House-Flipping Speculators Blew Up The Bubble
A weekend topic on this report from Quartz. “The grim tale of America’s ’subprime mortgage crisis’ delivers one of those stinging moral slaps that Americans seem to favor in their histories. Poor people were reckless and stupid, banks got greedy. Layer in some Wall Street dark arts, and there you have it: a global financial crisis. Dark arts notwithstanding, that’s not what really happened, though.”
“Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.”
“Analyzing a huge dataset of anonymous credit scores from Equifax, a credit reporting bureau, the economists—Stefania Albanesi of the University of Pittsburgh, the University of Geneva’s Giacomo De Giorgi, and Jaromir Nosal of Boston College—found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.”
“So why were relatively wealthier folks borrowing so much? Recall that back then the mantra was that housing prices would keep rising forever. Since owning a home is one of the best ways to build wealth in America, most of those with sterling credit already did. Low rates encouraged some of them to parlay their credit pedigree and growing existing home value into mortgages for additional homes. Some of these were long-term purchases (e.g. vacation homes, homes held for rental income). But as a Federal Reserve Bank of New York report from 2011 reveals (pdf, p.26), an increasing share bought with the aim to ‘flip’ the home a few months or years later for a tidy profit.”
“This set up a dangerous dynamic. The mortgages these prime borrowers were able to secure were much bigger than those taken out by poor homebuyers. Worse, speculators have less incentive to hold onto their extra homes than those who only own one home. So when the housing market started tumbling and the economy soon followed, they were much more willing to default and foreclose, as you can see in the chart below.”
“This would explain why, as the researchers put it, ‘the rise in mortgage delinquencies is virtually exclusively accounted for by real estate investors.’ The share of single-mortgage borrowers who couldn’t keep up on their loan payments barely budged between 2005 and 2008.”
“Recent research—particularly that by Antoinette Schoar, a finance professor at MIT Sloan—reveals that borrowing and defaults had risen proportionally across income levels and credit score, but that those with sounder credit ratings drove the rise in delinquencies. This new paper’s investigation into the habits of middle- and upper-income real estate speculators in the run-up to the crisis marks yet another chapter of the history books in desperate need of revision.”
Adams Morgan Washington, DC Housing Prices Crater 14% YOY
https://www.zillow.com/adams-morgan-washington-dc/home-values/
What bailout after bailout, negative interest rates, QE to infinity, massive budget deficits and not one banker going to jail produce…
Hint. NO wealth for the country and NO help to the poor to middle class.
But it did help a former president to afford buying a $15 million beach front lot.
It is a small club, and you ain’t in it.
++++
The Working Class Can’t Afford The American Dream
Sep 1, 2017 - Zerohedge
For millions of middle- and working-class Americans, the “American Dream” is all but dead. Far from being able to afford their own homes, the Fed’s latest survey on the wellbeing of US households revealed that nearly a quarter of Americans are unable to pay their monthly bills on time, and nearly half have less than $400 in the bank.
What they found is hardly surprising. In most areas of the country, the average working-class household would be running a spending deficit. According to HowMuch’s methodology, the best place to live from a financial perspective on an Average Joe’s salary is Fort Worth, Texas, which would leave a working-class family with a $10,447 surplus at the end of the year. On the flip side, that same family would need an additional $91,184 just to break even in New York City.
So where are the best places for working-class families to live? Here are the top five cities with the net surplus wokers are left with after living expenses.
1. Fort Worth, TX ($10,447)
2. Newark, NJ (($10,154)
3. Glendale, AZ ($10,120)
4. Gilbert, AZ ($9,760)
5. Mesa, AZ ($7,780)
And here are the five worst cities, with their associated cost-of-living deficits.
1. New York, NY (-$91,184)
2. San Francisco, CA (-$83,272)
3. Boston, MA (-$61,900)
4. Washington, DC (-$50,535)
5. Philadelphia, PA (-$37,850)
Newark, NJ doesn’t look like it belongs on the best places for working-class families to live.
If you’re earning a high salary in Newark, then there’s a high probability that you’re not living in Newark. This one doesn’t pass the smell test.
It passes the smell test.
They took the average joe wage vs what the average joe has to spend to live in a somewhat middle class lifestyle to include housing.
Newark is a long term democrat controlled public union dominated crime ridden hell hole.
But housing is cheap there.
Why people are getting the hell out of the Northeast
By Catey Hill, Moneyish
July 26, 2017
Last year, three states in the Northeast — New Jersey, New York and Connecticut — landed in the top five places people were moving out of fastest, according to 2017 data from United Van Lines.
The insanely high cost
The horrendous weather (GLOBAL WARMING!) (No?)
We told you winter was coming to the North — and it’s so bad that many people are leaving the Northeast in search of better weather. Indeed, the largest migration between states is from New York to Florida, according to data from the Census Bureau. And simple looks at recent winters in the Northeast explain why. For example, in 2015, Boston had its snowiest winter on record and New York City had one of its snowiest blizzards on record in 2016.
Just ask Karen Lanovi, a lifelong New Yorker who says she “left for better weather,” moving to central Florida 12 years ago. “It has proven a great decision for my husband, myself and our three children. We for the most part have a better life,” she says. The same reasons drove tech entrepreneur Jaimyn Chang out of the Northeast to Austin; he says he was “sick of the ridiculous snowy winters and bone-chilling temperatures” and “ the constant seemingly endless gray overcast days.”
The jobs
Many companies are setting up shop in warm and less expensive places, which means that people pondering getting out of the Northeast can now find work.
http://nypost.com/2017/07/26/why-americans-are-getting-the-hell-out-of-the-northeast/
2banana’s Rule:
Long term democrat rule + public unions + free sh*t army = misery, ruin and bankruptcy.
There is practically no way to change it. The only option is to vote with your feet.
+++++++
New Jersey, New York and Connecticut —
I’m curious, 2banana, where do you live now? Did you always live there?
As you mature and gain life’s experiences - you adjust.
I used to live in two large cities at separate times in my youth (hey - you can walk home from the bars)…
Then I did some math on the massive taxes. Add in a new family.
Then started to really see and understand the massive corruption.
Visited other places. Did some research.
And made some very good life decisions…
Just dropped a few coins in the jar. This kind of info in invaluable
I thought it was well understood that it was the speculators and flippers that were driving the ‘meaty middle’ of the bubble, so to speak. They were feeling so smug and smart at how they were riding leverage to greater and greater wealth (articles 11 years ago on Miami condo flippers come to mind).
The ‘low-income, shoddy credit borrowers’ were probably mostly 1) a group targeted by the financiers as ‘new marks’ to keep the expansion going in the later stages and heavily marketed to, and 2) trying to ‘come to the table’ after being marketed to and tired of hearing about speculators seemingly strike gold and getting tired of being sneered at by the flipperatsi for their ‘old fashioned’ ways.
‘I thought it was well understood…’
For a brief time, after it was realized it wasn’t contained to subprime, it was. Then the narrative began to be crafted. See, there wasn’t anything wrong with shack prices 1000%, even 4000% higher than the 1970’s. It was the loans! And those are long gone. (Never mind almost all loans today are less than prime.)
Funny this happened just as Bernanke and pals decided to reinflate to bubble, foam the runway for the banks and flipping went back to the small screen. Why we have several posters here (all up to their necks in shack debt, BTW) who will regale you with the virtuous nature of lending today. Yet, 90% plus of the defaults were prime loan. And the bulk of those had one thing in common: when they were made, meaning near the top of pricing.
Fleece others in order to line your own pockets. Because it’s legal, that makes it all okay.
And people wonder why the country is falling into the crapper behaviorally-speaking.
And no, not everyone else is doing it. So no, I do not buy that excuse.
It’s popular vernacular ’round here to say that Realtors are Liars. I would include Real Estate Investors are Liars, too. What an irresponsible, disgusting lot of individuals for the most part.
The repeal of Glass Steagall certainly has had its ramifications.
.
And if you’re a gambling “investor” type, please head to the nearest casino instead. There’s more honor in losing your own money than there is fleecing others to feed your “get rich quick” habit.
Remember…. Nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels. Nothing.
“So why were relatively wealthier folks borrowing so much? Recall that back then the mantra was that housing prices would keep rising forever. Since owning a home is one of the best ways to build wealth in America, most of those with sterling credit already did. Low rates encouraged some of them to parlay their credit pedigree and growing existing home value into mortgages for additional homes. Some of these were long-term purchases (e.g. vacation homes, homes held for rental income). But as a Federal Reserve Bank of New York report from 2011 reveals (pdf, p.26), an increasing share bought with the aim to ‘flip’ the home a few months or years later for a tidy profit.”
If real estate always goes up and tax-forgiven defaults are available to those who use their home equity wealth gains as a source of cash-out ATM spending money, then it is a smart move to leverage up into the biggest McMansion you can buy based on available low-down payment federally guaranteed lending offers.
“This set up a dangerous dynamic. The mortgages these prime borrowers were able to secure were much bigger than those taken out by poor homebuyers. Worse, speculators have less incentive to hold onto their extra homes than those who only own one home. So when the housing market started tumbling and the economy soon followed, they were much more willing to default and foreclose, as you can see in the chart below.”
This is bound to soon recur, given the Fed’s open encouragement for investors to snap up residential properties in order to ride up the financially engineered reflation in the post-2009 period.
Are you saying the obama Mel Watt 3% mortgages are not going to hold up in a downturn (let alone bubble popping) of the housing market?
But…but…diversity.
But…but…diversity ??
Dec 16, 2003 - President Bush on Tuesday signed into law the American Dream Downpayment.. “One of the biggest hurdles to homeownership is getting money for a down payment,” said President Bush.
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=0ahUKEwi7lvDPjIfWAhWQ0J8KHSdmBLcQFggzMAI&url=https%3A%2F%2Fgeorgewbush-whitehouse.archives.gov%2Fnews%2Freleases%2F2003%2F12%2F20031216-9.html&usg=AFQjCNFVRd4otBXrd_VZOAvzsmZlfbtSgw
The mind of a progressive/liberal.
Some previous guy had a minor program (40,000 out of millions of loans per year) that was discontinued after five years so it is OK if we make EVERY LOAN the government guarantees a SUBPRIME mortgage.
Gotta to keep that obama housing bubble going…no matter what.
++++++
American Dream Downpayment Assistance Act
From Wikipedia, the free encyclopedia
On December 16, 2003, President George W. Bush signed into law the American Dream Downpayment Initiative, which was aimed at helping approximately “40,000 families a year” with their down payment and closing costs, and further strengthen America’s housing market.
This loan assistance program was discontinued in 2008.
It blew up in 2006 2-Fruit. The mind of right wing conservative just cannot accept responsibility. Deflect, deny or lie.
“American Dream Downpayment Initiative”
http://picpaste.com/dubya.jpg
It blew up…
It is very much alive now.
The Tea bag and Freedom hoard stomped their feet and shook their mitts about liberal elites then delivered us the worst government larded with folks like the obnoxious, hyper-self entitled Steve Mnuchin and his twiddle twat finance Louise Linton. The “does my perm need more hairspray today Melania?” blowhard fits right in with those scum bags. Watch this administration flail for three more years and then watch the scrub-off fest of Trump bumperstickers off pickups just like we did when love for GW soured. You douche bags really screwed us this time.
‘twiddle twat finance’
My, somebody got up on the wrong side of the bed this morning.
Good morning, snowflake!
Get on the Trump Train and leave your rage-ravaged skull behind.
So why do people build houses and stay in flood zones? Even when flooded out multiple times?
Gee - I can’t see any kind of reason.
+++++
Flooded Again, a Houston Neighborhood Faces a Wrenching Choice
After three floods in three years, Meyerland, a thriving community of 2,300 homes, weighs deep ties against risks of rebuilding
Bradley Olson, Dan Frosch and Lynn Cook - Wall Street Journal - Sept. 1, 2017
Harvey was deluging one of the most flood-prone major cities in the country with the heaviest rains ever recorded in the continental U.S. And for the third year in a row, flooding would wreak havoc on his home in Meyerland, a neighborhood of about 2,300 homes on the city’s southwest side.
Mr. Bisel’s 3,800-square-foot ranch-style home was set to be raised 5 feet with about $350,000 in financial aid he was receiving through a federal grant program. But the work hadn’t started yet; he had lost a race against time.
Houston’s Meyerland neighborhood has been hit by three major floods in the past three years, after years of relatively minor flooding.
In the case of Meyerland, Mr. Bedient said the government should buy out thrice-flooded homeowners and use the land to create more detention ponds and widen storm channels. Farther upstream, at least three new reservoirs should be constructed west of Houston, and the existing two reservoirs, which were built in the 1940s and which engineers say could be at risk of failing, should be upgraded, he said.
After the 2015 flood, which took place around Memorial Day and poured 34 inches of water into his house, he was among several dozen residents approved to receive federal grant funds aimed at reducing repeat flood insurance claims by tunneling under homes and raising them on pillars.
This July, the Houston City Council approved the elevation plans for the first batch of homes being raised with FEMA money. But Mr. Bisel was in the second batch, 14th on the list. As he saw the forecast for Harvey last week, he feared he had run out of time. He, his wife and son went through the now-familiar ritual of moving their furniture and treasured belongings to higher ground.
They family already had the maximum amount of flood insurance made available by FEMA’s National Flood Insurance Program, she said. But to do any further renovations, they would likely have to spend $200,000 to raise the house—money they didn’t have. And who would buy it now, she said.
What a waste of money. We didn’t learn anything from the Sandy debacle. “Oh, let’s jack entire houses up at enormous expense.” This is the third flood in four years!
You want to live on beach? In a flood zone? On a river?
PAY FOR YOUR OWN HOUSE TO BE RAISED.
Got flooded three times in the last five years?
MOVE.
Watch big gov jack up flood insurance!
No free sht
Is your county spending big?
John Stossel on how he took advantage of Gov-backed flood insurance to repair his beach house:
https://www.youtube.com/watch?v=SJKv2iyBCIc
The easy soloution is “no” flood insurance available. Future Problems solved.
Politically-easier solution: flood insurance only pays once on any given property, and the funds must be used to demo, move and resettle elsewhere. Choose to stay? You’re on your own!
Problem solved.
Decades ago when I lived there I marveled at the beachfront homes in Del Mar, Clownifornia that would have their living rooms turned into aquariums every winter when a storm swell coupled with a high tide came barreling through. The fact that the middle class subsidizes this and the owners even get their puppets in government to undertake constructing expensive sea walls and sand replenishment projects (ironically needed due to construction of the sea walls and also done on the backs of the middle class) always struck me as insane.
End that nonsense and all the fire insurance nonsense as well. Building in areas where there is a wild fire likely to clean your clock every 5-10 years is nuts and we’d find out what RE prices really are worth without this safety net - plus a lot less people would be able to live in these areas.
But…but…{stammer}….I have every right to live wherever I want….it’s just that …that…the people of Houston…don’t.
I have ….{sob!}…worked very hard with other people’s money in order to afford my beach house.
But…but…I’m a good person! {Sob! Wail!} I give to all the right causes!
Besides!….{increasingly indignant}….If those people cannot stay in Houston, where would they live? Austin? Boulder? The thought of that….jeepers….makes me want to pray to God!
Quick! Call Minerva! Have her schedule me an appointment with my psychiatrist!
“The easy soloution is “no” flood insurance available.”
Federal flood insurance programs enabled urban development up and down both sides of the Mississippi river.
How quickly people forget.
After the flood of 1993 scoured out several hundred counties in flyover, there were a handful of Mississippi River towns that gave up the ghost and rebuilt inland.
So your rapidly depreciating shanty gets swept away by raging ocean tides so you put it on friction piles in the same location and it gets blown to splinters by a hurricane…… And you want another handout?
Dumb DebtDonkeys. Dumb dumb DebtDonkeys.
But…but…Location, location, location!!!
Harvey Could Reshape How and Where Americans Build Homes
That debate pits insurers, who favor tighter building codes and fewer homes in vulnerable locations, against homebuilders and developers, who want to keep homes as inexpensive as possible.
Harvey Could Reshape How and Where Americans Build Homes
By Christopher Flavelle
August 31, 2017, 11:53 AM EDT
Yeah right… Did Katrina reshape how and where Americans build homes? Not that I could see. Oh sure, a few people actually rebuilt with another flood in mind (see Musician’s Village and Katrina cottages), but in general it’s back to the same ol same ol’ McMansion Hell.
OX:
Just like the superdome…..relocating 15-20,000 people to a stadium with a fixed roof should be a lesson to all……if the superdome had a retractable roof supplies could have been easily airlifted and dropped on the playing field.
Joel Osteen church….no retractable roof……how would you feed supply this if all the roads flooded?
https://en.wikipedia.org/wiki/Lakewood_Church_Central_Campus#/media/File:Lakewood_interior.jpg
against homebuilders and developers, who want to keep homes as inexpensive as possible.
Sure they do. that is funny!
“Analyzing a huge dataset of anonymous credit scores from Equifax, a credit reporting bureau, the economists—Stefania Albanesi of the University of Pittsburgh, the University of Geneva’s Giacomo De Giorgi, and Jaromir Nosal of Boston College—found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.”
Pretty much what Ben has been saying all along.
http://www.msn.com/en-us/money/realestate/home-inspector-horror-stories/ss-AApnhre?li=BBnb4R7
Hey, what’s the problem with drive-by inspections? You can totally tell just by glancing at it that the house is OK.
Hell, if you can inspect dams in California with a quick glance, I don’t know why you cannot do the same with houses.
Honestly, Karen. What exactly is your problem? (sarcasm).
As I posted on another blog, the bubble is sure to pop soon - because I am starting the process of trying to buy a house for (drum roll)… roughly $1M.
Due to the economic karma that has followed me my entire life, it’s a sure thing that home prices worldwide will go into free fall minutes after the ink dries on the contract.
What zip code are you in ?
I considered giving more details in the original post, but figured it would cut into the laughs
I found this blog originally 10 years ago, and sold my house just as it was starting to bad, knowing that I was headed for a divorce soon. Many kudos and thanks to opening my eyes and letting me make a good decision because of it.
Today, I’m trying to buy the house we’ve been renting in 98040 - Mercer Island, WA, where people like Paul Allen are in the neighborhood. Our landlord has been put in a position where they have to sell. We’ve gotten along great with them since day 1 and they want to sell to us, for what looks to be 10-15% less than what it could get if put on the market, in return for much less hassle for them.
Our personal situation will have us living in the area 10-15 years minimum (divorce decree requiring proximity to kids, job factors, etc).
Reader here familiar with Seattle will understand the location benefits, especially since we seem to be ping-ponging back and forth between the Seattle downtown and the east side. Those not familiar with the area, the tl;dr is that the geography of the area is full of choke points and limitations, and a huge influx of people have moved to the area.. ~50K new residents a year to the larger metro area. We’ve been able to quantify the dollar savings from living in close in instead of in the outlying regions, not to mention the sanity of hours commuting saved each day.
We need a place we can settle into for the long haul.
As for the timing, due to divorces and kids, we’ve had to sit out being able own since the decade began and dig out of the huge hole the courts left us with. But now, things have taken off, and last year we hit the 99th percentile for income (just barley), and will be there for another 2-3 years. before dropping back to 97th or so.
So it’s a calculated risk, and I wish we could have done it sooner, but we’re working with the hand we’re dealt.
Well, you are a braver soul than I, I must say. I understand that timing and circumstances are sometimes out of our control, such as a LL who wants to sell; that would certainly be disruptive, if you decided not to purchase.
I also understand the temptation to settle down; my wife and I were tempted to stop bubble-sitting when we found out that she is pregnant with our second—but we regained our sanity in time, thank goodness.
Nice job on the income!
I’m up in Phinney Ridge, BTW. We should have another Seattle-area meet-up sometime.
Thanks! Phinney Ridge is not a bad location at all assuming you are not commuting to Redmond or Kent.
The income thing is one of those many-years-in-the-making overnight successes, and without it I wouldn’t dare try to buy. 3 or 4 years of exceptional income gives us a chance to pay it off before I turn 60 (in 9 years), and be in ok setup for retirement.
I’ll have to keep my eyes open for the next time a Seattle meetup happens.
3 or 4 years of exceptional income gives us a chance to pay it off before I turn 60
One question for you: are you fairly confident that your “many-years-in-the-making overnight success” is stable and sustainable, even in the face of a major downturn?
I feel like I’m doing fairly well, but have zero confidence that I won’t get hit with layoffs when the funny-money tsunami starts heading back out to sea. So I keep stuff that cash in the (figurative) mattress.
Prime,
(you may not get this as the next day’s post is up)
My situation is one of being irreplaceable (think Clint Eastwood in Space Cowboys) and owing a ‘piece of the pie/back end’ on something that is already well established. My contract with Fortune 25 company provides a base salary of $400k/yr (SO brings in another 150k) before the extras kick in. If they were to change the deal and want out, I’ve got a golden parachute clause.
The down side is that in ~2.5-3 years, it will all come to end (royalties will continue though), and I’ll back to competing for jobs in the $150-$200k yr band.
I’ve already received about $200k in royalties, which is stashed away as part of the down payment.
(you may not get this as the next day’s post is up)
Got it!
Wow, nice work putting yourself in that position! Well done.
I particularly salute you for understanding that when the gravy-train ends, it will not be easy to replace your full current salary. Lots of people who end up with “feast” years forget to prepare for non-feast periods to follow—but you haven’t.
2019 might be good
Nice. Mercer Island. Lived Around there for awhile. Had a good friend who’s family was part owner of the Mariners who lived there.
Reader here familiar with Seattle will understand the location benefits, especially since we seem to be ping-ponging back and forth between the Seattle downtown and the east side.
Totally get this — I work downtown and my SO works in Redmond. Hard to find a good rental house that won’t leave one of us with a miserable commute. Mercer Island will be on our list if we have to go looking for another rental.
I certainly understand the desire, and wish you luck. Personally, for reasons beyond just the current market/bubble, I’ve been trying my hardest to purge the idea of buying out of my mind
Personally, for reasons beyond just the current market/bubble, I’ve been trying my hardest to purge the idea of buying out of my mind
drummin, what beyond the current bubble insanity makes you want to avoid buying?
what beyond the current bubble insanity makes you want to avoid buying
Hard to give a short answer to this one
Most relevant to this blog is just the reality of commuting in Seattle. Being “anchored” to a house means reduced flexibility/career options if commute time is a deciding factor (and for me it is).
I also personally prefer more space. Ideally I’d find a place on an acre+. I suppose this is an artifact of the bubble(s), but all the houses on larger lots are getting bought up, bulldozed, and the lot sub-divided. Any larger lots left, that would afford a decent commute, are a) really freakin expensive/outside my price range, and b) usually 4000+ sq feet, which is way more house than I need or want.
The politics, taxation, and quite honestly me-focused mentality of so many of the folks around here (seriously..at least once a day someone either brings traffic to a dead stop because they’re in the wrong lane but refuse to miss their turn, or just mindlessly cut across 3 lanes of traffic so they don’t miss their exit) don’t align well with my personal disposition. Plenty of nice folks and I have really close friends here, etc…but honestly on most days I’d rather just sit in the house rather than have to interact with the people “out there”
All that said, I’d love to own a place where I could cultivate a big garden, build out a nice wine cellar, and not have to deal with my LL’s crappy home warranty company that can’t find a contractor to fix the broken/leaking dish washer (grumble grumble). And I love the great food and wine and scenery in this area. Three years ago there was a property in Woodinville I had been watching and, looking back, I wish I’d pulled the trigger. But as you know, the prices are drastically different these days (and I’d be looking for a new job if I bought a place up there).
At this point, though, and with the magnitude of dollars involved, the risk is just too high for one with something to lose.
btw Prime, did the new version of the extension (3.0.14) fix the issue you were seeing with multiple tabs?
The situation with rental houses is brutal. Supply is tight, and anything (detached SFH that can possibly hold kids) under $4K a month on Mercer Island gets snatched up almost overnight.
I totally get the desire for a chunk of land and a garden, but I doubt there’s going to be much to find in the King Country metro area that’s not for the stock option lottery set. As you well noted, developers are buying up everything they can get their hands on, especially if it can be subdivided. Here on Mercer Island, there is a lot of resentment towards the developers by the longer term residents. There are (used to be) a lot of 1950’s era/mid century homes, sub 2000 sq feet, some on decent size lots with a real comfortable feeling lot to building arrangement. Developers buy them up around $1M, tear them down, and replace with (2 or more) 2-story max sq ft allowed by code “box” homes. Cheap construction with a thin veneer of ‘luxury’ look, and then list them for $2.5-3.5M. And there’s also a lot of new building on some crazy steep lots, as that’s about all that was left undeveloped.
drumminj, thanks for the extension, works great for me!
As you well noted, developers are buying up everything they can get their hands on, especially if it can be subdivided. <…snip…> There are (used to be) a lot of 1950’s era/mid century homes, sub 2000 sq feet, some on decent size lots with a real comfortable feeling lot to building arrangement. Developers buy them up around $1M, tear them down, and replace with (2 or more) 2-story max sq ft allowed by code “box” homes
Yep, happening all over around here. My last rental (West of Market, Kirkland) was one of those huge ‘box homes’, and it sure sucks paying that much to look out your window…into your neighbor’s!
In my two years there I saw 2-3 of those mid-century houses on decent sized lots get leveled and replaced with a 4k sq ft monstrosity or two. Drove back through there last week and a few more had just been levelled.
The saddest part about that is it’s effectively irreversable. Someone may have been able to affort the house + larger lot, but few will be able to afford two houses side by side and to level one of them to add back open space.
Ironically, I am part of the “stock option lottery” set, but still am not comfortable with the prices around here. Maybe I’m just too conservative, because there surely are people buying out there.
Comment by drumminj
2017-09-02 18:36:17
btw Prime, did the new version of the extension (3.0.14) fix the issue you were seeing with multiple tabs?
Hey drummin,
Sorry for the non-response via email; I meant to do some targeted testing, but have never managed to find the time (long story, but life is esp complicated right now).
I think I kind of got in the habit of working around it by not doing simultaneous updates, once you explained that it was a race-condition (whereas I used to update a handful of tabs simultaneously on a routine basis). So I _think_ I haven’t seen it, but my test coverage is lower than I’d like to give a clear green “all clear” signal.
So I _think_ I haven’t seen it, but my test coverage is lower than I’d like to give a clear green “all clear” signal.
No worries — you’re not obligated to do un-paid testing
I do believe what you were doing before will work now though
No worries — you’re not obligated to do un-paid testing
I do believe what you were doing before will work now though
Hey drummin, followup: I’ve definitely seen it repro again—three or four times on this very post, as a matter of fact. :-/
I’ve definitely seen it repro again—three or four times on this very post, as a matter of fact. :-/
D’oh! Well, if you’re motivated, hit me up over email and we can try to figure it out. I just tested with 3 different posts on 3 different tabs, and advancing comments in one doesn’t wipe out advances in the others. This is with v3.0.14
your karma must be a close relative of my karma
You would think.
I swear, If I buy something, a car, high end electronics, etc, it’s replacement is announced the next week.
“I swear, If I buy something, a car, high end electronics, etc, it’s replacement is announced the next week.”
So you’re no Kramer.
George: Why didn’t Kramer pick it up?
Jerry: Cause he’s at that baseball fantasy camp in Florida.
George: Oh yeah, right. When’s he coming back?
Jerry: Monday, I think.
George: Kramer goes to a fantasy camp. His whole life is a fantasy camp. People should plunk down two-thousand dollars to live like him for a week. Do nothing, fall ass-backwards into money, mooch food off your neighbors and have sex without dating; that’s a fantasy camp.
http://www.seinfeldscripts.com/TheVisa.html
the bubble is sure to pop soon - because I am starting the process of trying to buy a house
Well, thank you kindly for finally getting the ball rolling! Why did you have to wait so long??!?
lol
LOLz… and I explained the timing above.
When I got divorced, it was the old song “She got the Gold Mine, I got the Shaft”.. $100K in debts, and $5K / month in alimony/support to me, all the assets including 75% of my retirement accounts to her, for a ‘no-fault’ caused by her infidelity. It took several years, and going for the brass ring a few times, to crawl out of that hole.
“As I posted on another blog, the bubble is sure to pop soon - because I am starting the process of trying to buy a house for (drum roll)… roughly $1M.
Due to the economic karma that has followed me my entire life, it’s a sure thing that home prices worldwide will go into free fall minutes after the ink dries on the contract.”
RIP MGSpiffy’s net worth.
Entirely possible I’ll regret this. But I feel I’m in a tough spot. Rents here are very close to what purchase P&I will cost me (assuming interest rates hold for a few more weeks) and we’re an area that’s about as ‘blue chip’ as it gets for Seattle.
It’s risk, and I’m doing what I can to minimize it, but there’s not a lot I can do.
I have that same economic karma. Hopefully you can set off the bubble for me because I am thisclose to buying.
I’ll do my best!
Seriously - best of luck to you.
<emAs I posted on another blog, the bubble is sure to pop soon - because I am starting the process of trying to buy a house for (drum roll)… roughly $1M.
Just the thought of how much the monthly nut would be for that makes my skin crawl. Between P&I, taxes and insurance it must be well over $6000!
We just had a monster layoff where I work. Not just worker bees got the ax, but so did managers, directors and even VPs. Imagine having a monthly nut like that (or even higher) and suddenly finding yourself de-jobbed. The engineers should be able to find new jobs quickly, provided they aren’t too picky, but I’ve known directors and VPs over the years who were never able to get another comparable job to the one they lost. Face it, if you get fired you aren’t in the Crony Club anymore.
“I am starting the process of trying to buy a house for (drum roll)… roughly $1M.”
Have fun. You will pay $2Million more than me for a place to live over the next 30 years, if you can stick it out.
“The share of single-mortgage borrowers who couldn’t keep up on their loan payments barely budged between 2005 and 2008.”
Well, yeah, that’s because these years were the final “blow-off” years of the suck-’em-in stage of the run up.
So, ask yourself, what happened after 2008?
If San Francisco hit 106 degrees, does this mean that folks will migrate there now to get out of the cold, or, will they instead choose Newark, New Jersey for it’s scenic beauty… and idyllic highways and byways…and open skies and memorable sunsets.
“If San Francisco hit 106 degrees…”
Which direction was the wind?
Driving around the bay area this weekend it wasn’t windy but I just assumed it had to be coming from central California and then compressing and heating up as it came down from the mountains. No way it was coming from the ocean. Even at the beach it was high 80s even though the water was cold as always.
LOTS of for sale signs everywhere, even the Monterey peninsula.
Lexington, MA Housing Prices Crater 14% YOY
https://www.zillow.com/lexington-ma/home-values/
I’ve worked in Lexington for the last several years. What’s interesting this summer is to see how many old SFH in undesirable locations (along main thoroughfares), many of which have sold in just the last two years, are now on the rental market, sometimes three or four a block. Because of all the colleges/universities, the vast majority of Boston-area rental turnover happens on Sept 1, meaning that anything not rented as of Friday has significantly diminished prospects; Zillow says there’s still ~100 properties for rent in Lexington, which is a lot for a town of its size.
We’re getting there.
Realtors are liars.
Maybe that MIT prof is too young to remember.
The financial crisis started when credit default swaps could no longer be sold - because the Montreal exchange shut down - abruptly - because there were no more buyers (flippers).
Almost every financial institution was buying and selling gobs of these swaps and making millions on their flips - because generally there were hundreds of millions involved in each flip.
Of mortgages of far less value, because house flippers were on a roll that collapsed.
Cause, yes, individual flippers bailed en masse, and then bankers, en masse.
In early 2005 I didn’t have a lot to work with so I poured over credit rating companies reports on their websites. This was obscure stuff. At that time one of them had buried a bit about extraordinarily high first payment defaults in a certain tranche or something. The floodgates were opening.
I’m in bellevue, WA. Townhouse next me had open house today. Asking price $509k. I can’t believe it! It sold for low 400s In 8/2017. Prior sale 289k in 2005. There is more inventory here in seattle ara, but prices have only gone up.
Asking price $509k. I can’t believe it! It sold for low 400s In 8/2017
~$100k price bump in less than a month?
Asking price. Anyone can ask anything…but I suppose there are few fools out there.
Askers
It’s beyond absurd. Here’s another: 900 Sq Ft brutal fixer asking $250K surrounded by homes selling for very low $300K’s and they are sitting longer. And another: Just closed Sept. 1 $750K –> sold earlier in June 2015 for $365K.
“And another: Just closed Sept. 1 $750K –> sold earlier in June 2015 for $365K.”
Wow… someone is laughing all the way to the bank.
7/2005 was the peak here in 22151 an we are still 3-5% shy of the high
People are underestimating the debt loads that are out there. CLTV’s are increasing (not decreasing as you would like to see) due to Cash out refi’s and moving debt ONTO housing (called debt “consolidation”).
People are being pushed out of the Seattle city limits and that is where a lot of developments are occuring. However, when you have brand new developments where approx. 50% of the neighbors are at 97% CLTV and 100% CLTV (VA loans, FHA or FHA combined with Washington State Housing Finance Commission Bond money used for down payment assistance) that is concerning. (I did a little research).
I don’t know about others but if nearly half my immediate neighbors debt loads JUST FOR HOUSING is at 80% CLTV or higher….I would be seriously nervous. All it takes is for one to not be able to service all their housing and related debt loads.
People need stop looking at “great sales numbers” and look under the hood per se to see what is buying the homes and that is what I conveyed to my Banker back in 2006 and I could tell my comment was scoffed at. I said do you know what is buying up your developers housing plats? 100% loans. We’re in a “new paradigm” is what I heard.
And now we have Fannie/Freddie loosening their debt to income ratios to 50% and considering removing student loan debt from the ratio’s? It’s crazy.
All the ingredients are here again for a meaningful correction. I hope I’m wrong and our economy forges forward.
http://www.msn.com/en-us/money/realestate/homeowners-faced-an-airbnb-nightmare-as-renters-left-them-facing-huge-fines-angry-neighbors/ar-AAr5FLU?li=BBnbfcN
This article is worth reading in full. Airbnb facilitates fraud and refuses to help people who were wronged.
They just have to keep the scam going for about another year for a massive payday…
+++++
Still, she’s not pleased. “It’s a huge scam,” she told CNBC of her experiences with renters illegally subletting their places to travelers. “And the city sticks the owners with the fees. Airbnb, VRBO and the rest of them are like real estate cancer.”
A crown jewel among Silicon Valley tech startups, the company has raised more than $3 billion in funding from high-profile investors and has a reported valuation of $31 billion.
Travel industry insiders expect the company to go public in 2018, according to PhocusWright Senior Vice President of Research, Douglas Quinby. He points out, “Airbnb is one of the largest online seller of accommodations in the world after C-Trip and Expedia.”
A crown jewel among Silicon Valley tech startups ??
LOL….Not even close…
Thanks for the link, Karen.
Absolutely must reading, I agree.
It seems to me the issue should be taken up with the tenants who violated the provisions of the lease agreement and not with Airbnb.
Pretty difficult to prove what’s going on and put a halt to it while you deal with your tenants when the Airbnb website doesn’t allow you to look up listings by address.
If you read the article, the owners described had to go through some real contortions to even find their place listed on the site.
Airbnb seems like it was designed to facilitate fraud at all levels.
Today’s entrepreneurs are yesterday’s scammers.
Airbnb Scammers
http://picpaste.com/scammers.jpg
Landlords may have to consider that these are the only people left who can pay the asking prices.
Found this interesting piece on the shadow government and the deep state (actually two different entities that interact). LOL, my little role-play as Secret Agent with Mr. Banker a while back was meant to be a joke. Turns out, it may have been more accurate than I realized.
So, who rules and how? Listen and learn.
https://www.youtube.com/watch?v=XHbrOg092GA&t=479s
“Let me tell you, you take on the intelligence community, they have six ways from Sunday at getting back at you,” Chuck Schumer.
It’s worse than we know. Way, way worse.
Saw that. Here is Shipp (with slides!)
Kevin Shipp - Former CIA Officer Explains The Shadow Government - The Hagmann Report
Thanks, Tboom. Will watch later. Explains a lot.
However, what people tend to miss is that the whole shebang doesn’t necessarily act in concert. Shipp represents all this as a monolithic enterprise and it is. But it is far from the Borg.
There is always constant jockeying for position and people wondering if they are being dealt out of the game. And in fact probably some are and are getting a bit suspicious about it. Notice that there seems to be a great disturbance in the tech sector right now. And in finance, who will be the next Lehman? In politics, both parties are having their internal conflicts.
When is the Borg not the Borg? When it is composed of entities with their own, individual agendas.
At one time I had assumed they were all acting in concert. TG for their power-mad selves all wanting to be top dog.
If you haven’t seen The Truth Factory channel, that cat is a riot.
anyone have a rent heat map
If portlandia (nirvana)rents are falling I think there may be no metros w rising rents
Highland Denver, CO Housing Prices Crater 13% YOY
https://www.zillow.com/highland-denver-co/home-values/
More sharing economy nonsense, this time in China. Great video in the middle of the article of a pile of 10,000 confiscated bikes, and another of some old dude tipping bikes blocking the sidewalk. Check out the traffic whizzing by. Where are people supposed to walk? Who cares, the sharing economy will fix everything, right?
http://www.msn.com/en-us/news/world/shared-bikes-bring-chinese-a-%E2%80%98monster-revealing-mirror%E2%80%99/ar-AAr80qm?li=BBnbcA1
BEIJING — Liu Lijing, a mechanic in Beijing, does not usually pay much attention to manners. He does not mind when people blast loud music, and he strolls the alleyways near his home in a tank top stained with grease. But when a stranger recently ditched a bicycle in the bushes outside his door, Mr. Liu was irate.
Start-ups have flooded the city with shared bikes, he complained, and people have been leaving them all over the place without thinking about other residents. “There’s no sense of decency anymore,” he muttered, picking up the discarded bike and heaving it into the air in anger. “We treat each other like enemies.”
There are now more than 16 million shared bicycles on the road in China’s traffic-clogged cities, thanks to a fierce battle for market share among 70-plus companies backed by a total of more than $1 billion in financing.
In many cities, the supply of bicycles far exceeds demand, bringing chaos to sidewalks, bus stops and intersections and prompting grumbles that excessive competitiveness — seen as a national trait — is spoiling a good thing. In Shanghai, where officials have struggled to maintain order, there is now one shared bike for every 16 people, according to government statistics.
In some places, the authorities have confiscated tens of thousands of bicycles and imposed parking restrictions. News outlets have documented the waste with astounding images of mountains of candy-colored bicycles, each hue representing a different bike-share company.
City officials are also grappling with creative vandalism of the bicycles, which varies in severity from smashing the locking device to setting the entire vehicle on fire. Some of the destruction has been attributed to residents angry about the blight of bikes piling up in their neighborhoods. But the police in several cities have also cited disgruntled rickshaw and taxi drivers upset that bike-sharing has sapped their business.
Technology executives who work in the so-called sharing economy and depend on good behavior for profit are now among the more prominent critics.
One start-up, 3V Bike, was forced to shut down in June after nearly all its 1,000 bicycles were stolen from the streets of small cities. In interviews with Chinese news outlets, the company’s founder, Wu Shenghua, blamed the public’s “poor suzhi” in part for driving the company out of business.
he-he, looks like Chy-NAH is threatening a hot war with the US via NK. “Buy our crap or we’ll nuke ya!”
This is a fascinating point that I’m embarrassed to say I had not really thought about: with a “shared” bike, there is no feedback or accountability possible, so people would naturally tend to behave in a less responsible fashion.
Think about parking your car on the street somewhere; if you park obnoxiously (perhaps by parking someone else in), there is a chance someone might react by keying your car in retribution. That risk affects behavior in a positive fashion.
When parking someone ELSE’s car or bike or umbrella or what-have-you, there is no accountability for how/where you left it, other than your own moral judgement—which many people seem not to have in adequate supply.
Interesting.
When parking someone ELSE’s car or bike or umbrella or what-have-you, there is no accountability for how/where you left it
Unless it’s built-in to the system. Assuming it’s something like Seattle has, where you have to scan/”check-out” the bike, then the bike is uniquely ID’d and you know the last user. Presumably you can hold that person accountable for how/where they left it.
Granted, for something like a bike, there’s nothing stopping another person from moving it/throwing it in a tree, unless it must be physically locked to something.