The Attractive Easy Returns Are Under Threat
It’s Friday desk clearing time for this blogger. “About that house in Sunnyvale — you know, the one that just sold for $782,000 over its listing price? In Cupertino, 10 houses sold for $200,000 or more above the asking price. One sold for — get this — $507,000 over the listing price. The young couple who spent $507,000 above the asking price ‘wanted to start in a good school district, planning the future for their family,’ said agent Mary Tan, who listed the property. They work in tech ‘and wanted a good location — just for the appreciation.’”
“News reports about homes selling for well over the asking price – like one in Sunnyvale that sold for $800,000 more than was needed – may seem like a dream come true, but the trend is making things difficult for both buyers and sellers. Realtor Lynsie Gridley doesn’t think the housing bubble will burst. ‘We don’t see that happening,’ Gridley said. ‘All the economists are looking at the job market and all of our growth around here and though it seems unsustainable, we don’t foresee it coming down.’”
“A money manager who was among the few to predict a housing bust a couple of years before it happened now sees disturbing signs that history is about to repeat itself. James Stack, president of Stack Financial Management, has dusted off the same Housing Bellwether Barometer that raised red flags more than a decade ago. That barometer, Stack explained, is an index of ‘the most sensitive stocks in the housing industry’. Over the past 12 months, Stack said in an interview, it ’started to go up like a rocket ship again, similar to what it did back in 2004-2005.’”
“That tracks the anecdotal evidence he’s seen of frantic bidding wars in some of the nation’s hottest markets. ‘It’s that kind of nuttiness that defines the psychology of a bubble,’ he said.”
“It was once the city’s priciest listing asking $120 million, but a 12,000-square-foot co-op at 834 Fifth Avenue is back on the market with a significantly reduced price tag of $76 million. Susan Gutfreund listed unit 7/8a in April 2016. She sliced the price back to $96 million five months later but, even with that discount, one broker described that price tag as ‘absurd.’”
“HOAs are foreclosing on a record number of homeowners for as little as $1,200 in missed maintenance payments, according to an Arizona Republic investigation. And homeowners who thought only their mortgage lender could seize property are losing their houses at sheriff’s auctions, sometimes for just $100 more than they owe. Cynthia Levine, 65, is facing foreclosure on a Maricopa home that she bought in 2006. She owes at least $24,000 in back payments, interest and legal fees to the Cobblestone Farms HOA.”
“Levine remains in her home, waiting for the outcome of her bankruptcy. ‘The HOA is heartless,’ she said. ‘Literally I’m going to be homeless.’”
“Purchases of Toronto homes by foreign buyers dropped over the summer after a new tax in Ontario began targeting international property investment. At the time the tax was introduced, the region’s housing market looked to be overheating as average home prices soared to nearly $1-million. Catherine To, a real estate agent specializing in the suburbs of Markham and Richmond Hill, where sales have plummeted since the tax was implemented, said the levy took away home buyers’ confidence in the market, causing many to retreat because they expected future bargains.”
“‘This is purely psychological,’ said Ms. To, who called the government’s decision to introduce the tax ‘irresponsible.’”
“The national housing market remains in the doldrums, weighed down by Brexit-related uncertainty and stamp duty increases, according to the latest report from surveyors. The reading for London is well in negative territory and hit its weakest level since 2008. ‘Brexit uncertainties [are] not helping [the] market, also stamp duty levels not helping,’ said Robert Ikin of surveyors Wright Marshall in Cheshire.”
“As widely expected, the introduction of higher stamp duty rates for foreign investors and the Australian Prudential Regulation Authority’s tightening of bank lending regulations on investment loans have reduced new investor housing demand especially for apartments. Market reports suggest that apartment prices have fallen by 10 per cent or more in several locations with growing concern about the impact on prices from projects yet to be completed.”
“Depending on whether and, if so, how quickly property prices fall, the prospect of future tax changes adds to the attractions of purchasing new investment properties before the next election. Even then, there’s the risk that major tax changes could kill the goose that laid the golden egg for many past investors by reducing the long run attractions of residential property investments.”
“The clear message is that the attractive easy returns from residential property investments are under threat from apartment oversupply and proposed major tax changes.”
“The number of houses being sold has dropped a whopping 20 percent compared to this time last year - and it’s also not just in Auckland - the slump is happening all over the country. Southland led the way down, 37 percent. Northland is down almost 30 percent, and Taranaki and Waikato both down 25 percent. Sales in our biggest market, Auckland, are also off by 21 percent.”
“BNZ Bank’s economist Tony Alexander believes sales volumes will continue to fall so he has a message for real estate agents. ‘Maybe for some of them - start looking for alternative job in the next few years,’ he says.”
‘The young couple who spent $507,000 above the asking price…work in tech ‘and wanted a good location — just for the appreciation.’
‘The greater fool theory states that the price of an object is determined not by its intrinsic value, but rather by irrational beliefs and expectations of market participants. A price can be justified by a rational buyer under the belief that another party is willing to pay an even higher price.’
Greater fool theory - Wikipedia
https://en.wikipedia.org/wiki/Greater_fool_theory
Look at the URL for this article:
http://www.mercurynews.com/2017/09/14/tip-of-the-iceberg-more-on-the-sunnyvale-house-that-sold-for-782000-over-asking-and-what-it-all-means/
It means pucker up Bay Aryans, it’s crash time!
I bet all Chinese buyers, HQ is up there they are all crazy competitive and make way more than 179K per year .. unless they are 26 year old H1B which maybe they are these look like starter homes.
3 people I know at work in the Ventura county office are buying AND not selling but renting out their homes.. no wait 4 .. that I know of.
Looks like another bubble is forming.. I bet it goes higher way higher just like last time. Paper money has become unhinged from wages and real GDP. all debt.
but you guys know this..
Forming? Pffft, it’s about to blow….
+1. The consumer is tapped out.
Autos - 2018
Housing - 2019
Financials - 2020
Sounds like a good time to be a realtor in Cupertino. Imagine making 3% off these million-dollar transactions. Do one a month for a couple of years and you could have $500K put away, and then go Oil City.
I strongly doubt that there are a couple of more years left in this cycle. But that does seem to be the plan for the people in my RE classes. But enrollments are already down significantly compared to a year or two ago according to the instructor.
” in this cycle…”
That kind of talk implies that there isn’t something much larger than the “business cycle” at play and that we will go on contracting and expanding on this upward path forever.
Yeah, I knew that was the implication when I wrote it. It’s basically a concession to me not seeing the end yet. Now that I know that the Fed is going to do whatever it takes for as long as they can (barring some miracle where a president appoints outsiders with a different agenda) I think we’ll go around at least once more. I think. But I agree it’s not the business cycle any more. It’s the Fed cycle. Which maybe it was all along. As long as there is capital and production and real wealth and and a functional army backing up the dollar there are still games that can be played.
‘The young couple who spent $507,000 above the asking price…work in tech ‘and wanted a good location — just for the appreciation.’
Yup. We’re all the way back to “housing always goes up”. And once you accept that, then you should always indebt yourself as much as you possibly can on housing. Anything else is leaving free money on the table.
A lot of this is media hype. The “price-reduced” listings are spreading like a disease.
Today I learned what a motherboard is
“They work in tech ‘and wanted a good location — just for the appreciation.”
They work in tech so their upper brain is powerful. They live in California so their reptile brain takes over.
Oh dear…
https://www.gofundme.com/stop-my-hoa-foreclosure
It’s probably the same lady:
My HOA is going to foreclose on my home. I will be homeless.
I have tried to make payment arrangements they refuse.
Please help me not to be homeless
I begging for help
No donations yet. Help launch this campaign and become the first donor.
Campaign created 6 months ago
Man, if she bought in Maricopa in 2006, she’s got really bad luck.
She’s pretty hot looking.
I wonder if she’d bang tango for some HOA cash?
Please don’t turn this blog into zerohedge.
The last thing this blog will become is a nest full of housing pimps.
‘Realtor Lynsie Gridley doesn’t think the housing bubble will burst. ‘We don’t see that happening,’ Gridley said. ‘All the economists are looking at the job market and all of our growth around here and though it seems unsustainable, we don’t foresee it coming down.’
‘I’m sad to say I was promised flying cars and I got … vending machines?’
‘I’m referring to Silicon Valley’s derision du jour, a startup called Bodega. A couple of ex-Google employees are placing 8-square-foot locked cabinets in buildings or stores that are stocked with microwave popcorn, mouthwash, LaCroix sparkling water (of course) and other nonperishable items commonly sold at convenience stores.’
‘I have a one-word rebuttal to this pitch: Nope. This startup has basically invented a vending machine.’
‘When people — often unfairly, in my opinion — criticize the tech industry for not tackling the world’s toughest problems, companies like Bodega are Exhibit A.’
Now if they introduced the kind of vending machines they have in Japan, that might be cool….many of which shouldn’t be mentioned on a family blog.
As the writer suggests, maybe “artificial intelligence” will end up being an unfortunate term.
Not just a vending machine, a culturally appropriated one!
‘Folks weren’t happy that Bodega appeared to be taking aim at mom-and-pop shops run by hardworking immigrants, while simultaneously misappropriating immigrant culture and celebrating gentrification.’
They hit the trifecta!
http://money.cnn.com/2017/09/13/technology/culture/bodega-silicon-valley/index.html
FWIW, the proper meaning of the word “Bodega” is what we would call a warehouse. I think only Puerto Ricans and maybe Cubans use that word for a corner shop. In Mexico, such a store would be called “estanquillo” , “miscelanea” or maybe “changarro”. I’m certain that other Latin American countries have their own words for them.
In Peru, it’s corner shop.
They need to invent a beer vending machine. $5 for a nice tall boy Pale Ale disguised as iced tea or something. Or a self pouring machine, like the coffee ones. Toss in a few bucks, get a double Crown on the rocks. That would be sweet!
The army had them a long time ago. They looked a lot like a Coke machine though.
Oh, you mean without the can?
I’ve seen beer vending machines in Germany, filled with beer cans (not beer on tap!). Pretty sure they’re in Japan too.
BTW, Stonestown Galleria has a bread vending machine that makes the baguettes right there - that’s way more creative than Bodega.
I thought we were past vending machines by now? I thought we were ordering and paying for cans of beer with a disruptive app, and it would be automatically delivered by drone using GPS coordinates.
Using coins or even swiping a credit card is so passe, and refilling any kind of vending machine needs one of those pesky human employees.
‘Cynthia Levine, 65, is facing foreclosure on a Maricopa home that she bought in 2006. She owes at least $24,000 in back payments, interest and legal fees to the Cobblestone Farms HOA.’
‘Levine remains in her home, waiting for the outcome of her bankruptcy. ‘The HOA is heartless,’ she said. ‘Literally I’m going to be homeless.’
This report is full of boo-hoo and pass the hanky. “What do you mean I have to pay my bills?” Well Cynthia, it was cheaper than renting. It reminds us of how this goes: “we’re gonna be rich!” we are told. Then, “Oh, life happened and I couldn’t pay” blah, blah. Better get some boxes.
‘Levine remains in HER home……..
Once again folks, it’s not your home! Quit paying the bank, HOA and county and you’ll see quickly who owns that house.
We’re all homeless!
I suspect this HOA issue will get a lot worse, especially in places with a lot of half-empty new construction like Miami. Unsold apartments = fewer owners = higher fees for remaining owners.
Yep, which is why I like to avoid owning property in a condo association for sure. I’m monitoring a sprawling condo complex in another part of Florida where some friends of ours purchased a unit. There are a LOT of places for sale in there. Yes, it is 55+, so they’re going to have a certain number of condos for sale due to die-off, but this seems like more than the usual attrition. I’m guessing there are some problems.
‘It has been a somewhat difficult spring and summer for the retail environment along Greenwich Avenue, the high-end shopping district in Greenwich, where several high-profile stores have closed. “Walk up and down Greenwich Avenue and you’ll see a decent amount of storefront vacancies,” said Tyler Lyman, senior vice president at RHYS LLC, the commercial real estate firm in Stamford.’
“When a national chain closes dozens of its locations, they tend to choose the ones in the high-rent districts,” said Jessica Curtis, a senior managing director at Newmark Knight Frank in Stamford. She pointed out that rents at some locations on the avenue might have been a bit too high. “There is also a disparity between what the landlord thinks the market rate is and what tenants can afford to pay. Sometimes there is a chasm that cannot be bridged,” the retail broker said.’
‘Lyman agreed, noting that some landlords may have gotten the message. “We are not seeing a lot of deals high of $125 per square foot.” he said. Several $200-per-square-foot requirements by landlord failed to attract tenants, he said. “Things have come down to earth.”
‘Greenwich Avenue leasing is also affected by the uncertainty regarding Chicago-based developer GGP’s planned Norwalk megamall, The SoNo Collection, a 700,000-square-foot complex expected to open in 2019.’
I remember when Greenwich Ave. still had a Woolworth’s.
palmy, the GF used to work at Rodgers on greenwich ave and had a 1 bd room apt. upstairs, what a commute….
I just got this in an email:
“ApartmentData.com, a leading marketing and information supplier to the multifamily industry, has been conducting one-on-one interviews with managers at 2,725 apartment properties in Greater Houston to obtain an accurate assessment of the number of units damaged by Hurricane Harvey.’
‘As of Sept. 14, ApartmentData.com surveyed 1,926, or 70.7 percent of those 2,725 properties. Key survey findings:
-166 properties reported damage to 8,956 units, about two percent of the supply of surveyed properties and 1.4 percent of the total supply of apartments
-The overall average effective rent per month rose by $12 to $996 from $984 pre-Harvey
-The overall occupancy rate has dropped slightly, to 88.8 percent from 89.1 percent pre-Harvey This rate is based on keeping the damaged units in supply
-71,000 units available to rent
-If the damaged units are not included in supply, then the occupancy rate is 90.1 percent.
-63,478 units available to rent
-Since Harvey, 6,063 units have been leased
-Prior to Harvey: the inventory of 2,725 properties represented 638,603 units
-70,000 units were available to rent
“As we continue to learn how apartment properties were affected by Harvey, I am surprised by the relatively low number of units damaged,” McClenny said.”
Golly, quite different from what we were told just a few days ago.
maybe they were as smart as the indians of 200 years ago
build on high ground” quimosabe
Houston is as flat as a table. Have you ever seen a table in the rain? How deep did the water get? From what I’ve read, much of the shack flooding was caused by municipalities draining ditches into the sewer system. Just like Katrina. Up from the manhole comes a bubblin’ crud. So bad management, here come the lawsuits.
Wouldn’t most of these units be on the second floor, especially in the luxe high-rises? Ground level is usually just the lobby and street retail.
Petaluma, CA Housing Prices Crater 13% YOY
http://www.movoto.com/petaluma-ca/market-trends/
spent $507,000 above the asking price ‘wanted to start in a good school district
Catholic schools are under 6k till HS
For that kind of money, they could move somewhere cheaper, have one of parents quit and homeschool the kid however they like. School districts are for resale value, not for school.
Catholic schools are under 6k till HS
YMMV. I have heard of Parochial HS that charge 10K or more. But K-8 tends to be cheaper, depending on endowments. I believe ours charges 3-4K. I remember when it was $2K per kid.
Catholic schools are under 6k till HS ??
Exactly…And there are private non-parochial options also…
So, there is something else going on here and I think it has little to do with schools..I have my own opinion…I have heard some asian real estate brokers say that in china, people who have never been to the united states that are interested in coming, know the word “Cupertino”…
‘Purchases of Toronto homes by foreign buyers dropped over the summer after a new tax in Ontario began targeting international property investment. At the time the tax was introduced, the region’s housing market looked to be overheating as average home prices soared to nearly $1-million. Catherine To, a real estate agent specializing in the suburbs of Markham and Richmond Hill, where sales have plummeted since the tax was implemented, said the levy took away home buyers’ confidence in the market, causing many to retreat because they expected future bargains.’
‘This is purely psychological,’ said Ms. To, who called the government’s decision to introduce the tax ‘irresponsible.’
For years, years! We were told, “there’s no way to know how many foreign buyers there are, we don’t have the data. And anyway, it’s racist!” Then someone found the data. “Look, it’s hardly any,” they cried.
Then the tax - bam!
I have talked with new housing vendors in Toronto area up to this crash - they all said that the buyers were from China. Some were buying many houses at the same time.
Same people say that several deals will not close to these buyers because they are walking from their deposits.
Generally buyers have to anti up deposits within their first three months, each month a higher amount - and there is no gaurantee as to when the house will be built - and you cannot demand your money back if closing takes even two years beyond it’s intended closing date !
Realtors are liars.
Yet another terrorist attack in London, this time on the subway. Perhaps they should change the current warning message, “Mind the gap” to “Mind the bomb”
Mind the religion of peace…
I guess we really saved England from tyranny during WW2, eh?
How’d you like to be a Brit citizen who objects to this kind of thing? You’re between a rock and hard place for sure. If you say so much a peep of protest regarding the invaders, you are arrested. By your own police. Except they’re not your own police. They’re owned by the globalists and won’t do a thing to stop this from happening.
And the left wonders why people like Milo are getting an audience. They think it’s fascism…
‘Teen wanted for deportation is accused of California killing’
‘Authorities say Garcia-Pineda had been detained by immigration authorities in December and released from custody in April pending deportation. An immigration judge required him to wear an ankle monitor and routinely check in with immigration officials.’
‘He failed to show up for his August appointment, said James Schwab, a spokesman for Immigration and Customs Enforcement.’
‘His ankle monitor was removed when he was arrested on Sept. 3 by sheriff’s deputies on misdemeanor battery charges. ICE says the Sheriff’s Department ignored a request to block his release from jail that day.’
This demonstrates who would have to be handled before any forward progress can be made in a situation like this. The problem isn’t really the Muslim terrorists. Not by a long shot.
When was the last time you heard of a US citizen killing someone in Mexico? Much less someone living in Mexico illegally. Why is that? Because Mexico doesn’t put up with that crap. Not only won’t they let bums in, you better be able to pay your way and check in every three months to prove it. Oh, but we’re racist if we want to do one tenth of what Mexico does.
“ICE says the Sheriff’s Department ignored a request to block his release from jail that day.’
Good find, Ben, similar sort of dynamic at work here in the US. I was going to say that the local sheriff’s dept around here does a certain amount of defending of illegals as well, although I don’t think they release any who are on an ICE detainment order.
Its way past time to end Press 1 for English, and to eliminate interpreters at immigration hearings. Thats what delays proceedings. lack of interpreters.
Freed to kill in a sanctuary city:
By Jennifer Smith For Dailymail.com
PUBLISHED: 01:26 EDT, 22 February 2017
An illegal immigrant who was freed from county jail in Denver despite ICE’s requests that he stay behind bars to face deportation is accused of murdering a man within weeks of being released.
Ever Valles, 19, is accused of murdering Timothy Cruz, 32, on February 7 after robbing him at a light railway station in the early hours of the morning.
The teenager had been freed by the Denver Sheriff’s Department in late December after posting $5,000 bond for theft charges.
They let him go despite requests from US Immigration and Customs Enforcement agents to keep the gangster behind bars so that they could deport him.
Denver Sheriff’s Department is standing by its decision to allow him to go free in December despite Cruz’s death.
Read more: http://www.dailymail.co.uk/news/article-4247962/Illegal-immigrant-arrested-murder-weeks-release.html#ixzz4sr5E8voX
Follow us: @MailOnline on Twitter | DailyMail on Facebook
“Denver Sheriff’s Department is standing by its decision to allow him to go free in December despite Cruz’s death.”
Read that, and let it sink in. Understand the full implications.
“Understand the full implications.”
Scrilla courtesy of the Front Range Snowflakes?
Silverton, OR Housing Prices Crater 16% YOY
http://www.movoto.com/silverton-or/market-trends/
we are going the way of japan as the central bank basically buys everything to prevent a freefall in prices.
Watch and see the FED have to add to its balance sheet instead of reducing it.
I personally like natural supply and demand forces to keep prices in check.
Are they buying these Manhattan condos?
Well Im sure some of the hot money they created is making it into folks hands and they r buying them. So indirectly , that is a yes.
When do u think they will do QE4? I just read an article sayn their balance sheet actually increased again recently.
How long is this chirade gonna last?
I have to laugh about these tax cuts. What a gimmick.
With 25 million excess, empty and defaulted housing units out there, did you really believe housing prices wouldn’t fall?
Andover, MA Housing Prices CRATER 7% YOY
http://www.movoto.com/andover-ma/market-trends/
Another day, another BLM race riot…
http://www.npr.org/2017/09/15/551292324/protests-in-st-louis-after-ex-cop-acquitted-in-anthony-lamar-smith-murder-case
http://www.stltoday.com/news/local/crime-and-courts/protesters-move-up-ramp-toward-i–blocked-by-city/article_e1ae8685-64bc-5833-8785-2859002b1276.html