The Market Could Fall Like A House Of Cards
A report from the Denver Post in Colorado. “Metro Denver’s real estate boom may still have room to run, but developers behind several high-profile projects in the region said they are turning cautious. ‘People can’t make the deals pencil out,’ said Matt Joblon, CEO of BMC Investments. More are biding their time, but some developers are turning to riskier lending sources or accepting returns so low they have no margin of error if anything goes wrong. ‘We are being patient and waiting. There will be a comeuppance,’ predicts Andy Klein, founder of Westside Investment Partners in Denver.”
“Developers this decade have heavily focused on luxury apartment projects in Denver’s urban core. But even there, so much new supply is hitting the market that landlords have become more lax in qualifying tenants, which Joblon warned could lead to a steep jump in move-outs and tenants who leave without notice.”
From the Santa Cruz Sentinel in California. “Despite concerns about tax reform hurting California homeowners, Santa Cruz County buyers showed up, pushing the median price to a new record, $880,000, up from $787,500 a year ago, and boosting sales to 175, up from 136 sales a year ago, according to Gary Gangnes of Real Options Realty. Listings rose, breaking the shrinking inventory trend that has dominated for five years, but mostly higher-end properties are for sale. Of the 340 active listings the first week of November, half were priced at $1 million or higher.”
“Roger Berke, owner of Thunderbird Real Estate since 1989, said he worries the current market could fall ‘like a house of cards.’ He said he sees home buyers borrowing against stock options, taking advantage of the market boom and a record Dow Jones Industrial Average under President Trump, when the formerly aggressive federal consumer protection agency is being weakened. ‘It just doesn’t feel right,’ Berke said, noting proposals in Washington to cap the tax writeoff on mortgage interest for newly purchased homes and to cap deductions of state and local property taxes.”
“Dennis Norton did the redesign of a Depot Hill home, purchased by the seller in 2013 for $1.3 million. He stayed within the existing 1,800-square-foot footprint. Home values on historic Depot Hill have jumped $1 million, he said, estimating that two-thirds are empty, owned by buyers who live there part-time, and hope to retire there someday. But with so many second homes, few full-time residents are around to keep an eye on the neighborhood.”
The Herald Tribune in Florida. “Bucking the national trend, the number of Southwest Florida homeowners who were late on their mortgage payments unexpectedly shot up over the year. But analysts say it’s not a sign of new housing woes, but instead the temporary impact of Hurricane Irma. In the Sarasota-Manatee region, 4.9 percent of mortgages were at least 30 days overdue in September, up from 3.4 percent in August and from 4.2 percent one year earlier, CoreLogic reported.”
“Charlotte County also reported a 4.9 percent mortgage delinquency rate, also up from 3.4 percent the prior month and from 4.0 percent last year. Throughout Florida, the 30-day delinquent rate jumped from 6.3 percent to 7.5 percent in September. Nationally, the early stage delinquency rate — defined as 30 to 59 days late — rose by 0.3 percent, the largest gain since June 2009. ‘This does not reflect a deterioration in credit, but rather the impact of the hurricanes in Texas, Florida and Puerto Rico,’ said Frank Nothaft, chief economist at CoreLogic. ‘September’s early stage delinquency transition rate rose to 2.6 percent in Texas and it rose to 3.2 percent in Florida, which is higher than the 1 percent that’s typical for both states.’”
The Houston Chronicle in Texas. “More than three months after Hurricane Harvey,Houstonians eager to return home are stuck navigating an unfamiliar world of flood insurance policies, mortgage company procedures and contractor bills. Many face precarious financial futures as grace periods and forbearance programs come to an end, leaving borrowers with bills three times their monthly mortgage payments.”
“‘I’m seeing people cutting bait, saying, ‘I’m done,’ said Kevin Riles, a longtime Houston real estate broker. ‘They’re just trying to sell for what they owe or look at short sales.’”
“As financial pressure mount, foreclosures are looming. Foreclosure Information & Listing Service, a local foreclosure reporting firm founded in 1963, predicts the number of properties posted for foreclosure will reach as high as 2,000 by the end of 2018. That’s more than double what they were running earlier this year.”
“After Hurricane Katrina, nearly 55 percent of mortgage properties had a delinquency. ‘There are 1.18 million mortgaged properties in Harvey-related disaster areas, more than twice as many as were hit by Hurricane Katrina, with nearly four times the unpaid principal balance,’ said Ben Graboske, executive vice president of Black Knight Data & Analytics.”
“John Campbell was already behind on his mortgage when Harvey hit. His house wasn’t damaged by the storm, but his job was affected. Campbell is a mental health counselor and his wife also works in health care. They are both independent contractors and, like many others, were unable to work the week of the storm. In the following months, Campbell said, not as many people sought out counseling because of their own storm-related financial woes.”
“Campbell said he called his mortgage company and was told he could defer three months worth of mortgage payments until a later date. He figured he and his wife could get caught up on the two months that were past due and then resume normal payments. At the end of November, they called to make their past-due payment and were told they owed a whole lot more. ‘They told my wife, ‘No, you owe us five months,’ Campbell said. If the couple doesn’t make two mortgage payments each month through February their lender will foreclose. ‘I’m scared and I’m angry because we’ve got three kids and a 2-month-old baby,’ Campbell said.”
The Cohasset Mariner in Massachusetts. “After analyzing the most recent housing data for Norfolk County, Register of Deeds William P. O’Donnell expressed some concerns with regards to real estate sales and lending activity for the month of November 2017. ‘The average sale price of residential and commercial property for the month was $638,120, a 12 percent reduction year over year,’ said O’Donnell. ‘Also, total sales volume, again for both residential and commercial, was $619 million, a 9 percent decrease from November 2016. Clearly, the limited amount of available real estate inventory is having a drag on the real estate market in Norfolk County.’”
“The story gets more sobering when looking at the lending market numbers in Norfolk County. ‘As we have seen for the last few months, the number of mortgages recorded during the month of November decreased by a significant 28 percent,’ said O’Donnell. ‘Also, the total volume of mortgage financing, for both residential and commercial properties, came in at $1.1 billion, a 35 percent decrease year over year. There is no question consumers are being cautious when considering big ticket expenses. Furthermore, interest rates have crept up slightly, which have proven disconcerting to many homeowners interested in purchasing a home.’”
“A total of 125 Notice to Foreclose Mortgage documents, the first step in the foreclosure process, were recorded versus only 52 in November 2016. ‘Frankly, the Notice to Foreclose Mortgage numbers were disappointing,’ said O’Donnell. ‘We must continue to bear in mind that foreclosure activity has a human face, even during these seemingly decent economic times.’”
Burke, VA Housing Prices Crater 5% YOY
https://www.movoto.com/burke-va/market-trends/
‘John Campbell was already behind on his mortgage when Harvey hit’
Foreclosures in Houston shot up prior to the storm. The fake news industry was quick to forget.
‘Home values on historic Depot Hill have jumped $1 million, he said, estimating that two-thirds are empty’
That’s some shortage. Just how “fundamental” is this million dollar windfall?
‘We must continue to bear in mind that foreclosure activity has a human face, even during these seemingly decent economic times.’
It sure does Bill, but why is it no one says boo when prices are shooting up like a bottle rocket?
They are both independent contractors and, like many others, were unable to work the week of the storm.
This is not a housing problem as much as it is a gig economy problem. They only really need to come up with two payments. This would probably be a good time to borrow against a 401K, but I bet these folks have no savings at all.
It’s always good to have a plan B and some extra cash to fall back on.
‘It just doesn’t feel right,’
Nobody is putting a gun to anyone’s head and forcing them to take out a million+ dollar mortgage to buy a house in 🎅 Cruz. If it doesn’t feel right, just say no.
“He said he sees home buyers borrowing against stock options,…”
Why borrow against your stock market portfolio when you can take advantage of leverage and borrow against your options. The Fed has guaranteed that the value of your options will only increase from here on out.
Borrowing against your stock options is akin to eating your own tail.
The smart play is to hedge those stock options by buying puts on the stock.
Dumb money does the first. Leverage is a poor man’s “equity”.
The smart play is to hedge those stock options by buying puts on the stock.
This was against company policy at my previous employer. Not sure what the ‘punishment’ would be (termination?) but was specifically against the trading policy.
Homebuyers borrowing against stock options…
Back in the late 1920s, weren’t stock optionbuyers borrowing against homes? Are people really this stupid?
Wait what? Margin against an option position? Who would offer such a thing? I can’t see how anybody would allow margin against an option position due to the time decay risk.
Stock compensation through options often have 10-year lives. My wife’s last job had 10-year expiration on her option grants. Given the poor tax treatment for the options (ordinary rates on all proceeds), the stability of her employer, and our ability to think of the option money as “gravy”, we waited 10-years before exiting (effectively utilizing cheap leverage).
By the time we got to years 7+, there was a hell of a lot of gain built in over and above the strike price, and so the volatility of the value wasn’t much different than the volatility of the actual common stock.
And so it would have been easy to see how a brokerage firm would have allowed us to margin the value of those options to some degree.
We never did, but I can see how it would be possible. But why would you? Why not simply sell and then buy with cash? One simple answer is that you have periods where you cannot sell…perhaps you are on an 10b5-1 sales program, but would like to buy something in advance of all the sales occurring.
10 years? Jezuz. All of mine have been 4 years with a 1 year cliff. 10 years…might as well be 100 since nobody stays at a job for that long.
10 years? Jezuz. All of mine have been 4 years with a 1 year cliff. 10 years…might as well be 100 since nobody stays at a job for that long.
Pretty sure RW meant a 10 year expiration on unexercised options, not a 10 year vesting schedule
The options vested over 4 years with a 1-year cliff, but you didn’t need to exercise them for a decade from the grant date.
I didnt mean what you suggested. I mean buy puts on the stock you have options on. A brokerage doesnt have to lend any money.
Eg you have 100k of options but cant exercise for a year. Buy 5k of put options. If the price goes down you make money on the puts. If it goes up you lose the 5k but your 100k is now worth 125k.
Basically it is buying insurance.
“Bucking the national trend, the number of Southwest Florida homeowners who were late on their mortgage payments [b]unexpectedly[/b] shot up over the year. ”
There’s the magic word: “Unexpectedly!” NO ONE could have seen it coming! LOL
Oops, I’m tag-challenged, obviously
I’m tag-challenged, obviously
Give the JoshuaTree Extension a try — adds formatting options to the comment box and auto detection of unclosed tags. (Available for Firefox as well..just google)
It’s OK.
The Herald Tribune in Florida. “Bucking the national trend, the number of Southwest Florida homeowners who were late on their mortgage payments unexpectedly shot up over the year. But analysts say it’s not a sign of new housing woes, but instead the temporary impact of Hurricane Irma. In the Sarasota-Manatee region, 4.9 percent of mortgages were at least 30 days overdue in September, up from 3.4 percent in August and from 4.2 percent one year earlier, CoreLogic reported.”
______________________________/
That is a complete load of BS. The hurricane did not substantially affect that part of the state. Maybe the analysts argue that people didn’t work for a few days due to business closures, and therefore didn’t receive their usual wages, and thus didn’t pay their mortgages? Sounds like a stretch to me.
what you should do is refi your house to barrow against your Bitcoin w Light-coin
The thing about ginormous bubbles is that they tend to grow indefinitely larger right up until they reach systemically risky size, at which point they crater and trigger bailouts to save the global financial system from collapse.
Bitcoin Is History’s Biggest Bubble, Turkey’s Simsek Says
By Cagan Koc
December 13, 2017, 1:34 AM PST
Deutsche Bank’s Slok Says Bitcoin Is Not Very Efficient
Speculation on Bitcoin has turned the cryptocurrency into “the biggest bubble in finance history,” Turkey’s Deputy Prime Minister Mehmet Simsek said in comments on Twitter on Wednesday.
Simsek, Turkey’s chief economic policymaker and a former strategist at Merrill Lynch in London, added his voice to a chorus of global policy makers expressing concern about the digital coin, whose value has surged more than 17-fold this year to as much as $17,578.
“One should stay away from this speculation,” Simsek said. “Just as Bitcoin’s price suddenly rises excessively, it could also crash.”
…
Just look at the comments on any Bitcoin article and it’s a bunch of day traders speculating.
The Litecoin bubble makes Bitcoin look pedestrian. Litecoin is up $8,600% in a year. That’s a normal return, right?
*8,600%
Move over tulip bulb bubble, we have a new champeen!
I rather doubt that cryptomania exceeds the scope of the global housing bubble.
I was stunned at yesterday’s article on how much electrical energy it took to mine bitcoin. Like, more than the whole of Africa. It would awful if mining and trading this bitcoin actually took more energy than building those ghost cities in China. Can humans GET anymore wasteful?
Let’s cut the waste - start in Washington DC.
How much energy is wasted in Washington DC? How much of all energy expended in Washington DC is spent doing things that are counterproductive?
A classic parabola forming. My God! Aren’t people capable of an “oh s__t” moment anymore?
https://www.buybitcoinworldwide.com/price/
Everybody is smart and will get out ahead of the herd.
Even millennials know:
Long term democrat rule + public unions + free sh*t army = misery, ruin and bankruptcy
+++++
Illinois Drives People Away
The Wall Street Journal | 12/12/2017 | The Editorial Board
If Republicans succeed in limiting the state-and-local tax deduction, one hope is that this could finally inspire a come-to-Jesus moment in prodigal high-tax states. Democrats in Illinois ought to be especially chastened by new IRS data showing an acceleration of out-migration.
The Prairie State lost a record $4.75 billion in adjusted gross income to other states in the 2015 tax year, according to recently IRS data released. That’s up from $3.4 billion in the prior year. Many of the migrants were retirees who often flock to balmier climes. But millennials accounted for more than a third of the net outflow in tax returns.
While Florida with zero income tax was the top destination for Illinois expatriates, the Illinois Policy Institute notes that Illinois lost income and people on net to all of its neighbors—Wisconsin (6,000 people based on claimed exemptions), Indiana (8,200), Iowa (1,900), Missouri (2,000) and Kentucky (1,100). What’s the matter with Illinois?
Too much for us to distill in one editorial, but suffice to say that exorbitant property and business taxes have retarded economic growth. Illinois’s corporate tax rate is 9.5%, and pass-through business owners pay 6.45%. Though Illinois’s flat 4.95% income tax rate is relatively low compared to its neighbors, Democrats have found other ways to clobber their citizens.
FYI…survey sez: Once Millennials start working full-time and paying taxes they become opposed to socialism.
I don’t know … I’ve met my share of six figure income “brogrammers” who vote Dem in lock step. Heck, most of my six figure income coworkers, regardless of age or gender, vote Dem. Must be a tech thing. Not saying all do, but in my experience most do.
I’ve learned over the decades to not talk politics (or religion) with the lunch bunch. Ditto with the bubble, all I get for my trouble are a lot rolled eyes. And I now I can’t since most were laid off and I now work from home.
“I don’t know … I’ve met my share of six figure income “brogrammers” who vote Dem in lock step. Heck, most of my six figure income coworkers, regardless of age or gender, vote Dem. Must be a tech thing. Not saying all do, but in my experience most do.”
I used to think so as well. I was sure I was the only deplorable in my group of co-workers. Then I discovered it was more like 30-40% of us, but everyone else assumed they were the only ones and stayed quiet when the discussions turned to politics.
Despite what the MSM would have you believe, Trump has a lot of support in the upper middle class. NYT exit polls showed he won every income category above $50K, while Hillary won every income group under $50K. But that doesn’t fit the narrative of Trump voter = lives in trailer by the river.
https://www.nytimes.com/interactive/2016/11/08/us/politics/election-exit-polls.html?_r=0
https://fivethirtyeight.com/features/the-mythology-of-trumps-working-class-support/
“The Mythology Of Trump’s Working Class Support:
His voters are better off economically compared with most Americans.”
Ironically those earning above $50k are far more poor with a
lower net worth than those earning less due to the heavy hulking mortgage debt burden on rapidly depreciating assets.
Pocatello, ID Housing Prices Crater 18% YOY
https://www.movoto.com/pocatello-id/market-trends/
I was sure I was the only deplorable in my group of co-workers.
I didn’t say that I was the only one. There were others, but we were definitely the minority. It was especially easy to tell during election time, as those who were “with her” were quite vocal about it.
What I’m saying is the minority is probably bigger than you think or both your group and the Im With Her are minorities, ie both less than 50%. Remember, neither one got over 50% nationally or in Colorado.
These people need to stop moving to Colorado.
And Florida. And Virginia. And N. Carolina. And Nevada. And…..well you get the idea.
Now that you mention it, pretty much every single member of the old lunch bunch was a transplant. I don’t believe that a single one grew up here. Like I said, it might be a tech thing.
A close friend of mine grew up in CO, moved to CA for school, back to CO to work in tech, then back to CA now to work in tech. I don’t think he’ll go back anytime soon.
I wonder how many other tech workers have gone back and forth between CO and CA (regardless of whether they started in CA or CO).
I started in CO and went to CA. Finally settled elsewhere and not going back to either one.
I wonder how many other tech workers have gone back and forth between CO and CA (regardless of whether they started in CA or CO).
I did CO->CA with a stop in China in between. But I was born in Colorado, which I think is unusual. If all else were equal I would prefer CO, but all else is never equal.
I was born in Colorado, which I think is unusual. If all else were equal I would prefer CO, but all else is never equal.
Same with my friend.
I think the survey I read reflected socio beliefs over political stand. They probably still vote dem but oppose the idea of someone picking their pockets for welfare. I don’t know if the respondents actually put two and two together.
There might be something to what you say. But I’ve never met a hipster brogrammer who was conservative. Note that I don’t include observant Mormon, Evangs or Catholics in that list, but I doubt you would ever mistake one for a hipster. We had one at the office for a while. He had plenty of imagery (Sacred Heart and other Icons) in his office.
Ha. I just talked with one.
He lives in downtown Philly but “officially” lives in his mom’s house in the suburbs to avoid the 4.5% Philly Wage tax (he works in another suburb).
Registers his car there too so he doesn’t get hit with the Philly Auto Insurance surcharge.
Buys his food (especially) soda there so he doesn’t get hit with Philly Soda tax.
Drives to Delaware for large purchases (no Philly 8% sales tax).
And votes straight line democrat.
2banana’s Law:
Conservatives are more than happy to live under the same laws and taxes they want for everyone else.
Liberals/Progressives expect to exempted from the same laws and taxes they want for everyone else.
FWIW, your acquaintance doesn’t have any special exemptions that aren’t available to anyone else who’s willing to live in the suburbs and drive out of state to avoid paying PA sales tax.
special exemptions?
Like party line voting for the folks that raise taxes and then doing everything in your power to avoid paying those taxes?
It is a special something…
As long as everyone else can do those same things …
Liberals vote for higher taxes, then work really hard to avoid paying the taxes.
Wouldn’t it be easier to just vote against high taxes in the first place?
I define brogrammers as 35 and under and in my observations they have been propagandized and cowed into a politically correct safe space by the brain dead feminized police state schools (picture a pink jack boot with sparkles on your neck) which provided very little opportunity to question what they were taught. Its hilarious to see them start to question some of their beliefs - they become afraid and reality just doesnt compute in the framework imposed on them so they seek to change the subject.
By contrast I work with a guy in his early 30s who was schooled in various countries before attending college at notre dame and he is notably more mature and able to evaluate things without any cognitive dissonance issues. Much more self reliant too - is married and fixes his own car which is a beater.
I used to teach in the inner city in Ohio and in rural SE Ohio.
City = Democrat voters.
SE Rural OH Trump
Inner city scores - 23% nationally (middle school)
Rural SE OH 82% nationally (science scores 10th grade)
Yet everyone says Trump voters are “dumb.”
I guess the left truly is math challenged.
Deplorables are dumb because they bitterly cling to guns and religion and don’t go to the right colleges. Standardized pre-college test scores are irrelevant.
They probably still vote dem but oppose the idea of someone picking their pockets for welfare.
Identity politics are work. Sure, Dems will pick your pocket, but the other guy will grab you by the p–ssy. And Dems will let in people who will mow your lawn and scrub your toilet and pick your lettuce for cheap. Because who needs a living wag… oh wait.
“If Republicans succeed in limiting the state-and-local tax deduction”
Big if. They’re already starting to cave, Latest is the corp tax rate will go to 21% or 22% in order to give lifelong Democrat voters in CA and NY more local tax deductions.
The Stupid Party strikes again.
*Sigh*
Crypto currencies and market at all time highs. I predict the unwinding crash will be spectacular.
I predict Coinbase will end up BK and in litigation. There’s already plenty of news out there about how difficult it is to actually get your funds from them.
But once again (ahem) everybody is smart and will get their money out ahead of the herd.
‘I’m seeing people cutting bait, saying, ‘I’m done,’ said Kevin Riles, a longtime Houston real estate broker. ‘They’re just trying to sell for what they owe or look at short sales.’
‘As financial pressure mount, foreclosures are looming. Foreclosure Information & Listing Service, a local foreclosure reporting firm founded in 1963, predicts the number of properties posted for foreclosure will reach as high as 2,000 by the end of 2018.’
There were more than that the month the hurricane hit.
‘In the Sarasota-Manatee region, 4.9 percent of mortgages were at least 30 days overdue in September, up from 3.4 percent in August and from 4.2 percent one year earlier, CoreLogic reported.’
‘Charlotte County also reported a 4.9 percent mortgage delinquency rate, also up from 3.4 percent the prior month and from 4.0 percent last year. Throughout Florida, the 30-day delinquent rate jumped from 6.3 percent to 7.5 percent in September. Nationally, the early stage delinquency rate — defined as 30 to 59 days late — rose by 0.3 percent, the largest gain since June 2009′
A 1% rate is high. Good thing the central bank has been raising rates to give it room to cut them later.
Back in the “20% down, prove you have a job, stable income and a reputation for paying back money” bad old days…
A 3% delinquency rate would get federal/state auditors involved
A 5% delinquency rate would have bank executive fired
A 7% delinquency rate would have the bank fold and bank executives in jail
We are much more civilized today in these good days.
See? Bigger government DOES work!
Just not the way you thought.
Back in the “20% down
When was that? FHA loans have been around forever, and I remember under 20% down bank loans back in the 80’s (you would have to pay PMI). Heck, I remember gimmick loans from back then where the interest rate would be lower the first 2-3 years to make it easier to qualify.
My first mortgage was in the ’70s. 10% down was required but my employer guaranteed that so I didn’t have to put anything down. It was a feature of the job offer to this penniless college grad.
Those “bad old days” were in 2012 when I was buying my house. I paid 10% down instead of 20%, but I had to provide all the same proof of income, and assets. And no questionable transactions such as a sudden cash infusion from daddy. It wasn’t the bank being strict; it was Fannie Mae. (I guess Fannie needed real paying customers to help fill the hole that they had dug while they were a private entity.)
After my first visit to the bank to discuss finances, I overheard my realtor say to the banker: “Isn’t it great to have someone come in here who actually has money for once?”
When I bought my place, the realtor was kind of shocked that someone would just write a check for what they were buying. Sort of the same thing?
Your banker and realtor nees to meet some new people lol. Plenty of people buy houses with cash every day.
Blue, it was worse than that. When the realtor said “actual money” she was referring to the 10% down payment check and the income/assets. People didn’t even have that.
My guess is that in 2009-2012, a lot of people came in with low income and no cash and expected a mortgage as if it were 2007. They were all turned down. Oh, but the realtor and banker both liked me because *IIIII* actually had money.
Donk,
The empty pockets jumped right back in in 2008 and they’ve been the market every since. It’s why the current subprime debacle dwarfs the previous years.
World skyscraper construction hits all-time high.
http://www.cnn.com/style/article/2017-ctbuh-skyscraper-boom/index.html
This one’s on Janet Yellen.
“Residential is taking up an increasingly big share of buildings measuring at least 200 meters in height,” he said in a phone interview. “If you go back to the latter end of the 20th century, you could almost assume that any building of that magnitude would be an office building.
“But that’s not necessarily the case anymore. Residential buildings, while not a majority, are continuing to climb. And mixed-use is increasingly becoming very common — especially among ’supertall’ buildings (those rising to 300 meters or above).”
The Housing Bubble 2.0 investment binge is realizing its apotheosis through sky scraper construction. This development will create a long-lasting hangover, for sure!
Fire at a homeless encampment sparked Bel-Air blaze that destroyed homes, officials say
http://www.latimes.com/local/lanow/la-me-skirball-fire-cause-20171212-story.html
It’s like the poster child for irony.
Irony isn’t the right word, but we know what you meant. More like “just desserts”, I think,
“You can’t fight in here, this is the war room!”
“I’m not the brightest bulb in the toolshed”.
At least you are one of the sharpest crayons in the toolbox.
Having large standing homeless populations in large metros definitely has its downsides.
Looks like the tax bill is done.
As I predicted, they split the difference on the MID to $750K and will allow $10K of income tax and property tax deductions.
It’s great that the GOP is looking out for the interests of voters in CA and NY that will never vote Republican.
I’ll actually be quite pleased with a $750k MID limit. While I would have preferred $500k, it really sends the message that the REIC breaks are not protected from on high.
Perhaps maybe people will believe that the GSEs might at some point NOT be government backed.
LOL…see, I made a funny. I no longer hold out any hope that the GSEs will move out from under the protective shadow of Uncle Sam.
Pfffft. $750k is a joke. Either get rid of it or leave it. This is nothing but window dressing.
Except for a few pockets of the country, this won’t affect r/e whatsoever since the vast, vast majority of mortgages are $750K and under.
Exactly - a nothingburger with all the fixings.
If my choices are to 1) get rid of it entirely; 2) leave it at $1MM, or 3) reduce it to $750k, I prefer #1, then #3, then #2.
Something is better than nothing–as I said, it at least sends the message that real estate breaks are not sacrosanct.
But I agree, it’s largely window dressing.
The $750K will save the value of many many vacation homes. I don’t know for sure, but I think there are large numbers of people who live in $500K homes and have a $200K beach house or cabin.
‘Despite concerns about tax reform hurting California homeowners, Santa Cruz County buyers showed up, pushing the median price to a new record, $880,000, up from $787,500 a year ago…Norton did the redesign of a Depot Hill home, purchased by the seller in 2013 for $1.3 million…Home values on historic Depot Hill have jumped $1 million, he said, estimating that two-thirds are empty…with so many second homes, few full-time residents are around to keep an eye on the neighborhood.’
Nothing is going to save the value of these shacks.
“Nothing is going to save the value of these shacks.”
….. or the DebtDonkeys that toil to hold onto them.
Fed should pop next housing bubble, Yellen says
By Greg Robb
Published: June 5, 2009
“The Federal Reserve should consider raising interest rates earlier to prevent asset bubbles from getting too big, San Francisco Federal Reserve President Janet Yellen said Friday, in a notable departure from long-term Fed consensus that monetary policy should not be used to prick asset bubbles.”
“Yellen said that she thinks the Fed should raise rates to lean against the expansion of a bubble in certain circumstances, especially when a credit boom is the driving factor.”
“In the current episode, higher short-term interest rates probably would have restrained the demand for housing by raising mortgage interest rates, and this might have slowed the pace of house price increases,” Yellen said in remarks to a central bank conference.”
“Speaking at the same conference, Boston Fed President Eric Rosengren, said regulators were asleep about the dangers of the evaporation of liquidity. The risk of a liquidity crisis received scant attention by academics, Rosengren said. If it was mentioned, researchers generally said that banks would be able to go to the Fed’s discount window for a short-term loan.”
“Policymakers never imagined that liquidity would disappear for months, as has happened in the current downturn.”
“In any event, it was clear that the textbook on monetary policy has been thrown out. The Fed has embarked on a new policy to buy almost $2 trillion in assets to bring interest rates down. There is no map for this policy, Yellen said. The Fed is just charting its course as it goes.”
https://www.marketwatch.com/story/fed-should-have-popped-housing-bubble-yellen-says
So is this just hypothetical in some other economy in some other country? Or does she mean she’s going to go back in time and do it a couple of years ago for the USA?
Article is from 2009. She was talking shit and did the exact opposite.
Arggg, I keep getting sucked into those 2009 articles without reading the dates.
BlackSwandive:: Article is from 2009. She was talking shit and did the exact opposite.
“When your principles go out the window in a crisis, they weren’t really your principles.”
As soon as Bernanke and Paulson started bailouts and firehosing money at the FIRE sector in the run-up and aftermath of 2008, I knew they’d been blowing smoke all along about capitalism and free markets.
“Socialism for the wealthy, rugged individualism for everyone else.”
“Socialism for the wealthy, rugged individualism for everyone else.”
Gotta copy that one. Hehe.
I like “capitalist on the way up, socialist on the way down.”
I like “capitalist on the way up, socialist on the way down.”
more like: “capitalism is the way up, and socialism is the way down.”
“Privatized profits, socialized losses.”
If you find a 200k beach home let me know, I will buy it tomorrow.
There are a a few houses and a *lot* of condos that are sub-$200K in Ocean City, MD. Also look at peninsula Virginia, which is on the eastern side of the mouth of Chesapeake Bay.
And that’s on the side facing the ocean. On the side facing the Bay, there is a cubic butt-load of beach houses under $200K. The shoreline is so jagged with islands and inlets that they can fit a lot of houses.
Granted, most of these units aren’t right *on* the beach, but they are within a block.
Here’s a condo near the ocean:
https://www.zillow.com/homedetails/12-72nd-St-303-Ocean-City-MD-21842/37742002_zpid/?fullpage=true
Here’s a bay-facing house that’s two hours from downtown DC.
https://www.zillow.com/homedetails/100-Norton-St-Oxford-MD-21654/37640205_zpid/?fullpage=true
Here’s another:
https://www.zillow.com/homedetails/8934-Tilghman-Island-Rd-Wittman-MD-21676/37644805_zpid/?fullpage=true
So, they’re out there.
All that DonkeyLogic detracts from the fact that for a fraction of the price of one of those run down shanties a oceanfront suite can be rented for a couple weeks every year for the rest of your life.
A house a block away from a river isn’t a “beach home”.
As I predicted…
If I had a nickel for every time that was posted here.
Crescent City, FL Housing Prices Crater 10% YOY As Demand Plummets Nationally
https://www.movoto.com/crescent-city-fl/market-trends/
Moar “luxury” apartments in Denver nobody wants or needs:
http://www.picpaste.com/20171213_113440.jpg
9 floors and 300+ units, and there will be two more buildings on site just like it.
Denver = CRATER.
One guy in the DP article says he couldn’t make the numbers work if someone gave him the land. Seems they are out of rich renters too.
None of it pencils out. Not new, not resale, not commercial and it hasn’t in years.
Someones a lion.
Those apartments aren’t all that. If the the land was free why couldn’t they pencil it out? Sounds more like a veiled “no one could have seen coming.” I’m sure they paid absurd amounts for the land, money that not so long ago would have bought land in Manhattan and not in cow town Denver. But yeah, how many hipsters in Denver could afford them? There are only so many brogrammers.
If the the land was free why couldn’t they pencil it out?
Um, because the developer’s costs have skyrocketed as GCs have gotten busier, and despite rents generally rising, they haven’t gone up enough to compensate?
You’re guessing.
Engineers estimates have fallen every year for a decade or more and bids are still only 60% of the EE.
I was thinking maybe it was something along the lines of what we’ve discussed here before: As in “as long as money is available, builder will build…that’s what they do”. Maybe it stopped penciling out a year or two ago but the money was there so they kept doing it?
‘because the developer’s costs have skyrocketed as GCs have gotten busier, and despite rents generally rising, they haven’t gone up enough to compensate’
Rents have never been so high nor taken up the percentage of income we see today. The article is about the boom being over. This is standard REIC camouflage language for “we’re all going to lose our butts and I wouldn’t take on another job if you gave me the land”.
You know people are leaving Denver now, right?
I’m simply speaking from the the underwriting I’m seeing today. We are evaluating an apartment project that really only pencils because the land is virtually free.
That pencil is like Oxy’s spreadsheet. The answer is wrong if the assumptions are false.
I’m not sure if that was an insult or a compliment.
I find it hard to believe that the materials/labor for apartments is so expensive that no rent is high enough.
insult or a compliment…
neither. So much depends on what we are sure will happen, but just might not be so.
“You know people are leaving Denver now, right?”
Funny you said that…I have spoken with three people during the past two months that have left Colorado - too expensive to live there now.
There’s always Aurora.
Remember too that article that Ben posted (beat me to the punch) a couple of weeks ago about the price of housing, the traffic, congestion etc and how jobs were only low paying resulting in on net folks moving OUT of Colorado. Hmmmm….chickens - roost - what is not to see here?
And to think I moved here to get away from the insanity that is Chicago and ILLANNOY. Yikes. But it is all good right?
‘The average sale price of residential and commercial property for the month was $638,120, a 12 percent reduction year over year…total sales volume, again for both residential and commercial, was $619 million, a 9 percent decrease from November 2016…the number of mortgages recorded during the month of November decreased by a significant 28 percent…the total volume of mortgage financing, for both residential and commercial properties, came in at $1.1 billion, a 35 percent decrease year over year…A total of 125 Notice to Foreclose Mortgage documents, the first step in the foreclosure process, were recorded versus only 52 in November 2016′
When I found this earlier today, I had to check the date 3 times to make sure it wasn’t a reprint from 2007.
12% is a HUGE decline, historically speaking.
At the time of filing, the company had less than $1 million in cash balances and less than $1.8 million available under its revolving credit facility. That followed a fall where the retailer operated without enough liquidity. Adamek said that cash-on-delivery demands from its vendors “have paralyzed the stream inventory.
https://www.retaildive.com/news/charming-charlie-files-for-bankruptcy-closing-100-stores/512818/
Great site, thanks for the link.
Great summary article of the retail bloodletting here: https://www.retaildive.com/news/retail-bankruptcies-2017/446086/
I only recognize a few of those names.
“the company’s debt service payments have been gobbling up around $400 million in cash every year, making it impossible to keep up with modern competition…”
This is the profile of which companies get crushed in a recession.
“Over the last several years, Charming Charlie’s revenues have fallen 22% and its profits have dropped off by more than 75%”, Adamek added.
Consumers are spending more for shelter… less everywhere else.
BTW can we stop referring to $100K as high income? The idea of bragging about six figure incomes is about 10-15 years out of date.
$100k is nearly double the median HH income so yes, it is substantially higher than the majority of income earners out there.
The current median resale housing price is a whopping 5x median household income. Long term trend is 2x median HH income….. which explains this….
Littleton, CO Housing Prices Plummet 19% YOY On Record Low Housing Demand
https://www.movoto.com/littleton-co/market-trends/
Yeah it’s higher than the median, but it’s nothing to brag about anymore. And it certainly is nothing remotely close to “rich”.
It’s double the national median. Nobody here asserts $100k/yr salary is rich.
It’s double the HOUSEHOLD income, not necessarily one income.
$100K may not qualify as “rich”, but they’re earning a hell of a lot more than most people.
If you can’t save considerable bank making $100K annually, say $30K (which should be very easy to do), the problem is your spending, not your income.
It’s basically what used to be middle class buying power. I pull in low 100’s and I don’t feel rich. I’m not running out to buy or lease a luxury car and intend to drive my current car into the ground.
Yeah, we went to London this year, but I got the airfare on sale (about 50% off the regular price), hunted for a bargain on the hotel (which are much cheaper 7 or 8 tube stops from city center), visited museums (which are free). Heck, to save 20 pounds per person to see inside St. Paul’s we attended Evensong (Vespers) which was free.
I pull in low 100’s and I don’t feel rich.’
Agreed this high tech stuff is getting crappier and crappier I made 50K a year in the 1980’s now I’m low 100K. 2X over 30 years that’s worse than a money market account.
Good thing I saved allot of money in the 1980’s. And invested it in the stock market and RE market.
wage donkey
Richiness isn’t what your earn, it is the spread between what you have and what you need.
If you make $100K and spend all your take home and more you are maybe poor at a higher level. If you live like you did when you made $30 or 50K and are making $100K you can become quite rich enough.
“can we stop referring to $100K as high income?”
I think you made some bad choices.
I did a little math. If I take out health insurance, taxes, $7000 to 401K, and $23K more in cash to please MacBeth’s $30K, that $100K translates to living on ~$3000/month. It’s very doable, but only if you are single, live very frugally in an apartment, and have either a paid-off car or paid-off college. Helps to have a roomie.
Doesn’t this rather prove the point? In order sock away $30K on a $100K income, you can’t live much better than a grad student, and you’re probably not allowed to fall in love either. Who wants that lifestyle?
not allowed to fall in love either…
I’ve been on a $2500/mo budget for many years. No car replacement accrual included so add some for that. Generous cruising allowance is included. Health ins covered by work. Very comfortable lifestyle and I could squeeze the expenses down significantly if needed. I don’t think I’ll ever need to though.
I’ve managed to fall in love numerous times.
“Richiness isn’t what your earn, it is the spread between what you have and what you need.
If you make $100K and spend all your take home and more you are maybe poor at a higher level. If you live like you did when you made $30 or 50K and are making $100K you can become quite rich enough.”
Excellent post.
Incidentally, it’s interesting watching various individuals here get into a groove at various times (”oohh…so and so is on a roll today - awesome!). Those synapses fire particularly well at times, yielding those particularly inspired moments.
“that $100K translates to living on ~$3000/month. It’s very doable, but only if you are single, live very frugally in an apartment, and have either a paid-off car or paid-off college. Helps to have a roomie. ”
As I said, if you can’t manage to save $30K a year on a $100K salary, then your spending is out of whack.
It’s not your income that’s out of whack. It’s your lifestyle. You’re living too high on the hog.
If that’s unacceptable, you need to make more money. And accept the notion that you are living a more than middle class lifestyle.
But then, what you’re living is NOT a middle class lifestyle. Middle class is NOT eating out 3-5 times a week, owning the latest electronic gadgetry, having new cars every 4-6 years. Or having a 1700+ square foot house.
None of that is middle class.
I used to feel quite wealthy until we had kids.
DebtDonkey
Bothell, WA Housing Prices Crater 13% YOY
https://www.movoto.com/bothell-wa/market-trends/
“I tried to care about money, but couldn’t!”
– Chelsea Clinton
7 figures is where it be. Try and catch up.
Whatever you like today I liked 5 years ago. :O
For someone with no payments it’s still a LOT of money.
$100k per year and no debt = RICH.
Holy Sweet Baby Bubba…
What could go wrong?
++++
Canadian Homeowners Take Out HELOCs to Fund Subprime Buyers Unable to get a Mortgage
Steve Saretsky - Dec 13, 2017 - Vancity Condo Guide
Between 2000 and 2010, HELOC balances soared from $35 billion to $186 billion, according to the Financial Consumer Agency of Canada, an average annual growth rate of 20%. As of 2016, HELOC balances sit at $211 billion, a 500% increase since the year 2000. While also pushing Canadian household debt to incomes to record highs of 168%.
What the HELOC has also been able to do is help spur the private lending space which has ultimately supported rising house prices. Seth Daniels of JKD Capital, one of the most astute Canada-Watchers, says there’s a growing trend where “a homeowner acts as a sub-prime lender by drawing a HELOC at 3% interest only, and lends it to a subprime borrower at 8-12% for one year (interest only).”
Rising interest rates pose special risks in Canada because most mortgages come with adjustable rates. Many of them adjust very quickly to rate increases. Others have a five-year fixed portion and then adjust. Meaning a rising interest rate environment is much more impactful. Hence the new stress tests, and new ways to get around them, including using private lenders that source their funds from taking out HELOCs.
This strategy has been bulletproof, because, well, prices can only go up. The lender makes a juicy return, and the borrower gets his house. The borrower then transitions into a traditional mortgage once his home equity rises after the one year expires.
This has created a situation where, as of September 2017, personal loans secured against residential real estate hit a record high $247 Billion.
Breaking: Federal Reserve hikes interest rates for third time this year
Donkeys beware!
The first eva MID Cap
Interest rates going up
The Great QE unwind
It is almost like something has gotta give…
Well, there is 5 million Americans who won’t be buying a house…
I would personally like to see the US taxpayer out of the student loan business and student loans being able to be discharged in bankruptcy.
But this would force the higher learning progressive indoctrination centers to actually “sell” a viable product and live well within their much smaller means.
++++++
Nearly 5 Million Americans in Default on Student Loans
Wall Street Journal | December 13, 2017 | Josh Mitchell
The number of Americans severely behind on payments on federal student loans reached roughly 4.6 million in the third quarter, a doubling from four years ago, despite a historically long stretch of U.S. job creation and steady economic growth.
In the third quarter alone, the count of such defaulted borrowers—defined by the government as those who haven’t made a payment in at least a year—grew by nearly 274,000, according to Education Department data released Tuesday.
The total number of defaulted borrowers represents about 22% of the Americans who were required to be paying down their federal student loans as of Sept. 30. That figure has increased from 17% four years earlier.
I would personally like to see the US taxpayer out of the student loan business and student loans being able to be discharged in bankruptcy.
sorry 2 i dont..i paid mine off and everyone should too unless you are totally disabled and cannot work.
But my idea is to return the degree to discharge the loan….the penalty is pretty severe since many professions and union rules require you to have it to get a job. But there are lesser jobs you can take return your law degree and be a paralegal. etc. give up your gender studies and work full time at costco.
Uniform Laws on bankruptcies. No where does it say “some debt is special and will haunt you until your dying days and can never be discharged in bankruptcy even if you took out the debt AS A TEENAGER”
++++++
The Congress shall have power:
To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
if there is no penalty other then a bad credit report, that would be really unfair to those who paid in full.
I think 1/3 of colleges should be closed seems a waste today to pay for 4 years or 6years to get that piece of paper to get a job
So whats the alternative? people need advanced skills to do advanced jobs….would you want lots of people with only a HS degree to work on the space shuttle?
So whats the alternative? people need advanced skills to do advanced jobs…’
H1B
Most of them aren’t rocket surgeons either. Pretty similar to average American new grads with no experience. Just cheaper and more obedient.
I agree with the ability to discharge student debt. In reality, this possibility would curtail lending itself since lenders would have a check. This would serve to make sure the borrowers are taking on reasonable amount of debt for a degree with earning potential in the future.
Aren’t student loans backed by FedGov these days? Our government has no concept of what is a “reasonable amount of debt”.
I’ll modify to say that I agree with discharging student debt for tuition only.* Tuition, I understand. But the beer, pizza, and luxury student housing is on them.
—————-
*Possibly fees. But not books, too much fraud there.
“Nearly 5 Million Americans in Default on Student Loans”
Those in default who are working for the federal government should lose their jobs, and they shouldn’t be eligible to be rehired until at least one year after the debt is fully repaid.
Seattle Meltdown: “Amazon’s hiring in Seattle declines by 60%”
https://www.retaildive.com/news/amazons-hiring-in-seattle-declines-by-60/512951/
http://www.loudountimes.com/news/article/fire_in_sterling_displaces_17_causes_714k_in_damages432
House fire displaces 17 residents in Northern VA.
And that must be how people are able to save up for the down payments.
moar stawks and homes!
Denver (Highland), CO Housing Prices Plunge 17% YOY As Housing Demand Dries Up
https://www.zillow.com/highland-denver-co/home-values/
*Select price from dropdown menu on first chart
Bucking the national trend, the number of Southwest Florida homeowners who were late on their mortgage payments unexpectedly shot up over the year. But analysts say it’s not a sign of new housing woes, but instead the temporary impact of Hurricane Irma.
Man that sounds familiar…
is it time for yellen & co. to cleans some clocks?
Sweep out garages and dust some furniture. Better than what they’ve been up to. I was looking for the Santa Cruz Sentinel article I posted in 2005 where she said the bay aryans weren’t in a bubble and came across this:
October 16, 2006
Some Areas Of Phoenix, Las Vegas ‘Ghost Towns’: Yellen
MarketWatch reports on a Federal presidents speech. “The housing slowdown has turned some areas of Phoenix and Las Vegas into ‘ghost towns,’ where many unsold homes stand empty, Janet Yellen, president of the San Francisco Federal Reserve Bank, said Monday.”
“Yellen said that she heard the ominous description from a ‘major home builder,’ who told her that the share of unsold homes in some subdivisions around the two Western cities has topped 80%.”
“‘Though the situation isn’t that bad everywhere, a significant buildup of home inventory implies that permits and [housing] starts may continue to fall, and the market may not recover for several years,’ she warned, according to the text of a speech.”
“‘We have yet to see the full effects of the series of 17 federal funds rate increases — some are probably still in the pipeline,’ the Fed president added.”
http://thehousingbubbleblog.com/?p=1642
Two comments:
“Comment by Hockeyman77
2006-10-16 12:42:17
Yellen is an idiot, the hosuing slowdown didnt create the ghost towns. They were already ghost towns, just nobody cared with prices rising and all the units owned by speculators. They were ever going to be occupied, just built to flip and flip. Only reason they are more ghost townish now is no speculators coming to buy. It amazes me just how stupid those people who are in charge of our financial system are.
Reply to this comment
Comment by Ben Jones
2006-10-16 12:59:53
Good point. And if Yellen had checked the photo gallery for this blog, she would have seen these subdivisions for herself months ago.”
And today we read of a neighborhood in Santa Cruz that’s 2/3s unoccupied.
Yellen is an idiot…
I can only guess a willful idiot. She’s led us right up to a bigger cliff I think. And what wonderful cattle most of us are. The whole country is in an uproar over who touched who’s skin, or said they might, and never a mind that these elite types are flaying the very skin off of millions upon millions of unwitting sheep.
trying to fix a debt problem with more debt is ingenius.
It’s the financial version of the Hair of the Dog Hangover Cure.
They may have a flawed economic paradigm.
The concept of cranking on debt in the teeth of a debt crisis, to an already heavily indebted country and populace, by encouraging it with low interest rates and targeted wealth redistribution via money printing seemed to have prolonged the existence of the system that caused the crisis. “Kicking the can down the road” policy. It may have just allowed stresses that should have been released, to continue to build.
Technology, the thing that actually improves the quality of life, marches on. However, trying to create prosperity through deft manipulation of the money supply seems to me to violate TINSTAAFL.
“Technology, the thing that actually improves the quality of life…”
That’s a rather dubious statement. I don’t necessarily agree.
“The whole country is in an uproar over who touched who’s skin, or said they might, and never a mind that these elite types are flaying the very skin off of millions upon millions of unwitting sheep.”
Use this again somewhere/sometime, Blue.
Only in Boise, Idaho the last place where housing prices rised to the first place they dropped
http://www.kivitv.com/news/dozens-claim-to-have-lost-millions-in-real-estate-ponzi-scheme
The people have their own greed to blame. They entrusted some guy they didn’t even know with all their retirement savings. How stupid can you be?
“He came across as a very good God fearing man, a christian,” explained Preston.
And that’s why they call them CON men, as in “confidence”.
“He came across as a very good God fearing man, a christian,”
A profit without honor in his own land.
Affinity fraud seems to be the worst of all. I think there is a special place in hell for these types of people.
Probably a lot more of this to come. Ignoring stupidity, I think it’s a side effect of the war on savers. If people could get 6% in a CD they’d be a lot less tempted by this sort of thing.
My wife is fairly well diversified but has a few investments in China that could end up being like this. I raise an eyebrow at her fairly regularly about it but it’s not my place to tell her what to do. Over there they don’t trust anybody but close friends and family. So when there is an investment opportunity with the right people they jump on it compared to trusting their stock market or even banks.
I’ve warned her repeatedly that if there’s ever a situation where she needs the principal back really badly, that’s when it won’t be there any more because her friend will be out of money for the same reasons as she will be. She heard me…that’s all I can do. But in the meantime she’s making 12% and it’s already gone on for enough years that she’s pretty much made her original investment back. For a paranoid guy like me it’s a little nerve-wracking.
Pat DiNizio (1955 - 2017)
Obituary
SCOTCH PLAINS, N.J. (AP) - Pat DiNizio, who as lead singer and songwriter for the New Jersey band the Smithereens was known for such hits as “Blood and Roses” and “A Girl Like You,” has died at age 62.
DiNizio helped form the Smithereens in 1980 after placing an ad looking for a drummer to help him on a demo tape. Dennis Diken answered the ad and with him brought Carteret High School classmates guitarist Jim Babjak and bassist Mike Mesaros. They named themselves after a favorite word of cartoon character Yosemite Sam.
Written by THE ASSOCIATED PRESS
The Smithereens “A Girl Like You”
https://www.youtube.com/watch?v=uwQAW6f9VLk
Have women declared a secret war on men, where unsubstantiated sexual harassment allegations is the weapon of choice?
Another day, another casualty in the War on Men….
‘Heaven is my home’: Father-of-five Republican pastor nicknamed ‘The Pope’ shoots himself dead on Kentucky bridge hours after Facebook post DENYING he had sexually assaulted daughter’s friend, 17
By Associated Press and Dailymail.com Reporter
21:22 EST 13 Dec 2017, updated 01:31 EST 14 Dec 2017
http://www.dailymail.co.uk/news/article-5177711/Kentucky-lawmaker-facing-assault-claims-commits-suicide.html
That’s certainly an odd response to reopening an old allegation. The decedent clearly had some issues, looks like the old allegations just lit the fuse.
It’s a card that has been offered up to women to play if they choose to do so.
Are the myriad bubbles that seem to be popping up in various asset classes these days a normal part of the financial landscape, or is this a historically anomalous period with abnormally high bubble frequency?