September 27, 2017

So Much Demand That Price Gains Have Been Coming Down

A report from “Maybe you’re addicted to those home-flipping shows on HGTV where glam couples buy grim shacks, spend 22 minutes smashing down walls and adding funky kitchen backsplashes, and then make tens of thousands selling the refurbished places on the open market. Or perhaps you’re jonesing for a steady stream of extra income and feel certain you’ve got what it takes to be a landlord. Or just maybe you’re on the prowl for a hands-off way to make serious real estate money with financial investments that don’t require laying down new flooring or screening prospective tenants.”

“Whichever option floats your boat, you’ve got plenty of company. After the epic boom-and-bust of the speculative home-flipping market in the aughts, everyone again seems to be looking to make a quick buck by becoming a real estate investor. But, of course, there’s no guarantee. And that’s why the thrill-a-minute world of real estate investing isn’t for everyone—especially when life savings are involved. ‘Real estate is very unpredictable,’ says certified financial planner Jenna Rogers of Mission Wealth in Santa Barbara, CA. ‘A lot of people feel like you can’t lose money in homes, but that’s not really the case. If there’s any kind of turmoil in the market, real estate usually gets hit really hard.’”

“OK, now that we’ve gotten that out of the way, let’s go shopping.”

From the National Association of Realtors. “Pending home sales sank in August for the fifth time in six months, and slower activity in the areas hit hard by Hurricanes Harvey and Irma will likely pull existing sales for the year below the pace set in 2016, according to the National Association of Realtors®. Lawrence Yun, NAR chief economist, says this summer’s terribly low supply levels have officially drained all of the housing market’s momentum over the past year. ‘August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,’ he said. ‘Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.’”

“With little relief expected from the housing shortages that continue to plague several areas, Yun believes the housing market has essentially stalled.”

From CNBC. “There is so much demand for housing and so few homes for sale that prices have nowhere to go but up — unless of course they get so high that potential buyers have no choice but to back away. That may be what is happening now. After hitting a peak in March of this year, price gains month to month have been coming down. In Southern California, prices are still up considerably from a year ago but seem to have stalled, according to CoreLogic. In Washington, D.C., where prices have been hitting new peaks recently, the median home price in August fell more than 5 percent annually, according to the Greater Capital Area Association of Realtors.”

The Mercury News in California. “We asked CEO of the Sereno Group, Chris Trapani to make sense of the real estate market in the heart of Silicon Valley: the notoriously tight supply of available homes and the persistent demand that keeps driving prices up. How do buyers manage to keep outbidding one another in a county where the median price of a single-family home is $1.1 million. Q: What have you uncovered? What are your theories?”

“A: The obvious thing is that the NASDAQ has been over 6,000 for a while; that’s a lot of equity that people have that they’re able to translate into housing. That’s the no-brainer. Another appreciation driver is the increasing use of Restricted Stock Units — known as RSUs — in loan qualifying.”

“Q: Does this create any longer-term risk? Is it a risky loan practice for the market? A: I think there’s more risk than if I’m qualifying from a base salary alone …”

The Ahwatukee Foothill News in Arizona. “The distribution of millennial buyers is not equal across the East Valley. While Chandler and Gilbert are attracting millennials, Ahwatukee is not a primary market to those buyers because of a higher barrier to entry. The one market that is seeing a glut of inventory in Ahwatukee is luxury homes. While the market has improved in the past few months, there is still a lot of inventory sitting because there are fewer buyers interested in homes above $750,000, said Realty Executives’ Patrick Lewis.”

The Wicked Local Georgetown in Massachusetts. “This year, especially in eastern Massachusetts, has seen a spike in housing prices and competition of offers unlike anything in recent memory. Currently, Newburyport has 67 homes for sale, with a wide price range from $379,000 to $4.1 million. Some of those listings have been on the market for well over a year, said Lisa Sevajian, realtor with Bentley’s Real Estate Group, so first-time buyers may find luck in Newburyport.”

“‘You’re not moving to Newburyport for no reason,’ Savajian continued. ‘You’re coming here because you like the lifestyle. It’s not like we have tech, for example. There’s a very specific buyer. So we have a lot of inventory, and prices are definitely attractive to buyers, and there’s a lot of price reduction this time of year.’”

“In nearby Topsfield, which has just 21 homes for sale, it’s a different story. The lowest list price in Topsfield is $472,000, and the highest is $5 million. ‘It’s a really good time to be a luxury buyer, because there’s a ton of luxury houses on the market - 831 days on market, 103 days on market, 351 days on market - and the summer may be over in Newburyport as a whole, but the luxury buyer should be out in full force,’ Sevajian said. ‘I’m encouraging my people who are looking in the higher price points to get out and get serious now, because people are going to be more willing to negotiate as we’re heading into the winter than they are coming out of the winter.’”

“There’s hope for those looking in Newburyport, which Sevajian says is a ‘cold market.’ ‘What that basically means is the summer market is long over - There are good houses, there are good values, there are good bargains and there are a lot of price changes,’ Sevajian said. ‘And what happens this time of year is that the people who are serious about selling stay on the market, and the people who are only looking to sell because it was a hot market pretty much take their house off the market.’”

“Even closer to Boston, Medford is still in a hot market - a really hot market, up 10 percent over this time last year - but foreclosures in that city may offer buyers hope. ‘Houses there still go quickly, but there’s a lot of foreclosures in Medford - There are about 5 times the amount of foreclosures that there are on the national average. So you’re going to have some distressed sales and some short sales that give buyers an opportunity to get into a hot market like that,’ Sevajian said.”

From Mansion Global on New York. “Last week was the worst week of the year for Manhattan’s luxury real estate market, according to the latest Olshan Realty report. The results were not simply lower than anticipated, but both the number of contracts signed and the total volume were the lowest of the year. Just 11 contracts were signed at $4 million or over—Olshan’s definition of luxury —for a total dollar volume of $61,047,990.”

“For a moment, it had appeared that the dreaded summer slump was over. During the week ending Sept. 17, and for the first time in 11 weeks, more than 20 luxury contracts were signed, signaling the market was on the up, but the surge didn’t last. The second most expensive was a three-bedroom condo at Tribeca’s ‘Jenga’ building, 56 Leonard. It was asking $6.975 million, reduced from $7.45 million when it went on the market in August 2016. Of the 11 contracts signed eight were condos, two were co-ops and one townhouse sold; no luxury condops sold last week.”

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Comment by Ben Jones
2017-09-27 09:22:03

‘With little relief expected from the housing shortages that continue to plague several areas, Yun believes the housing market has essentially stalled’

Tis the season for UHS horse hockey. If you want to see the manure pile really high, read the Massachusetts article.

Comment by snake charmer
2017-09-27 11:33:33

After the Great Recession, the industry has to believe it has political protection for it to lie this blatantly.

I am impressed by Yun’s staying power. Not that the job involves anything more than the manipulation of numbers and the dissemination of propaganda and talking points, but he’s had it for a decade now. He’s even testified before Congress!

Comment by junior_kai
2017-09-27 12:12:07

Why wouldnt Yun testify before Congress?

He paid for them to serve as his brothel - and its all legal.

Comment by snake charmer
2017-09-27 12:32:27

Correct, it’s a joke. And the joke is on us. Check out the figure for NAR’s lobbying during the 2016 election cycle. And more than a quarter of the lobbyists are former government officials.

As for campaign contributions, NAR spreads the money around regardless of political party, no doubt to make sure the industry always is in a position to shape policy.

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Comment by toast on the coast
2017-09-27 16:31:15

Leslie Simpleton Young, CAR economist
2005, Prices will be like a souffle. drop gently

Comment by Professor 🐻
2017-09-27 17:50:58
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Comment by Professor 🐻
2017-09-27 18:03:46

Gotta hand it to Snaith for correctly predicting souffle deflation. There’s a lot more of that to come, once fundamentals ultimately overwhelm the Fed’s Housing Bubble reflation measures.

Comment by bobby mac
2017-09-27 12:19:04

Boots on the ground: I live in Central Florida. I have rented 4 different places in my 12 years down here in the same hood. For the past however many years, half of the homes in my small hood weren’t even listed before they changed hands. Say there are a little over 100 houses. (there are townhouses mixed in but I am not including them) There are approximately 10 houses for sale now right now which is unheard of. A few of them have been out there for months. A couple of them put on the market, taken off, put back on etc. Asking prices are still insane yet these idiots don’t even think about taking the price down. Custom built “$700k” house in front of the neighborhood going to crap. Lawn getting high. You can see the rot from the outside. Bank was having a foreclosure sale but I’m not sure anybody even bid. So there is more inventory in my hood than I’ve ever seen before. But nobody dopey enough at this point to buy. Not sure what anybody else is seeing but this not enough inventory excuse is a real trip at least from what I am seeing.

Comment by rj not in chicago anymore
2017-09-27 12:30:11

“Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.”

Maybe Larry Yun oughta come down by you and look around a bit?

Yun is just a tool.

Comment by shenami
2017-09-27 14:09:17

There is plenty of inventory here in Southern California, if you’re willing to pay over $1 million for a crap shack.

Comment by junior_kai
2017-09-27 14:54:01

Which is a key indicator of a top. High end freezes up first, while the minions with less money and situational/economic awareness continue to bid up the low end. This is exactly how it unfolded in San Diego in 2003-5.

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Comment by Professor 🐻
2017-09-28 09:15:05

“…while the minions with less money and situational/economic awareness continue to bid up the low end…”

AKA affordable housing loan recipients…

Comment by rms
2017-09-27 20:56:57

“You can see the rot from the outside.”

Ditto for Oregon and Washington homes that sit empty.

Comment by GuillotineRenovator
2017-09-27 21:02:25

I laugh to myself as I look at what constitutes a $750k+ turn of the century house around these parts. You could take a screwdriver and stick it all the way through the support beams they’re so rotted out.

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Comment by Professor Bear
2017-09-27 12:46:33

“In Southern California, prices are still up considerably from a year ago but seem to have stalled, according to CoreLogic.”

Southern California housing prices have reached what looks like a permanently high plateau.

Comment by GuillotineRenovator
2017-09-27 21:04:15

You may be coffin shopping before house shopping at this point. :)

Comment by Professor 🐻
2017-09-28 09:18:47

Frankly I have learned to enjoy the flexibility and convenience of renting. We don’t have to sell a shack in order to relocate, and I never was that fond of spending my weekends doing yard work. I’m grateful for the Mexican lawn care service our landlords hire to take care of grunt work, enabling me to enjoy my weekends.

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Comment by oxide
2017-09-28 10:16:50

If you owned the house, you could hire that Mexican lawn service yourself and still enjoy your weekends.

And besides, people who do yardwork on weekends are doing it wrong. I do my basic yardwork on weeknights from about 6:00 to 7:30 pm while there’s still warmth and light. Most people can only do about 90 minutes at a time anyway. That still frees up my weekends. I spent last Saturday at the beach (because people with mortgages can’t do that).

Comment by Jingle Male
2017-09-28 00:17:40

Sacramento boots on the ground: for sale inventory supply is about 60-days, up slightly from this summer. Rental inventory is even tighter.

We sold a house located in the foothills this month. It was listed at $459,000 and went under contract in day 16. It sold at $450,000. It was a move up buyer using their equity to out 33% down.

Comment by 2banana
2017-09-27 09:26:28

Entering mainstream…


“This Is Not A Time To Buy Anything” - Sam Zell Warns Retail Real Estate Market Is A “Falling Knife”
Zerohedge - Sep 26, 2017 10:55 PM

Asked to offer up his thoughts on where retail real estate is headed over the next five years, Zell highlighted the significant excess inventory in the U.S., 4-5x more per capita than Europe, and said investing in the space right now is like catching a “falling knife.”

“Like a falling knife. You start with the fact that the U.S. has 4 or 5 times the amount of square footage per person of retail as anywhere else in the world. So we start with an enourmously large inventory of retail.”

“3 years ago your could buy an 8% mall…you could buy a B-mall and it was probably an 8% cap rate. The same mall, 3 years later, is now selling at 13% and 14%. So you’ve seen enourmous erosion of value.”

“An area that’s in this much disarray, with so many weak players, is not an area where I would want to deploy capital at this time. And I’m generally a contrarian but I think what we’re dealing with here is very significant.”

Comment by Ben Jones
2017-09-27 10:24:17

This is an example of artificially low interest rates and QE creating deflation. Here’s another:

‘Steve Pruett has seen more than his share of booms in three decades in the oil business. None, though, as strange as the one gripping the Permian Basin right now.

The telltale signs are the same as always, with companies like his desperate for skilled workers to man the drilling rigs that pierce the horizon in west Texas. What’s unusual, and unnerving, is that the Permian is still thrumming with activity after prices cratered for the stuff it pumps out. Crude is trading for around $50 a barrel, but this is the hottest oil patch anywhere on Earth, a swing producer influencing the trajectory of global markets and threatening OPEC.’

‘That either means the industry has become so incredibly efficient that production can continue to rise even if prices don’t, or that it’s throwing money after a mirage. Pruett, chief executive officer of Midland, Texas-based Elevation Resources LLC, is more and more concerned about the latter.’

‘By this point, “we’ve given up all of our profit margin,” he said, referring to the industry. “We’re over-capitalized, we’re over-drilling and, if prices don’t rise, we might be facing a double dip in drilling.”

Comment by GuillotineRenovator
2017-09-27 21:05:57

Luckily oil prices continue to melt up, for no apparent reason whatsoever.

Comment by 2banana
2017-09-27 09:28:40

No worries. Do not panic. It is just a bottleneck from a lack of inventory and low supplies.


Pending Home Sales Plunge; NAR Admits “The Housing Market Has Essentially Stalled”
Zerohedge - Sep 27, 2017 10:09 AM

After dismal drops in existing and new home sales, this morning’s pending home sales data for August was a disaster, tumbling 2.6% MoM (3.1% YoY) to its lowest SAAR since January 2016.

This is the second YoY decline in sales in a row, with SAAR tumbling to its lowest since Jan 2016.

Lawrence Yun, NAR chief economist, says this summer’s terribly low supply levels have officially drained all of the housing market’s momentum over the past year.

“Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.”

Comment by resistance
Comment by Mafia Blocks
2017-09-27 09:55:16

Remember…. I can ask $50k for my 10 year old Honda Civic but where is the buyer at that price?

So it is with all depreciating assets like houses.

Comment by redmondjp
2017-09-27 13:42:09

Give it up HA, the buyers ARE paying that much in Seattle - the stories from my realtor are staggering lately - six-figures over asking is typical in many neighborhoods, to this very day.

Comment by GuillotineRenovator
2017-09-27 13:57:53

You’re quoting Realtwhores? Wow, you’ve really lost your compass.

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Comment by redmondjp
2017-09-27 23:12:05


I have a personal relationship with one and I get good data. It’s nice to have somebody on the inside to get actual data months before the county posts the final sale price. Plus I get to find out how many offers there were and other details not generally known.

Comment by Jingle Male
2017-09-28 00:29:54

A friend’s son just sold a home in Bellevue. There was so much demand the son just listed it on Zillow and they had 8 offers by the end of the week. It sold for substantially over asking. I’ll get the specifics and report back next week.

Comment by Jingle Male
2017-09-28 07:12:00

Nevermind. They took it off the market. They paid $630,000 in 2012 ($50,000 over asking) and now it Zillows for $2,285,000.

Something crazy is going on in Seattle (though this is Bellevue)

Comment by Jingle Male
2017-09-28 07:20:15

Holy cow, I just randomly clicked on a house in the neighborhood and it seems to be true…..,-122.203884,47.627008,-122.209018_rect/17_zm/

This one sold for $650,000 in 2014, then remodeled and expanded? It sold for $2,638,000 in 2015 and today the Zillow value is $3,416,000.

The post by resistance, above seems correct:

South Vancouver, aka Seattle, bubble going vertical….

Comment by GuillotineRenovator
2017-09-28 08:59:32

That was a teardown and new build. You should stick to areas you know - if there is such thing.

Comment by GuillotineRenovator
2017-09-28 09:07:40

By the way, there is absolutely nothing which can justify those prices. It is purely a massive speculative bubble. You can go 50 miles in any direction and buy a huge house on big acreage for 20% of that price.

Comment by Prime_Is_Contained
2017-09-28 09:16:39

And from 50mi away, your commute-time into Bellevue would be hellish.

Clyde Hill is a very wealthy neighborhood; I used to cut through it on a near daily basis on my commute, way back in the day (late nineties, early oughts). I used to take a small token of satisfaction in the fact that I was adding traffic to neighborhood streets where the other half lived, and I knew they hated that (you could tell from the officers out looking for reasons to pull over any commuters).

Comment by GuillotineRenovator
2017-09-28 09:40:01

“And from 50mi away, your commute-time into Bellevue would be hellish.”

But those prices don’t represent houses for workers who commute. Again, it’s got nothing to do with economics. This is one of the biggest housing bubbles in the world.

Comment by Mafia Blocks
2017-09-28 09:31:19

And don’t forget cratering rents.

Seattle, WA Rental Rates CRATER 14% YOY

Comment by 2banana
2017-09-27 09:32:58

2banana’s Rule:

Long term democrat rule + public unions + free sh*t army = misery, ruin and bankruptcy.

For sure - More tax increases on the way. Not one penny will be cut from the insane public union pensions.

Lord help you if you own a house or a business there.


Connecticut Lawmakers Scramble To Close $3.5 Billion Budget Shortfall As Fiscal Crisis Worsens
ZeroHedge - Sep 26, 2017 10:25 PM

Despite a series of credit-rating cuts by all three of the major ratings agencies earlier this year, Connecticut still boasts a higher rating than Illinois and New Jersey. But that could soon change.

Lawmakers are squabbling over how to close a massive deficit expected to stretch to $3.5 billion over the next two years, which has left Connecticut as the only state in the US without a budget for the current fiscal year. And if lawmakers fail to pass a budget by the end of the month, it could trigger further cutbacks and in essential services.

The wealthiest state per capita, Connecticut has struggled to stabilize its deteriorating finances as generous (and underfunded) pension obligations and the departure of wealthy taxpayers like hedge-fund billionaire Paul Tudor Jones, Aetna and GE – two Fortune 500 companies that have decided to relocate their headquarters to New York City and Boston, respectively - have drained the state’s coffers, threatening to trigger a financial chain reaction that could end with the bankruptcy of the state’s historic capital, Hartford.

The executive order that controls state spending has already frozen millions of dollars in contracts and grants and limited support sent to municipalities. If a new budget is not reached by Oct. 1, many towns and cities are expecting a much smaller fraction of the usual amount from the state – or nothing at all.

This month, city officials in Hartford, which faces a nearly $50 million deficit, sent a letter to the state cautioning that a failure to reach a budget compromise with sufficient aid would make pursuing bankruptcy almost inevitable. The officials, including the mayor, Luke Bronin, noted that further cuts would force them to eliminate, and not simply reduce, essential city services.

At the University of Connecticut, which stood to lose at least $200 million over two years, its president, Susan Herbst, wrote a letter to students, faculty and alumni, warning of closing campuses and departments, ending majors and programs, as well as reductions in research, athletics and financial aid.

In Portland, a town of about 10,000 south of Hartford, officials said that if a budget were not reached by the start of next month, they stand to received just over $10,000 from the state – not the $4.6 million they had expected. “You just can’t do this to communities,” said Susan Bransfield, the first selectwoman.

Meanwhile, towns across the state have been unable to pass their budgets without knowing how much money they will receive from the state. Connecticut has seen its population decline over the past three years as Gov. Malloy has passed a series of tax hikes. Regardless of the outcome of this round of state-budget-chicken, Connecticut residents should probably brace for the possibility that taxes could rise further, while government services endure painful cutbacks.

Comment by rj not in chicago anymore
2017-09-27 12:34:33

Next up is Chicago and ILLANNOY!!

Comment by Sean
2017-09-27 09:36:42

I keep hearing the narrative of ‘demand is up’, but how exactly is demand measured inside the NAR? What specific metric or metrics do they use to measure said demand? I’m not setting up for a joke, I’d really like to know how they can flippantly say “Well, demand is up”.

Comment by 2banana
2017-09-27 09:43:10

Demand is up so you better buy now!

Get on the property ladder!

My Lexus car payments are not going to get paid without this commission…

There could be a bidding war - better come in at top dollar!

Comment by Ben Jones
2017-09-27 09:53:25

‘Even closer to Boston, Medford is still in a hot market - a really hot market, up 10 percent over this time last year - but foreclosures in that city may offer buyers hope. ‘Houses there still go quickly, but there’s a lot of foreclosures in Medford - There are about 5 times the amount of foreclosures that there are on the national average. So you’re going to have some distressed sales and some short sales that give buyers an opportunity to get into a hot market like that,’ Sevajian said’

Comment by 2banana
2017-09-27 10:05:01

I wonder, after the Housing Bubble v2.0 has popped…

Will people look back at statements like this and write thesis papers.

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Comment by bribe outfits
2017-09-27 10:24:55

They’ll have plenty of time to write while doing time.

Comment by In Colorado
2017-09-27 13:56:10

I really doubt realtors or mortgage bankers will be writing any thesis papers.

Comment by Mafia Blocks
2017-09-27 15:09:22

As my old friend from Minnesota always says, every closing is a crime scene but strangely enough, not because of realtors. It’s the mortgage criminals committing the crimes.

Comment by Karen
2017-09-27 14:47:44

Medford is a gritty slum filled with recent immigrants from Latin America and Southeast Asia and old, decrepit housing.

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Comment by sleepless_near_seattle
2017-09-27 21:29:58

Wow, talk about tone deaf.

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Comment by resistance
Comment by 2banana
2017-09-27 09:37:15

October 1st is coming…

The popcorn is ready.


The US Cities with the Biggest Housing Bubbles
by Wolf Richter • Sep 26, 2017

The term “housing bubble” to describe the housing market that peaked in 2006 and imploded with spectacular effects has been gradually fading out of use. The current theme is that years of asset price inflation have “healed” the housing market, and that the crazy peak of Housing Bubble 1 is now just some sort of normal base. Oh my…

The S&P CoreLogic Case-Shiller National Home Price Index for July was released today. The not-seasonally-adjusted index jumped 6% year-over-year, by far outrunning growth in wages and household incomes, which it has done for years. The index has surpassed by 5% the crazy peak (I mean, the normal base) in July 2006:


Since then, it has re-soared and is now 13% above the peak of Housing Bubble 1:


Home prices in the Seattle metro have spiked since the spring of 2016, pushing the index 20% above the peak of Housing Bubble 1 (July 2007):


When Housing Bubble 1 was blooming in many big markets, home prices in Denver were just edging up, and people felt left out. But then from the peak in August 2006, the index only fell 14%. The drama didn’t start until 2012, when Housing Bubble 2 lifted off with a vengeance. The index has now soared a stunning 44% above the prior peak:

Dallas-Fort Worth:

People in the Dallas-Fort Worth metro also felt left out during Housing Bubble 1. Prices rose only 13% in five years. The house price crash mostly bypassed Dallas as well. It was the way a housing market should be, with some ups and downs. But North Texans know how to party when their time comes. The index has now surged by 41% above the peak in June 2007:


In the Atlanta metro, where home prices had plunged 37% after Housing Bubble 1, prices are now 2.4% above the prior peak:


Portland’s home prices have detached from any sense of gravity since 2012, with the index soaring 73% in five years. The index is now 20% above the peak of Housing Bubble 1 and has ballooned by 123% in 17 years:

San Francisco:

Since then, years of global monetary craziness has sent liquidity from around the world tsunami-like to the Bay Area, and the index has soared 83% from the bottom of the bust and is now 27% above the prior crazy peak.

Los Angeles:

New York City Condos:

What’s hot in New York City? Condos. The Case-Shiller Index for condos in New York City soared 131% from January 2000 to the peak of Condo Bubble 1 in February 2006. That bubble barely deflated (-17%) before the Fed’s Wall Street manna arrived, flushed through the appropriate bank accounts, and reflated the condo bubble. The index is now 19% above the peak of Condo Bubble 1. Over the past 17 years, the index has soared 175%:

These are the visual effects of asset price inflation. A home whose price increases by 50% in five years didn’t get 50% larger or nicer. Instead, the value of dollars with regards to assets has gotten crushed. QE and ZIRP produced no wage inflation, moderate consumer price inflation, but extraordinary asset price inflation.

The Fed seems to be worrying this scheme might have gone too far and poses risks for banks which use inflated assets as collateral. Since late last year, the Fed has acted like clockwork. The QE unwind starts on October 1. The next rate hike is coming in December.

Comment by palmetto
2017-09-27 10:19:30

They missed the Tampa Bay area. It’s a bubble for sure here, including rents. Everybody wants to be here! What a joke.

I can’t wait to see what it looks like in Florida after the crash shock. Obamacare premiums are soaring:

This will soon be followed by insurance premiums due to Irma. We have so many people who have moved here from up Nawth and they’re still coming. And wait until the folks from Puerto Rico get here, any day now.

Comment by snake charmer
2017-09-27 11:44:46

None of our political leaders seem to grasp that a dollar spent on health insurance premiums, or healthcare in general, is a dollar which is not saved or spent elsewhere in the economy.

I was driving down Dale Mabry the other day and it seemed like every other billboard was healthcare-related. It could have been more, but the hurricane blew out a few.

Comment by Taxpayers
2017-09-27 13:41:28

There used to be health insurance
No one mentions that word

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Comment by FTHBwannabe
2017-09-27 21:27:21

Those dollars are presumed to be spent by healthcare providers and insurers. If the dollars are spent on consumption of goods and services of US products, it would have been in fact good for the economy. But did they? Apparently, those extra dollars seem to have been mostlay spent on speculation on asset appreciation or foreign luxury travels that add specious value to the real wealth of the country. Some say these “extra income” for the rich boost the economy, so-called trickle-down theory. Yeah, that may have been true before the Reagan era when the top marginal tax was 70% and the tax dollars were spent on things that were actually beneficial to the economy.

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Comment by Professor Bear
2017-09-27 12:49:45

The San Diego median sale price is up by 82% since early 2012 and we didn’t even make the list of bubbliest cities?

P.S. What’s happening on October 1? Is the MID going to be reinstated with the new tax plan?

Comment by In Colorado
2017-09-27 13:59:15

When Housing Bubble 1 was blooming in many big markets, home prices in Denver were just edging up, and people felt left out. But then from the peak in August 2006, the index only fell 14%.

I remember those days, and still that 14% felt like a bloodbath, since so many houses sold then were low or zero down. This time Denverites are going to learn the true meaning of pain.

Comment by Patrick
2017-09-27 09:42:13

Most QE went to repurchase shares at low interest rates; when the market was highest !

CEOs have used buybacks to pad their cheaper option grants, resulting in often more shares.

Most of these transactions do not impact the P&L, but the higher stock prices are at the expense of the Balance Sheet equity. Funny, sort of like the old days of wanting bond payouts instead of dividends.

The earnings should be devoted to capex, employee quality, dividends at about a third each. Today companies are trying to do 75% dividends and buybacks !

Trouble is, these purchases have come from earnings AND low interest loans resulting in increased net debt.

And that net corporate debt is about to punch those CEO Takers (SO-s) hopefully into Makers as rates rise.

But if they repatriate all those overseas profits I bet they will go down the rat hole of paying down net debt caused by share buy backs.

Another fiscal chicanery -

Comment by Senior Housing Analyst
2017-09-27 09:52:24

US Housing Demand Plummets To 20 Year Low

Comment by Professor 🐻
2017-09-28 09:27:18

Real estate: 4 reasons fewer Americans are buying homes
The U.S. homeownership rate is close to its lowest level since the 1960s. Here’s why.
Matthew Frankel | The Motley Fool

Comment by SW
2017-09-27 09:57:42

A: Let’s say I work at Google. I’ve been there for two years. They grant me 50 shares a quarter under a vesting plan. Every quarter I receive these 50 shares at $950 a share resulting in $190,000 in additional annual income. This RSU income is added to my base salary for qualifications purposes.

Comment by SW
2017-09-27 10:01:06

Companies use QE debt to buy and inflate company stock. Company employees use RSU stocks to buy and inflate RE.

This next crash will make 2009 look like a party.

Comment by Ben Jones
2017-09-27 10:31:00

‘Private trades in Spotify shares are valuing the music streaming company at about $16 billion, according to people familiar with the deals, raising the prospect of a bumper flotation next year.’

‘That is around $3 billion higher than in similar trades up until June, the people said, adding strong demand for the shares and rising subscription numbers at the Swedish business meant it could be worth at least $20 billion when it goes public.’

‘While its net losses doubled last year to $600 million, a more than 50 percent increase in revenues to $3.4 billion has raised hopes it is on the right track to make money.’

‘A bumper equity valuation would give Spotify a currency to help meet the challenge from rivals such as Apple Music and Amazon Music, and potentially fund an expansion into adjacent businesses, such as video, or geographies it has yet to reach. That could be vital, as Spotify does not have the large, profitable devices and retail businesses that its rivals can respectively draw on for support.’

‘A high market valuation would also bolster Spotify’s position in licensing negotiations with major music labels on which its business model depends. The trade-off, though, is that it piles the pressure on management to deliver results, and raises the specter of Twitter and Snap - two once white-hot internet players that have disappointed investors as public companies. Snap has lost nearly a quarter of its value since its flotation in March.’

It’s gonna be another twitter…

‘its net losses doubled last year to $600 million’

Comment by taxpayer
2017-09-27 10:37:01

I’ll stick w UBER ,who needs london,paris,san fran, chighetto,nyc
still worth an easy 60 billion

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Comment by Ben Jones
2017-09-27 10:48:59

I read about the NYC thing. Putting taxis into foreclosure, accidents up 40% as regular taxis aren’t allowed to even talk on the phone but these fly by night guys are using walkie talkies to find their way around constantly. What does uber do? Drop millions on lawyers to fight it.

Comment by Senior Housing Analyst
2017-09-27 10:15:11

Eden Prarie, MN Housing Prices Crater 7% YOY

Comment by taxpayer
2017-09-27 10:31:36

is there a CRE predictor that isn’t published by RE cheerleaders?
office buildings in N VA is the question

Comment by Carl Morris
2017-09-27 10:34:03

Another appreciation driver is the increasing use of Restricted Stock Units — known as RSUs — in loan qualifying.

Wow. OK. Last time I was at a job that had a lot of that sort of thing they were just starting to switch over from options to RSUs. I realize RSUs might be a little better than options for this, but still…seems like counting chickens before they are hatched.

Comment by Ben Jones
2017-09-27 10:52:43

We’ve got a Sacramento chicken counter that posts here sometimes.

Comment by Ol'Bubba
2017-09-27 20:27:42

Go Gators!

Comment by In Colorado
2017-09-27 14:29:05

but still…seems like counting chickens before they are hatched.

Especially since they aren’t vested yet.

But outside of overvalued companies like google, Amazon, Facebook etc., I suspect that few tech workers have significant unvested RSU holdings. I have some unvested ones of my own, from you know who (the big campus in Santa Clara), but they’re only worth 20K at this point in time.

Comment by Carl Morris
2017-09-27 15:54:17


I’ve made plenty of money over the years on stock purchase programs and just selling as soon as I could. But never have made any money on options or RSUs. And I received plenty. Just always at the wrong companies at the wrong time and had to wait too long.

Comment by Mot
2017-09-28 01:04:40

> Just always at the wrong companies at the wrong time and had to wait too long.

That’s exactly how they’re designed to work. ;-)

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Comment by Rental Watch
2017-09-28 09:34:26

In my experience (watching what happened at the company my wife worked out), most people got RSU grants on an annual basis, and they were set at a nominal dollar amount…so, if the stock price was down, the number of shares granted went up.

And they vested monthly.

The majority of people we know simply sold every time they vested, and so for them, it was effectively like income, which went up if the stock price rose, and down if the stock price fell. When the stock price fell, it simply meant that their grant would be for more shares the next year. So, there was plenty of volatility.

I, like you, saw it as “counting chickens”….when thinking about our income…especially as it counted toward living expenses, we always treated RSUs as “gravy”, and in fact, never sold except to pay the taxes on each vesting event.

We still hold the stock…I think that we are by far the exception…most people sold as soon as they could–and “grew into” that income. Risky.

Comment by Ben Jones
2017-09-27 10:50:45

‘of course, there’s no guarantee. And that’s why the thrill-a-minute world of real estate investing isn’t for everyone—especially when life savings are involved.’

‘OK, now that we’ve gotten that out of the way, let’s go shopping’

Is gotten a word?

Comment by Avg Joe
Comment by Ben Jones
2017-09-27 10:54:04

Well then let’s go shopping!

Comment by Professor 🐻
2017-09-28 03:27:23

Has there ever been another time in financial history when exactly the same dumb bet made rubes buckets of money for decades on end?

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Comment by Apartment 401
2017-09-27 11:21:00

Realtors are liars.

Comment by Senior Housing Analyst
2017-09-27 11:24:30

Arden-Arcade, CA Housing Prices Crater 9% YOY

Comment by Lesser Fool
2017-09-27 12:41:12

If the standard deduction is raised to $24k under the proposed tax reform, will this not burst the housing bubble in the US?

Comment by 2banana
2017-09-27 12:45:35

Trump wants to do away with the MID.

He got so much resistance from congress (ironically - from democrats protecting millionaire homes) that, I think, this is plan B.

Comment by Professor 🐻
2017-09-28 07:30:01

He can pretend to want to get rid of the MID to appease that part of his base, knowing full well that the NAR will successfully block any real attempt to eliminate it.

Comment by Prime_Is_Contained
2017-09-28 09:13:18

Raising the standard deduction is a smart way to undermine the MID, though; if it gets high enough, then essentially NONE of the middle class benefit from the MID—and at that point, it becomes easier to attack it via class warfare. It’s only the rich who benefit, so we should get rid of it, right?

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Comment by Professor 🐻
2017-09-28 17:57:37

“It’s only the rich who benefit, so we should get rid of it, right?”

That’s already the case, and will be more the case if the standard deduction increases. The result will be to reduce the cost of the MID and to more narrowly concentrate the benefits thereof on the wealthy.

I assume this means it is here to stay.

Comment by MightyMike
2017-09-28 09:52:11

Trump’s base includes a lot of rich people who benefit from the MID. There are probably very few who really want to get rid of it.

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Comment by ibbots
2017-09-27 13:03:52

Increasing the standard deduction to $12k per person from $6300 sounds good but the proposal also takes away the personal exemption of $4050 per person which results in only a $1650 increase in deductions.


Comment by In Colorado
2017-09-27 14:31:40

but still…seems like counting chickens before they are hatched.

FWIW, few other countries have a MID, yet their bubbles are frothier than ours. What drives the bubble is the expectation of making money without working and a heavy dose of FOMO.

Comment by MightyMike
2017-09-27 18:30:17

Administration officials said that some families making under $100,000 and taking the standard deduction could save $1,000 a year. But within hours of the document’s release, groups allied with Democrats circulated scenarios in which low-income households and senior citizens could instead see their taxes rise.

Gregg Polsky, a tax-law professor at the University of Georgia, said the increase in the standard deduction, combined with the elimination of state and local tax deductibility, would give many households less incentive to itemize their tax deductions, making provisions like a mortgage-interest deduction less appealing.

Married taxpayers would have to have at least $24,000 in combined mortgage interest and charitable deductions to get any benefit at all from itemizing, something that has charities and real-estate agents concerned.

“It keeps the mortgage deduction in name, but in practice only people with very large charitable contributions or million-dollar homes will benefit from it,” Mr. Polsky said.

Comment by Mafia Blocks
2017-09-27 18:44:35

That’s good news!

Comment by Rental Watch
2017-09-28 09:40:03

If you can design a major tax reform package in which there are no scenarios where someone pays more, you are either a magician, or a liar.

I personally expect to pay more (living in CA, no income tax deduction will sting). I just hope that my tax return is less than half the current 179 page length (Fed plus state) that I’m reviewing in advance of 10/15 filing.

Comment by rj not in chicago anymore
2017-09-27 12:43:30

Buuuuut - shouldn’t we all be takin a knee?

Comment by 2banana
2017-09-27 13:01:13

Unless you are Tim Tebow praying, on the sidelines, bothering no one.

Then you will be vilified and hounded out of your job.

Comment by In Colorado
2017-09-28 07:15:31

FWIW, Broncos fans loved Tebow, but at the end of the day he was a mediocre QB and Elway chose to let him go, other teams gave him a chance, until it was painfully obvious that he wasn’t NFL material. IIRC, the Broncos would have kept him as a tight end, but he wasn’t interested.

Now he plays minor league baseball and makes headlines, even though he bats .200 and will never make it to the MLB.

I often wondered it “Tebowing” was just some schtick he did to stand out and get noticed above all the other mediocre QB’s.

Comment by Bradford99
2017-09-27 12:48:46

I have followed this blog since 2005. We MUST be getting near the top, because for me these prices are starting to seem reasonable. To me, an 800k 3/2 in Bellevue, WA is starting to seem reasonable.

I found this gem, pre and post rehab. Sold 7/2017 for 600k (it was NOT on the MLS by the way, must have been sold privately). New kitchen and bath and it’s back on the market 2 months later at 825k.,-121.966439,47.496444,-122.335511_rect/11_zm/

Comment by 2banana
2017-09-27 12:53:14

Q: Why don’t developer build modestly prices apartments instead of insanely expensive “luxury” apartments?

A: (blind photographer?)

NYC’s craziest rent-controlled apartments need a new landlord
New York Post | September 27, 2017 | Jennifer Gould Keil

One tenant pays $127.61 a month for a spacious 1,000-square-foot, fourth-floor apartment inside the five-story townhouse at 59 Morton St.

One of the rent-regulated tenants is John Dugdale, a blind photographer, who lives with his guide dog.

The 25-foot wide Federal-style landmarked townhouse, between Bedford and Hudson streets, currently features five rental units. Along with the two rent regulated units, on the fourth and fifth floors, there are three market-rate units that can be delivered vacant: The garden floor rents for around $5,750 a month; the parlor floor rents for $7,687 a month and the other floor rents for $6,300 a month, according to the brokerage firm’s marketing materials.

Comment by BlueSkye
2017-09-27 20:17:42

You can be legally blind, disabled, yet still able to use optics to see things. One of my woodturning friends is in this category. He does amazing work.

Comment by 2banana
2017-09-27 12:57:24

Deep blue high tax states with insane property and income taxes (to fund the pensions of even more insane far left public union goons) are about to get schlonged.


Trump tax plan eliminates big perk for high-tax states
NY Post | September 27, 2017 | Marisa Schultz

President Trump will release a sweeping plan Wednesday to cut taxes and simplify the tax code that will eliminate the deduction for state and local taxes — a move that Gov. Andrew Cuomo has warned would be a “death blow” for New York.

Despite fierce opposition from high-tax states when the idea was first floated, the Trump administration is pushing ahead with the repeal, which would remove state and local income and property taxes as deductions on federal returns.

The perk — first enacted with the income tax in 1913 — is most heavily used in coastal, bluer states that include New York, California, New Jersey and Connecticut.

Repealing it would increase federal revenue by $1.3 trillion over the decade, according to the Tax Policy Center.

But it would also slam high-income New Yorkers.

Cuomo has called the elimination of the state and local tax deduction tax a “death blow” to New York by putting the state at a horrible competitive disadvantage.

Comment by In Colorado
2017-09-27 14:54:24

If Trump pulls that off, I will be very impressed.

Imagine, not being able to write off that 20K property tax bill or that huge state income tax bill.

Comment by Ben Jones
2017-09-27 16:03:01

Here’s the link:

‘Nationwide, about a third of all taxpayers itemize their taxes and virtually all who do so claim deductions for their state and local taxes on income, real estate, property and sales taxes. Households making more than $100,000 benefit the most.’

Comment by MacBeth
2017-09-27 16:24:56

And not bilking the rest of the country via the tax code.

Effectively making the rest of the country pay for your $20K property tax write-off is not very classy.

Trump most definitely continues to work on behalf of the middle class. The elitist class will stop him every chance they get. They love their ill-gotten gains and despise the middle class.

There’s that word again, Ben! “Gotten”.

Comment by Ben Jones
2017-09-27 17:02:05

It’s a very progressive proposal. Taking away incentives from the house gamblers. Good luck fighting that Maxine.

Fun uses of gotten:

Joe flipper would have “gotten” a lot more for his shacks if he hadn’t waited too long to sell.

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Comment by MacBeth
2017-09-27 19:04:10


Trumps wins politically no matter how the tax proposal comes out.

His proposal is simultaneously both Occupy Wall Street and Tea Party in vision.

Stick it to the monied interests on the coasts in favor of the middle class (Occupy), and cut tax regulations (Tea Party).

A very good position to campaign against down the road. The elitists will challenge it of course, only hurting their own cause in the process.

The real, valuable win happens if the tax proposal is passed. That must remain Trump’s real goal, not political points for himself.

The Alabama vote this week is a great reminder for Trump - that the movement is larger than himself. Trump supporters still support him and are still ahead of him. And that’s good.

We need to stay several steps ahead of Washington if we are to succeed. They need to follow us.

If Trump is unable to get done what his supporters want, they will find someone else who can get it done. They inherently understand this, which is why they aren’t mad when Trump doesn’t succeed.

The pro-individual liberty, anti-globalist movement is a genie that’s been let out of a bag. It’s strong, peaceful, resilient. Which is to be expected - it’s what a conceptual respect for individuals yields and always will yield. The movement continues to grow in number.

The SJW insanity, the meaningless/directionless protests, the paid-for protestors, the non-stop venom spewed by “the news” isn’t causal. It’s reactionary.

Comment by Senior Housing Analyst
2017-09-27 13:08:05

Seattle, WA Housing Prices Crater 5% YOY

Comment by redmondjp
2017-09-27 13:47:59

Cherry-picking data again, Mafia Blocks? Give it up.

Comment by Mafia Blocks
2017-09-27 13:58:13

Hello my good friend. Remember. Nothing accelerates the economy like falling prices to dramatically lower it more affordable levels.

Monterey, CA Housing Prices Crater 14% YOY

Comment by jeff
2017-09-27 15:50:49
Comment by Karen
2017-09-27 16:23:56

Elmira was a factory town back in the day, then they started depending on the local mall as the center of their economy. Once the PA oil and gas workers went away, it was cratertown.

And of course local government expanded as the sales tax money came in, and now they’re in trouble.

Comment by aNYCdj
2017-09-27 18:38:07

Ok I worked there in LIC years ago, talk about paperwork, the fun part was getting out of the office and interviewing the clients videotaping depositions and psychical examinations, but then a lot of senior employees wanted to do the same so you get stuck with the drudgery, nobody really lasted long.

Binder & Binder plans to lay off 100 of the 147 employees at its Hauppauge headquarters, a state regulatory filing says.

The company, once described as one of the country’s largest Social Security disability advocacy firms, has been shrinking its workforce since completing a bankruptcy reorganization last year.

The layoffs are planned for Dec. 11.

In addition, Binder & Binder plans to close its Long Island City, Queens, office and lay off all 90 employees, also on Dec. 11, a separate WARN notice says.

The company filed for Chapter 11 in December 2014, and in October 2016 its reorganization plan was approved, according to court documents and a clerk at the U.S. Bankruptcy Court in White Plains, where the case was filed. Earlier this year, Binder & Binder closed its Tampa, Florida, office, according to a published report.

The company didn’t return phone calls seeking comment.

Binder & Binder describes itself as a Social Security disability advocate that helps clients with their benefits claims.

The firm was noted for its once-ubiquitous TV commercials featuring co-founder Charles Binder in a cowboy hat, intoning: “We’ll deal with the government. You have enough to worry about.”

But a shrinking number of people seeking benefits and tighter government standards for granting them meant less money for firms like Binder & Binder, according to a Wall Street Journal article.

Under New York’s Worker Adjustment and Retraining Notification Act, companies with at least 50 full-time employees must file a 90-day notice of a mass layoff or closing.

Comment by In Colorado
2017-09-27 22:36:38

I read somewhere that there are over 1 million pending SSDI cases and they are being processed at a snail’s pace. All for a measly average monthly benefit of about $1000. That’s how desperate people are.

Comment by rms
2017-09-28 07:48:42

These SSDI cases are frequently scams, and I’ve read that disability has basically become an unemployment program for many red-state workers who lost their jobs to off-shoring.

Comment by aNYCdj
2017-09-28 11:14:36

or too young to collect SS and too obese to drive or fit into the cab of a forklift

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Comment by aNYCdj
2017-09-27 18:41:47

ok 1 more Some of the city’s best-known moms are mourning the loss of a breast-feeding specialty shop on Amsterdam Avenue.

Comment by oxide
2017-09-28 07:05:22

Rakowski-Gallagher, a former NYPD cop and breast cancer survivor, cites online competition for the store’s demise. “F–k Amazon,” she said. “Who are you going to talk to at Amazon? You need to bring your boobies in here.”

Online forums, honey. Get a recommendation from an online forum, check the product review section at Amazon, buy product, it’s on your doorstep in two days.

All in your undies, and none of your neighbors the wiser. This works for everything from breast pumps to knitting supplies to car parts to gourmet imported tea.

Comment by Young Deezy
2017-09-28 07:50:26

…and half of those items are Chinese fakes.

Comment by GuillotineRenovator
2017-09-28 09:03:59

Exactly. Amazon and eBay are loaded with Chinese counterfeits.

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Comment by Senior Housing Analyst
2017-09-27 19:44:07

Calabasas, CA Housing Prices Crater 10% YOY

Comment by jeff
2017-09-28 07:48:17

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