy. Don’t go house poor. Building your networth while renting is not a bad thing. But if you see something you can afford, take it, because even if there is a downturn, you can still afford it and take care of your family, and I think a good house is a superior lifestyle choice compared to renting. Good luck.

Comment by Neuromance
2017-08-25 04:54:03

I want to add one more thought:

• You’re not going to find nirvana in a house. There is going to be joy and heartbreak no matter your living choice.

Comment by anonym-house
2017-08-23 20:13:21

Thank you all for your thoughtful replies. We have a lot to talk about.

And the most heartfelt thank you to Mr. Ben Jones. We wish fair winds and following seas for you forever.

Comment by 2banana
2017-08-23 22:26:14

Dear anonym-house,

I know times may be tough. But you have a gift in a 3rd child on the way.

I have known (and have lived) plenty of people who lived very tightly with large families in tough times. They made it work. And would not trade those times for millions of dollars.

An abortion of your third child is something you will most likely regret for the rest of your life.

Please also consider the adoption process. There are long lists with excellent screened parents just waiting for a baby. I personally know several.

Comment by Professor Bear
2017-08-24 20:08:58

“But you have a gift in a 3rd child on the way.”

There is no greater gift. Children are well worth the expense, provided things generally work out favorably (no guarantees, though!).

Comment by rms
2017-08-23 23:27:40

“Wife (38) and Husband (40)…”

Marcellus Wallace snippet: “But painful as it may be, ability don’t last. And your days are just about over. Now that’s a hard m…f… fact of life, but that’s a fact of life your ass is gonna have to get realistic about.”

Comment by jeff
2017-08-24 08:02:07

“We’re expecting a third child, but not sure we want to go through with it. Wife (38) wants the baby, but with two kids in childcare, we’d burn $24K in daycare next year; we can afford it.”

20 years ago when I was 36 and my wife was 34 we were surprised to find out that we were expecting our third child, we couldn’t afford it in any way shape or form. We lived in a 2/2 side o a duplex and didn’t see how there was any way we could go through with it.

Fast forward 20 years and we love the 3/2 house we live in and I can’t even imagine what I would do without my beautiful 20 year old daughter.

Comment by rms
2017-08-24 17:39:27

“…can’t even imagine what I would do without my beautiful 20 year old daughter.”

Wonder how many Chinese have reached the same conclusion?

Comment by Tarara Boomdea
2017-08-24 19:38:44

Jeff, I know you can be no where near feeling alright, but if healing vibes exist or work (who the hell knows?) I’m trying my best to send them toward you.

Comment by jeff
2017-08-24 20:54:31

Thank you Tarara

The days where I have to force myself to get out of bed are getting fewer. I still kinda breakdown a couple of times a day which can be difficult because I never know who or what is going to make it happen although I have gotten pretty good at excusing myself from meetings or conversations before it becomes a problem. There is a pretty big hole in my heart and my life that I have been told by others in the same situation isn’t something that goes away but has to learned to live with.

I guess I rambled, anyway your healing vibes, thoughts and prayers or whatever you want to call them are appreciated.

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Comment by rms
2017-08-24 17:53:44

“I hope you guys can offer some collective wisdom here.”

We left California for eastern Washington when we started a family so that mom could be at home with the kids during their formative years. There’s no good reason to trade your family for economic reasons.

Comment by Professor Bear
2017-08-24 20:10:22

Family life in CA is indeed a challenge!

Comment by Mafia Blocks
2017-08-23 12:19:10

Remember…… A house is a rapidly depreciating asset that costs you money every day you own it.

Comment by jeff
2017-08-24 05:43:56

Remember……The Lord loves a working man, don’t trust whitey, see a doctor and get rid of it. Bye Grandma!

Comment by AdviceSeeker
2017-08-23 13:52:18

I’m in escrow and buyers are at tale end of escrow. They are now asking for $23k credit for plumbing, electrical and termite fumigation. Should we budget or screw this buyer? Need help.

Comment by Rental Watch
2017-08-23 21:57:00

I’d try to confirm whether the costs are BS or not with your own contractor/consultants as a first step.

If the physical costs are legit, then you should confirm whether or not the laws in your state require such problems to be disclosed when marketing the home for sale…I’d guess the answer is going to be “yes”–this means that re-marketing isn’t going to be a silver bullet…as you will need to disclose the issues in the marketing process.

Nothing requires you to accept their $23k price reduction, you have a multitude of options:

1. Accept the $23k offset;
2. Reject the $23k offset, but offer to pay for the work yourself (with a third party contractor of your choosing…if you think your contractor can do the work for a lot less).
3. Offer a lesser offset, with the logic that every house is going to have some work to be done…it’s not reasonable to assume that an existing home is “perfect”. You’ll help them get the items in question closer to perfect, but not all the way.
4. In the commercial world, you can often times get the brokers to cut their commission to bridge such a gap…could that be possible here? If the option for the sales broker is to have to re-market the home to earn their commission, they might be willing to throw a few thousand at the issue.
5. If you are going to be moving to a rental, perhaps you can horse-trade a free rent-back for a month or two to save yourself a few months of rent elsewhere.
6. Combination of 2, 3, 4, and 5.
7. Reject the offset, threaten to walk, and walk if they refuse to budge.

Comment by palmetto
2017-08-24 10:24:23

It’s interesting what this says about the market, though. Seems to be less of a sellers’ market if this sort of thing is happening. When it’s a roaring sellers’ market, buyers take it as-is, knowing they’ll do the work themselves.

Comment by Rental Watch
2017-08-24 12:13:43

There are also people who always act as though it is a buyer’s market, and try this kind of stuff after bidding more than they want to pay just to get it in contract. They hope that the seller will cave.

Generally though, I think there is always a seller’s market somewhere, for some assets.

If you have a brand-new 3/2 priced at $300k in southern CA?? Definitely a seller’s market.

If you have a 50-year old home that needs $25k of work where competitors without the needed work are trading at $125k in Cleveland? Probably not a seller’s market.

It certainly appears as though the buyer is acting as though it’s buyer’s market for that home.

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Comment by taxpayer
2017-08-24 09:49:39

most contracts have a limit-if your realtor didn’t he’s an idiot

Comment by strawman
2017-08-23 14:44:29

Giving advice is a dicey business even in minor things, and what you’re asking about is serious, so please take this with all the salt in the world.

From what you describe, I would be afraid that if you terminate, the “incandescence” you describe is going to become a harder thing than it is now, and hard to escape. You are right to be angry, and you will not be wrong in blaming others. But once it’s attached to that kind of a cost, you are likely to end up paying the price yourself, regardless of where the blame really falls.

I would sit down as a couple, talk through as clinically as possible what it’s going to mean to keep going with your 800 square feet, and swear to each other to try to make it work. Read some Little House on the Prairie or something to put “close quarters” in perspective. Frame the tradeoff you’re making in a word or phrase that either of you can quote at need when things get stressful. If Jan 2019 was the goalpost you had in mind anyway, focus on that; 16 months is not such a long time to have to hold out.

Good luck to you.

Comment by Mafia Blocks
2017-08-23 15:03:36

Englewood, CO Housing Prices CRATER 15%YOY

Comment by Jessica
2017-08-23 17:10:00

No nice house can replace the security and peace of mind from having a financial cushion. What do you think would be worse - buying a house and regretting terminating a pregnancy or having a baby and regretting buying a house right away?

Comment by julie
2017-08-23 19:09:13

Oh, I really feel for you! I just got done living in a series of less than ideal situations with three kids. One was a two bedroom condo the same size that you are in now. It can be done, but it is difficult. I am also a former “infertility” person, so this colors my answer. I think you should have the child because so few people are having children right now. The babies born right now will be in a vastly different situation. I forsee deflationary times and they might have their pick of affordable- or even abandoned- housing. Also, there may be an opportunity in the future to move to flyover country and get into a big nice house somewhere you are all happy. You just never know the future and the main thing is that both the parents are on the same page with a decision like this. We are finally in a big nice house and children really do benefit from the space. Project space, yard etc. BUT, it can be done in a small space, and all over Europe people do it. It’s kind-of a mindset. You just have to always be taking the kids places. Join a nice gym/ymca or something that you can take the kids to and drop them off for 2 hours and go and hide a read a book or something. Good luck. View the child as an opportunity, not as a hinderance.

Comment by OneAgainstMany
2017-08-24 07:02:35

“Join a nice gym/ymca or something that you can take the kids to and drop them off for 2 hours and go and hide a read a book or something.”

Wise words. I’m an RN and wife is a teacher. I work the weekends, she works the weekdays. I’m primary caregiver during the week. The gym we have here is fantastic and has great childcare. The 90 minutes that I get to run/lift while someone I trust is looking after my little guy is just enough to keep me sane from the tedium (and joy) that comes from being with a toddler all day. It’s good to have outlets.

Comment by Senior Housing Analyst
2017-08-23 19:35:50

Carmel, CA Housing Prices Crater 8% YOY

Comment by rms
2017-08-24 17:46:47

People don’t sell Carmel RE… they add it to the trust fund.

Comment by Tarara Boomdea
2017-08-24 19:44:49

Jeez, yeah. I remember being there, visiting California from NYC back in the 80’s. Granted, coming from a place that wasn’t exactly in the greatest shape and sort of being used to that since I was born and raised there, its pristine (ity?) and Stepford vibe creeped me out.

Might have been me, growing up in a gritty environment.

Comment by Carl Morris
2017-08-25 10:07:59

People don’t sell Carmel RE… they add it to the trust fund.

I’m sure there’s a lot of that. I was surprised a couple of months ago driving around back into the Pebble Beach (17 mile drive?) area that there were a lot more for sale signs than I expected though.

Comment by julie
2017-08-24 02:46:44

I should have added that there are tons of options for low cost/free undergraduate education. One of my kids is about to start, so don’t worry too much about that. Education isn’t worth what it used to be worth, so don’t overpay. Also, the risk of miscarriage is high at your ages, so this choice might just take care of itself. Let us know what you decide to do!!

Comment by palmetto
2017-08-24 05:19:31

An archived article on the Awan Brothers spy ring and their real estate liquidations.

“FBI agents suspect somebody in Congress tipped off the Awans that they would be indicted and now the criminal cases once-seemingly isolated to a group of rogue Pakistani IT specialists working for Congress suddenly has gotten much larger. And much more troubling.”

“It is no coincidence Awan began liquidating assets “like a mad man” in the days before his July 24th arrest, FBI sources and public records confirm. In fact, Awan closed deals on the sale of two houses for over $800,000. Both real estate assets were owned by he and his wife and he accepted buy offers on the properties the same day of his arrest. This was a small feat in itself because she was hiding 7,500 miles away in Pakistan. Awan was also lining up cash advances on credit line accounts and liquidating other financial instruments, federal sources said.”

“Awan’s strategy to sell his wife’s real estate assets while she was far from the clutches of the FBI might have paid off. Public records show just two weeks before the couple’s indictment, Awan closed on a sale of at least one Lorton VA home on August 3 for $617,000.”

Comment by anonym-house
2017-08-24 11:08:21

Thank you all again for your kindness and thoughfulness; we love this community.

Comment by Apartment 401
2017-08-24 11:23:23

Realtors are liars.

Comment by Mafia Blocks
2017-08-24 11:32:57

Flower Mound, TX Housing Prices CRATER 7% YOY

Comment by palmetto
2017-08-24 11:38:00

This is how you know that Cali is going to get the big one any day now:

Built by Hollywood producer-turned-real estate developer Nile Niami, the ‘gigamansion’ will have 20 bedrooms, 30 bathrooms, a 30-car garage, a two-story waterfall and a 40-seat home theater
The estate was due to be ready this year, but’s exclusive photos show construction is way behind schedule since it looks only halfway built
It is set to be the most expensive mansion on the market in America, costing $500 million
When completed, the house will feature five pools, a temperature-controlled room for storing fresh flowers and a sitting room surrounded by jellyfish tanks instead of walls
Aerial photos of the mansion reveal neighbor Jennifer Aniston has added an outdoor bath to her $21 million luxury pad
‘The very idea that a building of 90,000 square feet can be called a home seems at the least a significant distortion of building code.’

Read more:
Follow us: @MailOnline on Twitter | DailyMail on Facebook

Comment by rms
2017-08-24 18:00:59

Yikes… what an eyesore for their neighbors.

Comment by julie
2017-08-24 13:57:41

Ok, lay it on me. I was just the winning bidder on a house in Puerto Rico. Should I go through with the deal or not? I’m thinking this is the bottom over there. 22,500 for a 3 bedroom, two bath.

Comment by Rental Watch
2017-08-24 21:31:09

Heard a pitch a while back that was intended to buy homes on the cheap there and rent them out…HUGE yields.

However, the guys pitching the investment weren’t locals, so we were a bit concerned about upkeep, whether they would be buying in the right neighborhoods, etc.

All that said, buying when everyone is massively negative could lead to a great investment.

Then again, if you are at the poker table, and you don’t know who the sucker is…it’s you.

Of course, if it’s just for your use, and you can afford to lose the money…why the hell not?

Comment by Mafia Blocks
2017-08-24 14:16:56

Hermiston, OR Housing Prices CRATER 10% YOY

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