Booms Powered By The Cheapest Credit In History
A weekend topic starting with the Daily Nation in Kenya. “The real estate sector, which accounts for about 9 per cent of Kenya’s GDP, has consistently outperformed other asset classes in the past decade, incurring minimal losses while consistently generating returns of between 25 per cent and 30 per cent, according to a 2016 report released by investment firm Cytonn. The sharp increase in returns has attracted both speculators and long-term investors to the local property scene. However, some skeptics and investment analysts have intimated that the huge increases in property prices might be the signs of a bubble that is likely to burst.”
“Mr Johnson Denge, the senior manager for regional markets at Cytonn Investments, strongly rejects reports that there is a real estate bubble in the country. He says those who believe that there is a bubble in the sector have not conducted any research and, therefore, have no facts. ‘Fifty to 60 per cent of our portfolio, which amounts to billions of shillings, goes to real estate investments. We have immense faith in the property scene because, over the years, our firm has been seeing returns of up to 50 per cent from such investments. We wouldn’t be doing all this if our data indicated that the property market is just but a bubble headed for doom,’ the senior manager says.”
“So, what is a bubble? A bubble, Mr Denge explains, is a phenomenon that occurs when there is a rapid rise in the price of an asset class above the product’s intrinsic value. In real estate, this means that a bubble would occur if there were a rapid rise in land and housing prices, to the extent that the properties retail at several times their worth.”
“A real estate bubble, the expert explains, usually unfolds in five stages: Displacement. For a real estate bubble to occur, there has to be an external factor that causes a great disruption in the market by changing the behaviour of investors. After the displacement, many people will decide to cash in on the property scene because of its perceived high returns. Here, the prices of real estate will rise at a higher-than-normal rate as more people join the craze.”
“Buoyed by the returns accrued in the boom phase, a bubble market then enters a state of euphoria. Here, all caution is thrown to the wind as investors sell other asset classes like equities and retail businesses and shift all their money to real estate. The Euphoria stage, Mr Denge expounds, is driven by over-speculation and the ‘greater fool theory.’ He explains that the greater fool theory is displayed when an individual buys a house or a piece of land without caring whether the property is overvalued. Unfortunately, this bubble will eventually burst when the greatest fool fails to get a buyer.”
“Currently, there are conversations on online platforms in which Kenyans are pointing out that rental apartments in upmarket areas such as Kileleshwa and Lavington have many vacant units. Do the high vacancy rates prove that the bubble — if there was one in the first place — has already burst? Mr Denge says it doesn’t, adding that what we are experiencing are not symptoms of a real estate bubble burst but simply a phenomenon known as market correction.”
From the San Francisco Chronicle in California. “When real estate agent Josie George arrived to show a rustic cabin in the Berkeley Hills for an open house, people were already gathered outside. For two straight hours, Ratoosh answered questions from eager prospective buyers. At first they formed a line behind her, waiting for a turn, but eventually George just stood on the deck and addressed the group as if she were giving a speech.”
“George says more than 200 people came to look at the 640-square-foot cottage at 2794 Shasta Rd. listed for $479,000 —and this was on the same day as the Super Bowl. ‘I’ve never been at an open house that’s so busy,’ she says.”
“In the San Francisco Bay Area where real estate has boomed for nearly 10 years, stories of mobbed open houses aren’t unusual. Well-priced properties with curb appeal or potential receive dozens of offers and go for hundreds of thousands of dollars over asking price. The University town of Berkeley draws hungry homebuyers. The median sales price in September 2012 was $648,00 and nearly six years later that figure has nearly doubled to $1.225 million, according to Trulia. Seven months ago, two-bedroom bungalow with a pretty garden was listed for $725,000 and sold for 53 percent over asking at $1.111 million.”
“But 2794 Shasta Rd. might be a little different from the typical listing that causes a frenzy as it’s the size of a master suite in a typical new suburban home and it’s simple cabin design has never been updated.”
From the Washington Post. “The notion of buying a home with no money down is understandably alluring. But what looks sexy in a lender’s advertisement does not always translate into what is best for your financial well-being. What is a zero-down loan? Also known as 100 percent financing, zero-down loans require no down payment to purchase a home. For those with little to no cash in savings, these loans are touted as a windfall for those who could only dream of owning a home.”
“As a real estate agent, buyers who lost their homes during the crash have been asking me for the past eight years whether they will ever be able to purchase a home again. Today, I can finally say yes. We are at 360 degrees in the cycle. Underwriting requirements to qualify for a loan have eased. I have also recently seen an increase in advertisements from lenders pitching creative loan programs, such as zero down.”
“Some of these creative loans include (1) zero-down payment, with extra fees for this privilege wrapped into the loan, and high interest rates; (2) piggyback loans, which consist of a first mortgage at market rate plus a second mortgage at a much higher rate (the funds provided by the second mortgage are used as the down payment); and (3) grants.”
“‘These programs are wonderful for those who can’t afford to buy,’ said Michael Chelst, branch manager of Norcom Mortgage’s office in Greenbelt, Md. ‘More people can buy homes now.’”
“‘I get lots of leads from buyers on Zillow and Trulia,’ said Juan Umanzor, a real estate agent based in Bethesda, with a high percentage of his clientele in Prince George’s County, which experienced a high foreclosure rate during the recession. ‘Most of them ask about zero-down financing.’ Umanzor encourages his clients to buy now. ‘Interest rates are low and values continue to go up.’”
From the Australian Financial Review. “For years the Reserve Bank of Australia dismissed our warnings that excessively stimulatory interest rate cuts – which bequeathed borrowers with never-before-seen 3.4 per cent mortgage rates that fuelled double-digit house price inflation – had blown a bubble that presented genuine financial stability risks. This manifested via record increases in speculative investor activity, interest-only loans and, more broadly, Australia’s household debt-to-income and house price-to-income ratios, which leapt into unchartered territory (notably above pre-global financial crisis peaks).”
“The RBA narrative was very different. ‘Our concern was not that developments in household balance sheets posed a risk to the stability of the banking system,’ governor Philip Lowe recently explained. ‘Rather, it was more that…the day might come, when faced with bad economic news, households feel they have borrowed too much and respond by cutting their spending sharply, damaging the overall economy.’ Nothing to see here when it comes to financial stability, if you believe the weasel words.”
“It turns out Lowe was privately ‘packing his dacks’ after unleashing the mother-of-all-booms powered by the cheapest credit in history. After the sudden deceleration in national house price growth – as documented here – from an 11.5 per cent annualised rate in May 2017 to just 1.9 per cent today, the governor revealed to parliamentarians that he’s now ‘much more comfortable…than I have been in recent years when I have been appearing before this committee, when I was quite worried.’ That’s central speak for petrified.”
“Lowe conceded that ‘housing prices were rising very, very quickly – much faster than people’s income – and the level of debt was rising much faster than people’s income’. (We forecast that would occur back in 2013.) Yet according to the RBA’s interpretation, the 50 per cent explosion in house prices between 2012 and 2018 was propelled not by the 11 interest rate cuts it bestowed on borrowers over the same period, but by a lack of new housing supply. You have to ignore the record building boom to believe this BS.”
“Along these lines, Lowe now claims that the bursting of the bubble in September 2017 (when national prices started falling gradually) was not really attributable to the 40 basis point increase in investment loan rates – and chunkier hikes for the 40 per cent of borrowers with interest-only loans –that flowed from APRA’s decision to crush speculative activity. ‘I don’t think the tightening of lending standards is the primary thing that has changed the dynamics of the Sydney housing market,’ Lowe says. ‘It’s the full supply, less foreign demand, [and] better transport.’”
“It is precisely this policymaking hubris that sowed the seeds of the last crisis, and gives one pause when considering whether Australia is prepared to deal with the next one.”
From the Globe and Mail in Canada. “Hot housing markets – and how to cool them – are challenging many governments. Australia, New Zealand and Hong Kong generally face the same issues as some Canadian cities. The story in Australia, particularly in Sydney and Melbourne, is similar to that of Vancouver: a housing price boom fuelled by factors that include a strong economy and overseas buyers.”
‘Last spring, the country’s banking regulator, the Australian Prudential Regulation Authority, made what looked like a small move, putting a cap on interest-only lending to 30 per cent of all new loans, down from about 40 per cent before. Australia’s Treasurer, Scott Morrison, in December called the move a ’scalpel-like change.’”
“Prices did not immediately fall but appear to have peaked. In Sydney, prices had surged about 75 per cent in five years – similar to Vancouver – but in the final three months of 2017 fell by 2 per cent, which is similar to what has happened to prices of detached homes in Greater Vancouver since last summer.”
“‘The market for housing in New Zealand is completely broken,’ Grant Robertson, the new Finance Minister, has said. The country has banned foreigners from buying existing homes. More measures are planned. Westpac, the country’s largest mortgage lender, predicts housing prices will fall 5 per cent in New Zealand, with a slightly larger decline in Auckland, over the next four years.”
From Think Pol in Canada. “Asking prices for homes in Metro Vancouver are falling ‒ in one case by as much as 73% ‒ suggesting that budget measures announced by the NDP government to promote affordable housing by tackling rampant crime, corruption and speculation in the real estate market is beginning to work even before they come into force.”
“For example, the asking price for a home on the 10000 block of Seaword Court in Richmond’s Ironwood neighbourhood has dropped from the original listing price of $5,880,000 on February 14 to $1,588,000 today, data sent to ThinkPol by an industry insider show. ‘This is just the tip of the iceberg,’ the industry insider who sent ThinkPol the data said. ‘Many sellers are delisting and relisting to hide price falls and reset days on the market counter.’”
“The asking price for a property on 11000 block of Blundell Road in Richmond’s McLennan neighbourhood, originally listed for $4,680,000, has dropped by almost half to $2,380,000, the data show. The third largest drop we found was in Burnaby’s Brentwood Park neighbourhood, where a property on 4000 block of Alpha Drive has seen its asking price slashed by a third from $2,980,000 to $1,998,000.”
“The industry insider warned that the industry reaction will go well beyond mere press releases expressing concern. ‘The industry is fighting tooth and nail to water down the budget measures,’ the whistleblower added. ‘They’ve hired troll farms to infiltrate social media platforms and push the real estate industry narrative that NDP is ‘punishing’ homeowners.’”
“The whistleblower is confident that Premier John Horgan’s government will prevail despite industry push back. ‘But I don’t believe any amount of narrative control is going to help the industry,’ the insider said. ‘The only reason the bubble kept going for so long was the fact the the BC Liberals turned a blind eye to crime and corruption in our fentanyl-fuelled industry.’”
“‘The criminals know that [Attorney General] David Eby means business,’ the whistleblower concluded. ‘They’re now cutting their losses and fleeing, and the market will correct itself to align with fundamentals.’”
An alternative link to the Australian article can be found here:
https://www.livewiremarkets.com/wires/rba-not-inert-supply-blew-housing-bubble
Lowe conceded that “housing prices were rising very, very quickly – much faster than people’s income – and the level of debt was rising much faster than people’s income.”
The Kool-Aid was strong and Real Estate was the prettiest girl at the party… and everyone wanted to dance with her.
…and now she is the wrinkled and bitter fatty you’re paying alimony to
There are lots of creative people on this blog, but I think we can do without these type of sexist analogies.
To be fair, the men aren’t exactly Mr. Universe themselves. No biggie.. they usually order themselves a nice young hottie from Asia, and find themselves supporting the hottie’s entire family.
Hey Donk
Caring for an asian family is still cheaper than 1 brain damaged feminazi. Add up all the anti-psychotic drugs, yoga retreats, car wrecks, lawyers, etc. You can have a couple asian families for the same amount - its just math.
But I wouldnt expect a feminazi to understand basic economics. Enjoy the smell of cat pizz.
Eggy, whatever are you thinking?! Oxy is not a Nazi.
Yeah, not cool. Oxide is not that way at all.
Add up all the anti-psychotic drugs, yoga retreats, car wrecks, lawyers, etc. You can have a couple asian families for the same amount - its just math.
Wow, you’ve met my ex :-).
It’s kind of funny that I fit that stereotype now even though it was never my intention. Live in Asia long enough and the odds do kind of go up of that happening though.
The guys that are mailing ordering them…now that I know a variety of Asian women fairly well I get a little scared for those guys. There are a lot of really practical (and ruthless) people in Asia…including the women. It’s just baked into the culture. But parasitical snowflakes? No.
Bradenton, FL Housing Prices Crater 31% YOY As National Housing Demand Plummets To 21 Year Low
https://www.movoto.com/bradenton-fl/market-trends/
Bradenton is flat to up
Dig deeper
22151 has super low inventory and DoD $$$ on the way
DebtDonkey
Redmond, OR Housing Prices Crater 11% YOY As Mortgage Meltdown Continues
https://www.movoto.com/redmond-or/market-trends/
Any theories on why Treasury yields would fall as the markets try to price in four Fed rate hikes in 2018?
The Financial Times
Global Market Overview Markets
US stocks advance as bond yields retreat
Utilities, tech and energy sectors end week on strong note
Dave Shellock February 23, 2018
Friday 21:00 GMT
What you need to know
- Main US equity indices end higher for week
- Treasury yields continue to retreat
- Firmer dollar puts gold on course for worst week this year
- Oil prices hit fresh two-week highs
Big gains for the utilities, energy and technology sectors helped Wall Street’s main equity indices recoup all of the losses incurred earlier in the week after concerns resurfaced over the pace of Federal Reserve interest rate rises this year.
Friday’s equity gains came as US Treasury yields retreated further from multiyear highs as participants digested the Fed’s twice-yearly monetary policy report to Congress.
The dollar index, meanwhile, resumed its upward trend — leaving it nearly 2 per cent up from a three-year intraday low struck a week earlier.
The firmer tone of the US currency this week failed to keep oil prices from reaching fresh two-week highs, although gold was on course for its worst week so far this year.
The big event for markets this week was the release on Wednesday of the minutes of the Fed’s January policy meeting.
These showed a growing sense of confidence among policymakers over the outlook for the economy and inflation — fuelling speculation that the US central bank could adopt a more aggressive policy stance than had been expected.
Fed fund futures moved to price in a greater chance for four US rate rises this year — one more than the central bank’s current guidance.
…
Maybe Mr. Market thinks another QE spigot is about to open?
No, judging from the ever more upbeat economic outlook.
But if the stock markets swoon, will they not try to prop them up?
What makes you think that isn’t already underway? Did you notice how the recent supposed-correction ended a day or two after the onset, and then it was back to the races?
Any theories on why Treasury yields would fall as the markets try to price in four Fed rate hikes in 2018 ??
I posted this a few days ago…If you want to hear a strong contrarian view on why interest rates may go down (I do not necessarily believe that) then listen to the Consuelo Mack WealthTrack program of 2/16/2008 “Market Warning” with guest Robert Kessler..I have watched it a couple of times and will watch it again…If I new how to post a link to it I would…
Here ya go scdave:
https://wealthtrack.com/financial-markets-warning-t-bond-manager-robert-kessler-says-play-it-safe-there-is-danger-ahead/
Thx hwy….Pay no mind to the two hecklers about your punctuation…I think its classic hwy…
Well, scdave … eye strives for meaning + per$pective … Truth is, their point about punctuation adding clarity is quite correct. But eyes just old dog the scratches the itch in the same place, even whilst eye sleep.
( hoping the years have been good to you & the HBB gang whilst eye was “lost.in.translation” with my insect disruption quest, it was one heck of an adventure, knot the bee all solution eye was striving for (failure in scope), yet it took me to places ( literally & figuratively ) eye never would have imagined eye land @!
… maybee get together @ a HBB gathering with the wisest philosopher on earth, Mr. Olde Campfire.
LOL hwy….Would love to spend some time with you again to hear your stories of adventure…
Thanks for sharing. Kessler is a man after my own heart:
“It is expensive to be wrong in a market that goes down.”
Uh-huh. That’s why I try to avoid catching myself a falling knife.
We must think alike professor. That is the exact quote I posted when I watched that clip a few days ago.
I checked the data underlying Kessler’s gloomy comments regarding the U.S. Personal Saving Rate. The current level of 2.4% or so is nearly the lowest in history, and it’s falling. The only time it ever reached lower levels was just before the 2007-2009 financial collapse.
“The future’s so bright, I gotta wear shades” —Timbuk3
Get debt rates up in the 9%-12% range and watch the economy accelerate like you’ve never seen before.
When morts hit 5% watch out bellow
So a couple of things:
1) Another report was released, this time by non-Fed economists, that the Fed’s large scale asset purchases (LSAPs) were not particularly effective: https://www.cnbc.com/2018/02/23/feds-bond-buying-during-financial-crisis-was-not-that-effective-economists-say.html
This is in addition to the report released this summer by a Fed economist: https://www.cnbc.com/2017/09/19/fed-economist-no-evidence-qe-works-as-balance-sheet-unwind-starts.html
New York Fed President William Dudley and Boston Fed President Eric Rosengren were part of a panel discussing the paper. And they were very dovish, basically saying, no, we see a role for LSAPs anyway, in addition to other, yet more novel approaches. I assume they mean that they will continue to inject money into the financial markets if recession headwinds occur.
2) Again on Friday, Powell released his first yearly Monetary Policy Report: https://www.federalreserve.gov/monetarypolicy/mpr_default.htm
That report pretty much continued more of the same rhetoric as we’ve heard since mid 2017. Interesting data point, it said that the balance sheet has been reduced from 4.5 trillion to 4.4 trillion (p.39 of the PDF, 33 internal number).
So, dovish words from Dudley and Rosengren, and no public pronouncements from Powell. Tax reform, lowering of the corporate tax rate to 21 percent from 35 percent is expected to generate another stock market boom. People (institutional and otherwise) pulling money of the market till things get sorted out, then pushing them back in.
Additionally, the report has a section on Financial Stability Risks. It says a sudden increase in interest rates is a risk (p. 25 internal, 30 actual), but that it thinks banks are well positioned to deal with it.
Net result: I expect the stock market to continue to go up due to tax reform. The Fed has only marginally reduced its balance sheet so far from 4.5 to 4.4 and plans to gradually continue this, until it hits 50 billion a month, without stating a target balance sheet size. Dudley and Rosengren downplayed this. The big infrastructure plan is going to generate more debt. With less Fed money injections into the financial sector, it means less demand for debt. But organizations are still taking money out of the market and putting it back in, which will create ups and downs.
I haven’t had a chance to read Rosengren’s and Dudley’s remarks yet, but they will be informative. I know they were dovish, hence the market moves.
FYI:
1) Rosengren’s responses to the new paper, at the US Monetary Policy Forum is here: https://www.bostonfed.org/news-and-events/speeches.aspx (top link, dated Feb 23, 2018)
2) Dudley’s speech transcript here: https://www.newyorkfed.org/newsevents/speeches/2018/dud180223
Upshot: Both say they like LSAPs, and the market loves LSAPs.
The big question, of course, is ignored: Should the central banks be extracting purchasing power from the society (which is de facto covert taxation) and injecting it into areas they see fit? They may be well meaning technocrats, but all central planning schemes have well meaning technocrats at the core. Their allocation of resources will be suboptimal.
‘Along these lines, Lowe now claims that the bursting of the bubble in September 2017 (when national prices started falling gradually) was not really attributable to the 40 basis point increase in investment loan rates – and chunkier hikes for the 40 per cent of borrowers with interest-only loans –that flowed from APRA’s decision to crush speculative activity. ‘I don’t think the tightening of lending standards is the primary thing that has changed the dynamics of the Sydney housing market,’ Lowe says.’
Even as they’ve popped the bubble, along with the regulator, they deny having any role in creating it. These central bankers can’t be trusted so it’s best if we don’t. And we know from several reports that some areas of Sydney have seen huge double digit declines, same as Vancouver and Toronto. Where were they? In all three it was the detached shacks. Just exactly the target of speculators foreign and domestic.
“These central bankers can’t be trusted so it’s best if we don’t.”
They have a license to lie and deceive with impunity from the voters or the courts, which they freely exercise without apology or explanation.
“They have a license to lie and deceive with impunity …”
in·dem·ni·fy
inˈdemnəˌfī/Submit
verb
past tense: indemnified; past participle: indemnified
compensate (someone) for harm or loss.
“the amount of protection that may be carried to indemnify the owner in the event of a loss”
secure (someone) against legal responsibility for their actions.
“the newspaper could not be forced to indemnify the city for personal-injury liability”
Origin:
early 17th century: from Latin indemnis ‘unhurt, free from loss or damage,’ from in- (expressing negation) + damnum ‘loss, damage.’
Indemnified + “untouchable” = a dirty job$ gig that Mike Rowe has yet to take on.
Indemnified liars…I like it!
How many fed agencies do we have just to “regulate” housing 12?+
Better get Trumpf on that ,stat
‘the asking price for a home on the 10000 block of Seaword Court in Richmond’s Ironwood neighbourhood has dropped from the original listing price of $5,880,000 on February 14 to $1,588,000 today, data sent to ThinkPol by an industry insider show. ‘This is just the tip of the iceberg,’ the industry insider who sent ThinkPol the data said. ‘Many sellers are delisting and relisting to hide price falls and reset days on the market counter.’
Remember the poster here who scoffed at the idea the UHS would conspire? He doesn’t know the REIC very well.
‘Many sellers are delisting and relisting to hide price falls and reset days on the market counter.’
That should be illegal. It wouldn’t be possible if the MLS were not granted illegal and anti-competitive monopoly status.
+1
One key characteristics of a well-functioning market is good information which leads to efficient price discovery. The ability to hide prices this way and distort transparency is detrimental to the free market. I think only the medical industry hides prices worse than the real estate industry.
“I think only the medical industry hides prices worse than the real estate industry”
Barnyard dawg: where ya goin’ foggy?
Foghorn: to the NEW ho$pital, visitin’ Henery
Barnyard dawg: what happened?
Foghorn: he ates to many chickens, … feathers & all!
I’m seeing one of the markets I track doing a lot of relistings. Without the total days on market and numerous price cuts you dont get a real picture of 1) how deluded the seller/agent is, and 2) how desperate the seller is now.
There was an RE agent who was a former software engineer that mined the MLS data to provide a really good handle on what properties represented the best value. I think he eventually got shutdown by the RE mafia.
https://www.rew.ca/properties/R2240652/10700-seaward-court-richmond-bc?search_type=property_browse&search_id=ironwood-richmond-bc
For what it’s worth my wife’s unemployed cousin just bought a new $450K house last month.
How he was able to get a loan, I don’t know.
He’s moving in next week and I’m told that he is already thinking about flipping it for a profit.
Like moths to a flame.
“Like moths to a flame.”
+1 LOL!
How can he flip a house that he lives in? He’ll lose on the relocation costs alone. Shoulda bought a tiny house…
…the UHS would conspire?
Would you do business with an outfit that hires “troll farms”?
“Realtor Arrested In Connection With Multiple Burglaries”
http://www.fox10phoenix.com/news/arizona-news/realtor-charged-in-connection-with-multiple-burglaries
Crime news
Phoenix-area realtor convicted in a short sale fraud scheme
February 12, 2018
https://m.mysanantonio.com/news/crime/article/Phoenix-area-realtor-convicted-in-a-short-sale-12607745.php
Burglary, fraud, money laundering, tax evasion, just another day in the life of a Realtor.
Used home sellers apparently aren’t the sharpest tools in the shed.
“Hot housing markets – and how to cool them – are challenging many governments. Australia, New Zealand and Hong Kong generally face the same issues as some Canadian cities. The story in Australia, particularly in Sydney and Melbourne, is similar to that of Vancouver: a housing price boom fuelled by factors that include a strong economy and overseas buyers.”
What a difficult conundrum!
“‘The market for housing in New Zealand is completely broken,’ Grant Robertson, the new Finance Minister, has said. The country has banned foreigners from buying existing homes. More measures are planned.”
I wonder if similar measures could help solve California’s perpetual housing shortage, where foreigners who never paid a dime in local, state or federal U.S. taxes have been able to waltz in and snap up residential properties at high premiums to what members of California’s overtaxed Middle Class can typically afford.
“Asking prices for homes in Metro Vancouver are falling ‒ in one case by as much as 73% ‒ suggesting that budget measures announced by the NDP government to promote affordable housing by tackling rampant crime, corruption and speculation in the real estate market is beginning to work even before they come into force.”
So many great examples of how to restore normalcy to residential real estate markets are being set by foreign governments, raising my optimism that the U.S. will soon catch on and follow suit. Let’s Make America’s Housing Markets Great Again!
There used to be an old saying that you could always count on the United States to get it right - after trying everything else first. I’m not sure that’s true anymore. Other countries are getting it right well before us, if we even do anymore.
Other countries don’t have statues with outdated poems engraved on them. Has anyone accused New Zealand of being racist for not allowing foreigners “of color” to purchase houses?
“‘These programs are wonderful for those who can’t afford to buy,’ said Michael Chelst, branch manager of Norcom Mortgage’s office in Greenbelt, Md. ‘More people can buy homes now.’”
Bahahahahaha … these loans are wonderful for those who can`t afford to buy. Do these people who say these words ever realy listen to what they are saying? Do the people they are talking to ever really listen to what is being said to them?
“‘I get lots of leads from buyers on Zillow and Trulia,’ said Juan Umanzor, a real estate agent based in Bethesda, with a high percentage of his clientele in Prince George’s County, which experienced a high foreclosure rate during the recession.”
Juan Umanzor = a real estate agent (keep that in mind).
“‘Most of them ask about zero-down financing.’ Umanzor encourages his clients to buy now.”
A real estate agent encourages his clients to buy now. What a surprise!
“`Interest rates are low and values continue to go up.’”
What he means is interest rates are low and PRICES continue to go up.
Prices continue to go up because dummies “who can’t afford to buy” (his words) can now get hold of money that they should never get hold of and they then throw this money at houses which drives up the prices.
Which - at root - means high home prices are driven even higher by people who cannot afford to buy but are buying anyway.
This should end well.
“These programs are wonderful for those who can’t afford to buy,…”
What is the upside to handing out subprime loans to people who are quite obviously not going to be able to repay them, because they can’t afford the homes the loans enable them to purchase in the first place?
Sounds like a recipe for a financial clusterfork!
“What is the upside to handing out subprime loans to people who are quite obviously not going to be able to repay them, because they can’t afford the homes the loans enable them to purchase in the first place?”
The upside is fees for the brokers and lenders and appraisers, increased taxes for the tax man as prices are driven higher and increased equity for the neighbors for the same reason, prices are driven higher.
The downside? Stay tuned for the downside.
This is exactly what happened before the 2007-2009 subprime implosion. Get ready for round 2!
As I have written here before my wife and I rented in Seal Beach in the mid-90s. The landlord got sick and I started doing the credit checks on potential renters. Out of every 10 TRW checks that I did 9-10 were deadbeats.
Credit card debt averaged in the tens of thousands for many of these applicants (15-20K) and at least 50% had some sort of judgement on their records. This was a pricey area and the people looking for an apartment were all attractive individuals with shiny new vehicles, good jobs and nice clothes.
In 97 the landlord died and his unpleasant wife took over their rental properties and we decided to look at ownership. Found a place in Belmont Heights and made an offer. The property was a short sale backed by the Long Beach school credit union. The whole area was drowning in short sales and foreclosures at the time.
The property had been on the market for over a year and approximately 15 offers had been made on the property. According to our realtor, all had been denied because the people making the offers had a lot of debt and no money for a down payment. The Banks still had lending standards at that time. The credit union ate about $40K on our deal, unpaid mortgage payments and taxes along with a few other costs. At least that is what the prior owner’s 1099 stated that they signed in our presence.
The only reason that the housing market turned around in SoCal, like everywhere else, was because lending standards were dropped (around 1998) to the point where anyone (like those people I did TRW checks on) could swing a loan and those loans could then be sold to a third party as an investment vehicle.
Take away the fog, let the 10y go to 5% (where it belongs) report the true inflation rate (minimum 7% which would put home loan rates at about 9-10%) and then take away the sub-prime loans and credit cards from the average American and let’s see just how strong this “economy” really is.
Loose lending has ginned up prices to the extreme around here. It’s much, MUCH worse than before.
I was talking to a dirt guy recently. He’s quoting over $20,000 for a septic system installation now. It used to be $10,000 less than 5 years ago. It’s all greed. The materials haven’t increased that much.
The local governments have added all sorts of new fees and charges to development, too, which does actually add to the cost of some things. This is in addition to raising the prices of the old fees.
I feel very sorry for all the median and below wage earners. They are getting absolutely crucified now. The money just isn’t there for all of this stuff. We need a huge reset. This is insanity.
I can ask $50k for my 10 year old Chevy pickup but where is the buyer at that price?
So it is with all commodities and labor like septic tank installations.
great post steadykat!
Nice post. As Baldwin might be inclined to say, the American economy resembles a loaf of Wonder Enriched White Bread… nothing wholesome, just puffed-up air.
One thing I’d add to your post is that it’s not just the credit extended to the “average American” that’s the problem, it’s the cheap credit available for every bloated corporation in the country. It promotes businesses that are operating at a loss (see Amazon, Tesla, etc.) rather than sound businesses which actually need to generate a profit to survive. It’s financial insanity.
The real zombie companies are in China. Did you see that Anbang was nationalized a few days ago? It owns New York’s Waldorf Astoria.
Not just Amazon and Tesla. GM and GE come to mind as companies which used to be sound businesses making a profit on real goods and services. Then they got into banking and went to crap.
Amazon is putting its reputation as a money-loser in the rearview mirror.
The e-commerce giant posted a record profit of $1.9 billion during the last three months of 2017, marking the 11th straight quarter of positive net income for Jeff Bezos’s company.
About $789 million of that can be attributed to a tax benefit resulting from President Trump’s tax plan. But even without the benefit, the profit number would have been the largest in the company’s history.
Amazon Chief Financial Officer Brian Olsavsky said the fact that Amazon’s revenue came in at the high end of internal projections — $60.5 billion — helped margins, because warehouses can operate more efficiently when more products are running through them.
https://www.recode.net/2018/2/1/16961598/amazon-jeff-bezos-record-profit-11-quarter-q4-2017-earnings
Did you see that Anbang was nationalized a few days ago?
Yeah, some were saying they thought maybe it indicated the tipping point for China…something like their Lehman/Bear Sterns moment?
Now that Xi is emperor for life maybe that’s not an issue though.
“The Banks still had lending standards at that time.”
I remember the era of credit standards, which were still in place the last time my wife and I bought, in the mid 1990s.
Now that credit standards have been largely abolished, I don’t have any inclination to compete with deadbeats who qualify for subprime loans. They are sure to walk in the next crash, and creditworthy buyers will be left holding the bag as the owners of depreciated properties and underwater loans…same as last time.
Honest money cannot compete with easy credit.
Better to go where credit cannot.
“`Interest rates are low and values continue to go up.’”
Enjoy the feast today, for tomorrow you die.
Rising interest rates are near the danger zone
Feb 23, 2018 5:00 AM EST Markets
By Anthony Mirhaydari / MoneyWatch
The Federal Reserve’s latest meeting minutes caught Wall Street’s attention this week. The result was a wild swing of nearly 500 points in the Dow Jones industrials, as an early rally based on the minutes was swept away by renewed concerns about rising interest rates.
The 10-year Treasury’s climbing yield is getting serious as it now hovers near the 3-percent threshold (chart below) that many professionals have fingered as the danger zone as which point costlier credit will weigh on stock prices. That impact would be felt via everything from a pullback in corporate debt-funded share buybacks to diminished consumer financing and spending.
Credit Suisse analysts put the pain point slightly higher, at a 10-year Treasury yield of 3.5 percent. Surprisingly, they noted that stocks historically become less sensitive to rising rates as the pain point is neared. But once crossed, losses mount quickly.
The spin from traders concerning the Fed minutes evolved rapidly as they realized the initial dovish take was misguided, for a few reasons.
For one, the minutes said a majority of the Fed’s rate-setting group saw stronger growth lifting chances of further rate hikes. Suddenly, the specter of four quarter-point rate hikes this year is rising. Goldman Sachs economist David Mericle raised the possibility of five hikes in 2018.
….
“`Interest rates are low and values continue to go up.’”
“Enjoy the feast today, for tomorrow you die.”
” …But once crossed, losses mount quickly”
Would such an event have any effect$ on this piece of real estate?
666 Fifth Avenue
666 is the sign of the beast.
https://www.vanityfair.com/news/2018/02/kushner-may-soon-be-working-at-tgi-fridays
https://www.cnn.com/2018/02/19/politics/mueller-investigation-kushner-foreign-financing-efforts/index.html
Kushner probably hasn’t done a full day’s work in his life.
C’mon, CNN? Really? FAKE NEWS CENTRAL.
Don’t trust CNN reporting?
OK.
New York Magazine
February 20, 2018 10:00 am
Mueller Eyes Kushner’s Pursuit of Foreign Financing: Report
By Eric Levitz
…
Kushner’s family is massively indebted due to a poor investment decision that he made — and must secure hundreds of millions of dollars in new capital by early 2019 to avoid a financial calamity.
Which is to say: Any foreign government willing to nudge some investors toward Kushner Companies could conceivably exert undue influence over the White House adviser.
And that prospect looks all the more conceivable, given Kushner’s actions immediately after the 2016 election. During the transition period, Kushner (reportedly) met with the chairman of the Chinese firm Anbang Insurance, in hopes of securing a $400 million investment in his family’s flagship property at 666 Fifth Avenue. Meanwhile, his company also (reportedly) sought $500 million in capital from the former prime minister of Qatar for the same project.
Now, it appears that those dealings have piqued the interest of Special Counsel Robert Mueller.
…
Seems like this story is ubiquitous… not only on CNN!
Drudge dot com
Tuesday, February 20, 2018
Mueller Interested in Kushner’s Foreign Financing
Special counsel Robert Mueller’s interest in Jared Kushner has expanded beyond his contacts with Russia and now includes his efforts to secure financing for his company from foreign investors during the presidential transition, according to people familiar with the inquiry. This is the first indication that Mueller is exploring Kushner’s discussions with potential non-Russian foreign investors, including in China. US officials briefed on the probe had told CNN in May that points of focus related to Kushner, the White House senior adviser and son-in-law of President Donald Trump, included the Trump campaign’s 2016 data analytics operation, his relationship with former national security adviser Michael Flynn, and Kushner’s own contacts with Russians.
…
…
Mueller’s investigators have been asking questions, including during interviews in January and February, about Kushner’s conversations during the transition to shore up financing for 666 Fifth Avenue, a Kushner Companies-backed New York City office building reeling from financial troubles, according to people familiar with the special counsel investigation.
…
“In March 2017, reports were made that Anbang Insurance Group of China was in talks to purchase an interest in the building”
Wanna meet for lunch @ the Waldorf Astoria?, oh, forgot they might be closed this.day
The Anbang founder looks like Jared Kushner’s evil Chinese twin.
President Xi is doing a great job with his ant-corruption campaign. I can’t wait to see President Trump follow suit!
China Seizes Anbang, Charges Dealmaking Founder With Fraud
Bloomberg News
25 February 2018, 12:11 AM
22 February 2018, 5:35 PM
(Bloomberg) — China’s government seized temporary control of Anbang Insurance Group Co. and will prosecute founder Wu Xiaohui for alleged fraud, cementing the downfall of a politically connected dealmaker whose aggressive global expansion came to symbolize the financial overreach of China’s debt-laden conglomerates.
The surprise move furthers President Xi Jinping’s anti-corruption and de-leveraging campaigns while providing a government backstop for the high-yield investment products that Anbang sold to hordes of Chinese citizens. It suggests that after months of clamping down on acquisitive tycoons, China is increasingly focused on insulating the economy from their shaky finances.
…
Paging AlbuquerqueDan…
Goldman Says Stocks May Plunge 25% If 10-Year Yield Hits 4.5%
Joanna Ossinger
Bloomberg
February 25, 2018
“If the 10-year U.S. Treasury yield hits 4.5 percent by year-end, the economy would probably muddle through — stocks, not so much, according to Goldman Sachs Group Inc.”
“Goldman’s base-case scenario calls for a 10-year yield of 3.25 percent by the end of 2018, though a “stress test” out to 4.5 percent indicates such a move would cause stocks to tumble, economist Daan Struyven wrote in a note Saturday. He also said the economy would probably suffer a sharp slowdown but not a recession.”
“”A rise in rates to 4.5 percent by year-end would cause a 20 percent to 25 percent decline in equity prices,” the note said.”"
A rise in the 10-year yield to 4.5% seems unimaginable. Is there a historic precedent for this steep a rate increase?
I can’t see us ever getting up to lofty rate of 4.5% on the 10-year (sarcasm). The 10% rate in the 70s and 15% rate in the 80s could never happen again.
The 10% rate in the 70s and 15% rate in the 80s could never happen again ??
With the amount of debt in the system right now starting with China & USA rates that high would create a global meltdown…
With the amount of debt in the system right now starting with China & USA rates that high would create a global meltdown…
AKA painted into a corner.
“AKA painted into a corner.”
I’ve noticed over time that economists are quite susceptible to the intellectual error of assuming that all processes are reversible. Physicists and philosophers tend to better grasp that some processes are irreversible.
If a decade of extraordinary accommodation and financially-engineered interest rate suppression leads nation’s, firms, households and individuals to bury themselves deep in low-interest debt, much of it short term, is it reasonable to assume that interest rates can quickly and painlessly be returned to normal levels before the onset of extraordinary accommodation?
10-Year Treasury yields could get to 4% ‘in a hurry,’ bond fund manager predicts
Stephanie Landsman
Published 2 Hours Ago CNBC.com
While Wall Street braces for 10-Year Treasury yields to tick over 3 percent, one bond expert believes that will feel like a piece of cake compared to what may come next.
Sit Investment Associates’ Bryce Doty believes investors are in “denial” over how high rates could go this year and the painful impact it could have on stocks.
“We didn’t pierce 3 percent this time, but the next 10-Year auction in a couple of weeks is probably certain to do that,” he said recently on CNBC’s “Futures Now.” “I think it’s going to just keep going. 10, 20 basis points a month gets you to 4 percent in a hurry.”
With the 10-Year Treasury yield trading at four-year highs, Doty notes the bond market is now leading the stock market. Thus, he says, another significant leg down for stocks could be imminent.
“Typically, the stock market has sold off and has created a flight to quality and has driven yields down,” he added.
“Everything has changed. You now have the stock market reacting to an uptick in yields and bonds rather than the other way around,” Doty stated. “So, I think it’s going to take investors a while to re-calibrate that reality.”
…
People who didn’t load up their portfolio on risk, such as with a highly leveraged bet to purchase an expensive home on credit, don’t have to worry much about rising rates sinking their wealth.
Business News
February 23, 2018 / 1:16 PM / Updated 5 hours ago
Surging bond yields to pinch home owners, retirees
Richard Leong
NEW YORK (Reuters) - A surge in bond yields that sent stock markets skidding from record highs this month may have ripple effects outside Wall Street, as home ownership costs rise and nest eggs shrink.
While investors felt the brunt of a slide of more than 1,000 points in the Dow in recent weeks, before it recovered most of the losses, consumers have started to feel the pinch of rises in interest rates that are closely linked to the bond market.
Banks and lenders, whose own borrowing costs have risen, are charging consumers more on mortgages, some of which are at their highest rates in four years, and other loans tied to the bond yields.
Higher yields also hurt the values of bonds, which many individual investors are exposed to through mutual funds, whether through direct investments or via assets in 401(k)s and other retirement accounts.
…
“Daan Struyven said the economy would probably suffer a sharp slowdown but not a recession.”
A B.A. degree in Political Science(Hahahahaha) and a Ph.d in Economics…Housing Modeling. [Hey, you cant make this up.]
He wasn’t alive in 1980 for the Paul Volcker years so his experience is a jus’ a wee bit short. And we may not have a recession but we most definitely will have a Recession.
Anton Kreil said these clowns would run the GS shop and he was right.
I never found a lot of humor in poli. sci. class back in the day. Economics, on the other hand, is the dismal science. Maybe it’s all relative.
An excellent read …
https://wolfstreet.com/2018/02/25/why-buffett-pulled-back-companies-overvalued-after-purchasing-frenzy-fueled-by-cheap-debt/
Charlie & Warren makes Nebraska look different than Kansas, and it isn’t just a corn vs wheat thang either …
Billionaire Warren Buffett says encouraging CEO$ to pursue acquisition$ is a bit like encouraging a “ripening teenager to be sure to have a normal sex life.”
http://www.omaha.com/money/wall-street/the-latest-warren-buffett-compares-ceos-to-oversexed-teens/article_0d65c326-b542-5f06-a1ff-07e702857e99.html
It looks like I’ve misspoken and ended up in moderation, too! I don’t recall swearing or doing anything bad.
Realtors are liars.
…. And every closing a crime scene.
Contemplation:
‘Once the individual soul has, through its own act of will — externalized through dialectic — freed itself from the influence of Being, and has arrived at a knowledge of itself as the ordering principle of the cosmos, it has united its act and its thought in one supreme ordering principle (logos) which derives its power from Contemplation (theoria). In one sense, contemplation is simply a vision of the things that are — a viewing of existence. However, for Plotinus, contemplation is the single ‘thread’ uniting all existents, for contemplation, on the part of any given individual existent, is at the same time knowledge of self, of subordinate, and of prior. Contemplation is the ‘power’ uniting the One, the Intelligence, and the Soul in a single all-productive intellectual force to which all existents owe their life.’
‘Vision’ (theoria), for Plotinus, whether intellectual or physical, implies not simply possession of the viewed object in or by the mind, but also an empowerment, given by the object of vision to the one who has viewed it. Therefore, through the ‘act’ of contemplation the soul becomes capable of simultaneously knowing its prior (the source of its power, the Intelligence) and, of course, of ordering or imparting life to that which falls below the soul in the order of existence. The extent to which Plotinus identifies contemplation with a creative or vivifying act is expressed most forcefully in his comment that: “since the supreme realities devote themselves to contemplation, all other beings must aspire to it, too, because the origin of all things is their end as well” (III.8.7, tr. O’Brien).’
‘Since Plotinus recognizes no strict principle of cause and effect in his cosmology, he is forced, as it were, to posit a strictly intellectual process — contemplation — as a force capable of producing the necessary tension amongst beings in order for there to be at once a sort of hierarchy and, also, a unity within the cosmos. The tension, of course, is always between knower and known, and manifests itself in the form of a ‘fall’ that is also a forgetting of source, which requires remedy.’
‘The remedy is, as we have seen, the exercise of virtue and dialectic (also, see above). For once the soul has walked the ways of discursive knowledge, and accomplished, via dialectic, the necessary unification, it (the soul) becomes the sole principle of order within the realm of changeable entities, and, through the fragile synthesis of differentiation and unity accomplished by dialectic, and actualized in contemplation, holds the cosmos together in a bond of purely intellectual dependence, as of thinker to thought. The tension that makes all of this possible is the simple presence of the pure passivity that is Matter.’
https://www.iep.utm.edu/plotinus/
Somebody find Sheriff Longmire, eye thinks Mr. Ben has bee abbduckted!
Just giving those in moderation something to think about.
Annandale, VA Housing Prices Plunge 10% YOY As DC Area Housing Market Craters
https://www.movoto.com/annandale-va/market-trends/
‘These programs are wonderful for those who can’t afford to buy,’ said Michael Chelst, branch manager of Norcom Mortgage’s office in Greenbelt, Md. ‘More people can buy homes now.’
Remember the San Diego article on raising the debt limit from 40 to 50%? “They can afford a shack now!”
u can still afford in lemon grove!
Juan Umanzor, a real estate agent based in Bethesda, with a high percentage of his clientele in Prince George’s County, which experienced a high foreclosure rate during the recession. ‘Most of them ask about zero-down financing.’ Umanzor encourages his clients to buy now. ‘Interest rates are low and values continue to go up.’”
If you can’t save a few grand ($12,000 maybe in MD) you probably don’t have the mental discipline to own a home.
If I were buying at the peak right now, I’d want $0 down, too. I like the option of walking away having lost nothing when prices crater 65%.
thats what was part of the problem the last time around. angello mozillo gave out toxic loans and then SHTF. It was a good business decision to let the house go, wait a few years and buy another with an FHA loan.
A. 640 square ft = big tiny house
B. Recessions only happened in the past
C. 0 down but safe n sound
Love it!
Suzanne sells it and my bank finances it (using money that belongs to somebody else 😁).
If (when) it all goes tits up the PTB will once again step in because “B. Recessions only happened in the past”.
I want u guys to feel part of a community and buy a house so u can hang pictures of the SHP on your walls.
“So, what is a bubble? A bubble, Mr Denge explains, is a phenomenon that occurs when there is a rapid rise in the price of an asset class above the product’s intrinsic value. ”
Well, there’s his mistake. Nothing has an intrinsic value. God doesn’t declare how much a shack is worth, nor do the amount of materials nor labor hours that go into it decide its value. I can’t spend 10 years getting a Master’s Degree in ditch-digging, buy some gold-plated shovels, hire some contractors and pay them one million dollars to spend 3,000 hours digging a ditch, and then declare my ditch worth ten million dollars.
Intrinsic value has to do with human wants. Don’t know how God got dragged into it.
I can’t spend 10 years getting a Master’s Degree in ditch-digging, buy some gold-plated shovels, hire some contractors and pay them one million dollars to spend 3,000 hours digging a ditch, and then declare my ditch worth ten million dollars.
Modern artists do this every day…
“Modern artists do this every day…”
Good for them if they can figure out how to prosper through digging ditches with gold-plated shovels.
What is the ‘Intrinsic Value’
The intrinsic value is the actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Additionally, intrinsic value is primarily used in options pricing to indicate the amount an option is in the money.
…
San Diego, CA 92037 Housing Prices Crater 6% YOY As Housing Correction Expands Into Southern California
https://www.zillow.com/san-diego-ca-92037/home-values/
*Select price from dropdown menu on first chart
BTW, 92037 is La Jolla…
“The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”
—-Alexis de Tocqueville 1805-1859.
“Alternative Fact$”
The “Tiny House Movement”.
Its not a tiny house. its a TRAILER.
Its not a tiny house community. Its a TRAILER PARK.
You are not “right sizing”. You are DIRT POOR.
http://uncyclopedia.wikia.com/wiki/Solvay,_New_York
The “tiny houses” around here cost roughly $75,000, oftentimes more. I don’t know many “dirt poor” people who can afford a $75k “trailer” which doesn’t get into the myriad problems of finding a place you can actually use it. The tiny house movement was co-opted by the wealthy, or so it would seem.
You need a lot of money to have a philosophy which is detached from reality.
how is a tiny home different than a trailer?
You mean “tiny houses”?
Designer Jeans. The most expensive version possible of something that’s primary appeal is its frugality.
“Designer Jeans. The most expensive version possible of something that’s primary appeal is its frugality.”
Speaking of:
https://www.businesswire.com/news/home/20171027005864/en/True-Religion-Emerges-Bankruptcy
They may have struck a deal to stay off the executioner, but they are circling the drain. There was a structural shift in womens’ fashion from expensive jeans to yoga pants.
*stave off
What’s wrong with just a smaller, modest sized house. Like 1000 sf.
Wait, no money in that.
Some places have minimum square footage requirements larger than that.
Where?
I thought you were a builder? Surely you’ve heard of “builder restrictions” in the CC&Rs of housing developments? C’mon, now…
Also, there are cities and municipalities in this country where they have minimum house sizes, especially in historic neighborhoods, etc. The IBC is just a guideline.
Nope never heard of a municipality imposing minimum size requirement of =>1000ft2.
That’s why I asked where.
I don’t know much about back east, but out west we have a lot of communities, many gated, with strict CC&Rs. I’ll see if I can pull a copy of one from the county recorder and post a link.
Here’s a sample. These places are a dime a dozen out west now:
“Square Footage Minimums
Except on Production Builder lots, no principal residential dwelling shall be constructed or maintained upon any parcel or Lot which shall have a total floor area of less than 2,500 square feet, exclusive of porches, patios, attached and detached garages, outbuildings, breezeways or walks…”
https://somersettunited.files.wordpress.com/2015/09/aesthetic-guidelines.pdf
2500 sq ft, really?
I’ve heard of minimum house sizes of 800 sq ft, but never 1000. This is for SHF. Condoze and apts don’t have the same restrictions.
One website featured a 350 sq ft foundation house in Binghamton, NY, so I looked that up. Binghampton had a pretty specific building code. Some tiny size houses were allowed especially for singles, but the rules were written to outlaw the loft bedroom, which is what most tiny houses have. The 350 sq ft house passed.
“2500 sq ft, really?”
Yeah. There are some gated communites which have even larger requirements. This one’s not gated.
Those are HOA covenants…. rotted out and stinking with developer brown envelopes.
Again…. Where does a municipality impose a 1000ft2 minimum?
I just showed you an example, now you changed your original question?
Same question. Still no answer.
Comment by BlackSwandive
2018-02-25 17:41:01
Some places have minimum square footage requirements larger than that.
Comment by Mafia Blocks
2018-02-25 17:55:50
Where?
You’re an antagonist, right?
You’re not aware of any. Thats ok. Neither is anyone else.
You can look up zoning in any city in any state for yourself and see that the minimum sizes run the gamut. I’m not doing it for you. I am stunned that you pass yourself off as a builder but you don’t even know that many, many places do not allow for smaller houses of even the 1,000 square foot variety.
Here’s an interesting article about Cape Coral, Florida who had a minimum 1200 square foot requirement, but they’re now considering tiny houses.
Councilwoman Rana Erbrick who asked for tinies to be placed on the agenda answered Bertolini’s question:
“I was thinking of smaller houses on foundations in the 600 to 800 square foot range, not on wheels,” Erbrick said. “Something for people just starting out, or a widow who no longer needs the extra bedrooms.”
Because Cape Coral’s minimum house size is 1,200 square feet, a tiny home could simply be one that’s smaller than that.
https://www.news-press.com/story/news/2017/05/23/cape-cpral-says-yes-tiny-homes/335726001/
You’re an antagonist, right…
I looked at your example and think it is an HOA, not a municipality.
And my good friend is wrong about Cape Coral too. 750ft2 min.
http://www.loopnet.com/Attachments/E/6/A/E6A28BB8-6DB8-4B42-A585-468402B04E20.pdf
That’s just the corridor district. Cherry pick much?
From Cape Coral’s own website under their comprehensive land use plan”
BASIC REQUIREMENTS FOR CONSTRUCTING
A DWELLING IN CAPE CORAL
Minimum Land Area 10,000 Square Feet
Minimum Living Area
R1B & RD 1,100 Square Feet (1,400 Square Feet when across the street from salt water), not including garage, screened porches, storage areas, etc.
R1BW & RDW 1,400 Square Feet on canal/lake front or on a golf course or 1,800 Square Feet on river front (not including garage, screened porches, storage areas, etc)
https://imgur.com/a/ZkV8y
I can’t believe you don’t know that thousands of locales across this country have minimum square footage requirements over 1,000. I thought you were a builder.
“I looked at your example and think it is an HOA, not a municipality.”
It doesn’t even matter. My original comment was that there were “some places have minimum square footage requirements larger than that.” I followed up with municipalities and cities because it’s true in a lot of those areas, too.
Every county and city in this country has a comprehensive land use plan, and the regulations for every zone within that plan are different. The zoning boards decide what fits the area. The nicer neighborhoods always restrict anything small, because they want the larger tax base and to maintain a certain character of the neighborhood.
I’m shocked that somebody who portrays himself as the authority on building on this blog was unaware that there are numerous locales where 1,000 square feet is too small and not allowed.
“I’m shocked”
Are you horrified too?
There’s no money in *any* shf under 2200 sq ft these days. If you’re near a job, land is just too expensive. If you can work remotely, you can buy any ol’ plot and put a manufactured home on it. Or you can buy an existing home and fix it up. Like in Roanoke, VA.
That said, I do like the Chattahoochie “park model” TH for ~$70K.
https://www.youtube.com/watch?v=NWJUMuWDwPM
Donk….
There is a globe full of land where 95% of it goes undeveloped. Land is highly speculative resulting in massive price swings entirely unfounded on fundamentals. If you’re paying more than $500-$1000/acre, you’re paying too much. That’s why land is referred to as worthless dirt.
Kensington, MD Housing Prices Crater 27% YOY As DC Area Housing Correction Expands
https://www.movoto.com/kensington-md/market-trends/
You really are an idiot, HA.
What you are saying might be true out in podunk, but not anywhere near urban areas, where the rules are completely different.
You keep spouting the same incorrect drivel.
Hello my good friend.
Sacramento, CA Housing Prices Crater 5% YOY
https://www.zillow.com/east-sacramento-sacramento-ca/home-values/
https://snag.gy/m5EzRB.jpg
“…where the rules are completely different.”
“Asking prices for homes in Metro Vancouver are falling ‒ in one case by as much as 73%”
And we have a winner! Biggest price cut of the year so far.
‘Schecher has already taken 10 units for free from people who couldn’t handle the stress and gave up in lieu of foreclosure,’ Velez said.’
http://thehousingbubbleblog.com/?p=10353
“The real estate sector, which accounts for about 9 per cent of Kenya’s GDP, has consistently outperformed other asset classes in the past decade, incurring minimal losses while consistently generating returns of between 25 per cent and 30 per cent, according to a 2016 report released by investment firm Cytonn.
We have immense faith in the property scene because, over the years, our firm has been seeing returns of up to 50 per cent from such investments.
Now for some math
$100,000 invested at 50% per year for 10 years ( a decade) is
$5,766,504
at 25% it is a lowly $931,323.
No problem, I get those kind of after tax pay increases every year so, no bubble, grow up and move on.
“They aren’t buildin’ houses anymore …”
On accounts they might knot need to.
” …Many people already have been laid off or have quit. Sidney’s housing market is flooded with homes for sale, and many already are declining in value.”
http://www.omaha.com/money/bass-pro-shops-offering-buyouts-to-employees-at-former-cabela/article_33ec57d2-7730-5506-9c26-7ce8453cbb1c.html
Didn’t someone on here post how a California Pensior thought he got steal in Sidney? Think he is going to be in for an ouchie.
A rather long read for late at night. The title catches your attention, but, that’s not the heart of the matter.
https://www.theatlantic.com/magazine/archive/2018/03/paul-manafort-american-hustler/550925/
Keller, TX Housing Prices Crater 12% YOY As Housing Inventory Floods Dallas/Fort Worth
https://www.movoto.com/keller-tx/market-trends/
Traffic — Shouldn’t Have Took More Than You Gave (1971):
https://www.youtube.com/watch?v=JweZ_wzmifw
Did your hedge fund take a beating this month?
The Financial Times
Quantitative hedge funds take February beating
Computer-driven trend followers whipsawed as equity rally unravelled this month
Robin Wigglesworth and Lindsay Fortado in New York
3 hours ago
Computer-driven, trend-following hedge funds are heading for their worst month in nearly 17 years after getting whipsawed when the stock market’s steady soar abruptly reversed into one of the quickest corrections in history earlier in February.
Hedge funds known as “commodity trading advisers” or managed futures funds — which surf the momentum of markets — got sucked into big bets on stocks from last year’s rally, which culminated in the strongest monthly equity fund inflows since 1987 in January.
But the rally unravelled in dramatic fashion in early February, slamming trend-followers. Société Générale’s CTA index is down 5.55 per cent this month, even after the recent market rebound, making it the worst period for these systematic hedge funds since November 2001.
“Trend-followers are either long or short equities on any given day. Obviously, after a significant upward move, they were likely to be long and therefore vulnerable to a quick downward move,” said Sushil Wadhwani, the head of Wadhwani Asset Management.
Even SocGen’s CTA index understates the extent of the reversal, with some of the industry’s biggest names taking a beating.
…
KAboom
Fairfax County issues new tax hike 5% and Zillow immediately lower predictions from 2.1% down to 1.5%
we need to keep levitating asset prices so folks have equity to pull and buy cheap imports. we cant let these exporting countries suffer.
Homelessness….‘National disgrace’: Community fights back as California overrun by homelessness, human waste, needles
http://www.foxnews.com/politics/2018/02/26/los-angeles-burbs-crack-down-on-huge-homeless-camp-near-disneyland-fearing-new-skid-row.html
Gotta love it. People are now paying $130 just to get into Disneyland. Factor in a few meals and some overpriced souvenirs and the can easily spend $200 per person. Yet about two miles away, next to the Big A, is a huge Hooverville. California in a nutshell.
I always thought Disneyland was sold as a package deal with round trip travel, hotel, day passes w/rides, etc., the whole shebang. A family of four could probably drop $10k for a 5 day vacation.
HAMSTERDAM!
“Spitzer blames the problem on two issues: legislation signed by Democratic Gov. Jerry Brown over the past several years that has eroded the penalties for drug use, possession and petty crimes to where police often don’t bother making arrests; and the change in a law so that treatment is no longer forced for drug abuse or mental health issues.
This week he wrote a letter to Brown, urging him to declare a state of emergency over the homeless issue and reverse previous forced-treatment laws.
“When I was a prosecutor, the law behind possession was a felony,” said Spitzer, a former deputy district attorney. “We would use the hammer under the law of a felony. We would force someone into treatment and upon successful treatment, the felony would be dismissed. Now look what we have as a result of ridiculous short-sighted liberalization of drug use.”
Fairhaven, MA Housing Prices Crater 22% YOY
https://www.movoto.com/fairhaven-ma/market-trends/
http://money.cnn.com/2018/02/26/investing/corporate-debt-rising-rates/index.html
Corporate America, egged on by ridiculously-low borrowing costs, has built up more debt than any time since the end of the Great Recession.
“Removing the easy money punch bowl could trigger the next default cycle,” S&P Global Ratings wrote in a recent report titled “Debt high, defaults low — something’s gotta give.”
So, when things start to unravel, what will the Fed (and other central banks) do? More QE or will everyone be forced to take their medicine?