The Bottom Of The Hole Is A Long Way Down
A weekend topic on Canada and Australia starting with the Toronto Star. “The cost of a newly constructed detached home in the Toronto region dipped slightly in September to $1.6 million, down from about $1.8 million in August as more new low-rise housing came onto the market. Nevertheless, Building and Land Development Association says the inventory of new homes remains, ‘well below what is considered a healthy level.’”
“Its September statistics show that sales of new construction low-rise homes — a category that includes detached houses, semi-detached and town homes — fell 73 per cent, compared to the same month last year. Although they continue to dominate Toronto-area new home sales, condos — including high rises, low-rise apartments and stacked town homes — also saw a 37 per cent drop in the number of sales.”
The Saskatoon Star Phoenix in Canada. “Home sale prices per square foot in Saskatoon have nearly tripled over the last two decades, and Regina was close behind, according to a new survey. The Saskatoon Region Association of Realtors (SRAR) reported earlier this month that September sales fell 19 per cent year-over-year, while year-to-date sales were down six per cent compared to the first nine months of last year. ‘In a buyers’ market with elevated inventory levels it is critical to understand pricing and to properly prepare your home to compete against other homes in your price range,’ SRAR chief executive Jason Yochim said in a statement.”
“Century 21 said in the survey that while homes priced between $300,000 and $400,000 are selling ‘actively,’ a ‘huge supply’ of condominiums remains on the market. That echoes statements made by the Canada Mortgage and Housing Corp. earlier this year, when it reported record levels of ‘completed and unabsorbed’ condos in Saskatoon. The country’s mortgage insurer made similar comments earlier this month.”
The Fort Saskatchewan Record in Canada. “The Fort is expected to see continued realty growth because of strength of industrial jobs and its family-friendly appeal with various amenities. This gives the city an advantage over other municipalities in Alberta. ‘It’s an indication that over the next five years, Fort Saskatchewan’s real estate market is either more protected from downturn and the demand and the prices will increase more quickly then the rest of the city’s in the province,’ said REIN senior analyst Don Campbell.
“The average residential housing price to be $385,214, according to REIN. Fort Saskatchewan Re/Max owner and agent, Ken Jackson agreed with that number. He noted that a house built in 2000 or later averages $400,000 while houses built in the 1970’s average between $325,000 to $350,000. ‘Since mid-2015 until now, there’s been a drop of about 10 per cent in the market place on prices but it seems to have bottomed out and now it’s just a matter of too much inventory,’ said Jackson.”
From CBC News in Canada. “Edmonton is one of three cities in Canada where a surplus of new housing is becoming a problem, the Canada Housing and Mortgage Corporation has found. Two quarterly reports by the CMHC show more housing units have been built than are needed in Edmonton, Calgary and St. John’s, N.L. The CMHC Housing Assessment said ‘evidence of overbuilding’ went from moderate to high in the Edmonton market in the past quarter.”
“A building boom that started before the recession in 2015 is largely to blame, said Brent Weimer, CMHC’s principal in market analysis for Edmonton. A lot of construction that began two or three years ago is now approaching completion, while demand has dipped, he said. ‘Large projects, apartment buildings, have a very long lead-lag time,’ he said. ‘So the planning process, the construction process, the completion and then the occupancy takes several years sometimes.’”
“‘We have a lot of competition in the rental market,’ he said. ‘We also have a large number of condo apartments just sitting on the market, just trying to find a buyer.’”
The Port Stephens Examiner in Australia. “There are less new homes are under construction in Port Stephens than in quite some time, the latest housing approval data shows. There’s been little to grumble about since 2013 when construction approvals hit 388 for the calendar year. It slowed to 224 in 2014 but raced back to 377 in 2015 and remained strong at 342 for 2016; for a five-year average of 315.”
“The Housing Industry Association said it wasn’t overly concerned. ‘We’ve had a good few years in Port Stephens so its probably coming off the boil a bit,’ HIA Hunter director Craig Jennion said.”
“Closer analysis of the data revealed it was unit construction that had slowed the most. In the 12 months to August 2017 there was 37 multi-unit approvals compared to 71 in the same period last year. That’s a 48 per cent downturn. In the three months to August 2017, detached housing eased from 61 approvals to 45 – down 26 pc. At the same time unit approvals went from 33 back to 20. ‘We’re down a third overall in Port Stephens,’ Mr Jennion said. ‘Unfortunately it has softened a little.’”
The Queensland Country Life in Australia. “Brisbane’s rental market has performed poorly for another quarter, with rents totally stagnant for houses, falling for units and yields falling for both. Belle Property Bulimba principal Tony O’Doherty said the news was not surprising. ‘From the unit point of view there’s two obvious reasons, there’s the oversupply and there’s the competition because of the oversupply,’ he said.”
The Sunshine Coast Daily in Australia. “Banks are playing catch-up with a resurgent Mackay economy, and aspiring home owners still face excessively restrictive policies, a local real estate guru says. There were multiple signs the housing market had improved in the last year, REIC Mackay zone chair Peter McFarlane said. But the agent said head office bankers in Sydney or other state capitals were yet to acknowledge the regional resurgence.”
“Mr McFarlane said in recent years the Mackay housing market took a severe pounding. ‘Property values in 2015 were the equivalent of what they were in 2005,’ the Mackay Property and Management Services director said. For a while, banks lent ‘willy nilly’ and the market ballooned beyond reasonable levels, he said. And when the local economy hit obstacles, ‘the bottom of the hole was a long way down.’”
“So banks became less willing to lend to buyers, he said. During the downturn, Mackay became known as ‘a very high mortgage delinquency area’ and lenders viewed the entire 4740 postcode zone as somewhat taboo. Where prices plummeted and home loans exceeded a property’s value, banks sold houses at a loss. That loss for banks was generally recoverable from the mortgage insurer, he said.”
“Insurers had to go after borrowers, but to the chagrin of insurers, those borrowers frequently declared bankruptcy, he added. ‘The banks are being very very strict now in their lending and a lot of that does come from the mortgage insurers,’ Mr McFarlane added.”
“NAB said it considered multiple factors when assessing a customer’s lending application. ‘And we take into account local economic and market conditions for the security against which the customer wishes to borrow,’ an NAB spokesperson added. ‘This is the responsible and right thing to do for our customers, for our business, and for the Australian property market.’”
The Australian Financial Review. “Property industry veterans have started raising concerns about the build-up of retail and residential property construction along the east coast of Australia. Speaking at the Property Council of Australia’s annual congress in Cairns, Folkestone managing director Greg Paramor said the snapshot of new investor-style apartments was looking risky.”
“‘We look at all the major cities on the eastern seaboard and we see a genuine oversupply of investment-grade property,’ Mr Paramor said. ‘In the overbuilt areas of Melbourne and Sydney and Brisbane, there is a lot of rubbish that is coming through there.’”
The Sydney Morning Herald in Australia. “Treasury secretary John Fraser has said Australian banks could face further restrictions and warned regulators should guard against excessive debt in the financial system. He warned the Australian household sector’s assets are around five times greater than its debts, holding over $2 trillion in debt while maintaining $12 trillion in assets. ‘Asset values can always fall, and often do, while debt values generally don’t, squeezing net worth in the process and perhaps more importantly, around 75 per cent of household assets are in housing and superannuation,’ he said.”
“Treasurer Scott Morrison in March ordered the Australian Prudential Regulation Authority to slam the brakes on investor lending by restricting interest-only loans to less than 30 per cent of new home loan approvals while also tightening access to high-risk loans. ‘While banks’ progress against these measures has been positive, regulators will need to think carefully about whether future efforts to maintain financial stability should lean against cyclical excesses or address structural risks within the financial system,’ he said.”
I’ll be headed out on a four day business trip tomorrow and when I get back I will be flying to Texas for at least a week. Posting and moderation will be delayed.
Realtors are liars.
‘Home sale prices per square foot in Saskatoon have nearly tripled over the last two decades, and Regina was close behind’
It’s still close to $300/square foot.
Fort McMurray, AB Real Estate & Homes for Sale
792 results results
$ 445,000
104 Beacon Hill Place, Fort McMurray, AB, T9H 2S3
Building Type: Mobile Home
https://www.remax.ca/ab/fort-mcmurray-real-estate/na-104-beacon-hill-place-na-wp_id190859519-lst/
A couple of years ago this trailer would have fetched $500k. They should add some skirting.
That’s some Grade A dry humor there Ben.
Are mobile homes even viable in the sub-Arctic?
Oh yeah. I’ve seen video of some remote and cold towns/camps in Alaska and Canada that were nothing but manufactured housing.
Your standard issue mobile won’t work, but one that’s been insulated for the Arctic surely would.
who would leave their truck outside at 30 below? would it even start?
Block heater, dj…
It always amazes me how long the real estate bubble markets take to start unwinding.
We’ve been watching Canada for over a decade….. talking about how overpriced Vancouver and Toronto have become.
The same with Australia…..it seems it was about 3 years ago that China mining imports were dropping…. guaranteeing a drop for the Aussies.
‘We’ve been watching Canada for over a decade’
I don’t know that many of you remember what’s happened:
October 29, 2007
Speculators Caught Up In The Bust
The Times News reports from North Carolina. “Hendersonville’s downtown condominium market may be a casualty of a nationwide housing slump as several upscale condominium complexes announced over the past two years have stalled. The condominiums were all proposed for downtown when the housing market here was hot. ‘Obviously, the real estate market has slowed down,’ said Ed Hernando, who has proposed two downtown condo projects. ‘That’s kind of what has affected us slightly because people can’t sell their homes and move into this market.’”
“‘Buyers are on the sidelines waiting for sellers to reduce their prices so they can get better deals,’ he said.’”
From WJZ.com in Maryland. “Seventy houses in Baltimore City are foreclosed every week. ‘It seems as though the American dream has now become the American nightmare,’ said Baltimore resident Joanna Smith-Ramani. ‘With the market going soft, you can’t sell to get out anymore, so you’re stuck with this mortgage and this house you really could never afford to begin with.’”
“The leading cause of foreclosures are adjustable-rate mortgages adjusting so high that some Marylanders find they can’t make the payments. ‘It’s scary to think what will happen. The ultimate thing that will happen is foreclosure; they will drag me from my house bloody and screaming before I give up,’ said homeowner Ray Dawkins.”
“The investors who bought properties to make money are caught up in the bust as well. They make up a third of the foreclosures in Baltimore.”
The Herald Mail in Maryland. “When Donald Shumaker II refinanced his home in 2004, he knew the interest rate would stay the same for three years, after which it would become adjustable. But he didn’t expect what happened.”
“‘I was paying $910 a month,’ he said. In one month, the rate went from 7 1/4 percent to 10 1/4 percent, or $1,375 a month.” “‘Then, they sent me another letter, and my mortgage went up to $1,540,’ Schumaker said. ‘I’d have to have three jobs and no time with my family,’ he said.”
“Last Tuesday, less than 24 hours before his home was to be sold in a foreclosure auction on the steps of the Washington County Courthouse, Shumaker’s attorney filed on his behalf for bankruptcy protection.”
“‘I guess it’s my only option,’ Shumaker said. ‘I’m just going to have to go under, and that’s a sad thing to say.’”
“In the past 12 months, a total of 516 foreclosure notices have been filed at the courthouse. By comparison, 294 were filed during the same period in 2005 through 2006.”
“‘I’m seeing a significant increase. I’ve never seen it this bad. I’ve been doing it over 30 years,’ said William O’Brien, a Martinsburg, W.Va., attorney who handles such cases in West Virginia and Maryland. The number of resulting bankruptcies is ‘going completely crazy,’ he said.”
“A major problem, several attorneys and a local mortgage broker agreed, is that, like Shumaker, many borrowers don’t know what is in the loan agreements they sign.”
“Those agreements are ‘18 to 20 pages long, typically … but nobody reads that stuff,’ said a local mortgage broker, who didn’t want to be identified.”
“Friday a week ago, it was becoming clear to Donald Shumaker what he would have to do. He had tried to refinance with another lender, but was refused. He thought about trying to sell the house, but realized the market is so depressed, he couldn’t get near what he owed.”
“He had stopped trying to make payments to EMC because the debt was snowballing. Sale notices were published in the newspaper. The auction was to begin Wednesday.”
“‘More or less, they give me no choice,’ Shumaker said.”
“Tuesday afternoon, Hagerstown attorney Alex Bognar filed papers with U.S. Bankruptcy Court in Greenbelt, Md., seeking bankruptcy protection for Shumaker.”
The Philadelphia Inquirer from Pennsylvania. “Sales of existing homes in the eight-county Philadelphia region were down about 10 percent in the third quarter from the same period in 2006, data from HomExpert Market Report show.”
“HomExpert’s pending-sales index for August showed a substantial decrease in activity from July that was not unexpected. ‘We had anticipated a decrease in the region’s activity due to the heightened awareness of the credit crisis and mortgage availability,’ said Steve Storti, senior VP of marketing for Prudential Fox & Roach.”
“On the positive side, Lawrence Yun, senior economist for the National Association of Realtors, said, ’speculative excesses have been removed from the market, and prices remain near record highs, reflecting favorable mortgage rates and positive job gains.’”
“‘All real estate is local,’ he noted.”
“Some local observers have questioned HomExpert’s days-on-market averages, which in the third quarter ranged from 53 to 75. To ‘freshen’ a listing, they say, some agents and brokers remove houses from the MLS for a few days, then re-list them at lower prices, to give them the appearance of being new to the market.”
“Tim Crann, a veteran appraiser who handles properties in the five Pennsylvania counties, said he has seen many examples of this ‘resetting the DOM clock,’ and believed that the actual days-on-market figure for many houses was much higher.”
“Storti said he discussed the issue with the firm that analyzes data for HomExpert. ‘Their analysis tells them that manipulation at the broker level of re-listing does not have a significant effect…on days on market,’ he said. Some local Realtors agreed.”
The Associated Press on Connecticut. “Mortgage defaults and foreclosures in Connecticut’s cities have skyrocketed over the past year, a real estate tracking company has found. RealtyTrac said the number of foreclosures increased 547 percent in the New Haven-Milford area, 522 percent in the Bridgeport-Norwalk-Stamford region and 446 percent in the Hartford area in the first half of this year, compared with the same period in 2006.”
“State Attorney General Richard Blumenthal told the Connecticut Post that his office has been inundated with calls from homeowners seeking help.”
“‘We may be on the cusp of a huge wave breaking over Connecticut. People are very understandably upset,’ Blumenthal said.”
“U.S. Rep. Christopher Shays, R-Conn said he is focusing on who is being foreclosed upon and why. He said many subprime borrowers did not put any money down on their loans and ‘never really owned a home in the first place.’”
“‘I can’t imagine helping people who should not have gotten a loan in the first place,’ he said.”
The New York Times. “In neighborhoods in Brooklyn, Queens and the Bronx hit hard by the subprime lending crisis, mortgages had the shortest of life spans, taking about a year to go from approval to notice of foreclosure, and many of those home loans were originated by the same few lenders, according to a report released yesterday by State Senator Jeffrey D. Klein.”
“There were 19,729 foreclosure notices filed in New York City and Westchester and Nassau Counties from July 1, 2006, to July 31, 2007.”
“In the Jamaica and South Jamaica sections of Queens, the average time from mortgage origination to notice of foreclosure was 11 months. In Wakefield and Baychester in the Bronx, it was 14 months, the report said.”
“Jay Rosado said he and his wife, Ana, had been locked into two subprime mortgages from Fremont Investment and Loan on their Throgs Neck home. Their payment increased after two years by about $700, to $4,000 a month. After a long ordeal, the couple refinanced both loans at a lower, fixed interest rate.”
“‘It’s horrible what they’re doing to people,’ Ana Rosado said of subprime lenders.”
The New York Post. “State Sen. Jeff Klein yesterday released a ‘Sub Prime Hall of Shame’ report outside the New York Stock Exchange yesterday, naming the banks with the highest foreclosure rates in the city and Westchester County.”
“‘These banks grew rich off of defrauding the American Dream,’ said Klein.”
“According to Klein’s report, the state’s foreclosure rate for 2007 is on track to exceed last year’s by a staggering 60 percent.”
“Army Staff Sgt. Sandra Rolon came back from Iraq and hoped to have the American dream of owning her own home in The Bronx. Instead, the veteran has become one of an estimated 19,000 New Yorkers swept up in the collapse of the subprime mortgage market.”
“‘I feel suckered,’ said Rolon, who’s lost her house.”
http://thehousingbubbleblog.com/?p=3644
October 29, 2007
The Offer Seemed Too Good To Refuse At The Time
Some housing bubble news from Wall Street and Washington. Bloomberg, “UBS said Monday that the slumping U.S. housing market may lead to further write-downs on debt securities following the company’s first quarterly loss in almost five years. UBS, the largest bank by assets in Europe, is at risk from ‘further deterioration in the U.S. housing and mortgage markets as well as rating downgrades’ on mortgage-related securities, the bank, based in Zurich, said in a statement.”
“UBS reiterated that its third-quarter loss was between 600 million francs, or $516 million, and 800 million francs.”
From MarketWatch. “‘UBS is not assuming that the quarter will continue as positively as it has begun, or that the current difficulties will be resolved in the short term,’ the group said in a statement.”
From Reuters. “The UBS statement was highly unusual, coming only one day before the formal announcement of its third-quarter results.”
“‘They have not squashed it (the rumours of more writedowns), they have confirmed it,’ said one London-based analyst, who asked not to be identified.”
“UBS said the fixed income business ‘remains exposed to further deterioration in the U.S. housing and mortgage markets as well as ratings downgrades for mortgage-related securities.’”
From Forbes. “Japan’s biggest bank, Mitsubishi UFJ Financial Group, revealed Monday that its losses in the U.S. subprime mortgage market had ballooned to 30 billion yen ($263 million) over two months, six times more than previously announced.”
The Evening Standard. “Wall Street is bracing itself for a further $5 billion of losses at Merrill Lynch as the beleaguered bank tries to steady itself in the wake of the ousting of CEO Stan O’Neal.”
From Business Week. “Merrill sure prospered while the revelry lasted, raking in $800 million in CDO underwriting fees (more than any other firm) since the beginning of 2006, according to Thomson Financial/Freeman.”
“Now that the boom has gone bust, Merrill is left holding billions of dollars in less attractive pieces of CDOs that haven’t been sold to investors. Merrill was sitting on a lot of CDO tranches by virtue of its prime underwriting role, up to $32 billion in exposure as of June 29, the company says.”
“Now, Merrill has written down the value of those hard-to-trade securities by $5.8 billion and says it has cut its overall holdings by half. Is a future write-off looming? It’s a worry, especially if ratings agencies downgrade Merrill’s remaining CDO securities.”
From BBC Two. “The crisis in US subprime mortgages has fallen hard on the city of Cleveland, Ohio, where as many as one in six households have been affected.”
“Five years ago Eleanor Hall bought a house. What she didn’t realise was that her mortgage was a subprime. Now, she is unable to pay and left facing homelessness. ‘I’m truly at rock bottom,’ she says.”
“‘This was the Wild West of lending but there was no sheriff in town,’ says Jim Rokakis, County Treasurer for the Cleveland area. ‘There has been blood flowing on the streets of Cleveland but nobody cared. The only time anyone listened was when blood flowed on the only street that matters in this country, and that’s Wall Street.’”
The LA Times. “Despite the mortgage meltdown, the blizzard of advertising for home loans continues. Lenders struggling to remain profitable now are targeting people who have good credit and plenty of home equity.”
“Critics say the offers often appeal to the same inclination that led many sub-prime borrowers astray, the tendency of people to live beyond their means by using their home equity as an ATM.”
“‘It’s all the art of distraction,’ said Bruce D. Miller, CEO of Dailey & Associates Advertising. ‘For some people, all they care about is the monthly payment. And that keeps them from digging in and concentrating on the hidden elements.’”
“Countrywide Financial Corp., the nation’s largest mortgage lender, regularly barrages existing customers with pitches for new loans, encouraging them to cash out some of their home equity and saying they may not need to get an appraisal or prove their income.”
“‘There remains a very large stock of home equity that has not yet been tapped, greater than $10 trillion, which can be tapped to finance home improvements and other expenditures, such as education investment, small-business development and retirement spending,’ said David Sambol, Countrywide’s president.”
From Yahoo Finance. “If I had an adjustable rate mortgage (ARM) and I didn’t know when or how my mortgage would adjust, or how that would affect my monthly payment, I might be a little worried. After all, the media is now littered with nightmarish tales of mortgages gone bad.”
“According to a study recently released by the AFL-CIO. It found that nearly half of homeowners with ARMs don’t know how their loans adjust or reset, and nearly three-quarters don’t know by how much their monthly mortgage payments will increase when they do readjust.”
“Just 18 percent said they were worried about making their monthly mortgage payments over the next few years. It turns out that reality can be a real downer: Among homeowners who had already faced their first readjustment, 41 percent said they were worried about meeting their loan obligations.”
“U.K. banks approved the fewest mortgages in 26 months in September as borrowing costs increased. Lenders granted 102,000 loans for house purchase, the fewest since July 2005 and down from 108,000 in August, the Bank of England said in London today.”
“A tripling of house prices since 1997 has encouraged borrowing. Britons’ debts held at a record 1.4 trillion pounds ($2.9 trillion) in September, the central bank said today.”
“U.K. house prices fell for the first time in two years in October, led by central London and the financial district, a report by Hometrack showed today. Prices dropped for a second month in September, with the number of potential homebuyers dropping to the lowest since 2003, the Royal Institution of Chartered Surveyors said.”
The Daily Mail. “Like so many young professionals hoping to cash in on Britain’s property boom, 26-year-old Paula Collins, a recruitment consultant from London, thought her money would be safe. The buy-to-let market was booming and the deal from a Manchester developer seemed too good to pass on.”
“The two-bedroom flat in the Castlefield area was valued at £175,950, but the developer was offering a 15 per cent discount, taking the price down to £149,500, and best of all, no downpayment was required.”
“After 18 months, in which Manchester, like many northern cities, has seen a massive oversupply of new city centre apartments, Paula’s flat is now worth just £140,000.”
“Her mortgage costs her £900 a month, but she receives only £600 a month in rent. That’s when she could find a tenant. Now the flat is lying empty, so Paula has to stump up £900 a month just to cover costs.”
“‘The offer seemed too good to refuse at the time. I decided to do this one as a long-term investment, but I hadn’t anticipated that the property would be so debilitating,’ says Paula. ‘I paid such a high price, partly because independent valuers told us it was worth a lot more, and now I can’t sell because there are so many apartments in the area.’”
“‘I’m at a desperate stage. I’ve lost an enormous amount of money - about £14,000,’ she said.”
“There are 900,000 buy-to-let landlords in Britain, many spurred on in the past few years by rising house prices and the accessibility of mortgages tailored for buy-to-let investors. Many saw it as a get-rich- quick scheme in a buoyant market.”
The Guardian. “The number of repossessed homes looks set to soar next year to levels not seen since the 1990s house price crash…according to the Council of Mortgage Lenders (UK).”
“The group expects the number of repossessions to rise by 50% during the year, rising from 30,000 this year to 45,000 in 2008. It said remortgaging options available to some borrowers, such as those borrowing high income multiples, people with high loan-to-value ratios and those with adverse credit histories, would also reduce.”
From CNN Money. “Since the subprime crisis erupted earlier this year, vulture investors looking for bargains have been circling battered securities backed by mortgages. But the feeding has not yet begun in earnest, and that’s not a good sign for the housing and credit markets.”
“A recently created ’superfund’ designed to buy bonds and other debt backed by home loans could deter distressed investors from entering the market. Some critics, including former Federal Reserve chairman Alan Greenspan, have warned that the fund could do more harm than good by propping up prices.”
“‘If you intervene in the system, the vultures stay away,’ Greenspan said in a recent interview. ‘The vultures sometimes are very useful.’”
“The uncertainty leaves distressed debt investors with the tricky task of ‘catching a falling knife,’ said Daniel Alpert, a partner at New York-based boutique investment bank which specializes in mortgage and related securities.”
“‘You could argue this is a good time to go in,’ Alpert said. ‘But my view is that a good portion of the market thinks the knife hasn’t even started to plummet yet.’”
National Mortgage News. “A few weeks ago, former FHLB Chicago president Alex Pollock handed me a ‘reading list’ of that might shed some light on the current subprime mess/bubble/panic. None of these books, of course, are about the current crisis because, well, no one has written one yet (at least not for the layman).”
“At the top of Mr. Pollock’s list? ‘Lombard Street’ by Walter Baeghot, a book penned back in 1873. That’s right, 1873.”
“Anyway, 10 days ago Federal Reserve chairman Ben Bernanke spoke before the Economic Club of New York. And what book did he reference? Answer: ‘Lombard Street.’ Chairman Bernanke quoted from the book, saying, Baeghot believed a panic is a ’species of neuralgia.’ Confused? Type those words into Google and see what turns up…”
http://thehousingbubbleblog.com/?p=3645
October 29, 2007
Biting A Very Bitter Bullet
A report from the Arizona Republic. “Still dragging down the market is the number of existing homes for sale. Listings are still hovering in the mid-50,000s. Resales continued their slide in September, as did the median price of existing homes sold. Lower prices are helping the new-home market now. RL Brown, publisher of the Phoenix Housing Market Letter, said most Valley builders finally have realized they need to drop prices to sell homes.”
“David Seiders, National Association of Home Builders chief economist, said last week that these four areas will be most vulnerable to the subprime-loan fallout: California, coastal Florida, Phoenix and Las Vegas.”
“The speculator-driven housing boom is to blame. All those areas saw the huge run-ups in prices prompted mainly by speculators, often using subprime loans. Regular home buyers then often had to take out subprime loans to afford the higher prices.”
“‘With many of these mortgages scheduled to reset to higher rates in the remainder of 2007 and through 2008, additional weakness in housing markets is likely,’ Seiders said.”
“He said the potential for a vicious cycle of defaults and price declines will depend on the level of exposure to subprime loans, the current house-price environment and the strength of the local economy. Metro Phoenix is at a 15-year high for foreclosures.”
“Reason 97 that we’ve maxed-out on real estate reality shows: A Scottsdale, Ariz., couple are participating in a pilot for a TV series that aims to show, via their experiences, that the downturn in the market is pinching the wealthy, too.”
“The short version of the ‘Real Estate Rescue’ pilot, according to the Arizona Republic newspaper: A well-off guy takes early retirement, gets stuck with two very expensive houses and his new business, a tutoring service. To make ends meet, he goes back to his early career, as a pharmacist at a local grocery.”
“The fledgling producers hope to make a weekly go of chronicling the real estate travails of the well-to-do. There are no network or cable takers for the pilot, the newspaper reported. Big surprise.”
In Business Las Vegas from Nevada. “The number of new-home and existing-home sales in September fell to the lowest monthly total this decade as home prices continued to tumble, according to statistics. Builders didn’t show much confidence in the Las Vegas housing market in September when they took out 591 housing permits. That’s the lowest monthly total this decade, said SalesTraq’s Larry Murphy.”
“New-home sales plummeted to 1,328 in September, down 52 percent from September 2006, when there were 2,565. The median prices fetched for new-home sales in September was $308,055, 13 percent below the market’s peak in April 2006 when the price was $355,435.”
“As for existing-home sales, there were 1,466 in September, down 50 percent from September 2006 when there were 2,946. Of those homes that sold, the median price of $263,075 is nearly $27,000 or 9.2 percent below its peak of $290,000 in October 2006. That’s the lowest median price since it was $263,000 in March 2005.”
“Inventory remains at record levels with a 19-month supply.”
“Builders continue to offer…as much as $100,000 in free upgrades to buyers, Murphy said. Earlier this month, Lennar Homes dropped prices 25 percent in about 30 of its new-home subdivisions, Pulte had a sale advertising a 15 percent cut in prices while Astoria Homes had price cuts of $70,000 or more.”
“The fall in prices comes as a credit crunch makes it harder for buyers to qualify for loans. Analysts said that’s an even bigger problem in Las Vegas where there are a lot of first-time and second-time homebuyers. In addition, casino workers who in the past have relied on stated income loans aren’t qualifying today.”
“The release of the data by SalesTraq comes as a local housing analyst said Wall Street investment bankers are concerned that at least one and maybe other major public builders will pull out of the Las Vegas housing market.”
“Steve Bottfeld, VP of Marketing Solutions, declined to name the builder analysts named, but said they are concerned because Las Vegas has been so profitable for builders.”
“Despite the prices and sales continuing to nosedive, Bottfeld remains optimistic. ‘If we are not at the bottom, then we will have one more bad month before we see it turn around,’ he said.”
“For the ninth month in a row, Nevada reported the highest foreclosure rate in the nation, nearly triple the number of filings in September 2006, according to RealtyTrac.”
“Las Vegas firm SalesTraq reported that through September, 5,603 homes had been repossessed by banks, a 472 percent gain over all of 2006, when 1,829 homes were repossessed.”
“Tim Sullivan, president of the Sullivan Group Real Estate Advisors cited a report from Banc of America Securities tracking the volume of resetting adjustable-rate mortgages. In March, one estimate said it would peak at about $110 million and remain elevated through next summer, Sullivan said.”
“‘The net effect is that we have the first six months of 2008 to go through this and another three to four months of where we go from there,’ Sullivan said. ‘The implication is that it’s going to be a very difficult year for figuring our values from a real estate standpoint. There is going to be a lot of competition.’”
“Michael Krein, president of Nevada Real Estate Services, which handles foreclosures for lenders, said 80 percent to 90 percent of the properties he’s handled so far have been investors but expects that to change when loans reset for many homeowners next year.”
The Review Journal Business Press from Nevada. “Las Vegas Valley land values softened in the third quarter amid concerns about a residential downturn, tightening credit markets, rising interest rates and increasing construction costs, reports Applied Analysis.”
“Median vacant land prices were $677,300 per acre at the end of September, or $41,200 less than the previous quarter. The average price per square foot was $15.55, which is a 5.7 percent drop from the second quarter.”
“‘It went from a buyer’s to a lender’s market,’ said Kyle Nagy, a director at CommCap Advisors, which specializes in commercial real estate financing. ‘Underwriting is more conservative from every funding source…people are taking a wait-and-see attitude.’”
“A dramatic drop in the volume of deals occurred in the third quarter with only 140 parcels totaling 484 acres changing hands. It marks a 45-percent year-to-year decline in activity, due, in part, to diminishing land supplies.”
“‘Despite a long-term limitation, shifts within the present housing market continue to place downward pressure on demand for raw residential land,’ said Brian Gordon, principal of Applied Analysis. ‘We expect this trend to continue through the third quarter of 2008 as housing inventory levels will likely remain elevated and pricing remains unstable.’”
“Many investors with a reasonable exit strategy may face tough times ahead.”
“‘The impacts associated with softening demand for land are partially offset by landowners’ unwillingness to sell at deep discounts, forcing property values to remain relatively stable,’ said Gordon. ‘If residential conditions materially worsen or growth slows down substantially, property price reductions may become a reality.’”
The Review Journal from Nevada. “Southern Nevada’s sluggish housing market is spilling over into its commercial market, as ailing companies in the housing sector retrench amid rising foreclosures and a real estate credit crunch. Local office brokers say home builders, real estate brokerages, title companies and mortgage businesses are scrapping expansion plans, chucking office space and subleasing empty suites.”
“‘All of a sudden, we’re noticing softening in the housing-related office market,’ said Brad Peterson, a VP with commercial real estate brokerage CB Richard Ellis in Las Vegas.”
“Based on his conversations with home builders and developers, David Scherer, a VP with Grubb & Ellis in Las Vegas, said doesn’t expect tenant rosters in the residential sector to bounce back before 2009 or 2010.”
The Douglas Times from Nevada. “Construction of new homes in Douglas County, Carson City and Lyon County has been in decline for several years, government and industry officials from the tri-county area said last week.”
“‘It will definitely take us a while to catch up,’ said Kevin Gattis, chief housing official for Carson City. ‘The area has been over-built so much. But things really aren’t as gloomy as people say.’”
“‘Two years ago the market was out of control and over-inflated in terms of home pricing and construction. Now, the market is correcting itself and coming back to a more normal state,’ said Matt Denio, Dayton Land Developers’ project manager on the development.”
“General contractor Steve Edelstein, bought a half-acre lot at Santa Maria in 2005 and began marketing it in December 2006. The response has been minimal and he doesn’t know when he will begin construction.”
“‘I’m optimistic about the market turning around, I just don’t know when,’ he said. Edelstein has plans for custom homes in the $600,000-$700,000 range.”
“New home permitting in Douglas County plunged to 133 in the first nine months of this year, compared to 442 in the same period of 2005, county Building Official David Lundergreen said. ‘The builders are definitely struggling,’ he said. ‘In (2003 and 2004), it was like we couldn’t build fast enough. Now a lot of guys are just holding a lot of inventory.’”
“While it’s generally bad for the market when debts go unpaid and residents go homeless, the government bailouts some politicians have suggested will do just as much harm, said Rick DeMar, CEO of the Builders Association of Western Nevada.”
“‘I’m not a panic guy,’ he said. ‘This is not a permanent crisis. This is all part of a circular economic environment. It’s not the time to short-sell your (property’s) value.’”
“While DeMar noted that many builders ‘have not made the best decisions’ in building ahead of demand, he also blamed consumers who purchased homes that were beyond their means.”
“‘If you’re making $10 an hour, there are probably some houses you can’t afford,’ he said. ‘But you bought one anyway. Before this is over, some people are going to have to bite a very bitter bullet.’”
The Deseret News from Utah. “Real estate agents and developers are often known for their creative marketing strategies to sell houses, which is why one newly constructed home in Plain City is going on the auction block.”
“‘It (the home) appraises for $370,000, and realistically I think fair market is between $345,000 to $350,000,’ said William Velazquez, co-owner of a construction and land investment firm based in Layton.”
“Home auctions by owners are becoming more common in many areas around the country but remain relatively new to Utah. Velazquez said his property will begin with a minimum bid of $50,000 with no reserve, meaning it could go for far below the market value.”
“‘I think there are a lot of people in our situation that are realistically don’t want to leave the sale to question with the market letting it sit with all the other properties in the neighborhood for months,’ he said.”
http://thehousingbubbleblog.com/?p=3646
October 29, 2007
Buyers Have All The Strength In California
The Los Angeles Business Journal reports from California. “California’s housing market, suffering from a slump in single-family home and condominium sales, will ’stay tough for quite some time,’ KB Home CEO Jeffrey Mezger said, Bloomberg News reports. ‘I think it’s going to take quite some time for the inventory to clear,’ said Mezger, whose Los Angeles-based company is the fifth largest U.S. homebuilder by sales.”
From CNBC. “The CEO of U.S. home builder KB Home said home prices in California could fall another 10 percent to 15 percent in the next 18 months.”
“CEO Jeffrey Mezger was speaking on a panel with Countrywide Financial CEO Angelo Mozilo and California State Treasurer Bill Lockyer. Lockyer said they all expected about 10 percent or more.”
“Mezger saw a 10 percent to 15 percent drop, Lockyer told Reuters after the panel ended, which Mezger later confirmed.”
“‘The others were all 10, maybe 10 plus. The north side of 10,’ Lockyer added. ‘I’m probably the least able to forecast, but that seemed like a reasonable trend.’
The Orange County Business Journal. “Orange County’s growth will be stunted by the downturn in the area’s real estate market, economists from the UCLA Anderson School of Management said on Monday.”
“‘We’re floating dangerously close to a recession,’ economist Ryan Ratcliff said.”
“As for the housing sector, speakers at the event expect to see home prices fall by nearly 15%, and for sales to remain slow until at least 2009.”
“‘It will seem like a recession (here) if you are related to residential real estate,’ said Mark Schniepp, director of the economic forecast.”
The LA Times. “Attention, you picky buyers who think you have all the time in the world to house hunt before you ink an offer. Listen up: Agents are mad as hell and aren’t going to take you anymore.”
“And sellers, those of you who don’t believe that your palace won’t fetch what the shack up the street sold for a year ago, you aren’t making any agent’s short list of whom to call back today.”
“Walter Sanford, a top-producing realty sales agent for more than 20 years and today a sales-coaching guru, is brutally blunt on the topic. In a down market like this, he tells agents, dump the buyers and spend your time and budget cultivating more listings of motivated sellers and only motivated sellers. It’s a way for agents to avoid financial ruin.”
“Sellers too, at least the unrealistic ones, are getting the same tough-love treatment. ‘You can’t waste time with cement-head sellers,’ is how Sanford puts it.”
“Lonnie Maples, who has been selling real estate for 29 years in inventory-saturated Riverside, had a listing appointment with a seller whose property had been in the MLS for more than a year. The owner had made several price reductions from it’s original $1,095,000, and he was now ready to list at $895,000.”
“‘I knew it wouldn’t sell for even that,’ Maples says. ‘That house, in this market…$750,000 was more like it. I declined the listing because I didn’t want to waste my time and money.’”
“And then there are those who say they never walk away from a potential listing. Anthony Marguleas, broker in Pacific Palisades, says he and his agents never turn down listings. Period.”
“The onus, he says, is on the agent to educate the client. ‘If all the comps show a house is worth $1 million and the seller wants $2 million for it, it’s the agent’s job to explain to him why that’s not possible. We won’t give up. We show the seller market analysis, comps of recent sales; we show him what else is currently on the market. It’s our job to not let him make a mistake.’”
“As for agents who sideline buyers if the buyers don’t want to commit, Marguleas says that behavior is just plain ‘lazy.’”
“‘It’s actually more than lazy; it’s insulting,’ he says. ‘Buying a home is the largest investment of someone’s life, and an agent doesn’t have the patience or time to show them homes anymore? That’s not right.’”
“A salesman at Irvine mortgage brokerage Sunwest Lending Group said everyone at the brokerage took pains to carefully explain to borrowers the risks as well as the benefits of option ARMs.”
“The salesman acknowledged many borrowers at all income levels are attracted to the option ARM because they have let their personal spending get so out of control that the low payment is the only one they can afford.”
“‘Newport Beach, where everyone is driving a Mercedes and the homes start at $1 million, is like an old western movie set,’ he said, describing the finances of many wealthy homeowners as precarious. ‘It’s all just a front, with stilts holding it up.’”
The Daily News. “Sales of single-family houses in the San Fernando Valley plunged an annual 55.5 percent to a record low 362 transactions in September.”
“In the third quarter, there were 854 home foreclosures in the Greater San Fernando Valley, from Burbank to Calabasas.”
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., credits the high end with propping up the median. ‘High-end homes have been selling, and people at that end of the market don’t have to worry about funding.’”
“Andrew LePage, an analyst at DataQuick, said jumbo loan originations fell by 50 percent in Southern California from August to September.”
The Sacramento Bee. “The nation’s housing crisis has hit Sacramento’s economy like a sledgehammer, prompting a city government hiring freeze this month and an urgent examination into how millions can be trimmed from the budget.”
“‘We were hoping for a soft landing from the housing market problems, but it didn’t turn out that way,’ Russell Fehr, the city’s finance director, said on Sunday. ‘We have a widening gap that will grow and grow if we don’t do something about it.’”
“Sacramento’s financial picture has worsened rapidly, to the extent that city officials said they had not foreseen.”
“Home foreclosures have escalated at an astonishing pace in Sacramento. There have been far fewer sales of both new and existing residences than were anticipated in the city’s budget, according to the report. Development activity in the city will be 60 percent less than prior years, the report states.”
“‘Current staffing and service levels are not sustainable, given the current weakness in revenue growth,’ the report finds.”
The Modesto Bee. “The valley’s housing woes have triggered an employment collapse in some industries closely tied to the market. Mortgage companies and title insurance firms are closing branch offices and shedding employees by the dozens. Some real estate agents have walked away from the business.”
“For real estate agents in particular, he said, times are extremely tough. ‘A lot are going hungry,’ said Terry Harwell, division president of Alliance Title Co. in Stanislaus County.”
“Oscar Dominguez was one of them. The former agent for PMZ Real Estate got into the business in 2005. Dominguez thought it would free up more time to spend with his family, but instead found himself racing around to houses on the weekends and putting in 60-hour weeks. Then the slowdown hit.”
“‘My timing couldn’t have been worse,’ said Dominguez, who sold two houses during his tenure and now is training to become an electrician at Modesto Junior College.”
“‘It was tough. I was fortunate enough,’ Dominguez said. ‘There’s some agents who didn’t even sell two houses, like I did. Even established agents right now are struggling.’”
“Realtors are stymied by sellers who refuse to lower their prices, Dominguez said. Most people can’t or won’t accept less than what their house was valued at a few years ago, he said, meaning only the very best houses at the very lowest prices will sell. And those are few and far between.”
“‘Just about all of my co-workers are struggling and will tell you it’s a tough market,’ he said. ‘The buyers have all the strength. They can basically just name their price.’”
http://thehousingbubbleblog.com/?p=3647
Those October 2007 posts reflect a point when the Housing Bubble tsunami tide was flowing out to sea, leaving many naked swimmers stranded on the beach.
At present, the QE-induced return of the tsunami tide is at high crest. Time will tell whether this financially-engineered liquidity flood can be forever sustained.
I’m starting to lose interest in the icing on the cake, like the various GSE machinations, tax advantages and the like. What I’m seeing is a worldwide phenomenon from Mongolia to Germany to the US. The common theme it seems to me behind these price increases is ongoing liquidity injections by a central bank, sparking a price rise pulling in investors, sparking a bubble. I have to consider this a bit more but this is what I think is going on with these disparate markets.
The charts I want to dig up and post are:
• Money Supply: Monetary base and M2
• House price indices.
All these different countries are working from the same economic playbook. Which, like Newtonian physics, works for the “macro” world, but breaks down at edge cases, requiring different physics (quantum, specifically).
Don’t forget:
• Money Supply: Monetary base and M2
• Interest rates
• House price indices.
You could also throw lending standards into the mix of explanatory variables for housing bubbles, though I am not sure of exactly how one would measure these.
“I’m starting to lose interest in the icing on the cake, like the various GSE machinations, tax advantages and the like. What I’m seeing is a worldwide phenomenon from Mongolia to Germany to the US. The common theme it seems to me behind these price increases is ongoing liquidity injections by a central bank, sparking a price rise pulling in investors, sparking a bubble.”
And if you had been a fly on the wall, here’s what you’d likely have found:
Central bankers to hedge funds and moneyed interests circa 2008 (in private): “We’re going to send a firehose of liquidity into the marketplace, with an emphasis on asset prices. We’re talking trillions on a magnitude never before seen. Every asset class will benefit.”
Hedge funds and moneyed interests: “We’re going to work with banks to put together portfolios of hundreds of thousands of foreclosed houses to be sold in packages, on the cheap.”
Central bankers: “You will be handsomely rewarded, I can assure you.”
Hedge funds and moneyed interests: “We’re going all in on the stock market, too.”
Central bankers: “We are the largest single investor in the markets, so you will be very happy to know that our liquidity firehose will be pointed directly at the stock exchanges. Again, you’re going to be handsomely rewarded for your efforts.”
Handshakes and smiles all around as they head off to the Caviar and Cognac luncheon in Jackson Hole.
“explanatory variables for housing bubbles”
Those are only enablers. It is Mania.
Point taken.
As an engineer, I’m sure you grasp the concept of constrained optimization.
Potential constraints in this system consist of
(1) Traditional loan underwriting standards, such as limiting mortgage debt payments to 30% of income;
(2) Interest rates in a normal range (e.g. 6%+), which reduces the size of a mortgage payment that can be made for a given income level;
(3) Downpayment requirements;
(4) Borrower-funded mortgage insurance, which is eliminated when Uncle Sam chips in federal guarantees;
(5) Risk to the lender of losing the value of the money loaned, which is eliminated when Uncle Sam chips in federal guarantees.
Items (1)-(5) on the list of potential constraints have been either severely compromised or eliminated, through government complicity and sponsorship of the mania. The result is a massive housing bubble, the likes of which has never been previously witnessed in modern financial history.
Very well put. This is why we stay out of the housing market. I don’t want my money competing with someone else’s credit.
“This is why we stay out of the housing market. I don’t want my money competing with someone else’s credit.”
It’s not so much about competing with ’someone else’s’ credit that is the problem, as it is competing with someone else’s junk credit. Subprime Sam has given a leg up to those households who are most irresponsible with borrowing, and most likely to default on their obligations. Anyone who is financially prudent should step back and let Subprime Sam’s Debt Donkey enabler scheme fall on its face.
Honest money cannot compete with stupid credit.
I have kept my own affairs where stupid credit dares not to go, or cannot go. Sort of like bass fishing on the lake the first day of trout season.
“constrained optimization…”
I see where you are with that, but at some point it is just dancing around the edges of something that is quite simple. You don’t need all the logical props to pinpoint it.
When an idiot buys a house that they cannot actually afford (like 5 or10 times income) and figures the value of the house will go up so fast that it will pay for itself and even make them rich, it boils down to lunacy. And like you said on a scale the planet has never seen.
Gramps used to say that “you can’t use logic to explain something that is illogical.”
Granted, there are posters here that are still hanging ten, or so they claim. Some of them explode in rage from time to time, don’t speak for a while and then come back like nothing ever happened. What’s up with that?
lol.
Gramps used to say that “you can’t use logic to explain something that is illogical.”
I think the further you are away from a goal, the less motivation you have to work towards it. This explains why people in urban centers buy $300 sneakers yet have no savings. When things seem so unattainable, why bother putting forth the effort?
I remember explaining to a couple friend of ours about 10 years ago that, for philosophical reasons, we wanted to be able to buy a house outright, not with a mortgage. They looked at us with incredulity and said, “If we were to do that, we wouldn’t be able to have a house for at least 20, maybe 30 years. Our children would be long gone.” I could see distress on the wife’s face because I think she was worried that my philosophy might rub off on her husband. They were in the market and, as far as I could tell, his wife’s primary motivation for buying was so she could paint the walls and create a little baby room to her liking. They took the plunge and I get the sense that there is regret.
Those with money don’t pay $300 for sneakers. Those with money don’t pay 3 times construction cost ($50/sq ft, lot, labor materials and profit) for a used up 20 year old house.
Who does?
DebtDonkeys, Dramaqueens, HousingHens and Dreamweavers.
But it’s not like renting is great either. It’s almost impossible I think for young families to build up savings with the high prices of rents these days. For many households, rent increasingly takes up far in excess of 30% of income.
The best advice I give to young people I meet (well, younger than me!) is to live with their parents as long as they can and get creative. Figure out alternatives to paying nosebleed rents and sock away aggressively as much as possible. And wait for a correction or some sort of innovation to where house prices are 2x-3x median income.
“When an idiot buys a house that they cannot actually afford (like 5 or10 times income) and figures the value of the house will go up so fast that it will pay for itself and even make them rich, it boils down to lunacy.”
By loosening or eliminating all constraints on Crazy Loans, Subprime Sam and his lending industry allies enable lunacy.
“But it’s not like renting is great either. It’s almost impossible I think for young families to build up savings with the high prices of rents these days.”
Rent a smaller, less expensive place than you can afford and save the residual.
P-bear, you can’t rent a smaller place and save the residual. It might look good in the beginning. But in the long run — i.e. the 20-30 years in this discussion — slow but sure rent increases will eat away at the residual until there is *no* savings from renting. Maybe it’s different in Cali, but in my neck two-beds have already surpassed my PITI, and better quality one-beds are close to my PITI. And that’s only in the past five years. In 10 years, there will be no savings AND I will be paying more, even in a one-bed.
The rent decreases that Ben has been posting do not apply here. The big drops are mainly on luxe airboxes, which started off very high. Even the reduced luxe prices are more than my PITI now. In the future they will be much higher than my PITI.
Show the math.
Professor Bear:
• Interest rates
Good point, will include those as well.
Another data point regarding house prices: These very expensive relative-to-[median|average] income prices are a result of people trading appreciated houses. In Baltimore-DC metro, I don’t think there are a lot of first time buyers buying these typical 650-700K houses. It’s people trading highly appreciated houses for each other, perhaps taking out a small mortgage to cover any difference. At the bottom of the food chain, there are precious few (if any) sub 300K, much less sub 250K houses in decent areas.
If the plankton at the bottom of the ecosystem disappear, the blue whales disappear.
“P-bear, you can’t rent a smaller place and save the residual.”
Really? We’ve been doing it for over a decade…
“you can’t rent a smaller place and save the residual…”
How unfortunate to be trapped in a cage of one’s own construct.
La cage aux folles
“But in the long run — i.e. the 20-30 years in this discussion — slow but sure rent increases will eat away at the residual until there is *no* savings from renting.”
Our rent has gone up with economic recovery, but our incomes have gone up more. Still renting for under 25% of monthly income, as we have been since 2005.
In some places rents are unreasonable, just as unreasonable or more so than buying. Ours is one such place, especially in light of what the prevailing wage is. The vacancy rate is so low that rental rates have gone nowhere but up. This is even for the lowest priced units.
We have a good setup right now regarding rent because we’ve negotiated somewhat of a special circumstance: my father owns the unit we live in and we do some management of other properties he owns for subsidized rent–it’s a win-win. But most of my other peers around my age group are really struggling with housing costs. It’s not a question of overextending, it’s that their is nothing available for rent that matches their income. They are effective “rent-burdened.”
We were fortunate because we didn’t have children for a long time and both wife and I had good careers and socked away a lot of savings. This is why I like alternative housing situations because I see them as one part of a solution that will reduce demand. I like tiny houses, microhousing, RV-ers, communal housing, etc. Anything that can bring more supply and force up the vacancy rate might be the catalyst that starts the trend toward more normalcy.
“If the plankton at the bottom of the ecosystem disappear, the blue whales disappear.”
This is true.
However, in the human financial ecosystem, planktonhood is voluntary. Nobody puts a gun to people’s heads and forces them to sign up for a mortgage or rental contract at 50% of income.
“The rent decreases that Ben has been posting do not apply here.”
In due time.
Capital Business
Rents are finally falling in D.C. as new apartment projects boost housing options
Construction on the Wharf, a large new development on the Potomac River, continues in September in the District. Three new apartment buildings have opened there.
(Michael Robinson Chavez/The Washington Post)
By Aaron Gregg
October 29 at 12:49 PM
Average rents at the District’s higher-end apartment buildings have turned lower over the past year, research firm Delta Associates found, as a surge of new projects in the Southwest Waterfront area brings fresh competition to recently gentrified neighborhoods in the middle of the city.
The decreases are small, and developers and housing advocates regard the trend as little more than a temporary pause in the upward march of housing costs. Still, the shift is a sign that downtown renters have more options available to them after years of rent hikes.
“Market conditions are more competitive now,” Delta Associates President Will Rich said. “There are more neighborhoods that renters can choose from, and I think over the next year or so rents will be flat to slightly negative.”
Average rents for pricer Class A apartments fell citywide by about 1.3 percent in the one-year period ended Sept. 30, a Delta Associates report found.
The declines were strongest in the Shaw and Columbia Heights neighborhoods, where rents fell by 4.1 percent. The area that includes Logan Circle and the 14th Street corridor experienced a 2.4 percent decline in Class A rents.
It was the second quarter in a row that the research group reported falling rents, suggesting the trend could have some staying power.
…
P-bear, I specifically said that things are different in Cali for you, and they are. Also note that you are lucky enough to rent from a single LL and not a commercial complex. A commercial complex would eat your lunch.
Then I went on to say that the rent decreases were mainly for new luxe airboxes with very high starter rent. And what do you counter-post? A complex of luxe airboxes with very high starter rent!* I’m beginning to think you’re secretly on my side.
————-
*A one-bed in that Waterfront luxe complex starts at $2625/month. For a one-bed. Come on p-bear, that’s not even a fair fight. At least find some $1500/month basic Grade B one-bed in a ca. 1974 garden complex.
I said “in due time” because market adjustment in real estate is a gradual process. It will take a while for price declines in high end luxury apartments to trickle down to more affordable market segments. Eventually it will happen, because market segments are interconnected. When the high end starts falling, some guy who would have competed for middle class digs opts for newly affordable luxury housing. This frees up the unit he would have bid up for someone less wealthy to rent at a more affordable price level. Landlords with units that previously would have gone to the rich guy watch them now sit empty, and find they must reduce rent to attract a tenant. And so the price declines trickle down the chain.
How unfortunate to be trapped in a cage of one’s own construct.
Is a slightly larger cage any less a cage?
I forecast the RageCage is gonna get some reinforcement.
Anyways….. Why buy it when you can rent it for half the monthly cost? Buy later after prices crater for 65% less.
Englewood, CO Housing Prices Crater 18% YOY
https://www.movoto.com/englewood-co/market-trends/
“…..Still renting for under 25% of monthly income, as we have been since 2005.”
I bought my current home in 2010. My PITI is $2,350 (under 25% of income). Similar properties then rented for $2,600. Now they rent (if you can find one) for $3,400 (30% increase)
Just think PB, if you bought in 2010 too, your loan woul be paid down by 15% and you wouldn’t be facing any rent increases.
Instead he rents for half the monthly cost with the option of buying tlater after prices crater for 75% less.
No, but I would be facing the risk of a recession and real estate crash right about the time my wife and I were ready to downsize from family sized housing.
slightly. Only slightly. Quantifiably, objectively, slightly. Makes-me-seem-impressively-slightly. In an I’m-not-a-cheerleader-by-any-means slightly. But also so-incredibly-slightly-that-you-needn’t-worry-in-the-slightest slightly.
Hagerstown, MD
Hagerstown is a 2-hour drive from the DC line, if there’s no traffic. It’s not even a far exurb, except the occasional permanent w@h. No one should be paying $1600 for a house there.
HBB posters can remain renters through multiple housing cycles.
DebtDonkeys remain DebtDonkeys.
“Brisbane’s rental market has performed poorly for another quarter, with rents totally stagnant for houses, falling for units and yields falling for both.”
Unlike the last wave of Housing Bubble collapse, which began in the U.S., this one is starting elsewhere. Given the tight financial connections between countries in this era of globalization, I wonder how long it will be until the fallout washes up on California shores.
Prices actually started falling in Australia and the UK first. Sometime in 2005.
We saw the commodity thing hit a few years ago. Alberta, these mining areas in Australia, Brazil. Oil countries. Now it’s moved into plain speculative metros: Vancouver, Toronto, Sydney, London, New York and Miami.
Didn’t realize Oz was first to drop in the last round.
The UK probably started a little earlier but both were headed down before Florida and Massachusetts. This is part of that revisionism. The media and governments have spun it to where there never was a bubble in all these other places, but just a US subprime bubble. Even though 90%+ of the US defaults were prime loans. Take a look at that half million mobile home I posted. And they think prices are down now?
Here is a great article about the subject in 2005 from the Economist:
http://www.economist.com/node/4079027
Wahiawa, Hawaii Housing Prices Crater 13% YOY
https://www.zillow.com/wahiawa-hi/home-values/
*Select price on dropdown menu under first chart
“Treasurer Scott Morrison in March ordered the Australian Prudential Regulation Authority to slam the brakes on investor lending by restricting interest-only loans to less than 30 per cent of new home loan approvals while also tightening access to high-risk loans.”
Here in the U.S., there is no need to restrictions interest-only loans, as they are generally securitized with the debt federally guaranteed.
Remember…. 3% down payment mortgages are subprime by definition.
3% down payment mortgages are subprime by definition, the Lord loves a working man, don’t trust whitey, see a doctor and get rid of it. Bye Grandma!
https://en.wikiquote.org/wiki/The_Jerk
Real Estate News
Maybe 1 percent-down mortgages are too good to be true
By KENNETH R. HARNEY
August 02, 2017 5:09 PM
One percent down on a new home loan? Zero down? Generous gifts of thousands of dollars from mortgage companies to help you swing the deal?
If any of these sounds attractive to you, here’s a little sobering news: One of the country’s two largest mortgage sources is eliminating them.
In a surprise move, giant investor Freddie Mac announced that it is ending purchases of certain low down payment loans that include lender contributions to the buyers’ down payments. Under these programs, a lender might reduce the required minimum down payment on a Freddie Mac “Home Possible Advantage” loan from 3 percent to just 1 percent. The 2 percent difference would be provided by the lender as a gift.
Under the revised policy, borrowers will need to come up with at least 3 percent of the value of the house from their own personal resources for the down payment, though some of the money can come from traditionally allowable sources, such as gifts from relatives. If lenders choose to provide grants or gifts to borrowers, they can only do so after the borrower makes the required minimum investment of 3 percent.
…
This is an outrage. Where are the protests?
What interest-only loans? I haven’t seen any new I/O loans in 8-9 years, except to people who put ~30% down and take advantage of MID.
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Interest-only mortgages: They’re baaack
Diana Olick
Published 1:03 PM ET Mon, 20 July 2015
Updated 11:16 AM ET Tue, 21 July 2015
CNBC.com
They were the villains of the housing crash. Federal regulators called them toxic. Now interest-only mortgages are making a comeback, but these are not the loans of yesteryear or yester-housing booms.
“I think it’s opening the door back to responsible lending, giving people choices,” said Mat Ishbia, president and CEO of Michigan-based United Wholesale Mortgage, the second-largest lender through brokers in the nation.
…
Funny how the media works isn’t it? There’s a motive to stating what has been the truth all along. It provides cover for outcomes after the fact while all the Empty Pockets and DebtDonkeys howl and bray boo hoo hoo.
The thing the media consistently neglects to mention is how all of these subprime lending programs, including low- or no-downpayment, interest-only, negative amortization, high debt-to-income ratio, low- or no-documentation, all serve the common purpose of enabling DebtDonkeys to massively overpay for housing, and at a level of household leverage which greatly increases the risk they will eventually go into default and lose the full value of their investment.
Thanks p-bear. I will give this a closer look later.
lol
“Thanks p-bear. I will give this a closer look later.”
#pwned
“#pwned…”
Look at the big picture.
Anyone who bought at anything close to 2004 prices is going to be pantsed and worse.
I was out and about this afternoon on my phone, and wanted to wait until I got on my home computer to look up p-bear’s 5 links properly.
The first four links are just get-a-quote sites who want your personal finance and contact information before they tell you anything. These don’t count as examples, unless someone here is willing to sacrifice their email to get some real numbers to share with the class.
The CNBC link provided some hard info. Yes, there is a bank offering an interest-only loan, BUT here are their requirements:
1. The loan is only offered through a broker, not directly
2. Borrowers must put 20 percent down (including for refinance, i.e. they need 20% equity and get no cash out)
3. 720 FICO credit score,
4. Must qualify on what the payments will be once they’re adjusted higher, not at the starter rate.
These loans will sold only to investors. Fannie/Freddie doesn’t buy I/O. No strawberry pickers need apply.
In other words, it was p-bear who got owned. P-bear said that I/O is government-secured with no restrictions. The ONLY real I/O we see is heavily restricted and not government secured. I was closer, with my 30% down.
“I was closer, with my 30% down…”
I don’t think 30% is closer to 3% than 0% is.
You are hanging ten, thinking that buying at a price one year ahead of the peak (2004) price was the deal of a lifetime. Sure that these are not bubble prices and you will make out fine, get rich even. If this is the big bubble and prices drop to half or less than 2004 now that we’ve had the mother of all sucker rallies, you will write off 3/4 of that 1/2 million you will pay for your shack. It’s unfortunate. It’s a mania. You were the poster child. Nothing personal, this is what we are here to witness.
The trouble with putting 30% down is that you are competing with people who put 3% or 0% down. These people will walk away in the next recession at the first sign of falling prices, and drive down prices. If they wind up 15% below what you paid, then you lose half the value of your downpayment, and there is no walking away from it if you have that much skin in the game.
But perhaps the Fed, Fannie Mae and Freddie Mac will manage to keep a support under prices so that my price decline to fundamental equilibrium scenario will never come to pass.
No, my guess was that an I/O, if it existed, would require 30% down. The single I/O that Prof found required 20% down (plus some other hefty restrictions). I was comparing 30 to 20, not 30 to 0. If someone can find a 0% down interest only loan, please post it here. And not just some vague list of mortgage brokers who key-worded themselves solely to show up in p-bear’s google search.
“If this is the big bubble…” Yes, I know, we’ve been in a credit bubble since 1913 and someday by gum it’s going to be a big pop and you are all rooting for it to pop just so that I get my just desserts, whatever they are. I know the drill.
“Yes, I know, we’ve been in a credit bubble since 1913…”
I call bullshit on this. Robert Shiller’s graphs and housing price indexes document that U.S. real estate appreciated very modestly from 1890 through 1996, before taking off like a rocket. The question is whether the rocket can stay in orbit forever, or whether it will eventually re-enter the atmosphere and burn up as it plummets back to Earth.
The Fed arrested re-entry with QE1, 2 and 3, but now claims that it plans to unwind its balance sheet and normalize rates. It is not clear what will hold housing prices aloft if they drain the swamp of extraordinary accommodation.
Asset prices
The bubble without any fizz
Low interest rates have made more or less all investments expensive
Print edition | Briefing
Oct 7th 2017
USUALLY, when asset prices boom, people get excited. As America’s stockmarkets scaled wild peaks in 1929 and 1999 they did so amid feverish enthusiasm. Search for such euphoria on Wall Street today and you will come back empty-handed. Look at underlying numbers, though, and it is at first hard to see why. Over the past 136 years the cyclically adjusted price-earnings ratio (CAPE), a useful measure of how expensive stocks have become, has reached its current heights only twice before: during the dotcom bubble; and just before the Crash of ‘29.
Why does this remarkable surge not spur frantic enthusiasm—or for that matter deep trepidation? One reason is that in most market bubbles you can point to a particular type of asset which is seeing its price rise inexorably: tech stocks in the 1990s; houses in the mid-2000s. Today, though, America and much of the rest of the world are amid a bull market in almost everything: stocks, bonds and property are all strikingly expensive compared to long-term averages, and getting more so. When everything is going up, things are less exciting, and perhaps less worrying.
But it is still a time to take care. The hunger for assets that is driving up prices is also leading investors to take more risks—risks which may not be fully priced into their investments and which they may not fully understand, any more than they understood the risks of mortgage-backed securities and other instruments in the run up to the financial crisis ten years ago. And the underlying driver of this oddly broad bull market, low long-term real interest rates, has conflicting explanations—some comparatively benign, others less so.
…
…take property. In countries that were unscathed by the global financial crisis, such as Canada and Australia, house prices are far above their long-run average, relative to the cost of renting. In America, where house prices plunged in the crisis, they have now surpassed their peak of 2008 in nominal terms, and they are back above their long-run average relative to rents. In Britain, property prices are close to their peak against both average earnings and rents (see chart 2).
In bond markets credit spreads have narrowed dramatically. These spreads, which are the gaps between the interest rate offered by safe bonds, such as US Treasuries, and by riskier ones, such as those issued by companies or other countries, are a measure of how much compensation investors require to bear the extra risk. When the price of a risky bond rises relative to the price of a safe benchmark, the credit spread narrows.
…
You will own your place free & clear 23 years after they started telling you what a fool you were. They will still be renting and paying ever increasing rents. I know which position I would prefer.
Post the math and prove it.
“I know which position I would prefer.”
Stuck in the same place for 23 years, because ‘we can’t afford to buy the house we live in’?
Not so Jingle. I’m not a renter. She will pay half a million more than me for housing over the next three decades, that’s all. Choices. Will her house be worth half a million or half what she bought it for (1/4 of what she’ll pay)? Who knows.
Blue, we’ve been through this a dozen times. My house does not need to be worth a half million when I sell it in order to make it worthwhile. It only needs to pencil out vs. what I would have paid to rent. Nor do I think it will be worth 1/2 what I paid for it. Even the land is worth more than 1/2 the purchase price.
We’ve also gone through the drill where you were able to keep a high-pay engineering job in an area with very low-cost housing. I tried to do that 10 years ago and couldn’t make it work. Now I live in an expensive area, but I have the job security. 20+ years of job security is more than enough to offset an expensive house if that expensive house was bought at 3x income.
Also note that it’s easy to compare the “next three decades” .. when you have a 20+ year head start on me. It was during those 20 years that job security and R&D funding went to crap.
“The company announced Monday it is now offering interest-only loans through brokers, with significant safeguards. Borrowers must put 20 percent down, ensuring that they have the “skin in the game” that so many did not during the heady days of the housing boom. They must have at least a 720 FICO credit score, which is well above average, and they must qualify on what the payments will be once they’re adjusted higher, not at the starter rate.”
Interest Only loans are not “Qualified Mortgages”–accordingly, they don’t meet the standards for GSEs or selling loan pools without keeping some on their books.
So, they represent a small part of the market…frequently low LTV.
Incorrect.
Recently I had lunch with a friend who owns a mortgage company with offices in 4 states. We discussed at length ARMs and I/O’s and “they’re better than half our business” were his last words on the topic.
HA, both you and RW could be correct. If you analyse the situation, you will understand.
What about these?
Kenneth R. Harney: Zero-down payment mortgages are back
Kenneth R. Harney The Washington Post Writers Group
Published: June 17, 2017 5:00 AM CDT
Updated: June 17, 2017 5:00 AM CDT
WASHINGTON — They were all the rage, then the scourge, of the housing boom and bust. Now they’re back, big time: Home mortgages that require tiny or zero-down payments from buyers.
Several major lenders are offering 1 percent down payment loans, and now a large national mortgage company has gone all the way, requiring absolutely nothing down.
Movement Mortgage, a top 10 retail home lender, has just introduced a financing option that provides eligible first-time buyers with a nonrepayable grant of up to 3 percent. This allows applicants to qualify for a 97 percent loan-to-value ratio conventional mortgage — essentially zero from the buyers, 3 percent from Movement.
To illustrate: On a $300,000 home purchase, a borrower could invest nothing from her or his personal funds, while Movement contributes $9,000 from its resources. The loan terms also permit seller contributions toward the buyers’ closing costs to help swing the deal.
Duke Walker, branch manager for Movement for the Washington, D.C., area, told me that although the program is brand-new, it’s already “going great guns.”
…
Was meant as a response to Mafia Blocks comment about 3% downpayment subprime loans.
The best part of that article is a (off-topic) link to another article:
http://newsok.com/death-cleaning-the-swedish-way-to-declutter/article/5569463
Basically, you tell your parents to declutter their crap because you don’t want to get stuck with doing it after they die. Wow.
Brings back fond memories of the effort my sisters and I made to declutter my parents’ home when they moved out a couple of years ago. If anyone who doesn’t mind working hard wants a business idea, here it is: Start up a decluttering business that clears out and disposes of people’s stuff when they reach the point where they either die or otherwise need to move out of the family-sized home where they lived for decades. The demand for this type of service has to be quite strong, given the aging Baby Boomers.
I concur. Such a service would be greatly in demand. I see so many patients who are moving into assisted living centers or skilled nursing facilities and they have huge stashes of what I would cal-l-for lack of a better word–junk.
Boomer parents: ‘One day, this will all be yours.’ Grown children: ‘Noooo!’
https://www.csmonitor.com/USA/Society/2017/0725/Boomer-parents-One-day-this-will-all-be-yours.-Grown-children-Noooo
As baby boomers begin to downsize, they are discovering their grown children do not want their stuff. In fact, they recoil in something close to horror at the thought of trying to find room for collections of Hummels and Thomas Kinkade paintings.
“I see so many patients who are moving into assisted living centers or skilled nursing facilities and they have huge stashes of what I would cal-l-for lack of a better word–junk.”
My parents were moving from owner-occupied housing to an independent living apartment in a retirement community…what Mom calls the ‘first step down the slippery slope’, with assisted living, skilled nursing, memory care unit and the great beyond to follow.
The Christian Science Monitor article features a woman who started that exact business:
“Ms. Hayes, the business development director of Caring Transitions, spent 10 years as a transition specialist helping individuals downsize their possessions and homes.”
A couple weeks ago I watched a few episodes of the TV show “Hoarders.” I think that’s going to spark a lot of death cleaning.
Back?
I/O and zero down loans never disappeared. Some zip codes in CA are 100% ARM by the way.
Oxide? Bueller!?
That bell is now deafening:
http://www.zerohedge.com/news/2017-10-26/what-housing-bubble-sacramento-development-pushing-425000-pads-no-down-payment
“…the 22-year-old Las Vegas stripper who took out millions in mortgages so she could make “easy money” flipping homes…”
Awesome reference!
Mortgage scheme stripped lenders of $4.9 million
By David Hanners | Pioneer Press
PUBLISHED: December 10, 2007 at 11:01 pm |
UPDATED: November 14, 2015 at 5:32 am
The stripper was buying houses like crazy.
On Jan. 13, 2006, Irene Thomas, then a 22-year-old exotic dancer in St. Cloud, bought a $275,000 three-bedroom home in the Willard-Hay neighborhood in Minneapolis. Over the next three months, she went on a home-buying spree, picking up nine more houses – including one in St. Paul – at sale prices totaling more than $2.1 million.
As Hennepin County prosecutors described Monday, exotic dancing is not that lucrative in St. Cloud. Rather, Thomas was one of five straw buyers enlisted or duped by a handful of employees at Universal Mortgage Inc. of Brooklyn Park in a mortgage scam that bilked lenders out of $4.9 million and left the straw buyers owning properties they had no prayer of paying for.
…
Wow, I watched the promo video for “buy vs. rent” and I didn’t know whether to laugh or cry.
https://www.youtube.com/watch?v=X2tcNeH5IP0
As the author’s article notes:
“To summarize our understanding of the video, if you buy a home from Ranch Capital you’ll end up making hundreds of thousands of dollars and taking luxury European vacations but if you rent then you’ll end up dying alone and broke in a tiny apartment. The choice is clear…”
Forks, WA Housing Prices Crater 14% YOY
https://www.zillow.com/wa/home-values/
Zero Hedge is on fire with housing bubble news:
Speaking of mobile homes:
“About 20 million Americans live in manufactured homes — so called because they’re built in a factory, rather than on site — and about two-fifths of those can be found in mobile home parks, mostly in suburbs and exurbs.
Mobile homes are an important source of low-income housing. But homeownership can be precarious for people who live in mobile home parks. Because they don’t own the land beneath their houses or trailers, they have to move if the park closes down.
And many mobile homes aren’t all that mobile. Sanchez, who works at a nonprofit in Denver, says she could probably move her house if she had to because it was built recently. Her daughter’s house across the street may be a different story. It has sat there for over 40 years, like most of the homes in the park.
The closure of a mobile home park can create a crisis for residents and for the city or town they live in as dozens of displaced people scramble to find new housing, says Esther Sullivan, a sociologist at the University of Colorado Denver who has studied mobile home parks in Texas and Florida. In her research, she found that city council members who agree to rezone a park often argue that park residents can move into low-income housing elsewhere. But that’s not always the case, she said.”
http://www.zerohedge.com/news/2017-10-28/heres-why-cities-all-across-america-are-suddenly-buying-trailer-parks
And then there’s this: The Incredible Shrinking Yard!
“When national home price growth charts start to look like an Amazon stock chart, despite the fact that wage growth remains non-existent, but you know your family of 4 can never find a way to survive in a house even an inch smaller than 4,000 square feet, it only makes sense that lawn sizes would have to shrink to keep purchase prices somewhat ‘reasonable’…and by reasonable, of course we mean below FHA lending limits so that those McMansions can be purchased with minimal money down and backstopped by the American taxpayer.”
http://www.zerohedge.com/news/2017-10-28/incredible-shrinking-yard-growing-mcmansions-are-increasingly-devouring-backyards
And of course, this, which I think someone else posted:
http://www.zerohedge.com/news/2017-10-28/us-homes-have-never-been-more-unaffordable
I know a guy who just sold his shack, moved North 1 County where it’s cheaper and bought a Double wide for 90k cash.
He has about the same commute and he be debt free.
In Florida, jeff? That’s the thing about mobile homes, in Florida they’re a dicey proposition. You have to evacuate them in the event of a storm, unfortunately. I learned a lot about the mobile home biz in the course of helping a lady from up North find affordable digs.
Up here, they have a lot of frame and siding homes that are quite affordable. However, even though the area is less affected by hurricanes, the frame homes are still prone to wind damage and also damage from tree limbs, more than the block homes. Also mold can be another issue. A lot of them were built during the 1980s with cheap materials and the walls are a tad thin. Still, you can’t beat the price on some of them, in many cases they’re less than a mobile and no lot rent to pay. Just make sure there are no large trees close to the structure.
“That’s the thing about mobile homes, in Florida they’re a dicey proposition.”
Not only Florida but SE Florida.
It is amazing how every time there is a Tornado Warning down here the Tornado knows exactly where the mobile home parks are.
I didn’t question him on that but I am reasonably sure he would tell me that’s what insurance is for.
We had a big old cottonwood fall on a new motorhome at the Yacht Club. Those things are insulated with Styrofoam! It was like an exploding snowball, really amazing.
Those things are insulated with Styrofoam!
Expanded polystyrene—amazing insulation-to-weight ratio! And it works great when sandwiched in small spaces.
Beadboard.
Not really. Beadboard performance is piss poor. The only time to use it is when it’s free and the only place to use it is horizontally and only when space is available like an attic. Metal panel vendors use beadboard sheets to protect their product to get it to site. We toss trailer loads of it.
“I know a guy who just sold his shack, moved North 1 County where it’s cheaper and bought a Double wide for 90k cash.”
Seems a bit rich to me, but I’m old-fashioned. $30k I’d be on board.
I don’t remember seeing this and if I did I was too young to notice.
1:33 of Farrah Fawcett on the Partridge Family.
Boy was she ugly.
https://www.youtube.com/watch?v=RNbtVZ_V-_Y
Maybe not ugly, but kind of ordinary looking. i think it was the Charlie’s Angels hairdo that made her famous.
Lol, Colorado, I’m pretty sure jeff was kidding around when he said she was ugly.
Really, compared to what’s on offer these days, she was a goddess. No tats, no fat.
Beats the heck outta this:
https://twitter.com/i/web/status/924202826716217344
Or this.
OK, you win. Nothing tops that one. Nothing. Brings back memories of the election campaign. Good times.
AAAHHH!!!
There really should be a Triggly WARNING posted with that link.
“OK, you win.”
+1 Pbear gets the t-shirt!
OMFG
Some things cannot be unseen.
I don’t have permission to post links, but go to reddit and search “eyebleach”. You’re welcome.
Thank you, typical snowflake liberal driving her prius over the speed limit priceless.
“i think it was the Charlie’s Angels hairdo that made her famous.”
I’ll have to go back and look at the hairdo, I’ve always been a leg and
aaa, well I’ve always been a leg man and I’ll let it go at that.
I went back to look at the hair but I had a hard time getting over the purple collar on the dress.
Well, fashion was hideous back then.
“Well, fashion was hideous back then.”
I wasn’t looking at her dress either.
Why Do Men Find Women’s Legs So Alluring?
(I don’t agree with everything this dude says but he has the does have the general idea down)
And what exactly does it mean to be a “leg man”?
Posted May 17, 2016
Researchers have spent far less time studying men’s attraction to women’s legs than the typical man on the street devotes to gazing at them . . . and maybe finding himself spellbound by them. So—to heterosexual males at least—what’s so special about female gams?
https://www.psychologytoday.com/blog/evolution-the-self/201605/why-do-men-find-women-s-legs-so-alluring
Train time crush - Coupling - BBC comedy
Left or right?
It’s a leg, what else is there to ask.
LMAO
The real beauty was Jaclyn Smith, hands down.
Jaclyn aged well too.
“Boy was she ugly.”
Forgot the sarcasm tag?
Any thoughts on why the GOP thinks it would be better to tax personal productivity on the margin instead of curtailing the massive giveaways of the mortgage interest deduction to the wealthy and the real estate industry?
The title of this op-ed is way off, as it is definitely a multi-billion dollar mistake.
Opinion Review & Outlook
A Million-Dollar Mistake
A defensive GOP flirts with raising the top tax rate.
By The Editorial Board
Oct. 27, 2017 6:55 p.m. ET
House Speaker Paul Ryan has said tax reform will include a fourth tax bracket for millionaires above the top rate of 35% in the GOP framework, and now we hear it could be as high as 42%-44%. This bow to the lords of political envy would be a million-dollar mistake that undermines the purpose and much of the benefit of tax reform.
…
Instead of being defensive about rates, Republicans should argue that the better way to soak the rich is to eliminate their loopholes. The mortgage-interest deduction mainly benefits the affluent, as does the state and local tax deduction. Eliminate those and tens of thousands of higher earners will pay more taxes even if their rate falls to 35%. Yet the GOP has already surrendered on the mortgage deduction and may do the same on state and local.
…
2banana, you out there? How come your cherished GOP is so utterly bereft of principles?
House Tax Writer Gives Ground on a State and Local Tax Break
By Ben Brody
October 28, 2017, 2:34 PM PDT October 28, 2017, 5:46 PM PDT
Brady says he’ll allow deduction for property taxes in bill
Flare-up shows difficult path forward for tax overhaul plan
Bowing to concerns from Republican House members in high-tax states, the chamber’s chief tax writer said he’ll preserve a federal income-tax break for property taxes.
“At the urging of lawmakers, we are restoring an itemized property tax deduction to help taxpayers with local tax burdens,” House Ways and Means Chairman Kevin Brady said in a statement Saturday afternoon.
The announcement was welcomed by Representative Chris Collins, a New York Republican, who said the compromise would address the need “to protect middle income working families” in states like his own. He predicted it would assuage Republicans’ concerns.
But in a sign of the complex balancing act that Brady must perform to produce a tax-overhaul bill this week, the property-tax announcement came on the same day that the National Association of Home Builders pulled its support for the legislation. The group’s chief cited concerns that the bill might undermine existing tax breaks that support the housing market. Likewise, a coalition that includes the National Association of Realtors said in an emailed statement that it “will vigorously oppose this plan.”
Brady’s statement was aimed at resolving an impasse between House leaders and roughly two dozen Republican lawmakers from states including New York and New Jersey over an attempt to repeal federal tax breaks for state and local taxes. The issue threatened the bill’s prospects in the House. Brady plans to introduce actual bill text Wednesday.
$1.3 Trillion
Congressional leaders and President Donald Trump have suggested ending the existing state and local tax deductions as a way to generate as much as $1.3 trillion over 10 years — revenue that would help offset the deep tax-rate cuts they want for businesses and individuals. Restoring the property-tax deduction would trim that revenue projection by about a third — or $430 billion — said a conservative tax lobbyist who asked not to be named because discussions about the bill were private.
It would appear that deductions for state and local income taxes and sales taxes would still be repealed under the planned House bill.
…
Ryan loses key ally on tax reform after switch on breaks for homeowners
By LORRAINE WOELLERT
10/28/2017 04:59 PM EDT
Updated 10/29/2017 11:36 AM EDT
The National Association of Home Builders on Saturday accused House Speaker Paul Ryan of abruptly reversing course on a mortgage tax credit proposal and announced it would oppose the tax-reform proposal that GOP lawmakers expect to unveil on Wednesday.
The about-face by the housing-industry lobbying group strips Republicans of a powerful ally. Tax breaks for homeowners have long been one of the flash points of any attempt to rewrite the nation’s tax laws.
“All the resources we were going to put into supporting are now going to go into opposing the plan,” NAHB Chief Executive Officer Jerry Howard told POLITICO.
…
Given that most of the benefits go to white families pulling down over $200K a year, it is clear why the Republicans don’t want to see the mortgage interest deduction go away.
Report: Mortgage Interest Deduction Promotes Inequality
By Liz Dominguez
October 28, 2017
Among the repercussions the tax overhaul proposal can have on the mortgage interest deduction, the National Low Income Housing Coalition (NLIHC) and the Institute on Assets and Social Policy (IASP) at Brandeis University’s Heller School recently released a report, “Misdirected Investments: How the Mortgage Interest Deduction Drives Inequality and the Racial Wealth Gap.” The report states that the mortgage interest deduction exacerbates racial inequality and widens the racial wealth gap by distributing the annual $71 billion federal disbursement to primarily white, high-income homeowners.
According to the report, 84 percent of the deduction benefits go to households with more than $100,000 in income (about $55 billion annually), and 64 percent go to those with over $200,000. The report shows this also plays a role in the racial wealth gap, as most households (67 percent) are white and are more likely to be in a high-income bracket compared to black and Latino households.
Here’s a breakdown of the benefits by race:
Latino: 7 percent
Black: 6 percent
White: 78 percent
…
Yes. Get rid of it. I wonder how many Democrats would vote to get rid of the MID?
I’ll bet if it were a straight up and down vote on just MID that many democrats would jump on board. Democrats in wealthy districts would not (just like it is GOP republicans from NY who are holding up the GOP plan now), but I think you would have democrats in poorer districts would would break with their party. I think the philosophical difference you have right now is that Dems are opposed to the repeal of the estate tax (which primarily applies to the wealthy) and the feeling that lowering the corporate tax rate will also primarily benefit the wealthy 5%. If it were just the MID, I think you could get a bipartisan coalition.
“…you would have democrats in poorer districts would would break with their party.”
Why would financially clueless people in poor districts who don’t vote matter to Congress critters?
I doubt that many Democrats or Republicans would vote to get rid of it. What politician wants to forego campaign contributions from REIC industry groups, or face their political opposition?
New York Republican slams GOP tax plan
By Brett Samuels - 10/29/17 01:02 PM EDT
Rep. Dan Donovan (R-N.Y.) in an interview on Sunday slammed his party’s tax reform plan, saying residents in his state could lose their homes.
“What they’re proposing, John, is to eliminate a deduction from your federal tax return that’s very important to every New Yorker.… to deduct your state and local income tax and your property taxes,” Donovan said in an interview with John Catsimatidis on AM 970 in New York.
“That’s essential for hard-working New Yorkers,” he added. “It’s been in the tax code since 1913.”
Donovan said eliminating the deduction would mean that people in New York “couldn’t buy homes anymore, couldn’t pay their mortgages, couldn’t pay their children’s tuitions.”
Lawmakers have argued that the GOP proposal would hit high-tax states like New York, New Jersey and California especially hard.
Donovan said on Sunday that he and fellow New York lawmakers such as Rep. Pete King (R) are fighting “tooth and nail” to save the deduction.
“There are some people in Washington who believe this is a subsidy for New York, “ he said “That’s not true… New York is a donor state. For every dollar New York sends down to Washington we only get 79 cents back in federal resources.”
…
Skeptical GOP lawmakers aren’t on board with tax reform plan
By Marisa Schultz
October 29, 2017 | 2:03pm
WASHINGTON – The House GOP tax legislation to be released Wednesday will include a new compromise on property tax deductions, but it’s still not enough to win over skeptical New York Republicans.
“Right now, I’m certainly not on board,” Rep. Peter King (R-L.I.) said Sunday of the revised tax plan on Fox News’ “Sunday Morning Futures.”
King was one of 20 Republicans who voted against the GOP budget last week that opened the door to tax reform legislation.
Representatives from New York and New Jersey have revolted against a provision to eliminate state and local tax deductions on federal tax returns, which are used by about 44 million Americans.
Nodding to the pressure from high-tax state representatives, Rep. Kevin Brady (R-Texas) announced this weekend that he’d retain an itemized deduction for property taxes – but still plans to eliminate the write-off for state income and sales taxes.
“At the urging of lawmakers, we are restoring an itemized property tax deduction to help taxpayers with local tax burdens,” Brady, the chairman of the House Ways and Means Committee, said in a statement.
…
The GOP congressmen are desperate, and out of time, ideas or principles.
PowerPost
Republicans, desperate for a win, already face setbacks as they prepare to unveil tax bill this week
Rep. Kevin Brady (R-Tex.) with President Trump at the White House September. The House’s chief tax writer will enter the spotlight this week, when he unveils Republican tax legislation (Jabin Botsford/The Washington Post)
By Mike DeBonis and Damian Paletta
October 29 at 3:12 PM
The Republican effort to overhaul the tax code suffered a bruising setback over the weekend when a powerful corporate interest group came out against the proposal just days ahead of House leaders’ planned release of the legislation to the public.
The National Association of Home Builders, after learning that a “homeownership” tax credit they had wanted will not be in an initial version of the bill, is preparing a nationwide campaign against it. The development underscored just how difficult the prospect of a successful tax overhaul will be, given the complex and competing interests that President Trump and GOP lawmakers are trying to serve.
“We will do everything we can to defeat this thing,” said Jerry Howard, chief executive officer of the National Association of Home Builders.
…
…“homeownership” tax credit…
Why the endless REIC discrimination against low-income renters?
There is no way tax reform is going to pass without numerous massive giveaways to the REIC.
The problem is that the GOP is trying to pass tax reform under reconciliation, so they must show that the new tax policy has no net negative impact on the budget over a 10 year period. They are searching for revenue, hence the 401k being on the chopping block, along with other less-than-desirable options.
If the GOP needs revenue to fund lowering the corporate tax rate, they should look at repealing the bush tax cuts before they increase top tax rates.
“It appears that the optimal capital income tax rate is higher than the labor income tax rate.”
http://equitablegrowth.org/equitablog/optimal-tax-capital-income/
“…so they must show that the new tax policy has no net negative impact on the budget over a 10 year period.”
Eliminating the real estate subsidies built into the tax code would save billions in the federal budget, but would cost the politicians billions of dollars in bribes…er, I mean, campaign contributions.
It sounds like the GOP tax reform effort is lying on its death bed. If it happens to survive, it will retain a mere shell of its stated objectives and be sold to the American people with a tweetload of propaganda to polish and perfumize the turd.
When you’re gambling, you gotta know when to cash in your winnings and step away.
“If you’re gonna play the game, boy
You gotta learn to play it right.
You’ve got to know when to hold ‘em
Know when to fold ‘em
Know when to walk away
Know when to run
You never count your money
When you’re sittin’ at the table
There’ll be time enough for countin’
When the dealin’s done.
Every gambler knows
That the secret to survivin’
Is knowin’ what to throw away
And knowin’ what to keep
‘Cause every hand’s a winner
And every hand’s a loser
And the best that you can hope for
Is to die in your sleep”.
This was on the sidebar.
https://www.youtube.com/watch?v=OmOe27SJ3Yc
Awesomely apropos for the HBB!
Hailey, ID Housing Prices Crater 8% YOY
https://www.zillow.com/hailey-id/home-values/
*Select price from dropdown menu under first chart
EvERyTHinG bUBBle
“94,785,000 Not in Labor Force; At 62.9%, Labor Force Participation Stuck Near 38-Year Low”
https://www.cnsnews.com/news/article/susan-jones/no-records-set-august-number-employed-americans-drops-participation-rate
Baby boomers. Guess we need to put all those slackers in retirement homes to work!
My Fingers Hurt.
Well Now Your Back Is Going To Hurt Because You Just Pulled Landscaping Duty.
my take is lots of people ARE working but not on the books….I would have been considered not in the labor force but i was dj’ing every weekend and my bills would be paid on time.
Moms next door neighbors grandchild moved back home at 28 lost her job now she babysits does home health aid stuff plenty of work here and she doesn’t even have to drive, all off the books cash only,
I feel like a dupe for paying off my student loans and helping my daughter make good on repaying hers. Who knew they were forgivable?
AP sources: DeVos may only partly forgive some student loans
MARIA DANILOVA, Associated Press
16 hours ago
AP sources: DeVos may only partly forgive some student loans
WASHINGTON (AP) — The Education Department is considering only partially forgiving federal loans for students defrauded by for-profit colleges, according to department officials, abandoning the Obama administration’s policy of erasing that debt.
Under President Barack Obama, tens of thousands of students deceived by now-defunct for-profit schools had over $550 million in such loans canceled.
But President Donald Trump’s education secretary, Betsy DeVos, is working on a plan that could grant such students just partial relief, according to department officials. The department may look at the average earnings of students in similar programs and schools to determine how much debt to wipe away.
The officials were not authorized to publicly comment on the issue and spoke on condition of anonymity.
If DeVos goes ahead, the change could leave many students scrambling after expecting full loan forgiveness, based on the previous administration’s track record. It was not immediately clear how many students might be affected.
A department spokeswoman did not immediately respond to a request for comment Saturday.
But the Trump team has given hints of a new approach.
…
Bear you paid your loans and so did I. i will always be opposed to forgiving student loans in BK.
It seems the only options is hand back your degree to cancel the loan, but that means you can never apply for a job that requires a degree eg College professor, or most civil service jobs. And employers can fire you if you dont have a valid degree, since it would be illegal to get a verified college transcript with a GPA…only pass fail.
Lots of professions have 2nd tier jobs, dentist, instead be a dental assistant, lawyer be a paralegal….
Otherwise work for a non profit, or some obscure Indian tribe in wyoming for 10+ years and pay the debt off that way.
I feel sorry how kids were duped into going to college when very few know how to fix anything.
I think it has been shown pretty conclusively by the Case-Shiller index that real estate appreciates at about 1% above the long-term inflation rate over the very long run. But that does not factor in the cost of maintenance and depreciation. So I would say in the long run, real estate doesn’t really grow wealth so much as it does store it. But it is highly ill-liquid, and there are large transaction costs when it comes to buying and selling. The major caveat is that it is only a reasonable investment if one doesn’t buy at wildly inflated prices, such as what we see today.
Stuck in Place, U.S. Homeowners Hunker Down as Housing Supply Stays Tight (Wall Street Journal)
More choose to stay where they are and renovate, making it harder for
renters to enter market
By Laura Kusisto and Christina Rexrode
Oct. 29, 2017 7:00 a.m. ET
Despite rising home prices and a growing economy, U.S. homeowners’ mobility rate is stuck at a 30-year low as many opt to stay put rather than move to pursue job opportunities or trade up for more space.
The median duration of owners in their homes in 2017 was 10 years, according to data soon to be released by the National Association of Realtors. That matched last year’s duration, which, along with 2014, was the highest level since the NAR started tracking the data in 1985.
One had to laugh at the headline considering there are 25 million excess empty and defaulted housing units out there.
Show us your link for this, Housing Analyst.
I personally know some empty nesters in Denver who wanted to downsize last year. Before selling their place they tried to find the replacement first. After losing several bidding wars, they decided to stay where they were.
They could not find something suitable out of 25,000,000 empty houses? HA, that almost makes me think there are closer to zero empty houses.
Not to mention the fact that housing demand is at 20 year lows and falling fast.
“rather than move to pursue job opportunities…”
I suspect that those booming job opportunities, or lack thereof, may have more to do with it than lack of housing options.
Oh man, sometimes it hurts so bad.
https://www.youtube.com/watch?v=JwvaGBETLrQOh man
Redmond, OR Housing Prices Crater 11% YOY
https://www.movoto.com/redmond-or/market-trends/
tax cuts for the rich!
Rich white guys are the GOP’s primary constituency, so it really does make sense.
Real estate investing is a no brainer when prices are climbing at double digit rates year after year. But you can bet your bottom dollar that the same geniuses who are currently crowing about their savvy real estate purchases will be a wailing and a moaning in the wake of the next crash that nobody could have foreseen.
Low-Hanging Fruit
“The same geniuses who are currently crowing about their savvy real estate purchases will be a wailing and a moaning in the wake of the next crash…”
Right.. but isn’t the general trend always moving upward? My father has owned a house in the Excelsior District of San Francisco, CA for like 20 years.
Obviously he went through ups and downs with recessions, crashes, etc. But the price of the house, like all real estate in SF, has a general upward trend.
Yes, it’ll fall when the next bubble bursts.. But how bout when it recovers? Won’t it just surpass it’s previous maximum?
I’m just bringing up questions so I can gain more knowledge.
This was different. I looked at the MLS listings history of some Very low end multi-family housing, duplexes and a bit larger, in the downtown area of Clinton, Iowa. Saw some price declines between 40-80 percent. Yes, 80 percent. Super trashy stuff, many of the basements flood in that area of town, stinky ADM is the major employer. Is this the start of something, or just a blip?
I imagine these declines are what Detroit was like awhile back, and now?