Buyers Are No Longer Responding To That Feeding Frenzy
It’s Friday desk clearing time for this blogger. “Anyone who bought a luxury condo two or three years ago and is now trying to sell is faced with falling prices and a glut of new product that, in Manhattan, is still growing. That not-so-perfect storm, sources said, is pushing those sellers into a challenging position. And in some cases, it’s forced them to list their apartments for even lower than what they paid, openly advertising they’re willing to take a hit. ‘It’s painful, I try to not think about it when there’s been a huge loss for my seller,’ said Patricia Shiah, a broker with Stribling & Associates who marketed former Avon CEO Andrea Jung’s apartment at Toll Brothers’ 1110 Park Avenue, that sold in August for $17 million, an approximate $600,000 loss on what Jung paid last year.”
“In the case of 1110 Park Avenue and other buildings in the city, these private sellers are also competing with the sponsor’s remaining units. ‘There are lots of buyers out there who are finding that their assets are being devalued by their own sponsor,’ Douglas Elliman’s Frances Katzen told the Wall Street Journal this week. ‘I think that there are plenty of people who are very angry to see that.’”
“It’s time for a reality check. With decreases in the number of homes sold and average home price, the Denver real-estate market experienced a slowdown in September 2017, according to the Denver Metro Association of Realtors’ October market report (of September data). Those moves, though small, may spur more dramatic shifts in the future. Sellers can no longer put a house on the market on Friday and expect 10 offers by Monday. ‘Buyers are no longer responding to that feeding frenzy,’ says Steve Danyliw, chairman of the Denver Metro Association of Realtors Market Trends Committee.”
“Home prices in North Texas are continuing to rise, with prices in the Dallas area climbing 7.1 percent year-over-year in August. And as a result, some would-be buyers are beginning to push back, said Ted Wilson, principal at Dallas-based Residential Strategies, a firm that tracks the new home residential market. ‘At higher price points, we are running into a resistance of what buyers can afford,’ Wilson told the Dallas Business Journal. ‘We have a short supply of homes on the low end of the spectrum undergoing an inflationary situation. But we also are seeing a lot more discounts and incentives for the pricier properties over half-a-million dollars.’”
“House Republicans have released their proposed tax reform plan. It could take a toll on the housing market in California. Gustavo Gonzales with Santa Clara Co. Association of Realtors said, ‘Look at the numbers! I mean, we are being punished because our housing is expensive. That’s not fair to any Californian.’”
“A Richmond Hill, Ont., woman may lose the house she lives in because of bad timing and a falling real estate market. The plan was to sell the Richmond Hill home — where she has lived for the last five years — after securing the second home and apply the proceeds of the sale to her new house. But that plan hasn’t worked out. ‘It was an absolute disaster,’ Dora Elia said, referring to the chain of events that took place after she purchased a home in Innisfil, Ont., about a one-hour drive from her current home in Richmond Hill. ‘I am in jeopardy of losing both homes and owing money,’ she told Global News.”
“‘The bottom fell out,’ mortgage broker Ron Alphonso said, describing the cooling in the residential real estate market. ‘A lot of people who went into multiple properties are being adversely affected.’”
“Elia said she agreed to several mortgages to secure the purchase. While she accepts responsibility for agreeing to the purchase, she said the lenders didn’t supply legal paperwork in advance and put off her concerns, saying those would be addressed after the documents had been signed. After agreeing to purchase the second home, the market changed and her current home was worth about $100,000 less. On top of that, the home she was buying was similarly worth about $100,000 less. In short order, she had effectively lost about $200,000 worth of real estate equity.’You’re trusting in people who have a (mortgage broker’s) license and expecting them to be honest, not take your money,’ she said.”
“What does the property industry think of an interest rate rise? Sandfords – Andrew Ellinas, Director (London), ‘There are two blocks of apartments near our Regent’s Park office that are historically very sought-after and if a property came available we would be swamped with buyers and a sale would be made very quickly. In one of those blocks, in the same month in 2016 there were three apartments on the market and they all sold. This year, there are ten apartments currently available but there are no buyers for them. In the other block, a very similar situation, there was one property on the market in 2016 and in 2017 there are ten that are not selling. There are two main reasons for this. The first is that they are overpriced. Vendors still believe that values are what they were two years ago. There is too much uncertainty and buyers, particularly overseas investors, have been put off making big financial commitments.’”
“Average house prices have shot up around 70 percent in both Sweden and Norway over the past decade (in Copenhagen they’ve nearly doubled since 2012, the year Danish rates first turned negative). After years of warnings about excessive debt and overheating from financial regulators and central bankers, they’re now slowing in both Stockholm and Oslo. ‘These measures have worked,’ said Erik Bruce, senior economist at Nordea Bank in Oslo, noting that prices in Oslo are down 7-8 percent from their peak.”
“The provincial Department of Economic Development, Environmental Affairs and Tourism in Bhisho has turned down Nelson Mandela Bay’s application to build the homes in the upper catchment of the Baakens on the city’s western rim. The department said the Nu Way, KwaNobhule Integrated Housing Estate, Jachtvlakte and Utopia housing projects and more homes linked to Baywest and nearby Parson’s Vlei had all been approved, but had not yet been built. ‘It is evident there is an oversupply of housing in the immediate and surrounding areas.’”
“Auckland house values have fallen for the first time in six years but smaller towns also face a big risk of a property price plunge, according to new economic analysis. While much focus has honed in on property in major centres, many outlying areas have also seen prices sky-rocket over the past three years or so. Infometrics chief forecaster Gareth Kiernan calculated the 10 areas likely to see the greatest drop in house prices over the next three years, and regional New Zealand dominates the list.”
“‘The problem with some of those outlying areas is while they’ve had population growth which might have been the strongest in 10 or 15 years … when you think about their general economic prospects, it’s a bit of an aberration the way the property market’s performed,’ he said. Kawerau house prices rose by an astronomical 79 per cent between June 2014 and June 2017. Kiernan said this was not sustainable. ‘If they’ve gone up a long way and there’s not a lot of substance to it then they could easily come back down the other side.’”
“There was a common theme among the top eight places on the list: they were mostly smaller outlying areas that had been caught up in the tail-end of the property boom, without anything fundamental to justify the price lift, he said. ‘Population growth might have been reasonably strong, but not to the degree that justifies some of the house prices lifts.’”
“A global investment bank has called the end of Australia’s world record housing boom, saying the golden years are ‘officially’ over after home prices fell in Sydney for the second month in a row. ‘There is now a persistent and sharp slowdown unfolding,’ ending 55 years of unprecedented growth that has seen home values soar by more than 6500 per cent, UBS economists wrote in a note to clients. The recent weakness in auction clearance rates and anaemic price growth over the past five months suggested ‘the cooling may be happening a bit more quickly than even we expected,’ economists George Tharenou and Carlos Cacho wrote in their note.”
“House Republicans have released their proposed tax reform plan. It could take a toll on the housing market in California. Gustavo Gonzales with Santa Clara Co. Association of Realtors said, ‘Look at the numbers! I mean, we are being punished because our housing is expensive. That’s not fair to any Californian.’”
That’s one way to look at it. Or you could take the opposite view: California’s high housing prices are punishing its residents. Capping MID could incrementally ease their burden by pushing the prices down from nosebleed territory.
I haven’t read the whole bill (I skimmed parts of it, and the summary), but among the details:
1. Takes away some tax credits to oil/gas;
2. Limits deductibility of interest (will be less advantageous to load up an entity with debt);
3. Limits people’s ability to take the $500k tax free gain from housing (instead of every 2 years, you can do it every 5—bad for people who like to hop around to take the gains tax free, no biggie for most).
I’m likely to pay more in tax (no SALT deduction, 25% rate for passthrough is not the wealthy “gimmie” that people want to portray), but I do like that they are taking out a lot of freebies (no more $ for electric cars, etc.) and taking a swipe at the MID.
Let’s get it done.
I’m okay with most of the changes, but I’m disappointed by the elimination in tax credit for electric cars. Congress should just allow the credit to expire on it’s own as intended and not renew it. Eliminating the credit abruptly is not good policy as many expensive decisions have been made about production. That sort of catches major automakers off guard. Besides, pollution is a negative externality, and cars are primarily the biggest polluters.
By abruptly eliminating the tax credit for electric cars, they’re just disrupting the disruptors
https://seekingalpha.com/article/4120093-conference-call-confirms-teslas-model-3-faces-huge-problems
Conference Call Confirms Tesla’s Model 3 Faces Huge Problems
O for a muse of fire…
I’m writing about Tesla’s (NASDAQ:TSLA) conference call, but there is no way my abridged description can fully capture its surreal quality. There was:
-The moment when Elon Musk, in high dudgeon, expressed outrage at the “journalists and editors with low integrity” who have reported that Tesla fired employees despite the absence of negative performance reviews. “Shame,” he said (though he never refuted any of the facts reported);
-the seemingly endless pause after Musk was reminded that three months ago he professed to be absolutely certain Tesla will achieve a Model 3 production rate of 10,000 by some point in 2018, and was asked whether he was still equally certain (spoiler alert: that was then; this is now);
-pretentious blather about step exponentials, S curves, vertical climbs, air friction, pushing robots to the limit, and speed as the ultimate weapon; and
-a series of statements so fatuous that respected members of the auto industry press are openly mocking Tesla and Musk as rank amateurs (for an example, start here at 13:30).
Tesla=failure. Just like solar.
My solar is a huge success. $12,000 5 kW system saves me $1,500 per year. That is a great investment. The tax credit of $4,000 brought the cost to $8,000.
Ka-ching. HA is mis-informed again.
DebtDonkey
Honolulu, Hawaii 96813 Housing Prices Crater 16% YOY
https://www.zillow.com/honolulu-hi-96813/home-values/
“My solar is a huge success. $12,000 5 kW system saves me $1,500 per year. That is a great investment. The tax credit of $4,000 brought the cost to $8,000.”
That’s a definition of success that’s based on capturing a government subsidy. I think HA was referring to the intrinsic value of solar, not the payoff after the cost is larded down with government subsidies.
“$12,000 5 kW system saves me $1,500 per year.”
Our annual electricity costs are roughly $1,800 in an all electric house.
You missed my point: The tax credit was incidental to the viability. A 12.5% return on my investment is great. The tax credit took it to 18% and encouraged me to take the risk.
Three years later, I have saved $4,500 on electricity. You could do the same if you wanted.
“….annual electricity costs are roughly $1,800/year…..”
Mine were $1,500/year and now they are zero.
Solar employs more than twice the number of Americas as coal does in the US. Tesla is the most American car manufacturer by parts and assembly.
Just like the MID helps line the pockets of realtors but hurts the average homeowner by propping up prices to unaffordable levels, policies designed to keep the average US homeowner wedded to the grid and dependent on centralized power generation is not good for the economy as a whole, though it might be good the oil/gas companies.
The $1500 Jingle Male is now saving annually is more than what Paul Ryan says the GOP tax plan will do for the average middle class household.
As you said, you’re new here. Jingle lies alot.
Solar employs more than twice the number of Americas as coal does in the US.
The subsidies for solar are not only, and not even principally, at the level of tax credits to consumers. The entire industry is based on government support.
Jingle Male:
My solar is a huge success. $12,000 5 kW system saves me $1,500 per year. That is a great investment. The tax credit of $4,000 brought the cost to $8,000.
Ka-ching. HA is mis-informed again
You missed my point: The tax credit was incidental to the viability. A 12.5% return on my investment is great. The tax credit took it to 18% and encouraged me to take the risk.
Three years later, I have saved $4,500 on electricity. You could do the same if you wanted.
$12,500 spent on system three years ago
- 8,000 tax credit
______________
$ 4,500 out of pocket
$ 1,500 per year savings on electric bill
x 3 years since system installed
________________
$ 4,500 saved
Even if this is all true (and how often do numbers zero out like this?) you have only just broken even.
Never mind, it’s even worse than I thought. I transposed numbers:
The tax credit was only $4,000, which means he’s out-of-pocket $8,500, and has not even come close to breaking even.
The subsidies for solar are not only, and not even principally, at the level of tax credits to consumers. The entire industry is based on government support.
The tax credit for solar installation is 30% of solar system costs. This tax credit goes directly to the consumer who purchase solar panels.
https://joinmosaic.com/how-does-federal-solar-tax-credit-work/
If individuals lease solar panels through a company, they get the reduction in electricity costs but the company generally claims the tax credit.
$8000 out-of-pocket for solar installation after tax credit.
$1500 yearly savings in electricity costs x3 = $4500.
$3500 remaining for break-even.
If you read the post above, Jingle wasn’t claiming he had broken even yet. It looks like he still has 2 and a half years until break even point. But after that it’s all gravy. I get a 17% return using Excel’s Internal Rate of Return on a 15-year time horizon (I assume the panels life cycle will last at least that long). That is without assuming any increase in electricity prices.
Thank you OAM. It is nice to see someone can do some competent analysis and understands an investment time line. My panels have a 25 year warranty and electrical rates will certainly rise.
DebtDonkey
Silverdale, WA Housing Prices Crater 6% YOY
https://www.movoto.com/silverdale-wa/market-trends/
has anyone w either net worth or income under 1 million bought an electric care?
I know people with the Ford CMAX and Chevy Volt. Neither are full time EV but do run all electric for their commutes. The only full time EV owners I know have Teslas. But there are Bolts out there.
Thats a good point - the majority of EV owners I know are upper middle class (1m+ net worth) and enjoy the benefit of virtue signaling constantly about how much they care about the planet while ripping off the peons via tax subsidies - not just with the purchase, but with the government mandated charging stations at gov facilities and any new malls/shopping centers that get built.
Every single one of them (no exceptions yet, I’ve looked into this) also has a giant truck to get ‘er done on the weekends - some are even diesel. Plus the missus has to haul the chillens around in a tank like SUV. But the planet, they care!
So much of this virtue signaling should really be called wealth signaling because thats what it boils down to. Hey, I’m staying a 1K/nt ecolodge in bugtussle, Africa, look at me!
+1
The nickname for the Prius is a “Pious” for a reason.
It’s pretty funny when these limousine libs just “get a plug in the garage” or “use the other car for long trips.” They automatically assume that everybody has a garage and two cars. Do they even realize how many people can afford only one used car, and how many people park their cars in surface lots or garages at apartment complexes?
Nissan Leaf is best-selling EV worldwide. We have quite a few Nissan leafs around here and people driving those seem to be firmly middle class. There are a gazillion Priuses everywhere, but those are of course hybrids. Uber drivers I talk to say only Prius owners can really make money because MPG is so much higher.
I concur that it’s mostly upper class people driving the Teslas due to the price point. If model 3 gets on track that could change. As a side note, Chevy Bolt outsold Tesla Model S last month, so GM could be a force to be reckoned with in the EV market. Nissan is also putting forth some very low cost Leaf models, so they actually could win the game long term.
It’s no surprise that a new technology targets those with excess cash. It’s similar to how when cell phones first were introduced to the consumer market they were limited to the very wealthy. Sometimes it takes early adopters willing to pay a premium until the cost curve can bend. Now even homeless people have cell phones.
Infrastructure is firmly in play in the state where I live (Utah). We have ChargePoint locations going up along all major interstates. Unless you’re being careless, it’s not an issue to get almost anywhere in an EV.
The holy grail is self-driving, autonomous fleet. Google (Waymo), GM, Lift, Uber, Apple, Tesla, Ford, and everyone else has figured out that there is a lot of money to be made by transportation networks. GM wants to use self-driving Chevy Bolts and turn them into 24-7 taxis. Given that the revenue split for Uber is mostly to the driver, imagine how lucrative a full-time taxi would be with no human driver. A solution like that means that apartment dwellers don’t need cars anymore.
The nickname for the Prius is a “Pious” for a reason.
My folks bought a Prius a long time ago based on the math. It has paid off for them bigly. No status symbol for them.
P.S. My folks other car is a full size Chevy pickup (they know how to burn lots of gas when they need to)
My folks bought a Prius a long time ago based on the math. It has paid off for them bigly. No status symbol for them.
Yeah, that pious Prius stuff is a load of BS. I’ve never seen anyone use the term “virtue signaling” in a way that makes an honest point.
I remember seeing the payback on the differential in prices for a Prius vs. a similar compact car being something like 3 years.
No “virtue signaling” there.
The payback for a hybrid Lexus SUV though was 99 years.
Definite “virtue signaling” there.
Yeah, buying a prius a long time ago when you got a fat tax credit - you made out like a bandit. Where did that credit money come from? The unwashed heathen.
As far as Leafs, their price point definitely aims at middle class, but I’ve read very poor reviews and the resale value of them is abysmal. Its almost a cruel joke, better buying a honda fit.
I’ve wanted to get an electric motorcycle - a Zero - for a while but it just doesnt make economic sense. Maybe as batteries get better and if they go to carbon fiber, but guess what - ducati developed a carbon fiber bike and its 100K. I would like something clutchless, quiet and low maintenance for mostly back country riding but the tech isnt there yet for those of us who can’t afford to virtue signal, lol.
I’m with you with the Zero, that is a sick bike. My philosophy is that a lot of purchases can’t be justified by economics, but it doesn’t mean that they are necessarily bad purchases. I can probably always eat at home for less than going out, but I value the experience. If you can afford it, and what you are purchasing with your life’s time is worth it, then I say go with it.
Alas, my bike days are probably through. I’ve done too many rotations in the ER and seen too much. So many mangled bikers, usually not even their fault.
All decisions are rational. Your marginal benefit, when non-financial benefits are included, is higher earing out. At least until you get the credit card bill.
“virtue signaling”
I work with folks whose electric vehicles serve this purpose. Hang out in California more if you want to find pious environmentalists, because I am surrounded by them.
If you suscribe to the efficient market theory, then you believe that all decisions are rational. But modern economic theory is just getting its hands around behavioral economics. The Nobel prize this year was awarded to Richard Thaler, pioneer in behavioral economics. Thaler’s work highlights the notion that people are predictably irrational and that they consistently behave in ways that defy economic theory. Besides, if every economic actor were rational, then we probably wouldn’t have bubbles and manias. Daniel Kahneman has some good insight into behavioral economics.
From the DOE: “This tax credit will be available until 200,000 qualified EVs have been sold in the United States by each manufacturer, at which point the credit begins to phase out for that manufacturer. Currently, no manufacturers have been phased out yet.”
The EV credit doesn’t have an expiration date per se. So I can see why they would cut off the tax credit abruptly. Maybe it’s better to get rid of the incentives until the cars and the refueling infrastructure are more standardized.
How will I charge my car if I live in a city and rely on street parking or a parking garage without chargers?
I can’t very well run an extension cord out my apartment across the sidewalk and down the street.
I agree. Some years ago I thought Tesla was going to develop that swappable battery, but I haven’t heard anything. And charges are still taking hours. And there is NO talk of converting existing stations to include electric charging. Until the refueling is figured out, there’s no point in trying to improve the car.
Check out these sites:
plugshare.com
EVmatch.com
Also, see this vid:
EV charging without a garage:
https://www.youtube.com/watch?v=lNTMwE9GQHM
An 11-minute you tube video telling apartment dwellers to charge in a public space somewhere. I found another site which said the charger shuts off after 30 minutes, which gives you about 50 miles.
I think we’ll get there eventually, but, if this were an airplane, we’re haven’t even gotten to the Charles Linburgh stage yet. It might be upwards of 20 years.
This is all so unnecessary. Hybrids work great and get cheaper and better every year.
This is all so unnecessary. Hybrids work great and get cheaper and better every year.
And plug-in hybrids are great…for some folks they work as EVs for most of the time anyway, but don’t have the range issues.
There are 250 million cars on the road. The electric car subsidy doesn’t do a damn thing about pollution…especially when you consider the energy that goes into producing one electric car that is generated using less than perfectly clean methods.
The subsidy artificially pushes more production of vehicles that we don’t need and makes shareholders and other owners of companies like Tesla rich in the meantime.
But the subsidy is popular, and can really improve your “green” credentials when you try to get votes!
You’re not informed on pollution. EVs have a huge impact on pollution. It’s not just the amount of cars on the road, it is their distribution and the idle time. EVs idling cause no pollution.
You’re not informed…
There’s a classic conversation stopper!
Car by car, yes, each one has an impact on pollution. You will get no debate from me on that item.
HOWEVER, EVs are a teeny tiny, eensy weensie part of the overall market. The effective benefit to health overall is meaningless. The subsidy will have NO measurable effect on reducing the negative externality from pollution.
And the cost of such subsidies is that (while cleaner) we use resources to create production capacity for a product that is too expensive relative to the competition, and only viable if we continue to subsidize the product. Is this really a good use of resources?
Or are we better off leaving that money elsewhere in the economy, and allow people to continue to develop the technologies that will make EV economically viable AND price competitive?
You are right, that was quite boorish of me. Where is my delete button? I work with immunologists, cardiologists, and respiratory therapists all day. I know first-hand the impact that pollution has. I push legislators to understand the very real impact it has on birth defects, the young, and the elderly.
But more to the point, producing an EV is not carbon neutral. And it’s fair to say that an EV is only as clean as it’s power source. But it is just not true that an internal combustion engine is less eco-friendly than an EV. But the main issue that we see in urban environments is the number of high PM 2.5 days from tailpipe emissions.
It’s a little bit like pee in a swimming pool. We all know it is in there, but it’s the concentration that matters. A little pollution on the plains of Nebraska where the wind blows might be tolerable. But in big urban centers, even the small amount of pollution from commuters adds up to catastrophic health effects.
“You’re not informed on pollution. EVs have a huge impact on pollution.”
You’re exactly right. It’s filthy technology which relies upon the raping of the land with smoke belching diesel excavators and dump trucks to mine the materials needed to produce the batteries and their ugly side effect- toxic waste.
OneAgainstMany-
You seem to be missing my point.
Subsidizing EVs as a way to combat air pollution from combustion engines is a bit like one man trying to push a 100 ton boulder.
The effort is noted, and if the guy pushing ends up sweaty and breathless, he might be applauded for the effort, but the reality it that it was a complete waste of time and energy.
We are better off pursuing technology that makes EVs economically viable without subsidy–AND/OR creating devices to make combustion engines cleaner.
I believe EVs will eventually be more competitive in a total cost to own scenario vs ICEs. No subsidy will be needed.
38% of pollution in our metro area is by buildings, commercial and residential. 48% of the pollution is from vehicles, which is where I think the easier targets are. Stricter building codes and insulation can reduce heating and cooling needs, so obviously that has to be part of the pollution discussion.
If we truly were to be able to tabulate the true cost of ICEs and the deleterious impact on human health and account for that and adequately charge that to the consumer, then EVs would likely already be on par.
“Or creating devices to make combustion engines cleaner.”
I have about as much faith in making combustion engines cleaner as I do in clean coal technology. Let’s just hope any efforts on that front have better results than VW’s “clean diesel” scam.
What we do have the technology to do is to be a little bit more conservative as to how we design our lives around work, home and other stuff. Some people do this on purpose. Others want some invention or subsidy so they can just go on as they are accustomed.
Maybe we can all breathe a little easier when this credit fueled bubble economy takes a much deserved dirt nap!
Perhaps easy credit is the dirtiest fuel we use.
From what I understand, new cars emit very little pollution. A ton of pollution is admitted manufacturing electric vehicles.
Actually, vehicles, even new ones, are the primary cause of pollution.
Major pollutants impacting health:
Ozone
Particulate Matter
Sulfur Dioxide
Nitrogen Dioxide
Lead
Carbon Monoxide
“Vehicles contribute 48% of emissions that lead to the
formation of fine particulates, whereas small industrial and commercial sources, known as area sources, contribute
39%.[2, 3] Examples of area sources include gas stations, dry cleaners, and home heating. Only 13% of fine particulates
come from large manufacturing industries.” (Source: Utah DOAQ report)
On the flip side, I guess if we keep on the rate we are going we won’t have to worry very much about entitlement spending since our death rate is increasing.
Thank you for leaving out carbon dioxide.
Ozone
Particulate Matter
Sulfur Dioxide
Nitrogen Dioxide
Lead
Carbon Monoxide
I haven’t used leaded gasoline in quite a while. I guess I’ve never used fuel with Sulfur in it except in my BBQ.
Most lead and sulfur come from industrial sources nowadays, although leaded gas is still used for many general aviation purposes and finds its way into the atmosphere.
New cars, due to the direct gasoline injection, actually have higher levels of lung-damaging particulate matter (PM) than older cars!
And PM is a huge problem from all oil-powered vehicles such as heavy trucks, buses, jet airplanes, and ships.
The worst air quality in the Seattle area is downtown (from the container, fishing, and cruise ships) and then right around Sea-Tac airport (planes).
Even if everybody drove an EV in Seattle, nothing is going to change the PM levels until we do something about these other pollution sources.
Cars do not run on bunker fuel.
one-many,
new PASSENGER vehicles emit less than 0.5g/mile of smog emissions.
source: http://www.ucsusa.org/clean-vehicles/fuel-efficiency/automaker-rankings-2014#.Wf0U1raZNE4
i recall research showing that approximately 50% of emissions comes from vehicles. included in vehicles are commercial and private vehicles. commercial (semi trucks) were the biggest polluters.
i think the point that RW and I were trying to make (if it’s even a valid point
) is that replacing gas new car sales with EV new car sales does almost nothing for pollution and air quality simply because the gas cars the EVs are displacing on the road are a very small part of the pollution issue.
It’s a valid point. Sure, now it’s a drop in the bucket. But eventually it won’t be. Once it reaches a critical threshold, the demand will shift massively. Estimates show that by 2050, about 60-75% of fleet will be EV.
Many automakers have already figured this out and are planning accordingly. VW announced it will make 80 EVs by 2025 and will fully electrify its fleet by 2030. Volvo, for example, will be phasing out gas-only cars as early as 2019:
http://money.cnn.com/2017/07/05/autos/volvo-electric-cars-internal-combustion-engine/index.html
India, France, Britain, and Norway all have plants to phase out gasoline and diesel cars. China is now on board too.
http://money.cnn.com/2017/09/11/autos/countries-banning-diesel-gas-cars/index.html
Let’s get it done ??
Thats exactly what everyone with a net worth above 11-mil is saying….and please don’t run out the “poor farmer” meme…
I’m under no illusion that the estate tax is gone for good.
I just like all the freebies going away.
scdave, Please debunk the “poor farmer” meme. I’d like to have a counterexample. Goes with being a good scientist. Thanks.
I hear stamping your little feet helps, Gustavo.
As someone who lives in a relatively low tax state, with cheap-ish real estate, I have zero sympathy for anyone in California. Prepare to pay!
Man I love watching these Real Estate Experts and Analysts squirm and complain about a $500K cap on the MID. Their tears are delicious.
The funny thing is that no one thinks about the other side of the reduction of the MID (as well as the cap on interest deductibility for businesses).
On the margin, this will reduce the demand for mortgage debt from consumers (and debt generally from businesses).
All-else equal, this results in slight downward pressure on interest rates, and a less leveraged society.
If someone does go over the $500k maximum, they will have that much more incentive to pay off the mortgage faster. That’s GREAT.
I once knew a guy who took out a $1MM mortgage on his $8MM, paid-for house because he thought 30-years fixed at 3.something% was the cheapest, most tax efficient debt he would ever get.
He would have borrowed less, or not at all with the $500k limit.
So, how exactly is this bad? Oh, I forgot…the brokers have one less lever to pull to convince a borrower to buy a $1MM house instead of an $800k house that was more appropriate for them anyway.
IMO, this doesn’t affect Joe 12 Pack personally and directly. Average flyover Americans won’t get anywhere near the $500K cap, so realtors can save their “Killing the middle class” junk.
Indirectly? It lowers incentives, like you said, to take on that much debt and will in turn lower housing prices. I always thought that’s a good thing - more money in Americans wallet, 529 or 401K, which upsets realtors because that money doesn’t flow to them……..which again makes me happy!
https://www.marketwatch.com/story/the-new-trump-tax-calculator-what-do-you-owe-2017-10-26
I live in CA and using this calculator and my appox. income I break even
I’m not a high earner not for this state.
I guess “middle income” for CA is 200K and 25K in state and property taxes ? IDK but would guess that’s average here were I work in high tech.
too bad 4 you guys
It’s funny how Chuck and Nancy are whining that this bill is a giveaway to the rich, while the rich in CA/NY (home of Nancy and Chuck funny enough) are freaking out about paying more taxes.
Pick one story and go with it guys, but it can’t be both.
I’m in CA…my taxes are going up with this bill…yet I support it.
Does that make me an idiot? Or a patriot?
Yes, it makes you a patriot. What is good for one isn’t necessarily good for the whole, and vice versa.
“…Gustavo Gonzales with Santa Clara Co. Association of Realtors said, ‘Look at the numbers! I mean, we are being punished because our housing is expensive. That’s not fair to any Californian.’”…”
Actually, its *very* fair.
If average R/E prices drop (very likely) then 1st time buyers have a better chance of actually buying a property.
I would challenge Mr. Gonzales to name *one* consumer product in which rising prices are considered a good thing.
I am constantly astounded by the incredible in-your-face arrogance of the Real Estate Industrial Complex.
Everyone from elitist local agents who won’t give you the time of day unless your prepared to spend $2mm for a crapshack to the Gutavo Gonzeles of the world to Larwrence Yun of the NAR.
When webster updates the next dictionary edition, the ought to post pictures of these clowns under the word “Greed”
If average R/E prices drop (very likely) then 1st time buyers have a better chance of actually buying a property.
Maybe at higher prices, but that’s not “first time” buyer territory generally anyway.
There will be a softening in “move-up”, somewhat less supply of people selling cheaper homes to “move-up”, and even even more competition for homes under $500k. And that’s where the supply shortages mainly reside.
After skimming some aspects of the GOP plan, here are two things that I think are very positivel:
1) The legislation would limit the corporate interest deduction at 30 percent of a company’s earnings before interest, tax, depreciation, and amortization.
2) A 20 percent excise tax on payments, including royalty payments, that U.S. companies make to their offshore affiliates.
#2 is known as the “backdoor border adjustment tax (BAT).” I would be thrilled if this one stays in the final version as I view this as a direct attack on large corporations shifting profits to lower taxed jurisdictions in an effort to game the tax system.
As for #1, limiting the tax deductability of interest encourages more prudent business expansion and less gaming of the system. Having a lower corporate tax rate is a fair trade off for eliminating the deductability of interest.
In my review, I’ve noted a few giveaways that are taken away, and incentives to borrow have gone down.
And I think those are both very good.
The Democrats cry of this being a giveaway to the wealthy are ringing quite hollow to me as I look at what is being done–especially in light of how many wealthy people are already avoiding the estate tax through legal means anyway.
With 25 million excess, empty and defaulted housing units out there, there is no shortage of housing.
HA, it’s only 24,999,999. I know someone who bought one in 2012…….
The onset of falling prices could trigger a stampede of investors out of California, which would create a favorable situationn of an inventory glut at prices that more middle class Californians who are currently priced out could afford. Entirely eliminating the MID instead of eliminating it selectively would do an even better job of making housing prices affordable for people who don’t already own one or more houses, but then the GOP would have to sacrifice the “punish California” objective on the alter of sound governance principles, with lost real estate lobby campaign contributions as a likely consequence.
‘It was an absolute disaster,’ Dora Elia said.‘I am in jeopardy of losing both homes and owing money’
‘I am in jeopardy of losing both homes and owing money’
Some failed to let Dorcas know that stocks can go to zero, houses can and do go negative.
Shhhhh! It’s un-American to mention that asset prices can and do drop, especially at the point of bubble collapse.
“In short order, she had effectively lost about $200,000 worth of real estate equity…”
The correction has only just begun.
Similarly, can our own resident ambassador from the Real Estate Investing Club get his biscuits out in time?
How quickly things have changed:
April 8, 2017
No Eureka Moment To Imperil The Gushers Of Money
The first of two weekend topics on the realization of a housing bubble. Macleans, “In mid-March, Elijah Joseph attended the Toronto Real Estate Wealth Expo, a jungle of real estate gurus and their 15,000 disciples who paid up to $500 per ticket, only to be told to invest in what is actually one of the worst buyer’s markets in Canada. A line-up of personalities preached that, despite record-high Toronto house prices, now is actually an ideal time to buy. The presenters all had personal stakes in the market, but attendees ignored the conflict of interest, and the event, disguised as a conference and concert, became a full-day sermon on buying real estate as the greatest good.”
“‘Fear will kill you. Fear will drown you,’ said Daryl King, who is selling properties upwards of $8.8 million throughout the Greater Toronto Area and Ontario. ‘Just jump in!’ chanted Inez Kurdrik, a downtown realtor. On the same panel, Brad Lamb, nicknamed ‘the condo king,’ who has built eight high-rises in Toronto, declared, ‘Toronto has become one of the last safe havens in the world.’”
“If real estate were a religion, Joseph would be a believer. He is 24-years-old, and he has devoted his future to erecting properties trimmed with 24-carat gold. ‘I’m looking to build a great big empire,’ he says. ‘There is no doubt. I have a plan. I have a course of action, and right now, I’m kind of looking for a mentor.’”
http://thehousingbubbleblog.com/?p=10045
“A Richmond Hill, Ont., woman may lose the house she lives in because of bad timing and a falling real estate market. The plan was to sell the Richmond Hill home — where she has lived for the last five years — after securing the second home and apply the proceeds of the sale to her new house. But that plan hasn’t worked out.”
“Buy two houses, rent one, apply to buy a third, rent the second. Sell both pay for the third! What can possibly go wrong?” — anon
What people fail to realize is the economy, at its core, is a competition for resources. I realize that while large companies with teams of lawyers and accountants can discover angles to essentially print money, the possibility that such schemes are available to individual retail investors, without having been taken advantage of by a larger player, is exceptionally unlikely.
Ashford, WA Housing Prices Crater 13% YOY
https://www.movoto.com/ashford-wa/market-trends/
“The department said the Nu Way, KwaNobhule Integrated Housing Estate, Jachtvlakte and Utopia housing projects and more homes linked to Baywest and nearby Parson’s Vlei had all been approved, but had not yet been built. ‘It is evident there is an oversupply of housing in the immediate and surrounding areas.’”
________________________________/
I’ve been to South Africa. It’s a beautiful country but very complicated. I would not advise naming a housing project “Utopia.” I believe “Jachtvlakte” is Afrikaans for “hunting area,” as this is the Dutch translation. I would not advise using that name for a South African housing project either.
Then again, maybe these names are the South African equivalent of “Oak Trail” or “Deer Creek Reserve.”
Realtors are liars.
…. And every closing a crime scene.
https://www.politico.com/magazine/story/2017/11/02/clinton-brazile-hacks-2016-215774
Crooked Hillary
And this is the gang that won’t stop yammering about interfering in elections. Sad pandas are kinda quiet these days.
And the Hollywood crowd is too busy signing settlement agreements to speak up.
And I LOVE the fact that this article was written by a Democrat.
55 years.
This credit bubble goes back a very long way.
Sure seems like a lot of former world beaters headed down. Could the MSM have missed the bubble pop?
why would Orlando be one of the highest gainers last year w the highest? predicted increase. When I drove through on rt 4 it was a steaming wasteland.
pro que?
I-4 through Orlando is a dispiriting experience, but the worst part of the highway isn’t in the city proper, but west of it. The 10-mile section bracketing the theme park exits is perpetually and infuriatingly congested no matter what time of day or year.
Lowered lending standards help the service industry folks around Orlando now qualify.
I really can’t account for the popularity of Orlando. It totally baffles me. I was looking at the definition of “hellhole” in the dictionary, and there, right next to the definition, was a map of the Orlando area.
If you went looking for hell and found Orlando, you’d have reached your destination.
“‘You’re trusting in people who have a (mortgage broker’s) license and expecting them to be honest, not take your money,’ she said.”
This is why I love this blog. 😁
She took their money, didn’t she?
‘It’s painful, I try to not think about it when there’s been a huge loss for my seller,’ said Patricia Shiah, a broker with Stribling & Associates.
I bet it’s so heart wrenching you had to reduce your fees from the transactions, right Ms. Shiah?
Of course not! She works hard for that money.
The most dangerous place to be is between a realtor and their commission.
Hmmmmm……..
This from HBB today……
“It’s time for a reality check. With decreases in the number of homes sold and average home price, the Denver real-estate market experienced a slowdown in September 2017, according to the Denver Metro Association of Realtors’ October market report (of September data). Those moves, though small, may spur more dramatic shifts in the future. Sellers can no longer put a house on the market on Friday and expect 10 offers by Monday. ‘Buyers are no longer responding to that feeding frenzy,’ says Steve Danyliw, chairman of the Denver Metro Association of Realtors Market Trends Committee.”
This from HBB day before yesterday……
The Denver Channel in Colorado. “The cost of renting in Denver has dropped for the second month in a row according to the latest data from rental listing site ApartmentList. Lone Tree, which has the most expensive rents in the metro, also saw the biggest decreases last month with rents down 1.7 percent.”
And this from my local pioneer press rag here in Castle Rock this week…….
BUUUUUT………THE PRICE OF A HOME
The following are the median sales prices of single-family homes in September for communities throughout the Denver metro area, according to the Denver Metro Association of Realtors. At right is the percentage increase or decrease as compared to September 2016.
Lone Tree: $659,000 (+6.3 percent)
Golden: $538,450 (-0.1 percent)
Highlands Ranch: $469,000 (+6.2 percent)
Castle Rock: $466,673 (+7.9 percent)
Parker: $462,000 (+6.2 percent)
Centennial: $429,000 (+5.9 percent)
Littleton: $421,000 (+5.4 percent)
Arvada: $415,000 (+3.9 percent)
Denver: $415,000 (+9.1 percent)
Lakewood: $413,000 (+8.7 percent)
Wheat Ridge: $412,450 (+1.8 percent)
Metro median: $409,000 (+7.6 percent)
Thornton: $370,000 (+12.1 percent)
Englewood: $368,950 (+5.4 percent)
Westminster: $350,000 (+1.2 percent)
Aurora: $351,250 (+11.5 percent)
Northglenn: $315,000 (+3.8 percent)
It should not be any mystery why homeownership rate is at 50 year lows and housing demand at 20 year lows.
Remember….. You can ask $50k for your 10 year old Honda Civic but where is the buyer at that price?
So it is with all depreciating assets like houses.
Who’s going to buy the 10-year-old depreciating asset? Well evidently everybody in the Denver Metro. Those are median list prices… you know… the ones that Zillow conveniently leaves when you post your crater nonsense. btw, my house price was lower than ALL of those medians.
Hey Donk…
Austin, TX Housing Prices CRATER 5% YOY
https://www.movoto.com/austin-tx/market-trends/
One thing I’ve noticed here is when discussing Toronto real estate, nobody seems to mention that the numbers in Canadian dollars. So the $700K CAD median price is really $500K USD. Still high, sure. But compared to San Francisco or Seattle it’s a bargain.
Plus another thing about Toronto is, there are no ghettos. The “bad parts” of town, are still livable. Take out the unlivable parts of a large US city and its median price skyrockets. Call it the Livable Part of Town Median Price. But in Toronto, the entire city is livable so the city’s median is the Livable Median. Basically the median home in Toronto is a lot nicer and in a better neighborhood, than the median home in say Chicago or Boston or Los Angeles.
What I’m trying to say is Toronto seems expensive, but it’s not really, at least not when compared to the same sized cities south of the border.
That’s an interesting perspective Marq.
I rather think that housing >10 X Income is bubbly in any place regardless of the currency exchange rate. Other necessities besides housing are more expensive in Canada than the US even after you do the exchange rate, so they should have less money for houses. This was always the case until recently.
If you want a reality check, look at border towns like London or Kingston. Is there a logical reason that houses are twice the price on the Canadian side?
Not really, but Canadians healthcare is included in their taxes, so there is that to consider. Still, that shouldn’t make it 2x the price.
If you think Toronto is great, you should check out Montreal. My favorite city on this continent.
‘it’s a bargain’
Yeah they’re just catching up to Hong Kong. Jeebus the woman loses 200k Canadian pesos in just a few months. If that doesn’t scream bubble what does?
Denver, CO 80202 Housing Prices Crater 6% YOY
https://www.zillow.com/denver-co-80202/home-values/
*Select price on dropdown menu under first chart
It seems like most of the markets that would be significantly affected by the $500k limit on the MID are in Democrat majority states. Is this due to coincidence or by design?
So, when Democrats aim to raise taxes on the rich (which frequently reside in Democrat majority states), it’s considered making the wealthy pay “their fair share”, but when Republicans take away deductions that generally favor the wealthy in wealthy states, it’s political targeting?
Remember those “blue states” also have very high renter populations…who don’t benefit at all from the MID, and won’t be hurt (only helped) from it’s reduction.
I wasn’t making a comparison to Democrat tax strategy. Don’t put words in my mouth.
Prediction: Through the lens of the rear view mirror, proposed reductions in REIC subsidies in the tax bill will not be implemented; rather they will appear to have been rent extraction mechanisms.
By
design
If the main point is California payback, then a Republican Congress should be able to get on board.
Wait. Think of all the good will Maxine Waters has built up with the white house! Surely she can save jingles biscuits.
From Forbes:
“Rental property owners may continue to deduct interest paid to finance the purchase of rental properties and can deduct state and local property taxes. … Additionally, unlike homeowners, rental property owners receive tax savings through the deductibility of maintenance costs and depreciation.Oct 2, 2017″
Trump’s dad was a landlord, so it makes sense that landlords continue to get special treatment.
Trump’s dad was a landlord, so it makes sense that landlords continue to get special treatment.
That is not “special treatment”. Businesses deduct their expenses from their revenue before it’s taxed, regardless of whether they are landlords or restaurants or doctors or whatever.
Geez.
The current plan exempts real estate investors from the 30% limit on interest deductability. I think this carve-out for landlords is a mistake. While I agree with scraping or limiting the deduction as currently proposed, I think it is a very valid question to ask why corporate landlords get to keep the deduction if a homeowner can’t (well, they actually can up to $500k, so maybe a moot point).
I view owning a rental property as a fundamentally different business than a restaurant or doctor. Doctors provide a service, restaurants provide goods (food). Construction workers create the housing unit. A landlord might coordinate repairs and even a small mom and pop landlord might do yard work, but a landlord is fundamentally a rent-seeking enterprise. It takes a small cut out of the goods and service producing economy. This isn’t to say it is inherently bad, but when it becomes too large as a share of the overall pie, we move towards serfdom.
The current plan exempts real estate investors from the 30% limit on interest deductability.
Of course they’re not limited in this. It’s basic business accounting! Revenue - expenses = profit. Taxation is then based on profit.
You are so economically-ignorant that I am forced to Joshua Tree you.
FYI the owner of this blog is in the landlording biz.
Well, I’ll agree with you on being ignorant on one point: I don’t understand your Joshua Tree usage.
My point was that the deductability of interest for every other business is on the chopping block under the GOP plan. Actually the plan “limits interest deductability to 30% of earnings before interest, tax, depreciation, and amortization.” I just am not sure there should be a special carve-out for one group if its being limited for every other business.
I have no ill will toward landlords. The owner of this blog runs a wonderful service, and hopefully he has a thriving business. He seems to tolerate many points of view and generates a lively discussion. If he is against anything I’ve posted, I’m guessing it’s not the first time something has been posted here with which he disagrees.
The Joshua Tree is prickly and intended to be inserted where the sun never shines. Crude but somewhat funny.
All my houses were purchased for substantially less than $500,000. My biscuts are very tasty, thank you.
“……..Sellers can no longer put a house on the market on Friday and expect 10 offers by Monday…..”
That is not true in the Sacramento foothills. I put a house on the market on Friday and have an offer today (Sat). A second one is supposed to come in tomorrow. I am pleasantly surprised by the strength of the November market.
The race is on…
Good thing for you Mel Watt is handing out loans like lollypops.
This one is an FHA loan!
Well what do you know, yet another government backed shack. I’m glad you are so proud Jingle, cuz I know if it goes bad you’ll give all your profits back to the tax payer. You will, won’t you?
Comment by Jingle Male
2017-11-03 20:02:08
…have an offer today (Sat).
Check your calendar dude. 11/3 was Friday.
Thanks Blue. You’re correct. I’m in SF on vacation so it felt like a Saturday.
“………you’ll give all your profits back to the tax payer….”
The taxpayer has done quite well by me. I’ve always paid my taxes in timely fashion and never received any payments for unemployment, healthcare, or food stamps. I consider myself lucky. They will get another $300,000 as I sell our portfolio.
I am going to start collecting Social Security in January, 2018. It’s the first government check I will have ever received.
“It’s the first government check I will have ever received.”
Anyone who owned a U.S. residential real estate investment portfolio over the past five years was a huge beneficiary of the Fed’s housing market QE3 reflation program. Whether you received checks issued by Uncle Sam had nothing to do with where your investment gains originated.
So I just slept overnight in a brand new condo my daughter rented in San Francisco. 1,000 SF, 2 BD, 2 BA, $4,500/month (down from a $4,750 asking in April). Chinese invester bought it in Feb. for $1,125,000. After expenses, his NOI will be about $30,000/year (using 8% vacancy, even though it was vacant for 8 months after he bought it).
Zillow estimates the value today at $1,500,000.
I get it that the HBB readers believe the world has gone mad……but I remember shaking my head 45 years ago when my uncle died in Menlo Park and his home sold for $325,000. If it has been this way for 50 years, is it a bubble or reality?
“…….Whether you received checks issued by Uncle Sam had nothing to do with where your investment gains originated……”
I agree with you to some degree….and you could have benefited too, if you wanted to take the risks.
The point I am making is that I contribute huge amounts to the taxpayers every year. You and Ben are the beneficiaries of those dollars. I’ve never purchased a property I could not afford or used sub-prime financing, so you can stop worrying about my “losses”. The real estate market could drop by 50% and the only thing that would change is I would buy more houses. I got caught once in a declining market and had to do a “cash in” refi 4 years later. That experience encouraged me to watch the cycles and operate from a position of strength.
Jingle Male,
I’m a relatively new contributor to this blog, but I appreciate you being here. I’m on the other side of the fence regarding my views on housing, but I think it is healthy to have contrarians participating in the dialogue. Echo chambers are not healthy. As Keynes said,”When the facts change, I change my mind.”
The $1.25 mil condo your daughter rents seems wildly overvalued, but the price is propped up by the healthy, high-paying jobs in the SF area. If the tech bubble pops, watch out. Even Lawrence Yun has said as much.
The main question in my mind is whether there will be a correction in terms of prices, especially in bubilicious areas, or whether wage inflation will catch up to make relative housing costs affordable. My operating thesis is that self-driving vehicles will open up new housing options and push down prices in pricey urban centers. Also, I think that companies will increasingly relocate to lower priced areas which will also put downward pressure on prices.
I’m on the other side of the fence regarding my views on housing, but I think it is healthy to have contrarians participating in the dialogue.
The whole entire world is beating the drum of housing as a can’t-lose investment. Jingle is not a “contrarian”.
But as you stated so eloquently before, jingle lies alot.
Karen, I am not saying real estate is a “can’t lose” investment. I learned that lesson in 1990-1994.
I am saying is that housing has cycles and if you plan accordingly, it can be a great investment…..just like stocks, bonds, gold, etc. Investing in real estate in 2009-11 has been the best investment if my lifetime. It is life changing for my retirement.
OAM, the SF rental market is softening. The apartment my daughter moved from required a $4,200 security deposit plus first and last (3 years ago). Today, $99 security and first month rent moved her in.
I have 3 children living in SF & LA and I have counselled all 3 to keep renting and save the $3,000-$4,000/month differential. I agree with you that the dot com employment frenzy return to normal eventually.
That being said, we had dinner at Gorilla Sushi last night and 4 Google busses and one Genentech bus dropped off passengers during the hour we sat there. Unbelievably plush double decker private transportation free of charge. Who knows where all this is going?
“Chinese invester bought it in Feb. for $1,125,000. After expenses, his NOI will be about…”
Not if he is paying interest on a million bucks.
The whole entire world is beating the drum of housing as a can’t-lose investment. Jingle is not a “contrarian”.
Point taken. For the purposes of this blog, he is in the minority, so many contrarian is accurate as a relative term. Having said that, I don’t think the entire world believes housing is a can’t-lose investment. I hear plenty of voices decrying how unaffordable housing is (especially in certain areas), but I think many people 1) feel they will be able to get off the bubble before it bursts or 2) can’t envision the catalyst that will cause a correction. Also, many people diverge on what will happen as a result. Are we in for a crash a la 2008 or more of a tapering out and sideways movement of housing for the next decade. Time will tell.
Point taken. For the purposes of this blog, he is in the minority, so many contrarian is accurate as a relative term.
Sure just like all the Soros-funded trolls all over the internet are “contrarians”. If we have a single goddamn space to express our own amazement at what has become of this country we are inundated with this crap trying to school us and to tell use we need to “see the other side”.
Give me a break.
Contrarians are handy if they:
Can do math.
Aren’t giddy manic about their genius and guaranteed road to riches.
Can carry on a conversation without an explosion of antisocial rage.
Tell the truth.
They are far and few between.
The whole entire world is beating the drum of housing as a can’t-lose investment. Jingle is not a “contrarian”.
Although to be fair, Jingle is selling today. If he believed it was “can’t lose”, he wouldn’t be selling.
Housing is certainly not “can’t lose”…today is a good time to be a seller.
Unless, you live in it…
Jingle’s story is that he can’t play property manager anymore because he is going remote. He is not timing the market, he’s timing his retirement (as am I).
Yes, but Jingle has also said numerous times that 1: His timing was great, and 2: that he isn’t a buyer today.
It is a bit of both….my retirement certainly is possible by the upward cycle of housing. RW is correct in the sense that it is a good time to be a seller.
I don’t think we are going to see a crash in housing values like we did in 2007. Back then, I was dumbfounded at the lending policies. Today, I see nothing near that ridiculous. People are not buying on such speculation and generally have the ability to repay their loan.
Will housing soften? Sure, it always does. It will be a couple more years though and likely driven by a recession, which is typical.
DebtDonkey
Englewood, CO Housing Prices Crater 7%
https://www.movoto.com/englewood-co/market-trends/
Are we in for a crash a la 2008 or more of a tapering out and sideways movement of housing for the next decade.
A big problem is that Fed manipulation has convinced people that 2008 is the worst case scenario going forward.
Will housing soften? Sure, it always does. It will be a couple more years though and likely driven by a recession, which is typical.
I tend to agree. However, in addition to lending not being as crazy as it was from 2004-2007, we are also building 1.2MM housing units per year…not 2MM per year.
All that said…prices today are consistent with peak pricing.
There are times when you should buy if you intend to stay for at least 4-5 years (low point in a cycle).
There are times when you should only buy if you intend to stay for 10+ years (mid-cycle).
There are times when you should avoid buying altogether (like right now).
Actually subprime lending is more widespread since 2009 than it’s ever been. And with 25 million excess, empty and defaulted housing units out there, there’s no need to build more.
GOP House tax bill would deliver blow to California homeowners
President Trump wants House passage of the tax bill by Thanksgiving and Senate passage by the end of the year. (Nov. 2, 2017)
By Lisa Mascaro and Jim Puzzanghera
House Republicans released a sweeping tax overhaul Thursday that would limit or end many of the most popular tools used to minimize how much Americans owe— particularly in high-cost areas like California — including lowering the cap on mortgage interest deductions and eliminating write-offs of state income taxes.
The much-anticipated rollout launches a grueling legislative process that will test GOP unity in the coming weeks as the party struggles to deliver one of President’s Trump’s top priorities.
…
How does handing out subprime loans to anyone who can fog a mirror minimize what people owe if the result is to drive home prices to unaffordable levels? Makes absolutely no sense, whatever.
If it were easier to build more housing where it is needed, the laws of supply and demand would keep prices more stable.
With 25 million excess, empty and defaulted housing units in the US today, there’s no need to build more housing.
If you look at the rust belt and NE corridor, housing prices are quite reasonable and they have the same access to GSE loan programs. Why? Because that is where HA’s 25 million vacant foreclosed empty houses exist…..but not many people want to live there. We need to build more houses where there is demand.
That’s precisely the point. Housing demand is at 20 year lows… and falling fast.
Jobs, housing, and transportation are all connected. There was a good deep-dive this morning in the New York Times about Detroit as a Housing Incubator city. Lots of interesting programs aimed at rehabing dilapidated housing stock and getting it back on the market at very affordable rates. Lots of the vacant houses are in areas where there are no jobs, or are outside of the transportation radius to said jobs. The NYT article also highlights some of the obstacles to kick starting housing in Detroit, namely bank financing being hard to come by.
https://www.nytimes.com/2017/11/04/business/detroit-housing.html
Detroit: From Motor City To Housing Incubator
Matthew Goldstein
The 2008 financial crisis and 2013 city bankruptcy gutted Detroit’s housing market. Now, Detroit is experimenting with unorthodox ways to get people to buy homes and renovate houses that would be vacant otherwise.