January 5, 2018

Now The Fear Is They Can’t Sell

It’s Friday desk clearing time for this blogger. “The crazy-hot real estate market that Boulder County has experienced the past four-plus years began to cool in 2017, but you might not know it. Homes are still selling for record highs. Well-priced properties still bring multiple offers. And homeowners this year got hit with property tax assessments that — combined with values of commercial properties — grew 35.7 percent from 2013, the largest increase in at least 20 years, according to the Boulder County Assessor’s Office. ‘The market has definitely slowed some — thankfully, I would say,’ said D.B. Wilson, of Re/Max of Boulder, who provided the data. ‘It takes awhile for everyone to realize the market has turned.’”

“After several years of double-digit percentage price growth in D-FW, the rate of home appreciation is expected to be lower in 2018. ‘We are looking at around 5 percent for D-FW,’ said Dr. James Gaines, chief economist with the Real Estate Center at Texas A&M University. ‘The long term average is around 4 percent. We don’t want home values to go up 8, 9, 10 or 11 percent year after year. Some of the steam might have been let out.’”

“High-priced properties have a ceiling here in the valley that might be lower than other areas in Vermont. Broker John Redd, of Ski Home Realty in Dover had a listing for a house that was built for more than $6 million that didn’t sell. The slopeside mansion at Mount Snow eventually sold at auction for $1.9 million this summer. ‘That tells me the top end of our market is about $2 million,’ said Redd. ‘There is a ton of inventory. More and more property keeps coming on the market. The biggest challenge is sorting though what is value and what’s properly priced.’”

“As the pool of deep-pocketed foreign investors continued to recede over the past year, developers, brokers and sellers in South Florida’s luxury condo sector have been forced to adjust their pricing, wait longer for units to move and scour the globe for new buyers. ‘At the end of November 2017, we have five years worth of condo inventory over $1 million in the market,’ said Ron Shuffield, CEO of EWM Realty International. ‘This is the highest total in one month since the recession in 2008.’”

“It’s the opposite of B.C.’s reliably boastful real estate market. Prompted by the annual release of property assessments, thousands of homeowners across the province will spend the coming months highlighting flawed construction, poor views, noisy neighbours and over-hyped market conditions in bids to convince authorities their homes aren’t worth as much as one might think. One Langley man argued unsuccessfully that market ‘frenzy’ drove him to pay $31,000 more than the list price for his single family home; He was fighting an assessment of $905,000, which was $5,000 more than he paid.”

“‘The appellant submits that as a result of the inflated market and fear of missing out on the purchase, he overpaid for the property,’ the decision reads. ‘The appellant submits that this constituted ‘duress’ and results in the price paid not being reflective of market value.’”

“Norway’s house prices extended losses in December, adding to concerns an economic recovery will be thrown off track. Housing prices nationwide fell 2.1 percent over the year through December, driven by a 6.2 percent decline in Oslo. After a period of rapid growth in house prices and mortgage debt, the market has reversed course in recent months. The property market started to cool following a tightening of lending standards at the start of 2017. The central bank has so far appeared sanguine on the housing market, with Governor Oystein Olsen saying last month that he foresees a ’soft landing.’ The bank on Dec. 14 even signaled it could raise interest rates sooner than anticipated, indicating a first rate hike by the end of 2018.”

“‘Unbelievable reduction,’ says the broker’s email. An investor who agreed to purchase an apartment at the ritzy One Blackfriars project on the banks of the River Thames is offering the two-bedroom home on the 20th floor for 1.8 million pounds ($2.44 million), more than 22 percent less than they agreed to pay for it in 2013. The seller, who’s from Asia, wants to offload the property before it’s completed, according to Christian Barr, who’s brokering the sale.”

“The stockpile of unsold London homes under construction rose to a record in the third quarter as developers ramped up supply. Price falls in London’s best central districts are rippling out. Values in Fulham are now 14.4 percent below their 2014 peak, according to broker Savills Plc.”

“For the first time since February 2011, Auckland is now a buyer’s market as new listings drop and the housing stock increases, according to realestate.co.nz data. ‘The average asking price is still increasing despite high levels of stock. Auckland saw new property valuations last year which may be leading vendors to expect more than the market wants to pay,’ spokeswoman Vanessa Taylor said.’With Auckland leading the charge into a buyer’s market due to increasing stock levels, it will be interesting to watch if Wellington and Canterbury follow suit.’”

“Falling prices are expected to push an avalanche of homes onto the market in the first half of the year turning Sydney from an extreme seller’s market to a buyer’s one, housing experts claim. SQM Research figures show the year has already started with a 21.3 per cent jump in listings compared with last year. Among those tipped to sell are upsizers and downsizers who had delayed listing in recent years fearing price rises would make it difficult to buy their next home.”

“Much of that fear has now gone, with Sydney’s median home price having fallen 2.1 per cent in the past three months to hit $895,000, according to CoreLogic. SQM Research director Louis Christopher said softening prices have shifted homeowners’ mindsets. ‘Before, homeowners wanted to buy their next home before selling their current one so they wouldn’t be locked out the market,’ he said. ‘Now the fear is that if they buy first and can’t sell at the price they want they’ll be short-changed.’”

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Comment by Ben Jones
2018-01-05 09:38:01

‘We are looking at around 5 percent for D-FW,’ said Dr. James Gaines, chief economist with the Real Estate Center at Texas A&M University. ‘The long term average is around 4 percent. We don’t want home values to go up 8, 9, 10 or 11 percent year after year. Some of the steam might have been let out.’

You know Jim I documented a shack north of Dallas that went up 50% in the two years prior to 2014. You guys are fooked.

Comment by Ben Jones
2018-01-05 09:40:27

‘Among those tipped to sell are upsizers and downsizers who had delayed listing in recent years fearing price rises would make it difficult to buy their next home. Much of that fear has now gone, with Sydney’s median home price having fallen 2.1 per cent in the past three months’

And we know the “ritzy” areas of Sydney have fallen double digits in the same time. Boy, this stuff can turn quick. The race is on for all you speculators!

Comment by azdude
2018-01-05 09:42:05

as long as u can service the debt u need to join the party.

how many trillions in debt have been added to corporate, household and govt balance sheets to keep the game going?

Debt is easy to create but paying it back is a real B@tch. We cant even service the debt. It keeps getting bigger.

Comment by Lesser Fool
2018-01-05 11:20:26

Soon this will become easy via Fedcoin aka Ripple. It will be legitimized by all the banks, and will grow at a faster rate than the debt. It’s a steal today in the 3 dollar range. One day it will have the market cap of all the FAANGs combined. Problem solved! And those who get in now will be richly rewarded. On this planet, one immutable fact is that anyone getting in early into a Ponzi scheme will become incredibly wealthy in short order. Cryptocurrencies enable this for those of us in the 99% that are awake and aware. Do it.

Comment by 2banana
2018-01-05 11:37:12

Anyone remember when obama and the dems suggested the mint just produce a $1 Trillion coin. Problem solved!

And, yes, they were serious.

Comment by Anonymous
2018-01-05 14:15:16

I wished they would do it! Didn’t happen, though.

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Comment by Carl Morris
2018-01-05 14:25:17

Didn’t happen, though.

If they minted trillion dollar coins as needed, who would we pay interest to?

Comment by rms
2018-01-05 15:17:57

Seems like they could curate the moon rocks and store ‘em in Ft Knox with a $20T dollar value. Zero debt!

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Comment by alphonso bedoya
2018-01-05 11:49:07

It’s a rather complicated picture. Big banks need to reign it in and they can’t. They thought they could run the Futures but it banged them. So what was left? Australia prohibits accounts and Merrill Lynch does the same. Next up is JPM with Jamie never explaining WHY he’s opposed to it or how he became a billionaire in ten years without inventing or manufacturing anything other than running America’s entitlement programs through “his” bank.

Consider NEO, the Chinese BTC counterpart. If it offers a dividend, do you think it will disappear or give it legitimacy?
It is what it is and no one knows what it is and that’s what makes it interesting for an aging generation of Magellan bag-holders.

Comment by azdude
2018-01-05 12:37:30

some people work, some people create credit and leech off of others

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Comment by alphonso bedoya
2018-01-05 13:08:26

Year 1928

Comment by redmondjp
2018-01-05 16:11:21

Cryptocurrency is the future. What is happening right now is a bunch of beta-testing, right before our eyes.

At some point, the globalist bankers will step in and make it their own, and it will become the basis for our new cashless, global currency.

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Comment by BlueSkye
2018-01-05 18:39:06

beta-testing, right before our eyes…

It might be a Litmus Test.

Comment by Senior Housing Analyst
2018-01-05 09:46:56

Kennewick, WA Housing Prices Crater 25% YOY


Comment by Jingle Male
2018-01-06 08:05:07

HA! Two houses in your market sample? The only thing cratering around here is your mind! HA! The big jokester.

Comment by Mafia Blocks
2018-01-06 08:09:43


Alameda, CA Housing Prices Crater 13% YOY


Comment by Jingle Male
2018-01-08 04:58:33

HA! You post the same tripe over and over. There are millions of dwelling units in the Bay area and you find a zip code with 16 houses for sale? I must say you are talented…..just not as a housing analtst! HA!

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Comment by tj
2018-01-05 09:48:07

a few days ago i posted something that should be clarified.

the discussion was about how gdp isn’t a good measure of the economy. someone mentioned watching the direction of food stamps. i agreed as long as some variables are taken into account.

then i mentioned i knew a guy that measured freeway noise. i should have explained further. the guy was an economist and investor. he was seeking a reliable real-time measure of the economy.

he started longterm tracking of freeway noise and found a strong correlation with it and the economy, which he could back test against other historical economic variables, including gdp. he found it a reliable enough indicator to use with his investing.

Comment by Mafia Blocks
2018-01-05 09:57:47

Noise is as good as any economic indicator out there. Especially coming from braying DebtDonkeys and Degenerate Gamblers.

Comment by tj
2018-01-05 11:12:27

he had a special microphone for them. :)

Comment by BlueSkye
2018-01-05 18:45:46

Ironically, most statistical analysis tries to eliminate “noise”.

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Comment by tj
2018-01-05 20:18:24

Ironically, most statistical analysis tries to eliminate “noise”.

much less study it.

Comment by In Colorado
2018-01-05 10:41:46

A thought on freeway noise: wouldn’t a freeway be noisier if traffic is flowing at 65 mph vs a gridlocked freeway? So if it’s noisier (meaning fewer cars on the road) would that mean the economy is weaker?

Comment by tj
2018-01-05 11:05:21

i don’t even know how far he was from the freeway, though i suspect it was some distance. he had the money to make any refinements, and get any equipment he needed. obviously his methods were proprietary and he didn’t talk about them, but he was extremely intelligent and i believe he took everything thoroughly into account.

he did mention he took several measurements a day. and it took him over a year to compile enough data to start using the real-time info.

there was probably even a way he could use gridlock data. whatever he was doing with the data was obviously working for him.

Comment by Lurker
2018-01-05 15:07:23

You have to look at “the economy” that’s he correlating freeway noise against. What measure does he use? GDP? If he only looks at data from the last 30 years, he might just be correlating freeway noise to the high points of artificial bubbles rather than, say, widespread prosperity.

I think there is definitely a correlation between traffic and bubbles - the bubblier and more irrational the economy, the worse traffic gets. There are probably multiple reasons, most of which are not good news for the average economic participant:

-an uneven distribution of bubble gains causes more and more people to clog into certain big-money centers,
-big money centers get more expensive forcing people to commute longer distances,
-easy credit allows more people to buy cars that they possibly cannot afford,
-a spike in service jobs and cost of living rises lead to people with multiple part-time jobs who have to drive between them,
-more families where two people have to work, both driving at commute times,
-more consumption instead of savings means more deliveries

Etc. But how does one measure economic efficiency rather than mere activity? Traffic congestion indicates activity, but also inefficiencies and a lot of waste (fuel, time).

It would require a paradigm shift on what defines a “good economy.” Right now high stock prices, low dividends, high employment, low interest rates, high inflation, and bad traffic = a good (busy, expensive) economy. But maybe widespread prosperity in a solid (efficient, affordable) economy comes from just the opposite.

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Comment by KareBear
2018-01-05 18:00:35

In 2005, had a neighbor stock broker friend (she sold her house at the very top of the market in 2005 in Simi Valley, CA ((prices started softening there in autumn 2005 well before the crash in ‘08)) - so smart!) who told me a good indicator the economy is in a recession is when you see cars lining high traffic/visible streets with ‘For Sale by Owner’ signs posted on them. I moved to Redondo Beach, CA in Aug ‘07 and by late fall and into early ‘08 (before anyone obviously knew the economy was crashing) there were massive amounts of cars parked along side streets with ‘For Sale by Owner’ signs, which included so many BMW’s. When I started noticing this trend of cars lining the streets, I knew my friend’s wise words were right…

Comment by tango_uniform
2018-01-06 00:20:55

To KareBear’s point…I look at the motorcycle market (new/used) in SoCal as an indicator of economic strength. The “gay pirate” (holiday warriors that dress the biker part) crowd tend to dump their steel horses early in a downtrend since most of them are realtors, dentists or similarly situated at the front end of the professional services industry.

The motorcycle industry’s been hard-pressed over the past few years to increase it customer base. Go figure.

Comment by Mot
2018-01-07 22:26:49

Except, for instance in Chicago - it’s illegal to put a For sale sign on a car parked on a city street. Used car dealers evidently went overboard with this some years ago.

Comment by OneAgainstMany
2018-01-05 11:09:51

Here are one metric that I would like to see reported nationwide:

Percentage of individuals who own their home outright (i.e. no mortgage).

Politicians always talk about home ownership, but in my view, the policy goal shouldn’t be getting people into mortgages (e.g. debt), it should be how many people pay off their mortgage (or never get into crushing mortgage debt in the first place). Why has the American dream become synonymous with debt?

I feel like the above would be much more relevant than GDP. Another useful metric that could be looked at is % of households that are “rent burdened” (e.g. spending more than 30% of their income on rent/mortage). “Severely rent burdened” is spending more than 50% of income on rent/mortgage.

A lot of the quality of life aspects are subjective and don’t map well to GDP, but are certainly just as important (if not more so) when considering how GDP informs well-being.

Comment by Mr. Banker
2018-01-05 11:46:23

I asked Google about how many people own their houses without mortgages and the reply I got back was …

“Nearly a third of homeowners — 29.3 percent of them — do not, according to a recent analysis by the real estate site Zillow. That translates into nearly 21 million Americans who own their homes free and clear, Zillow found.” From Jan 16, 2013.

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Comment by oxide
2018-01-05 13:04:58

Outright ownership is a good indicator for now, but I’m not sure it will last as an indicator. I can see a couple things that would distort the data:

1. Boomers die out of their owned outright houses, so the fraction of mortgages will go up. Even if all the youngsters paying those mortgages have high pay jobs and can easily pay the mortgage, the high fraction of mortgages will still make the economy look bad.
2. Hedgies like BlackRock (Blackstone?) and AmericanHomes4Rent own houses outright. So the high fraction of owned houses indicates that the economy is good, even while the tenants renting the houses are fooked.
3. Boomers are opting to downsize the big house, take the cash, and take out a mortgage in their retirement home because their investments earn more return than they pay in PITI.

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Comment by Ol'Bubba
2018-01-05 17:11:11

Just because there’s no lien or mortgage on a house owned by AmericanHomes4Rent, that doesn’t mean that it’s not leveraged. It’s leveraged at the corporate level.

Outfits like AmericanHomes4Rent, Blackstone, and their peers may own the houses outright, but at the corporate level those organizations have leverage in the form of revolving lines of credit, term loans, issued bonds, etc.

Comment by Rental Watch
2018-01-05 17:35:34

American Homes 4 Rent was founded by the guy who founded Public Storage…he is famous for utilizing pref equity much more frequently than debt.

So far, American Homes 4 Rent is pretty light on leverage…about $2.5B of debt against about $8.5B of assets. They so far issued three rounds of preferreds…..A, B, and C…I think they actually converted at least one of the preferreds to common.

And no, I don’t own the stock, and recognize that lots of REITs lever up…but post-crash, most have been pretty conservative in borrowing…Wall Street analysts and ratings agencies are still smarting from problems in 2008-2009…so they frown upon using too much leverage, even unsecured at the corporate level.

The other monster (Invitation Homes) is much more highly leveraged…$5.9B of liabilities on $9.5B of assets.

Comment by Drater
2018-01-05 14:03:57

“Why has the American dream become synonymous with debt?”

(Debt) slaves are easier to control…pay interest, pay taxes, have poor health to become dependent on prescription drugs, give birth to new debt donkeys, then die after the remainder of your assets evaporate paying for end-of-life medical care

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Comment by oxide
2018-01-05 14:59:41

The American dream has always been synonymous with debt. What do you think all those Greatest Generation and Boomers were doing during the 1950s - 1990s? They were taking out debt and paying it off. But that debt was comfortable and temporary. Comfortable compared to renting, especially after 6-7 years in the house. And yes, 30 years is temporary. The ideal was to buy when you’re 30, burn the mortgage at 60, and look forward to 20+ years in a mortgage-free house. Not to mention passing it on to your kids for them to live in with no debt at all.

Problem is that nowadays the debt is neither comfortable or temporary. PITI at 40% income. And instead of cashing out after 30+ years to downsize, or to give to kiddies, everyone is cashing out too soon, to serial refi,or to pay for kiddie’s college.

It’s not going to end well. I watch Househunters on HGTV and all those Millenials are living with Baby Boomer mom and dad while they look for their $450K dream home. Too bad they simply can’t rent until Boomer Mom goes to a nursing home and they can move into the family homestead.

Comment by OneAgainstMany
2018-01-05 20:03:55

1. Boomers die out of their owned outright houses, so the fraction of mortgages will go up. Even if all the youngsters paying those mortgages have high pay jobs and can easily pay the mortgage, the high fraction of mortgages will still make the economy look bad.

When boomers pass away though, they will leave their purchased home generally to their family, who can then sell it and divide the proceeds among living relatives, or they can live in it. Either way, this paid for residence ought to be beneficial and should, in theory, support the posterity financially.

2. Hedgies like BlackRock (Blackstone?) and AmericanHomes4Rent own houses outright. So the high fraction of owned houses indicates that the economy is good, even while the tenants renting the houses are fooked.

My ideal metric would be percentage of the US population that owns their home outright. It would look the people, not the houses being free and clear. So even if large private equity groups owned many houses (leveraged or not), this would not meaningfully change the value of this metric.

3. Boomers are opting to downsize the big house, take the cash, and take out a mortgage in their retirement home because their investments earn more return than they pay in PITI.

This does make sense for many people to go to assisted living or skilled nursing, depending on their health status, functionality, and availability of family aide. However, the trend is probably to age in place. I am in healthcare (RN) and so many of my colleagues work as RNs for home health and hospice. It is vastly more economical to try make housing modifications and get by with routine visits from medical personnel.

Having said all that, this metric would be subject to Goodhart’s Law, but I would still be in favor of policy makers referencing this statistic when talking about economic growth than GDP growth.

Comment by goedeck
2018-01-05 12:39:09

Dublin CA has lovely freeway noise (580/680 crossing).

Comment by aNYCdj
2018-01-05 11:18:56

Food stamps could be a good measure if you realize its based on income that is on books

Comment by tj
2018-01-05 11:41:17

that would have to be taken into account. other things too. still, i think they could be a good economic indicator with enough refining.

Comment by jeff
2018-01-05 21:00:42

“Food stamps could be a good measure if you realize its based on income that is on books”

No wonder you don’t like Archie Bunker.

Didn’t need no welfare state,
Everybody pulled his weight.
Gee our old LaSalle ran great.
Those were the days.

Comment by Overbanked
2018-01-05 11:34:13

There’s the economy, there’s GDP, and then there’s civilization. Mississippi had a healthy economy and high GDP in 1859. But sometimes sheet happens. You need people willing to pick up a spear.

Comment by alphonso bedoya
2018-01-05 11:59:55


You really missed out on probably the most offensive indicator ever created. It appeared in Barrons.
It’s was called….drum roll… the Dead Chicken Indicator.
When economies get bad, road kill is collected and eaten by people in rural areas. An investment boutique had its workers riding back roads in Florida looking for road-kill and they noticed the absence of it.

Never underestimate the financial sector looking to be creative in their endeavors.

The group that lost the most, no one had any sympathy for—-the vultures in the sky.

Comment by oxide
2018-01-05 13:07:58

I’ve never seen any chicken roadkill. Not recognizable. Measure venison instead.

Comment by alphonso bedoya
2018-01-05 13:10:34


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Comment by Ol'Bubba
2018-01-05 17:14:50

Rural economies and urban economies are much different from each other. I suspect that “dead chicken indicator” was in use when we had a more agrarian economy.

Comment by OneAgainstMany
2018-01-05 20:06:41

I wonder how insightful it would be to figure out the gross gratuity amount over time. Maybe when people feel flush they tip more and there would be belt tightening and outright stiffing when things got bad.

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Comment by alphonso bedoya
2018-01-05 23:45:48

The indicator was applied to Central Florida, a rural economy during the 1978-1980 time period. It was written up in Barron’s and readers thought it was joke until they realized the contrary. What was evident was that an investment group was trying to create and quantify a misery index.

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Comment by ja
2018-01-05 10:13:52

I live in SoCal, and have been monitoring the market consistently. I am noticing that flips are taking much longer to sell, and homes are entering the market 15-20k lower than they were 3-4 months ago. Could be the time of year, could be the Trump tax plan taking effect, or could be a changing of the tides. Will be interesting to monitor into 2018.

Comment by Sean
2018-01-05 10:47:54

I’m seeing almost the same thing here up in NoVa, especially after the new year. More inventory, stagnant prices, longer DOM. It’s gonna be an interesting spring.

Comment by taxpayer
2018-01-05 13:15:52

If the dod budget adds 50+ billion N VA is saved
otherwise not
VA gets 12% and we split w hampton roads area

Comment by junior_kai
2018-01-05 16:08:52

Same in my area - best indicator is them holding an open house every other day and announcing it on craigslist. I’m also seeing a fair number of newly built homes just sitting on the market. As I’ve said before, there is no single straw that breaks the camels back but at some point the market itself is exhausted and once it turns the psychology that buying a home is a ticket to wealth gets broken and takes some years to wipe that from the collective unconscious.

Comment by Ant Naples
2018-01-05 10:30:47

I want to buy a nice home in beautiful Summerlin (Las Vegas), NV!!

When does everyone think I should buy? How long should I wait?


Comment by OneAgainstMany
2018-01-05 11:00:15

My feeling is that housing prices won’t normalize until mortgage interest rates start moving up past 6% toward their long term average at about 8%. This could be many years down the road still. But it’s hard to know.

Comment by taxpayer
2018-01-05 13:18:36

bet on it !
or 2 years after people start bitching

Comment by Anonymous
2018-01-05 14:25:07

Not yet!

Just come south and be my neighbor, by renting an apartment in Coronado Ranch. :D

Comment by KareBear
2018-01-05 19:17:09

If you’re trying to time the market it might help to read everything on Mark Hanson Advisers’ blog.


I bought an incredible foreclosure in 2010 based off learning as much as I could from Mark Hanson and tracking his data and reports. Didn’t Las Vegas follow California during the last crash? If history repeats itself, watch for the market to decline and stall out in Socal first for the declining ripple effect outward into Las Vegas and Phoenix areas, and be patient. Once the CA real estate equity dries up and Californians stop invading Las Vegas, Phoenix, Colorado, Utah, etc… Then it seems like those markets start declining and probably fall faster and deeper than the time CA markets take to decline. There are some nice areas of Utah (Draper, Holliday, Alpine, foothills and avenues of Salt Lake…) where the home prices are coming close to CA prices, which tells me CA prices aren’t going higher but other markets in other states are still cycling up - mainly due to the exodus of California…

An investor told me to watch declines in New York and San Francisco and then watch SoCal follow…

Comment by In Colorado
2018-01-05 10:38:15

And homeowners this year got hit with property tax assessments that — combined with values of commercial properties — grew 35.7 percent from 2013, the largest increase in at least 20 years, according to the Boulder County Assessor’s Office.

Keep in mind that their property tax won’t rise that much (35.7%). My assessment has risen almost 100% over the years, yet my property tax remains virtually unchanged.

Comment by alphonso bedoya
2018-01-05 12:05:35

Assessments rose to prevent people from using them to request the lowering of their property taxes.

Comment by Apartment 401
2018-01-05 10:43:33

Realtors are liars.

Comment by Mafia Blocks
2018-01-05 11:01:33

… and every closing a crime scene.

Comment by Apartment 401
2018-01-05 10:46:57

Average sale price of $480,000 for single family houses in metro Dumver:


Comment by Apartment 401
2018-01-05 10:56:01

Global debt = $233,000,000,000,000:


The following is a list of all the sucessful fiat empires in history:





Comment by Overbanked
2018-01-05 11:13:25

Here’s where I get confused, this is a rough hypothetical. USA, China, Europa have similar sized economies, USA produces peaches, China produces apples, Europa produces figs. USA owes China 20 years of future peaches, China owes Europa 20 years of future apples, Europa owes USA 20 years of future figs.

Where’s the problem?

Comment by 2banana
2018-01-05 11:35:53

40:1 leverage with fiat

Comment by Karen
2018-01-05 12:02:32

The “USA, China, Europe” neither produce nor owe anything. This is the problem of looking at things in the aggregate. Individuals companies produce and owe various things in various amounts. Governments produce nothing but owe mucho $$$.

Comment by Apartment 401
Comment by Anonymous
2018-01-05 14:43:12

Bicycle valets, LOL :D

Yes, reminds me of tech bubble 1.0.

Comment by Carl Morris
2018-01-05 15:00:30

Yeah :-). One good thing about it though. Back in the good old days of the American corporation, which I think was based on the WWII military model, the organization/mission was worshiped and it was easy for top talent to be very underappreciated and treated exactly the same as the guy who was adding almost nothing. But they stayed because if they changed jobs they would just get the same treatment at the next job too, so why bother moving?

At least now being really important to the company’s bottom line is recognized as valuable.

Comment by redmondjp
2018-01-05 16:25:19

I might be missing your point entirely here, Carl, but I see the exact opposite happening today in corporate America - the real value-makers for the company are overworked/underpaid and considered disposable assets (like computer equipment - dump it after it’s a few years old or it costs too much to keep running, and/or when you no longer need it).

The perceived value-makers are the BSers at the top who, well, what is it that they do exactly?

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Comment by alphonso bedoya
2018-01-05 23:48:54



Comment by Carl Morris
2018-01-06 15:12:30

Really? I see a lot of coders making a lot of money that in the past would have only gone to management or executives and the coders would have been told to be patient and work their way up to management. That’s how I saw the IBM-type world working prior to the late 90s bubble. You didn’t have a coder superstar system back then and the companies seemed comfortable with letting the most productive engineers leave if they didn’t like it. But most didn’t leave…their best option was to suck it up and work within the system as best they could rather than start over again somewhere else. That has changed a lot now IMO.

Comment by In Colorado
2018-01-05 23:04:23

Stodgy office towers around the U.S. are getting millennial-friendly makeovers.

I’ve seen examples of these sorts of offices. The pool table and the beer on tap looks cool, but the bench seating environment makes me think of sweatshops in India.

Comment by Carl Morris
2018-01-06 15:13:37

bench seating environment makes me think of sweatshops in India.

Agree with that. I had my own office for years and these days unless I live on the road it appears that a cube is as good as I will ever do again outside of management.

Comment by Senior Housing Analyst
2018-01-05 11:05:49

Albany, OR Housing Prices Crater 28% YOY


Comment by Ben Jones
2018-01-05 11:07:10

‘Price falls in London’s best central districts are rippling out. Values in Fulham are now 14.4 percent below their 2014 peak’

I’ll note again, the most expensive, usually detached shacks are falling faster and farther. Toronto, Vancouver, London, Sydney, Auckland. Add in New York townshacks and airboxes and Miami Beach airboxes. All the most expensive stuff is down the most. How many formerly world-beaters are crater now? Lagos, Manhattan, London, Oslo, Auckland, Sydney was on top for a brief time. Last dog standing is Hong Kong.

A bunch of runner ups I don’t bother to post like Dubai.

Comment by Lesser Fool
2018-01-05 11:15:34

Hong Kong will remain standing. They’re not making any more land there. And as all these other cities fall in price, where do you think the rich peeps will flock to? Because in housing, as you know, high price = high demand.

Comment by Lurker
2018-01-05 16:48:32

If you’d said today’s post was actually from the archive (2006ish), I would have believed it. The mood seems exactly the same now as then for the high end and the top tier cities.

The fact that any journo anywhere is talking about a “peak” is a dramatic sea change from earlier in the year. I’m sure many casual newspaper readers are asking, “Wait, there was a peak? And now we’re past it?”

Comment by Senior Housing Analyst
2018-01-05 12:47:45

Atlantic Beach, FL Housing Prices Crater 27% YOY As Housing Correction Expands


Comment by Carl Morris
2018-01-05 12:53:40

Today is the my last day of work in Silicon Valley for the foreseeable future. Driving up to Folsom over the weekend and starting on Monday there at a new job. First time I’ve ever left a “good” job voluntarily…feels a little weird.

Comment by azdude
2018-01-05 13:05:39

what kind of work r u doing in folsom? seems intel is a big employer there.

Comment by Carl Morris
2018-01-05 14:03:34

Intel is the big dog, Toshiba and Micron both use the location to pick up some of the crumbs that Intel drops. I work in storage testing so those are the big 3, with MicroSemi a storage controller maker that’s also in the area. If I can stay valuable to at least one of the above (or their suppliers that need an onsite person) I should be able to settle in there until retirement at a favorable salary to cost of living ratio compared to San Jose.

Comment by cactus
2018-01-05 16:57:50

I think we have a small place in Folsom a company we bought awhile back…

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Comment by drumminj
2018-01-05 18:49:44

wow. Good luck!

Comment by BlueSkye
2018-01-05 19:01:54

Good luck Carl. This is my first week of retirement. They are already trying to call me back. I am liking not having the monkey on my back though.

Comment by Mr. Banker
2018-01-06 08:42:14

An interesting read …

How to prevent laziness and free riders on big group projects.

An excerpt:

“… roughly the square root of the number of people in an organization do half the work.”

Or, in other words, if the group contains 16 members then 4 of these members do half the work. If the group contains 100 members then 10 of these members do half the work. And so on.


Comment by Carl Morris
2018-01-06 15:18:19

“… roughly the square root of the number of people in an organization do half the work.”

Interesting. I had always thought of it as an 80/20 or 90/10 rule, but that might be more accurate.

In defense of the freeloaders, for some people it’s really hard to navigate group politics AND actually do any work at the same time.

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Comment by Carl Morris
2018-01-06 15:16:31

They are already trying to call me back. I am liking not having the monkey on my back though.

Nice :-). Coming back on contract has its good points. Pick your hours, skip all the BS and reviews…just do what you’re good at and go home. It’ll be another 15 years before I can think about turning that down.

Comment by azdude
2018-01-05 13:37:21

“Ah yes, retail investors: long beloved on Wall Street because they miss every equity bull market then inevitably join the party too late and serve as the buyers of last resort that soak up the supply of overvalued garbage being dumped by hedge funds, banks and other institutions at end of every bubble. Showing up to the party too late and then riding the crash is just kinda their thing.

As the Wall Street Journal points out this morning, that cycle appears to be repeating itself with the current equity bubble. Well, only the first part, because no matter how high the market rises, retail investors just can’t stop selling. In fact, since 2012 retail investors have pulled nearly $1 trillion in capital from U.S.-focused mutual funds.”


Comment by aNYCdj
2018-01-05 13:51:17

bubbles anyone???

World’s Tallest Residential Building is One Step Closer to Completion
Developer Extell has secured $1.135 billion in financing for the New York City tower


Comment by CHE
2018-01-05 14:00:18

Forgot to mention this:

Was at a buddy’s new house in Ontario, CA over New Years weekend. It’s new construction in a new planned community “Ontario Ranch.” He’s been there about 6 months.

They have this hoity-toity “resort” style pool area with two pools, hot tubs and fancy club house. When I suggested we go hit the spa, he said he’d have to check because it hadn’t been working for awhile.

I told him, “You better call them up, this is brand new and this is why you pay HOA.”

He coyly replied he didn’t want to start trouble, admitting that he hadn’t paid his HOA dues


Comment by Carl Morris
2018-01-05 14:06:44

Whoa…and this is in “good times”. Yet he and the community are already acting like FBs. I wouldn’t want to be in that neighborhood when times are tough.

Comment by Lurker
2018-01-05 15:54:43

And in a new complex too! Reminiscent of people who defaulted before making their first mortgage payment back in 07.

Like the article above that mentions tax increases of 35% since 2013, I’ve seen buildings with similar or greater percent increases in HOA dues in that timeframe. I have absolutely no idea how so many people manage to pay it, particularly the long-time residents.

Comment by Lurker
2018-01-05 15:37:45


Very appreciative of your detailed reply yesterday, thanks. If I ask my LA friends about it, they just don’t notice!

It sounds like the homeless situation has gotten much worse in the last couple of years. I knew people who used to take their kids to play in Poinsettia Park! And the houses around there are nearly twice as expensive now than they were in the last bubble.

Tents on Sunset that far west is amazing too - that stretch always had such potential, with some cool businesses/galleries. I guess the dodgy Sunset/La Brea area has migrated towards Fairfax. Makes me wonder about all the vacant storefronts in proper West Hollywood, which are just an invitation for problems. Sounds like the sheriff’s dept has their hands full.

Again, thank you for the intel.

Comment by CHE
2018-01-05 16:57:18


Yeah - as a lifelong SoCal resident, LA used to be that disgusting place we drove through from OC on the way to Grandma and Grandpa’s in Montrose (Glendale area)

When I started to drive in the mid-90s I would come up from OC to see TV shows being taped. It was still real sketchy.

Then I recall the “renaissance” in the late 90’s and early 2000s when Hollywood and Highland opened. There’s been a lot of clean-up of Hollywood and gentrification of previously gross areas.

Now, the past couple years has brought back the homeless (and cropping up in places I’ve never seen them before) as well as graffiti. I had brunch on the Sunset Strip a few months back in WeHo and recall looking across the street to a building with graffiti - and we’re talking on Sunset by old Tower Records.

It’s starting to look like echos of the 1990s. For the first time considering leaving what used to be a good area.

Comment by Anonymous
2018-01-05 18:48:20

Interesting. I remember visiting the Sunset Tower Records a few times, but that was back in the 80’s.

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Comment by redmondjp
2018-01-05 17:34:14

There are tents completely blocking downtown Seattle sidewalks right now as well and the police and city will do nothing about it.

It is hard to believe until you see it in person.

And Seattle is spending something like $35K per homeless person, per year, on solving homelessness.

Comment by Senior Housing Analyst
2018-01-05 16:45:37

Boulder, CO Housing Prices Crater 7% YOY


Comment by Professor Bear
2018-01-05 16:47:42

Last time it seems the U.S. led the international real estate correction. This time the correction is starting everywhere else first.

What gives?

Comment by BlueSkye
2018-01-05 19:05:27

Our fountain of Yellen Bucks squirted out all over the world.

Comment by KareBear
2018-01-05 17:21:56

Watch “California Housing Bubble Bust? L.A. Home Prices Drop More Than 8%” on YouTube


‘The median price of a Los Angeles County home last month was $530,920, down 8.5% percent from $580,360 in October’

Info comes from this article:


The everything bubbles don’t make sense and they seem fixed…

Comment by Senior Housing Analyst
2018-01-05 17:58:49

“California Housing Bubble Begins to Crack: Home Prices Fall State-wide”


Comment by Ben Jones
2018-01-05 20:52:35

Jordan Reports From Clinton Defeat

Published on Nov 9, 2016
TYT Politics Reporter Jordan Chariton joined The Young Turks election night special live from outside Hillary Clinton’s campaign rally, where hundreds flooded out in despair over Clinton’s defeat to Donald Trump.


Comment by Ben Jones
2018-01-05 21:02:14

“The press are her friends’


Comment by Ben Jones
2018-01-05 21:06:09

WTF with the guy in the mouse outfit?

They get into the yuge Trump women and Latino votes @ 14:30.

Comment by Obama Goons
2018-01-05 21:19:58

God Bless President Trump. God Bless The United States of America.

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Comment by jeff
2018-01-05 23:32:01

On my screen that video rolled right into this one.

The lead off man at 4:55 made me laugh so hard it hurt.


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Comment by BlueSkye
2018-01-06 06:03:17

“They just weren’t getting it.”

Comment by Senior Housing Analyst
2018-01-05 21:24:28

Henderson(Foothills), NV Housing Prices Plunge 7% YOY As Water Resources Evaporate


Comment by Taxpayers
2018-01-06 08:01:24

has increased by $2,595 in the last 30 days
DoD spending going up


Comment by Langley guy
2018-01-06 08:40:07

I lived in Langley for over ten years and these houses are as average as they come. They are probably going for three times more then incomes, the real type of income not the cocktail party incomes can support. There is a long drop back to sanity if it ever happens.

Comment by rms
2018-01-06 10:26:01

“In the fictional universe of Star Trek, the Prime Directive is a guiding principle of the United Federation of Planets prohibiting the protagonists from interfering with the internal development of alien civilizations.”

We need something similar to protect free markets.

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