March 8, 2018

Prices Can And Do Fall, Hard

A report from the Toronto Star in Canada. “Re-sale home prices in the Toronto region dropped 12.4 per cent, or about $110,000, year over year in February. The average price fell to $767,818, from $875,983 for all housing categories, including detached, semi-detached, town homes and condos. The number of sales also plunged nearly 35 per cent last month compared to Feburary 2017 — to 5,175 transactions from last year’s record 7,955, according to the latest statistics from the Toronto Real Estate Board. The sluggish start to 2018 is what the real estate board says it predicted after the extraordinary Toronto-area market peak in the first four months of 2017. Last April, prices topped out at an average $920,791 — 24.5 per cent above the previous year.”

“Sales have since been declining because that month the Ontario government took cooling action by introducing its Fair Housing Policy, including a foreign buyers tax, said Jason Mercer, TREB director of market analysis. In Newmarket and Aurora, sellers are still lagging buyers in their expectations of what homes will fetch, said Richard Gibb of Century 21 Heritage Group. ‘You still are seeing those housing prices based on last year’s sales. There definitely is a large number of listings that are way over-priced,’ he said. ‘There are a lot of homes that would probably sell, but (buyers) know the house is overpriced so they’re going to wait,’ he said.”

From Curbed. “Canada escaped the global financial crisis in 2008 unscathed relative to much of the developed world, but after 15 years of virtually uninterrupted home price appreciation, America’s neighbor to the north might be cooking up a financial crisis of its own. Loose lending has helped create a housing bubble to rival that of the U.S. in 2006, and with household debt in Canada being among the highest in the world, Canadians have little room in their budgets to absorb rising housing costs.”

“The next year will be telling because unlike in the U.S., the interest rates on most mortgages in Canada reset to the current rate every five years, and 47 percent of Canadian mortgages will ‘reset’ within the next year. ‘We’re basically in a correction now, which most people believe will be a soft landing,’ said Hilliard MacBeth, author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash. ‘I’m pretty sure it’s not going to be a soft landing. It’s going to be a crash.’”

From Macleans. “Real estate agent Paula Minuti knew the housing market had reached a turning point. The problem was her clients refused to accept it. In May 2017, Minuti listed her clients’ home in York Region, a collection of suburbs just north of Toronto. Just a few months earlier, homes in the area were selling in a couple of days for tens of thousands of dollars—or more—over the asking price. But this house had sat on the market for eight whole days without any offers. Now a bid had finally arrived, just shy of the listing price.”

“Minuti urged her clients to accept it, pointing out that negotiating power in the market was shifting to the buyers. Her clients refused, sending it back with a request for an additional $45,000. Minuti walked the counter-offer to the buyer’s agent, who was waiting outside while his clients sat in their car. The agent did a double take and went to the car to inform his clients. They started the engine and sped away in a fury, leaving their agent dumbfounded at the curb. ‘They were pissed,’ Minuti says. No amount of pleading over the next few days could bring them back. The house sat on the market for two more weeks before another offer came in. It was $15,000 less than the previous one. This time, Minuti’s clients took it.”

“This is the new reality in many parts of Ontario. After years of booming prices and a few months of complete insanity, the housing market in many cities is falling back to earth. The average home price in Aurora, Markham and Vaughan has plummeted more than 30 per cent since last April, whereas sales fell more than 60 per cent. Prices in Richmond Hill, meanwhile, have dropped a whopping 43 per cent from the peak. The experience of York is a microcosm of what a wider housing crash in Canada might look like. It illustrates an obvious truth that many Canadians have either forgotten or never had to consider: home prices can and do fall, hard.”

“‘For five years, they were basically our bread and butter,’ says Sylvia Morris, a real estate agent who specializes in Unionville, an area of Markham. Foreign buyers, typically from China, would purchase four or five houses at a time. ‘This time last year, I’d put a property on the market and within two or three days, I’d have 10 offers on it,’ she says. Morris often participated in transactions where buyers never even visited the property; their agents sent video footage instead. Minuti saw countless local clients repeatedly shut out of bidding wars. ‘The offers I would get would just blow everybody out of the water,’ she says. ‘I’m talking $150,000 or more over asking.’”

“Domestic investors and speculators could be just as aggressive, though. ‘It was just off the charts how many people were buying investment properties,’ says Realosophy president John Pasalis.”

“Getting caught in the frenzy caused problems for aspiring landlords, Pasalis notes, as prices escalated and rental income no longer covered the carrying costs. Last year, 95 per cent of all investment properties purchased in 2016 were losing money each month, Realosophy estimated. ‘When you see people buying investment properties where they’re losing $2,500 a month, it tells you people have this belief that prices will just keep going up forever,’ Pasalis says.”

“The notion the market could only move in one direction was dispelled by the Ontario government’s Fair Housing Plan in April 2017, which imposed a 15 per cent non-resident tax on homes sold across the Greater Golden Horseshoe. More than anything else, the plan changed the psychology of the real estate market, cutting through the speculative mentality that was causing prices to rise more than 30 per cent each month. ‘John, who asked that his real name not be used, purchased a home in the GTA for $1.3 million in June. An appraisal was conducted soon after. ‘It came back short. Very short,’ he says. ‘I had a small heart attack.’”

“He borrowed $300,000 from a private lender at nine per cent interest under a one-year term, and found tenants rather than flip the property. The rent doesn’t cover the carrying costs, so he’s losing money every month. ‘I probably got ahead of myself on this one,’ John concedes. He hopes to refinance later this summer with an alternative lender at a more bearable interest rate.”

From the Vancouver Sun. “The speculation tax, calculated at two per cent on assessed value, would levy $20,000 on a $1-million recreational property. But a British Columbian with an income of $100,000 a year would only get back the $7,000 or so that he or she would be paying in provincial income taxes. When I raised that likelihood in a column last week, I heard from numerous British Columbians concerned that they might be facing a big bite from a tax that was supposedly crafted to target foreign and out-of-province speculators.”

“From a Vancouver Island resident with a condo in Vancouver: ‘If the proposed speculation tax proceeds as you describe, the two-per-cent tax will far exceed the B.C. income tax that we normally pay. We will have no choice but to sell our Vancouver condo. We’re not speculators. We simply wanted to enjoy a few days a month in the city we used to live in, in the comfort of our own condo.’”

“On the problem for seniors with recreational properties that have been in the family for years: ‘If they pay zero income tax because their annual income is low enough to warrant no tax — i.e. married couple making around $25,000 or so — they’d never recover the amount.’”

“From someone with a place on Bowen: ‘Kelowna, the Gulf Islands and Bowen Island have many vacation or second-home properties and this sudden change may have a sharp negative impact on property values as families scramble to part with a property they can no longer pay the annual taxes on. In the small island vacation home areas, often the most expensive homes such as waterfront are second homes.’”

RSS feed


Comment by Mortgage Watch
2018-03-08 09:26:03

Superior, CO Housing Prices Crater 6% YOY As Denver Housing Correction Expands

*Select price from dropdown menu on first chart

Comment by Ben Jones
2018-03-08 09:31:09

Some comments to the last article:

Fred Mickleson
Dear Mr. Weaver
I have read the Vaughn Palmer in the Vancouver Sun from March 6, 2018 titled “Vaughn Palmer: Readers stunned by impact of B.C.’s new ’speculation tax’ and the last two paragraphs were of interest to me. Apparently, a reader contacted your office on this proposed speculation tax and were told by you that normal British Columbians owning multiple properties would not be affected.
I am one of those “normal” BCers, who through years of hard work and sacrifice, both from myself and also my family, have been fortunate to accumulate quite a few holdings in BC.
I have always payed my fair share of taxes and have never once complained about how this province is governed, because I believe like Jimmy Pattison, that I was not meant for politics.
In my holdings, I own properties that are not rented because they are meant for the enjoyment of my family and myself, among them are ones in Victoria, the Gulf Islands, and also in the Interior. These were purchased years ago, for the purpose of REGENERATION of the Mind, Body and Spirit, not as a means to make money or speculate as your government puts it.
Yes, I calll it YOUR GOVERNMENT, because you are a MAJOR part of the coalition government, and this proposed Budget. I can say this because without you, the NDP would not be in power, but rather the Liberals or maybe none and we would have had another election to settle the matter.
I can honestly say, that if these proposals take affect, I for one will not be too happy having to pay a “ANNUAL Speculation Tax” on these properties. I will not sell them as Carole James might have you think and I will also not rent them to anyone, I will be forced to pay. I will however endeavor to do everything within my power and influence to make sure that the NDP and Green parties NEVER again have the opprotunity to sit in power in British Columbia.

Your sincerely

Fred Mickleson

Ilia Nizker · Vancouver, British Columbia
Fred, you are part of the problem. People are struggling to afford even one property, and you’re complaining about having to - not sell, mind you - but pay a little extra, which you seem to be comfortable enough to afford. Guess what? The reason NDP and Greens are in power is because a lot more people agree with me, and we all vote - so good luck, we’ll see you at the ballot box.

Fred Mickleson
Ilia Nizker Amazing what you consider “a little extra”. You do not penalize people for being successful by having them pay more taxes, but this government thinks if you are successful you should.Dropping MSP premiums and having the employer pay everything is not socialism, its Robinhoodism, steal from those who saved and give to those who don’t. Russia and the Eastern Bloc tried it, they failed. Affordability is a fancy term that Canadians have adopted, but in effect means nothing. Labour costs have already driven building a house out of the reach of average Canadians and you think that this will stop it, it will not. Restaurants are struggling to find workers not because of the housing issue,but because of what they pay, people can not live day to day, because everything has gone up in price.

Comment by BlueSkye
2018-03-08 11:27:36

Labour costs have already driven building a house out of the reach…

Really? I don’t think Canadian wages are soaring. Maybe it is the price of land that you all are bidding up?

Comment by Mafia Blocks
2018-03-08 13:13:43

“Labour costs have already driven building a house out of the reach…”

That’s a beaut isn’t it. Spoken by another know-nothing. $50,000 labor for a new house isn’t ‘out of reach’.

Comment by oxide
2018-03-08 13:09:14

All righty Mr. Mickleson: if you don’t want to pay a speculation tax now, then upon sale you may forfeit any profit made to the Canadian government. Wonder what he would think about that?

Comment by Ben Jones
2018-03-08 14:05:36

‘In my holdings, I own properties that are not rented because they are meant for the enjoyment of my family and myself, among them are ones in Victoria, the Gulf Islands, and also in the Interior. These were purchased years ago, for the purpose of REGENERATION of the Mind, Body and Spirit’

I think Fred has watched too much Oprah. Or Johnny Depp.

Comment by BlueSkye
2018-03-08 16:36:36

Or they are safety deposit boxes in the woods and he is a lion.

(Comments wont nest below this level)
Comment by OneAgainstMany
2018-03-08 17:00:53

In my opinion, this Fred character has it coming for him. It sounds as if the NDP policy is exactly what Canada’s housing market needs. Good on them for trying to curb rampant speculators who are impoverishing local residents by holding on to houses that sit empty most of the time.

Comment by Carl Morris
2018-03-08 17:16:20

Good on them for trying to curb rampant speculators who are impoverishing local residents by holding on to houses that sit empty most of the time.

It’s a problem that solves itself if you don’t put artificial support under the prices. But you have to be willing to let the consequences of that play out.

Comment by OneAgainstMany
2018-03-08 17:24:43

It’s a problem that solves itself if you don’t put artificial support under the prices.

And by artificial support surely you mean massive foreign money (some of which is illicit) and too few regulations on who can qualify for a mortgage?

Comment by Carl Morris
2018-03-09 17:41:45

The foreign money contributes to the problem…not sure the best way to handle that. I’m mostly talking about artificially low interest rates.

I don’t think the lending regulations are the problem. That problem would also solve itself if the people lending the money were at real risk of losing it. The govt shouldn’t insure them against that loss.

Comment by Ben Jones
2018-03-08 09:33:21

More comments:

Ian Mackay · Managing Broker/Realtor at Royal LePage Parksville-Qualicum Beach Realty
If anyone believes that the revenues from these taxes will go towards creating affordable housing, social housing or other initiatives your mistaken, the governments other policies (MSP premiums etc) will create such a crater for money it will most certainly never make it to support the intended purpose. And for those who think it’s unfair that anyone should be able to acquire wealth through hard work and effort, and have it snatched or taxed away, consider the overall impact that could have on the societal model we live in. A quick look at true socialism might be a sobering voyage.

Brad Hall · Vancouver, British Columbia
Your wealth is acquired through fortunate circumstance, less to do with hard work and effort - others work just as hard, probably harder, but are less fortunate often due to circumstances beyond their control. You appear to be in the business of real estate speculation, where flippers look to make a quick buck. not through hard work and effort, but by one-upping their fellow citizen, exploiting scarce societal resources and coming away with a “quick win”. Not everyone is so predatory or driven by shallow self-interest.

Ian Mackay · Managing Broker/Realtor at Royal LePage Parksville-Qualicum Beach Realty
Getting personal Brad, you know nothing of my circumstance, history or journey To home ownership …….oops I almost took the bait

Glenn MacKenzie
Brad Hall Up to a million people have hard earned (and saved) equity in the real estate market. God help the NDP if it causes a downfall in the value of that equity.

Comment by Ben Jones
2018-03-08 09:46:57

Jane Boon · Fordham University
I’m a Canadian who purchased a second home in Vancouver (a small condo) and I have employed locals to undertake renovations, paid property taxes, purchased goods and services locally. I am not a speculator; I’d like to retain my condo and enjoy more of Vancouver. Many cities/locales have similar issues with housing availability, but BC’s approach has risked undermining a significant part of its economic dynamism with this budget.
This tax is punitive and poorly targeted. There will still be speculators arbitraging new properties, they’ll either be BC locals, or very short termers from out of province/country flipping ownership for a quick profit. And the so-called “speculation tax” will land more heavily on BC locals with second homes, whose provincial income tax does not cover the 2% of appraised value. Once those first assessments come due, there will be howls, once the BC voters recognize they were had. I hope the government undoes this proposal before it metastasizes.

Michael Rawlings
And if a family who owns it full time likely would have employed the same people to do similar Reno’s. Your points isn’t valid. You are under using a public resource that we desperately need. So there is now a social cost for you to continue to do that.

Owning a second home is speculating. If you want to vacation here sell to a local family and come stay in a hotel when you vacation. You’d do more for society that way.

Allen Batchelar · Kelowna, British Columbia
Michael Rawlings spoken like a true communist.

Alison Malis · Victoria, British Columbia
How can a privately owned dwelling be considered a public resource. Wtf.

Comment by Ben Jones
2018-03-08 09:49:02

Peter Kelly · Nanaimo, British Columbia
Let me get this straight. The BC Liberals deregulated this industry in 2006 that allowed for both shadow flipping and runaway real estate speculation. This is what lead to market rates that all but exclude those not in the top 1-2% of income earners in our larger cities. Well guess what happens when your working folks can’t afford to live in the communities they’re supposed to work in? They’ll take their skillsets and leave. Sure, some well intended folks may feel a small bite from these measures, but the only worse thing to do in this matter is nothing at all.
My suggestion for those handed an invoice with a balance owing is to send it to the BC Liberal party. They started this and they are 100% to blame here.

Colleen Stewart · Langara College
Can’t say I disagree with you but have you ever noticed that every solution the government implements involves putting massive sums of money in government coffers. This works for all Parties.

Glenn MacKenzie
The Liberals are right to keep govt. out of the real estate market. The NDP–socialists have no problem controlling markets like car insurance, real estate and anything else as long as it helps their friends.

Peter Kelly · Nanaimo, British Columbia
Glenn MacKenzie the BC Liberal solution was to give free money away to new home buyers which would have the same net effect as what nuked the ‘08 crash in the USA. Fuel + fire. They made the problem bad, their solution was to make it worse. Good riddance BC Liberals.

Comment by Ben Jones
2018-03-08 10:00:33

Vancouver Real Estate Advisor-Sutton Grp West Coast Realty
What I want to know is how can we as Canadians stand together and fiercely oppose this tax proposal instead of just complaining about it. This tax will not hurt the housing prices nearly as much as it will hurt the average Canadian living outside of BC who has worked a life time to aquire his or her secondary property or properties here. These Canadians are not “speculators”. The government needs to step down on this one.

Ivan Hadanoff
Oh look, the RE industry is crying again. Is it the end of the world again like it was going to be with the foreign buyer’s tax?

Jodi Collins
You are a realtor you should not be in this conversation for the fact that you make a lot of money off selling homes to whomever.

(Comments wont nest below this level)
Comment by Ben Jones
2018-03-08 10:01:52

Peter Moffat · Vancouver, British Columbia
Every single one of these complainers in this article have not one but TWO (minimum) properties in arguably the most expensive real estate market in the world. Boo hoo. Pay the tax, or sell. Love the comments about the hard done by folks who have reno’ed their second / third properties, and just how unfair this is!

Starla Boehnert
WRONG! I do not have two properties in this expensive market as you say. I do have a home that is bought and paid for in another province which was accomplished by 25 to 30 years of work, budget etc. Now, I am able to afford a second home to spend at least 6 months of the year in. My goal is simply to enjoy my life, spend tme with each of my grown kids one in each province. At the rate of taxation there will be nothing left of what i have earned to hand down to help my kids hopefully one day purchase their own home. (After they do what we did, work and save and budget) Its called LIFE 101.

Jou L Ma
Starla Boehnert You are a bloated plutocrat and we should punish your success!

Peter Moffat · Vancouver, British Columbia
Starla Boehnert What a struggle you’re enduring…I really feel for you! It’s called an affordability crisis. Sorry you can’t leave a vacant home sitting around while other families struggle to find a place to live.

Comment by Ben Jones
2018-03-08 10:08:36

Val Clark · Vancouver, British Columbia
Unaffordable housing is identified as the number one crisis in our economy. There is no way local salaries can afford to buy a home in the lower mainland. The B.C. Liberals watched this problem grow and grow and did absolutely nothing. Was it because some of their biggest donors were real estate developers? At least the NDP are trying to do something about this. Let’s provide productive feedback to make the tax only target off shore non residents of B.C. or local speculating flippers.

Jannick Slavik
i think it’s because we see a lot of folks equate “detached housing” with entry-level housing. It’s that sense of entitlement that leads to misplaced expectations. In the new economy, detached housing is typically affordable after 3-4 mortgage renewal cycles on a families’ multi-family housing.

Glenn MacKenzie
No, I suspect the Liberals didn’t interfere in real estate (except to put the foreign investment tax on) because of the very reasons you see here. Taxes ruin all the good that marketplaces offer.

Adam Ferlandez
“The accumulated filth of all their vacation homes and equity will foam up about their waists and all the boomers and politicians will look up and shout “Save us!”… and I’ll look down and whisper ‘No.’”

Sara Scott · Capilano University
Laundered drug money !!! Kills our citizens and cheats us out of our birthright. Who’s profiting? Foreign drug lords, Govt., big business bottom feeders

Bill Byson
I am looking forward to getting paid to live in one of these luxury vacation homes totqualify the owners as long term rentals! Send me a msg if you would like my services in the west van area.

Comment by Ben Jones
2018-03-08 10:13:15

Trevor Dyck · Abbotsford Senior Secondary School
Glad to see this tax. Good job NDP this is why we voted for you. Those of you who have benefited from your multiple speculative properties going up in value exponentially due to all the illegal foreign investment can certainly afford it. Cry me a river!

Jocita Webb
Let’s get this straight, you are complaining because you have to pay a little extra tax for your second home.. Any sympathy for those that cannot even. afford their first home?

Jannick Slavik
Horgan essentially bars BCers from owning a vacation home…in their own province. And lefties, due to their greed, selfishness, and arrogance, support it. Are lefties even human?

Melanie Mortenson
Wow, I had NO idea there were so many Canadians who owned second or third homes/condos etc in Vancouver for their own or their families pleasure…through all their “hard work”. Wow. No wonder my kid can’t find a rental unit in Vancouver for under $1,000 (for shitholes) and has to compete with 20 other people for it. But god forbid we “take away” your third pleasure home you worked so hard for.

Jannick Slavik
Imagine growing up in one of the most prosperous countries in the world, surrounded by fair laws, unlimited opportunity, and unprecedented mobility, with the ability to raise a family in safety and abundence. all to throw it away, give up on life, and become a lefty. 10 times out of 10, the newly arrived immigrant who is ready to work hard to provide for his family, is FAR MORE RESPECTABLE than the 1st world cultural marxist i.e. the sniveling entitled brat with the entitlement complex (the NDP electoral base) The Problem with BC is that it’s filled with Lefties.

Sam Israel
If someone has a better idea to keep housing affordable for the middle class, or that matter any class, I’d like to hear it. Conservatives in B.C. disguised as Liberals had 15 years to deal with a predictable problem. What did they do? Made it worse through ideology. The housing mess we have today was designed by people who think that if you can’t afford the neighborhood you grew up in or the city in which you worked all your life, then just move.

Shmuel Marmorstein
Does anyone have the world’s smallest violin handy?

Comment by Ben Jones
2018-03-08 10:16:13

Cross Di Anastasia · Simon Fraser University
I see Bob Rennie, Ian Gillespie and Jon Stovell are working the media angle now that the pressure has been put on them. Palmer and Postmedia certainly knows where their bread is buttered. And check out most of these comments… seems like there little troll factory of fake commenters are hard at work.

Donald Malcolm Johnston · Works at Self-Employed
I was “stunned”, when the Liberals cut taxes on the wealthy and recouped lost tax monies on the poor via outrageous user fees. I was equally “stunned” when the NDP found that $20 billion of criminal money was laundered in BC Casino’s. I am continually stunned that Postmedia was never “stunned” by Liberal criminality until it was so bad, so gross, that they had to report it. I am still “stunned” by the vastness of homeless people and ‘tent towns’. The downtown east side stuns everyone. Taxes on second homes rates a stun level of 2 compared to more pressing and stunning revelations.

Comment by Mafia Blocks
2018-03-08 10:29:01

The product quality these troll farms sell is piss poor.

Comment by Ben Jones
2018-03-08 14:07:51

‘the BC Liberal solution was to give free money away to new home buyers which would have the same net effect as what nuked the ‘08 crash in the USA. Fuel + fire.’

The BC government just got rid of this program too, BTW.

Comment by Mr. Banker
2018-03-08 09:48:28

“The next year will be telling because unlike in the U.S., the interest rates on most mortgages in Canada reset to the current rate every five years, and 47 percent of Canadian mortgages will ‘reset’ within the next year.”

I find this very interesting. This means every mortgage in Canada is effectively a variable rate mortgage.

An excellent way to lose your a$$ is to get tangled up in a variable rate mortgage. With most purchases a buyer a can determine exactly what a purchase will cost him; With a variable rate mortgage the cost of a purchase becomes a WAG.

Stay tuned.

Comment by Rental Watch
2018-03-08 09:59:38

This means every mortgage in Canada is effectively a variable rate mortgage.

30-year fixed rate mortgages are very rare when you look globally.

Comment by Mr. Banker
2018-03-08 10:05:29

“30-year fixed rate mortgages are very rare when you look globally.”

Is this the result of the choices buyers freely made or is this the result of government mandates?

Comment by In Colorado
2018-03-08 11:13:23

30-year fixed rate mortgages are very rare when you look globally.

Yup, in most of the world the only choice is a variable rate loan. Have relatives in the UK who many years ago almost lost their house when rates skyrocketed.

Imagine taking out a million pound mortgage in London that you can barely service at today’s super low rates. Every time interest rates go up, you’d break out in a sweat. Oh well, who needs a car, or vacations … or real food.

Comment by BlueSkye
2018-03-08 11:39:48

Hence the insanity of purchasing what you cannot pay for without a several decades long loan. Sure everyone does it. The insanity of a mob is insanity nevertheless.

(Comments wont nest below this level)
Comment by Lurker
2018-03-08 14:48:48

In a sane world, that kind of risk would constrain prices.

(Comments wont nest below this level)
Comment by b
2018-03-09 08:25:58

And actually this worked well for many years. The real issue is that Canadians starting in the financial crisis - started pulling out lots of HELOC $s

Comment by rms
2018-03-09 08:50:08

“…started pulling out lots of HELOC $s”

Precisely what the Central Banks expected… juice the economy.

(Comments wont nest below this level)
Comment by ibbots
2018-03-08 09:59:24

D-FW home flips were up by more than 20 percent last year.

“Last year the share of D-FW houses bought and flipped by investors jumped by 23 percent - one of the biggest increases in the country, according to analysts at Attom Data Solutions.

Last year 5,244 home flips were recorded in the D-FW, representing 6.3 percent of all home sales during the year, the researchers found. That made D-FW the 10th busiest home flip market in the country, Attom Data says. Phoenix was first with 8565 trades.

The median purchase price for D-FW houses that were flipped was $180,000. And sellers made an average gross profit of $46,218.”

Comment by txchick57
2018-03-08 10:32:25

I’ve been chasing wannabe flippers away from this house 2-3 times a week for the past 2 years. I pity the fools that knock on this door. They get sent away with a stinging rear end.

Comment by tresho
2018-03-08 13:54:59

I pity the fools that knock on this door.
I simply stopped answering knocks on this door years ago.

Comment by b
2018-03-09 09:35:12

are people really making a gross profit of $46K? That seems to indicate that there is real demand.

Comment by BlackSwandive
2018-03-08 10:04:49

Can you say cr8er?

$9,250.01 Bitcoin price
−$639.23 Past hour (USD)
−6.46% Past hour (%)

Comment by CryptoNick
2018-03-09 00:12:46

This is what it feels like to get completely gutted by your crypto investments
By Shawn Langlois
Published: Mar 8, 2018 4:09 p.m. ET

Comment by Mortgage Watch
2018-03-08 10:17:54

Redington Shores, FL Housing Prices Crater 10% YOY As Bottom Falls Out Of Vacation Property Market

Comment by BlackSwandive
2018-03-08 10:25:39

When libtards, bunk science, greedy water rights owners, corrupt politicians and their bought and paid for judges come together, this is what you get - an absolutely sickening display of picking winners and losers.

This decision could be called “I got mine, now f**k you,” or “come to the city and waste 20,000 gallons a month if you so choose, but buy 10 acres in the country and you get 950 gallons a month.”

If you ever wanted to buy a small parcel of land in the state of WA state to build and start a small garden, heaven forbid have livestock or a farm - good luck with that. You’re TOO LATE. There’s not enough water for you (in the state with the only rain forest in the lower 48).

Comment by BlackSwandive
2018-03-08 10:41:17

*950 gallons PER DAY

Comment by BlackSwandive
2018-03-08 10:55:24

The rural areas are where you grow things, raise animals and livestock - you know, do stuff with water. Now? Not so much…

950 gallons a day is enough to live off of, but it’s not nearly enough for any sort of gardening or farming. And you can’t buy water rights because they’re all spoken for. Water is so abundant in western WA that most of the old homesteads are on hand dug wells. 25-30 feet is common.

But the enviro-whackos, the tribes, and the senior water rights owners have co-opted the justice system and scored a massive stranglehold on all future water use, at the expense of every human being in WA state who wants to someday enjoy what all of their ancestors and fellow citizens already do.

Comment by OneAgainstMany
2018-03-08 17:22:32

Sounds like a raw deal. My sister lives in Renton, but I have absolutely zero insight into this issue. If water is as abundant as you say, then this certainly seems like overreach. I wonder if the planners are trying to head off the problem that is going on in California where almond farmers are consuming more water than people are using for drinking.

Not saying Washingtonians are going to try growing Almonds there, but I can’t help but wonder if these types of restrictions are to head off pre-emtively the disasters that are going on in CA.

Comment by OneAgainstMany
2018-03-08 17:32:52


(Comments wont nest below this level)
Comment by taxpayer
2018-03-08 10:27:28

Re-sale home prices in the Toronto region dropped 12.4 per cent

I wonder how much taxes will go down?

Comment by Mr. Banker
2018-03-08 11:00:13

“I wonder how much taxes will go down?”

This blog is filled with comedians.

Comment by b
2018-03-09 10:17:29

keep in mind that the the great toronto realtors changed the reporting metrics. They have funged it up (just like the US U-3 unemployment rate).

So it is actually much worse

Comment by jeff
2018-03-08 10:28:32

Septic Springs :)

Recycled water from sewers coming to California taps

By Ted Andersen Published 11:24 am, Wednesday, March 7, 2018

Water that once coursed through city sewers may soon find new life coming out of your home faucet.

New regulations approved Tuesday by the California State Water Resources Control Board allow treated recycled water to be added to reservoirs, the source of California municipal drinking water.

Comment by SusanM
2018-03-08 12:31:21

This is long overdue. Filtering process is highly sophisticated. It just sounds gross.

Comment by jeff
2018-03-08 13:17:21

Bottled water giant Nestlé tells California regulators it’s entitled to keep piping water

Ian James, The Desert Sun Published 5:55 p.m. PT Feb. 9, 2018 | Updated 11:01 a.m. PT Feb. 12, 2018

Nestlé is disputing the findings of an investigation by California water regulators, arguing the company is entitled to keep piping water out of the San Bernardino National Forest — even more water than it has been bottling and selling in the past few years.

Comment by ironknee
2018-03-08 14:27:46

I’ve long since considered the water in Clownifornia to be hazardous to ones health, but this will take it to the next (lower) level, where you will have to drink bottled water like some third world country. Its a perfect comparison for where that state is headed unless they roll the guillotines.

Comment by In Colorado
2018-03-08 14:52:56

Water that once coursed through city sewers may soon find new life coming out of your home faucet.

The tap water there is already fetid.

Comment by OneAgainstMany
2018-03-08 17:31:50

I saw this a few years ago:

I watched the piles of feces go up the conveyer belt and drop into a large bin. They made their way through the machine, getting boiled and treated. A few minutes later I took a long taste of the end result: a glass of delicious drinking water.

The occasion was a tour of a facility that burns human waste and produces water and electricity (plus a little ash). I have visited lots of similar sites, like power plants and paper mills, so when I heard about this one—it’s part of the Gates Foundation’s effort to improve sanitation in poor countries—I was eager to check it out.

The water tasted as good as any I’ve had out of a bottle. And having studied the engineering behind it, I would happily drink it every day. It’s that safe.

If waste is treated properly, it should be pure enough to drink. The yuck factor is hard to get over though, but it doesn’t mean it’s not clean.

Comment by Mafia Blocks
2018-03-08 17:37:10

Ok… Go ahead and take dump and squeeze some water out of it and drink it.

Let us know.

(Comments wont nest below this level)
Comment by MacBeth
2018-03-08 18:14:27

Grodie! Grodie to the Max!!

Where’s Moon Unit Zappa these days?

Comment by Apartment 401
2018-03-08 18:16:07

It’s California. The taste of feces is an enhancement, not a problem.

Comment by Mafia Blocks
2018-03-08 18:17:48

Back to housing my friends.

Aiea, Hawaii Housing Prices Crater 17% YOY As Vacation Property Market Grinds To a Halt

Comment by tresho
2018-03-09 13:50:39

Go ahead and take dump and squeeze some water out of it and drink it.
Every drop of water we drink has probably come out of dinosaurs’ rear ends over & over again before it got to us. If you want a “clean” drink, may I suggest 200 proof ethyl alcohol?

Comment by alphonso bedoya
2018-03-08 21:39:33

Are you getting TERTIARY treatment or only PRIMARY and SECONDARY?

(Comments wont nest below this level)
Comment by rms
2018-03-08 19:26:49

“Recycled water from sewers coming to California taps”

Similar to the International Space Station.

Comment by oxide
2018-03-08 19:47:51

Or Dune. Or Waterworld. Or they could invade the East and harvest the humidity from the air, like in Star Wars.

Comment by OneAgainstMany
2018-03-08 20:55:12

Since you mentioned it:

Pulling Clean Water From Thin Air


” A Chilean startup has built a machine that can take moisture out of the sky and turn it into super-clean drinking water at the touch of a button.”

“Hector Pino was making a good living as an engineer in Santiago when his life took an unexpected turn. A rare medical condition made it difficult for his young daughter to process the minerals in Chile’s drinking water. With his daughter’s kidneys wearing down and her teeth decaying, Pino decided to invent a solution to the problem.”

(Comments wont nest below this level)
Comment by Mafia Blocks
2018-03-08 21:39:04

Diamonds can be manufactured too…. But it’s much less costly to mine them.

Manufactured diamonds are an economic failure no different than solar power, electric cars, water from air and government ’solutions’.

Comment by OneAgainstMany
2018-03-09 15:30:00

“Grown” diamonds — a term the Diamond Producers Association disputes as misleading — cost consumers 30 to 40 percent less than natural diamonds.

Not surprisingly, companies like De Beers, Rio Tinto and other members of the Diamond Producers Association have cried foul, saying lab diamonds are inauthentic. The manufacturers of synthetic diamonds, on the other hand, are promoting the environmental benefits of their process, hoping to attract millennials more concerned about being green and saving money than embracing the tag line “a diamond is forever.”

Comment by Mafia Blocks
2018-03-09 21:55:45

NYT=garbage in garbage out.

Comment by Ben Jones
2018-03-08 10:31:46

‘The average price fell to $767,818, from $875,983 for all housing categories…Last April, prices topped out at an average $920,791 — 24.5 per cent above the previous year.’

‘Sales have since been declining because that month the Ontario government took cooling action by introducing its Fair Housing Policy, including a foreign buyers tax’

Well lookie here rental watch. Did they “build” their way to these whopping price declines? Ho no! All this “we can’t build enough shacks” stuff is nonsense. Cut the government goodies off, stop subsidizing speculation/turning a blind eye to money laundering and crater.

Comment by alphonso bedoya
2018-03-08 21:54:21

“Foreign buyers, typically from China, would purchase four or five houses at a time.”

And no one said….

Comment by HKJ
2018-03-08 10:32:48

Well I am still waiting for prices to crash in California!

Comment by palmetto
2018-03-08 11:19:16

Heh, still waiting in Florida, although you can still find somewhat affordable pockets of homes that aren’t completely disgusting.

Comment by palmetto
2018-03-08 11:29:41

Speaking of Florida, that infamous retirement community (50,000 strong) known as The Villages has been hit by a series of sinkholes:

six, count ‘em, SIX. I wonder if that will put a chill on the popularity of that community.

Comment by Mr. Banker
2018-03-08 11:53:51

“six, count ‘em, SIX. I wonder if that will put a chill on the popularity of that community.”

Market it correctly and maybe you can the sinkholes into a selling point.

Anyone remember the artist that sucessfully marketed his sh1t as art?

Go here …’s_Shit

(Comments wont nest below this level)
Comment by Mr. Banker
2018-03-08 12:07:58

Market it correctly and pukes will pay some very big bucks for a house perched on a cliff that is destined to collapse into the ocean.

Watch “Couple looks on as house falls off cliff” on YouTube

Comment by BlueSkye
2018-03-08 16:41:36

Just as humorous, around here on Seneca Lake there are houses built at the bottom of shale cliffs. Quite the sight when the earth pushes the house out into the lake.

Comment by Mwr
2018-03-08 12:10:31

Slightly off topic but I read recently that a California audit report stated that 1% of the population pay 48% of the CA taxes.
I can’t wait to see what happen when they start leaving.
Remember the story of the hedge guy who left New Jersey for FL and put a 150,000,000 hole in the state budget, and he left when you could deduct more than 10,000 in state taxes.

Comment by Mr. Banker
Comment by OneAgainstMany
2018-03-08 17:47:00

You can tax three main things to generate government revenue: 1) income 2) consumption or 3) wealth.

What particular mix of these any local, state, or federal government uses in its taxation scheme is up where politics come into play. But I think there is a strong argument to be made about increasing property taxes in CA to fund government. Properties, unlike individuals, can’t leave the state. Also, a property tax is more of a wealth tax and less of an income tax, so there is a certain ideological tidiness about it.

After reading about the Vancouver speculation tax, it appears that it is somewhat ingeniously designed tax wealth (i.e. property) but to rebate some of that tax based on whether the taxpayer is generating income.

(Comments wont nest below this level)
Comment by Rental Watch
2018-03-08 12:54:11

The Federal government numbers are similar…top 1% paying 46% of taxes.

It is also worth noting that this statistic is nothing new…it’s generally been between 40% and 50% for the past 20+ years, and was over 50% in 2012:

That said, I also expect more people in CA to pack their bags and head to cheaper locales with the elimination of the SALT deduction.

Another interesting off-topic conversation is about “income/wealth inequality”. Nassim Taleb brought up an interesting point in a recent podcast–that a person in the top 1% in the US don’t necessarily stay there for long. He noted that if you look at the Forbes 400 from 1985 and compare the list to today, you find that a huge number of the families are different from then to now. Likewise, the average tenure for a company in the S&P 500 is less than 20 years (it used to be 50+ years).

In other words, the US system may have persistent inequality in that every year the top 1% make a lot more than most other groups, but who is in the top 1% changes quite a bit from year to year.

This is in contrast to more “equal” countries, where the list of the richest folks is far more static–in other words, if you are part of a rich family in France, your kids and grandkids are far more likely to stay rich than if you are part of a rich family in the US.

He noted that the richest families in Florence Italy today, are the same families that were rich hundreds of years ago.

Comment by OneAgainstMany
2018-03-08 17:58:40

Rental Watch

I would like to see the data behind that assertion as it runs contrary to everything I have read.


It’s not an exaggeration: It really is getting harder to move up in America. Those who make very little money in their first jobs will probably still be making very little decades later, and those who start off making middle-class wages have similarly limited paths. Only those who start out at the top are likely to continue making good money throughout their working lives.

That’s the conclusion of a new paper by Michael D. Carr and Emily E. Wiemers, two economists at the University of Massachusetts in Boston. In the paper, Carr and Wiemers used earnings data to measure how fluidly people move up and down the income ladder over the course of their careers. “It is increasingly the case that no matter what your educational background is, where you start has become increasingly important for where you end,” Carr told me. “The general amount of movement around the distribution has decreased by a statistically significant amount.”

Of course it would be fair to look at intergenerational economic mobility and not just relative mobility of one specific generation. For example, if someone in the 20th percentile is almost certain to stay in the 20th percentile in the US, but they are very likely to exceed their parent’s standard of living (who were also at the 20th percentile), then that may not be such a bad thing. The problem though, as I see it, is that I’ve been reading data that shows that increasingly the younger generations are faring worse than their parents. So not only is relative economic mobility trending more towards EU countries, intergenerational economic mobility is also going backwards from what we have come to expect (e.g. the hope that your children will do better than you did).

The other wrench to throw in there is that income (and wealth) inequality is a whole other angle to look at. This is probably best looked at by the Gini coefficient or by looking at wealth accumulation by deciles or quartiles.

(Comments wont nest below this level)
Comment by Rental Watch
2018-03-09 11:32:46

“Consider that about ten percent of Americans will spend at least a year in the top one percent and more than half of all Americans will spent a year in the top ten percent[1]. This is visibly not the same for the more static –but nominally more equal –Europe. For instance, only ten percent of the wealthiest five hundred American people or dynasties were so thirty years ago; more than sixty percent of those on the French list were heirs and a third of the richest Europeans were the richest centuries ago. In Florence, it was just revealed that things are really even worse: the same handful of families have kept the wealth for five centuries.”

10% of the wealthiest Americans were among the wealthiest 30 years ago (many presumably created their own wealth…were not heirs).
60% of those on the French list were heirs.
33% of the richest Europeans were from families that were rich centuries ago.

So, America might have better or worse social mobility as compared to America of the past. However, it appears as though regardless, the social mobility is greater than in Europe (an oft-cited example of what we should emulate for social mobility).

“The most recent research suggests that in fact, the U.S. has relative mobility rates very close to those in Canada, Sweden, Finland, Norway, Germany, and the United Kingdom.”

“What looks like fairly low levels of relative mobility in the U.S. translates into surprisingly high levels of absolute mobility. My research finds that roughly 40 percent of today’s 40-year-olds who grew up in the bottom fifth of income remain in the bottom fifth. But over 80 percent are better off in absolute terms than their parents, after adjusting for the rising cost of living and declining household size.”

“we don’t know that the United States has lower absolute mobility than other countries.”

Taleb’s comments regarding the wealthiest families in the US vs. European countries seems to indicate that the US at least is among the better places to create massive amounts of new wealth.

Comment by OneAgainstMany
2018-03-09 15:42:56

I am looking forward to reading Skin In The Game. I am a huge fan of Taleb. To this day, one of my all-time favorite books is Fooled By Randomness.

I tried to find the data for the quote that you cited and it was not in the footnote. I am willing to suspend disbelief because I think Taleb is credible, but that particular statistic is a huge outlier to almost all inequality data and social mobility data that I have read in the US.

I actually looked at what he said and it very well may be true, but not prove his larger point. He was stating that 10% of Americans may be in the top 1% of income is probably true. But income is very different than wealth. Looking at income in one year increments may give the illusion of economic mobility. But where someone sits in the pecking order, in terms of total net worth, has gone down precipitously in the US. Not sure if it is higher or lower than the US.

It may also be true that US is the best place to create massive new wealth (like Elon Musk has done moving from South African to the US). But it is also true that the odds of creating this massive amount of wealth are quite low, especially when you don’t start with much wealth to begin with. In this regard, the US seems similar to most other western developed nations.

Comment by OneAgainstMany
2018-03-10 09:21:21

Rental Watch,

I finally had time to read the Medium post by Taleb in its entirety. I look forward to reading all of Taleb’s newest book, but I have not yet done so. I respect Taleb and appreciate his view on things, but I don’t think he is authoritative when it comes to inequality. He is a good thinker though. I wanted to respond to a couple of points that he makes, as it appears as if he has an ax to grind with Piketty, and with Stephen Pinker for that matter.

I also read his academic paper (On the Super-Additivity and Estimation Biases of Quantile Contributions). Since I am not a stochastically trained mathematician, I had difficulty following his theorems, but that didn’t keep me from understanding his major points, which I surmise as:

1) Inequality can appear larger than it is because because sampling can miss extreme values in fat-tailed distributions. He starts out his paper by noting Paretto’s distribution is not really the top 20% own 80% of wealth, but more like top 1% own 70% (instead of the previously held 53%).

2) Adding countries together can be problematic when they are mixed distributions and not homogeneous.

It appears that what Taleb is basically attacking is that the methodology and the data that Piketty used to formulate his theory. He is essentially saying that the structural change in inequality, which Piketty identifies, is possibly related to different sampling methodologies over time. But all of this doesn’t really refute anything that Piketty offers, or any other economist highlighting growing inequality. Someone said it this way:

“It’s also clear from the book that Piketty’s conclusion wasn’t based solely on aggregations of equality data, but also historical returns on capital that would not be subject to Taleb’s bias. In short, at best, Taleb offers an alternative explanation for the historical inequality data. More of a caveat than a refutation.”

I get the sense that Taleb keeps harping on inequality because he views this as the natural order of thing. In Fooled By Randomness he discussed at length the phenomenon of winner-take-all and network effects that mean essentially ingrain inequality into modern capitalist economies with regards to tech.

You may be interested in this review by The Economist of Taleb’s newest book:

Lastly, I think Raj Chetty lays out a pretty compelling picture of declining probability that Americans will do better than their parents did economically:

Comment by jeff
2018-03-08 19:24:29

“I can’t wait to see what happen when they start leaving.”

The Tax System Explained in Beer

KYLE BECKER | MAY 13, 2014 | 7:41 PM

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this…

The first four men (the poorest) would pay nothing. The fifth would pay $1. The sixth would pay $3. The seventh would pay $7. The eighth would pay $12. The ninth would pay $18. The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20”. Drinks for the ten men would now cost just $80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men ? How could they divide the $20 windfall so that everyone would get his fair share?

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100% saving). The sixth now paid $2 instead of $3 (33% saving). The seventh now paid $5 instead of $7 (28% saving). The eighth now paid $9 instead of $12 (25% saving). The ninth now paid $14 instead of $18 (22% saving). The tenth now paid $49 instead of $59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20 saving,” declared the sixth man. He pointed to the tenth man,“but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than me!” “That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D. — Professor of Economics.

Comment by OneAgainstMany
2018-03-08 21:04:36

You need to include taxes as a percentage of income and all other taxes (not just income taxes). These types of analogies are designed to portray the wealthy as the benevolent overlords of a well-functioning economy and if we are not careful they will get skittish and havoc on the economy. It’s a kind of hero-worship that is distorted. The wealthy certainly add to the economy, but they are not getting a raw deal from the tax system. This is a more realistic view of who gets what and who pays what:

(Comments wont nest below this level)
Comment by jeff
2018-03-08 22:11:09

I am very grateful for the “$431,042 in annual property taxes” Tiger Woods pays and other high dollar people in my area pay each year.

Tiger Woods Moved Too, Says Mickelson Was Right About Taxes

JAN 23, 2013 @ 11:38 PM

Phil Mickelson probably wishes he hadn’t mentioned his high federal and state taxes. See Golfer Phil Mickelson Is Not Alone In Fleeing Taxes. When a high income earner mentions high tax burdens, it’s likely to rub someone the wrong way and come off like sour grapes, no matter how deftly he says it.

Mickelson may be worth $73 million, but he likely won’t talk taxes again. He’ll just act. And if he does, he might be more like Tiger. See Tiger Woods admits he left California because of tax rates. That’s right, Woods—worth $600 million—has confirmed that he ‘understood’ why Mickelson might be planning a move from California to Florida or another no tax state.

Comment by Ben Jones
2018-03-08 10:36:14

‘‘For five years, they were basically our bread and butter,’ says Sylvia Morris, a real estate agent who specializes in Unionville, an area of Markham. Foreign buyers, typically from China, would purchase four or five houses at a time. ‘This time last year, I’d put a property on the market and within two or three days, I’d have 10 offers on it,’ she says.’

Five years. And for all those five years these dogs screamed racist at anyone who suggested this was going on.

Ah, the good old days, eh Sylvia? Unless you saved a bunch of that bread and butter, you’ll have to get a real job.

Comment by CorporateShill
2018-03-08 10:40:03

The take away from Canada seems to be monetary policy juiced the market and to fix the Marxists impose a second home tax rather than addressing monetary policy.

Could they not have included a carve out for Canadian citizens that have second homes? Not that I’m generally for carve outs or taxes.

Comment by Ben Jones
2018-03-08 10:53:01

All levels are going after this bubble and they have been raising interest rates. If they pay income taxes they get an offset. You may remember there are big swaths of super expensive, often empty Vancouver shacks where the foreign “owners” claim almost no income.

Comment by CorporateShill
2018-03-08 14:52:24

I did not know that. What are Canadian property taxes like compared to US markets?

Comment by Mortgage Watch
2018-03-08 10:53:50

Hailey, Idaho Housing Prices Crater 15% YOY As Demand For Retirement Properties Plummets

*Select price from dropdown menu on first chart

Comment by Puggs
2018-03-08 12:54:53

Poor Bruce Willis. Doesn’t he have a house there?

Comment by taxpayer
2018-03-08 11:48:47

anyone have the CURRENT p/e of the S&P

no lags please

Comment by Mr. Banker
2018-03-08 12:49:47
Comment by Rental Watch
Comment by Rental Watch
2018-03-08 13:00:25

BTW, I generally don’t like the forward looking data…too much guesswork. HOWEVER, the rear-looking data is missing the key point of the new corporate tax rate. The forward looking Factset data I posted (not yet showing up), I believe takes into account the tax savings.

It would be interesting if someone took the rear-looking data (all S&P 500 companies for the past 10-years) and adjusted earnings based on a 21% corporate tax rate vs. the then prevailing rates, and ran the CAPE on that basis.

The CAPE wouldn’t be as high as noted on the multpl website, but certainly not as low as the Factset data.

Comment by Mafia Blocks
2018-03-08 13:17:55

Housing my good friends.

Castle Rock, CO Housing Prices Crater 10% YOY

Comment by Puggs
2018-03-08 11:51:18

Have we learned nothing?!!

The risk lurking in the US mortgage market.

Comment by Apartment 401
2018-03-08 12:24:39

Realtors are liars.

Comment by Mafia Blocks
2018-03-08 13:07:21

….. and every appraisal apocryphal.

Comment by redmondjp
2018-03-08 15:29:52

That’s a pretty big word you are using there, Haystacks . . .

Comment by Mafia Blocks
2018-03-08 16:07:43

Hello my good friend.

Newcastle, WA Housing Prices Crater 22% YOY As Seattle Area Housing Inventory Skyrockets

(Comments wont nest below this level)
Comment by redmondjp
2018-03-09 10:02:15

Thanks for the laugh there HA, I drive by that neighborhood twice a day and as usual, you are 100% wrong.

Comment by Mafia Blocks
2018-03-09 11:38:52

Hello my good friend.

Jacksonville Beach, FL Housing Prices Crater 8% YOY As Vacation Property Market Demand Collapses

Comment by Ben Jones
2018-03-08 14:03:10

‘John, who asked that his real name not be used, purchased a home in the GTA for $1.3 million in June. An appraisal was conducted soon after. ‘It came back short. Very short,’ he says. ‘I had a small heart attack.’

‘He borrowed $300,000 from a private lender at nine per cent interest under a one-year term, and found tenants rather than flip the property. The rent doesn’t cover the carrying costs, so he’s losing money every month.’

Well he didn’t flip it cuz he would have had to bring money to the table. Call me crazy John but I think I would have got the appraisal before I signed up for a 1M loan. Oh, correction, your name isn’t John. What do you bet “John” would have used his real name if he had scored some sweet equity?

‘under a one-year term’

Five Canadian pesos says he’ll bail by the summer.

Comment by Rental Watch
2018-03-08 14:35:24

I would have thought the million dollar lender would have obtained an appraisal prior to making the loan.

Do we know he has a loan other than the $300k?

“Very short” could very well be a value of $1MM (or less)…which would only make a $300k loan sensible if there was not a $1MM first.

In other words, if he borrowed $1MM to buy a property for $1.3MM and then got an appraisal for well short of $1.3MM, how in the world could he then borrow $300k?

My guess is that he has a loan other than the $300k (the 9% rate certainly implies second position), but that it’s not $1MM…or he wouldn’t have been able to get the $300k loan. I’m guessing $500k or $600k, and the appraisal said $1MM (or thereabouts).

Comment by ironknee
2018-03-08 14:46:34

Hopefully not before he has another, much larger, heart attack.

Parasitic greed heads need to die. Bring back an honest days pay for an honest days work.

Comment by BlackSwandive
2018-03-08 15:21:24

‘He borrowed $300,000 from a private lender at nine per cent interest under a one-year term, and found tenants rather than flip the property.’

Hahaha. I love it. This turd thought he was going to flip a $1.3 million house and got “stucco.”

Comment by azdude
2018-03-08 15:45:59

what a tool deserves to lose his @ss

Comment by oxide
2018-03-08 20:04:33

Did anyone else get the impression that the “private lender” was someone akin to Michael Corleone?

Comment by Mafia Blocks
2018-03-08 20:31:01

Hey Donk

Comment by Neuromance
2018-03-08 16:43:04

I listened to Draghi’s press conference this morning, on the commute. It was very dovish. A promise to continue QE beyond September, and a promise to keep interest rates at this level indefinitely. All until inflation rises. He talked about M1 and M3 growing nicely - M3 at about 5% a year. No hints that monetary policy or QE were anything but efficacious (and of course they are, depending on one’s perspective).

The Dow closed up, US 10 Year closed up (yields down) as a result.

Worth a read:

The only thing that briefly upset the financial markets (and was the very first question) was that the verbiage of the speech changed from last time, to not promise to increase QE. Merely to extend past September.

Comment by Neuromance
2018-03-08 16:51:37

I’m curious about Amazon. Toys R’ Us is about to liquidate and the PR is that it’s Amazon’s fault (never mind the 7.5 billion in debt loaded on the company by private equity); and there have been other bankruptices and liquidations blamed on Amazon.

But… it’s a giant online mail-order catalog. It’s an enhancement over the old big paper catalogs that the department stores used to provide. And it’s multi-store. It has user reviews. But it’s still mail-order. They drop packages on your doorstep, rain or shine, crime or no. I don’t have the numbers and maybe they explain it, but it seems awfully odd Amazon would be considered disruptive.

Maybe it is that disruptive. But IMO worth a bit of skepticism.

Comment by azdude
2018-03-08 17:58:16

people r broke

Comment by OneAgainstMany
2018-03-08 18:17:35

Amazon is part of the story, but not the most important part. The decline of Toys R Us should be properly understood as being inflicted by private equity’s penchant for saddling up good companies with crushing debt:

Comment by palmetto
2018-03-08 19:15:53

Thanks for posting. Sounds like a Bain Capital/Mitt Romney type deal. Fuggin snake.

Stripping out cash and loading a company up with debt. How is this even legal?

Comment by Neuromance
2018-03-08 19:37:22

“One transaction, involving the medical diagnostics company Dade Behring, took place in 1999 as Mr. Romney was leaving the firm, and the other, involving KB Toys, occurred about two years later. Bain and its co-investors extracted special payments of over $100 million from each company, enabling Bain to make a healthy profit even before re-selling the businesses — a practice known as “getting back your bait.” Lenders say Bain is one of the firms that has taken the most in such payments, which companies usually make by taking on additional debt.

Both Dade Behring and KB Toys soon suffered dips in their business. Unable to meet the burden of their debts, each filed for bankruptcy and laid off thousands of workers. Bain Capital spokesmen have said the company did nothing improper.

Mr. Romney, who remains an investor in Bain Capital, said he had not been involved in those decisions but acknowledged that such payments became part of the buyout business “very early on.”

“It is one thing that if I had a chance to go back I would be more sensitive to,” Mr. Romney said. “It is always a balance. Great care has got to be taken not to take a dividend or a distribution from a company that puts that company at risk.” He added that taking a big payment from a company that later failed “would make me sick, sick at heart.”

It’s the NYT, and they have a particular slant. Below is another link which is bit more favorable, though not particularly so IMO.

(Comments wont nest below this level)
Comment by palmetto
2018-03-08 20:25:59

Thanks, Neuro. I’d rather have the eight years of Obama than even four of Romney. And you know, they don’t seem to be all that fond of him even in Utah. Interesting.

Comment by OneAgainstMany
2018-03-08 21:15:37

And you know, they don’t seem to be all that fond of him even in Utah. Interesting.

Couldn’t be further from the truth. Romney will crush anyone who runs. Romney is probably the most beloved politician of all times in Utah. When he came to Salt Lake and turned around the Olympics he engendered a lot of love and loyalty for lifetime. A lot of moderate Republicans also respect him for speaking out against Trump. The hardcore Trump supporters dislike him for this, although it looks like the Russians have been agitating against him:

Russian-backed trolls took to social media following President Trump’s 2016 victory in an attempt to prevent Mitt Romney from being appointed as Secretary of State, according to the Wall Street Journal.

The newspaper’s analysis found that Kremlin linked accounts pushed messages calling Romney a “two-headed snake” and “globalist puppet” and also spread a petition to stop him from being nominated to the high-profile post.

The Wall Street Journal’s findings come after a New Yorker report suggesting that Russia attempted to push Trump toward a more pro-Russia State Department head.

Romney had called Russia the U.S.’s top “geopolitical foe” in the 2012 elections, an idea that many at the time, including President Obama, dismissed.

“It’s not surprising that the Russian troll operation tried to do whatever it could to prevent [Mr. Romney] from being secretary of state,” Ryan Williams, a political strategist and former Romney spokesman, told the Journal.

Trump eventually selected Exxon Mobil CEO Rex Tillerson for the position. Tillerson’s firm has worked in Russia and Tillerson has boasted having a close relationship with Russian Prime Minister Vladimir Putin.

Comment by palmetto
2018-03-08 19:39:16

What it reminds me of is that scene in the movie Goodfellas, where Paulie takes over a nightclub under the guise of providing protection, and he and his gang basically strip all the cash, run up the credit and sell the stuff they buy, run the place into the ground and then set it on fire for the insurance.

This is no different than a Mafia bust-out.

(Comments wont nest below this level)
Comment by palmetto
2018-03-08 19:46:31

Ah, here it is, the scene from Goodfellas where they asset-strip the restaurant and light it on fire:

buck you, pay me!

(Comments wont nest below this level)
Comment by OneAgainstMany
2018-03-08 21:20:39

Interestingly enough, the article that Ben posted yesterday about HCR Manorcare, US’s 2nd largest nursing home operator, likely was a victim of private equity as well.

When buying HCR in 2007, Carlyle assured skeptical state regulators that a leveraged buyout of a nursing home would not put HCR at risk.

But three years later in 2010, HCR sold its real estate for $6.1 billion to what became QCP, arranging a sale-leaseback transaction. Carlyle likely made a guaranteed profit on HCR thanks to the real estate sale, sources said.

HCR then started paying $550 million in annual rent to QCP, and HCR within a few years could not afford the payments.

This is some shady stuff. It should definitely be illegal. I wonder if the new tax law’s treatment around the tax deductiblity of interest will curtail this at all. One can hope!

Comment by tresho
2018-03-09 13:56:45

victim of private equity
“crushed by self-induced debt” is the mechanism.

Comment by rms
2018-03-08 19:56:11

The share of income going toward student loans, housing and transportation leaves little for retail shopping. FWIW azdude is right, “people r broke.”

Comment by Mike
Comment by azdude
2018-03-09 07:04:14

rates up = prices down?

Comment by taxpayer
2018-03-09 07:42:44

add re taxes and ,yes

Comment by Rental Watch
2018-03-09 11:20:17

Well, from a 3.75% rate to a 4.5% rate, reduces purchasing power by about 9%.

I understand there is a lag effect (ie. takes time for this to effect enough market players to have an effect on prices).

I honestly don’t think low rates has been the major driver in prices to date, and so I don’t think this move is going to make one bit of difference in the trajectory of prices. If rates get up to 6% or 7%, then even with low levels of development, I think we’ll see weakening of prices.

For those that think the run up in prices has been nearly entirely from low interest rates, how long do you think this ~10% purchasing power reduction will take to show up in the broad data? 1 year? Less time? More time?

Comment by Sam (SW)
2018-03-09 15:46:41

RW - it seems that easing lending standards are driving prices higher at this point. How much you have to put down always seemed a bigger deal to me than an extra couple hundred a month. This is my gut talking. I don’t have any numbers to back it.

(Comments wont nest below this level)
Comment by Rental Watch
2018-03-09 17:28:00

RW - it seems that easing lending standards are driving prices higher at this point.

I hear this all the time, but I also hear that the Millennial generation is getting into marriage/child-bearing years and starting to buy homes with greater frequency (increasing demand on the margin).

Fannie Mae released their Credit Characteristics for lending with their Q4 Reports:

17.8% of their loans in 2017 were 90-100% LTV, vs. 14.6% in 2016.

Average LTV 75.4% in 2017 vs. 73.6%.

Weighted average FICO? 744 in 2017 vs. 751 in 2016.

All metrics indicate easing credit standards on their face….but one other metric to consider:

Loan purpose: 55.8% of loans in 2017 were for purchase, vs. 44.3% in 2016.

Were standards marginally looser? Or where there marginally more people moving from rentals to buy homes for the first time (who tend to have less to put down and less credit history), and fewer established borrowers refinancing? The latter would skew the numbers as seen.

For perspective, FICO under 620 represented about 0.3% in 2017…during the peak of the madness, the average 2008 and earlier was 10%. Credit may be loosening…but it still doesn’t seem loose to me.

Comment by Mortgage Watch
2018-03-09 21:54:00

90%+ of all mortgages made since 2008 are sub prime.

Comment by OneAgainstMany
2018-03-08 18:22:30

High housing costs and long commutes drive more workers to sleep in cars
Patrick Sisson

March 6, 2018

“Santa Barbara, California, a coastal enclave boasting beautiful beachfront Spanish missions and a nearly $2 billion tourism industry, offers a postcard view of the state’s many natural advantages.

“At night, in about a dozen area parking lots attached to churches, nonprofits, and city property, it also provides a look at California’s continuing affordability crisis. Known as the Safe Parking Program, the initiative, run by a local nonprofit called the New Beginnings Counseling Center, provides a place to park and rest overnight, as well as connections to local government and charitable resources. These lots form a network of temporary rest spots for low-income workers living out of cars and recreational vehicles with few other options.”

“According to Safe Parking Program coordinator Cassie Roach, there truly are few options. The city of nearly 92,000 has a 7 to 10 year waitlist for subsidized housing, a single room is hard to find for under $1,000, and the rental market has a 0.6 percent vacancy rate, according to the city (apartment owners argue that’s inaccurate). Many of her roughly 150 nightly clients, who spend their evenings in RVs or attempting to doze off in their cars, usually spend their days working: 35 to 40 percent are employed, working as painters, gardeners, servers, and even nurses and veterinarians.”

“You would think Disney would be aware of how many workers drive more than an hour to make $13 or $14 an hour,” he says. “It’s so overwhelmingly bigger than the average in Orange County and Los Angeles. Disney should be a leader in this, yet they make the problem worse.”

As Dreier notes, Disney has previously campaigned against proposals to bring more workforce housing to Anaheim, which would ostensibly provide more room for their workers. Dreier’s research found that, due to juggling family and child care issues with oversized commutes, many workers miss shifts. The company has a serious absenteeism issue; why not use its influence and resources to make things easier for its workforce of more than 30,000?

“People love to be a part of the magic,” Drier says. “They love their work, put on a smile, and then they go to sleep in a car, or drive an hour to someplace where they pay 60 percent of their wages for rent.”

Comment by jeff
2018-03-08 19:33:59

Manny! Manny! Manny!

Manny! Manny! Manny!

Manny! Manny! Manny!

And we’ll see you all again in 1974.

Good Evening

Comment by jeff
2018-03-09 07:19:17

This would have been better…

Comment by azdude
2018-03-09 07:30:17

cap ex is down 30% from 2000. WTF?

Where is all the corporate cash going?

Comment by BlueSkye
2018-03-08 20:41:12

I’m going to be sleeping in my car, what my grandson calls my “really big car”, for the next few. Headed for the warm down south for an adventure. Maybe it will be nice around Myrtle Beach. Might boondock with the homeless and the shiftless along the way.

Comment by OneAgainstMany
2018-03-08 21:25:38

I’m strongly thinking about sleeping in my car and working out of Colorado. Just read an article that UC Health has a massive shortage of RNs and is paying signing bonuses of $10k to $20k. Might be worth going next door for a bit.

Comment by azdude
2018-03-09 07:27:15

“there is so much excess capacity in steel there will never b a shortage.” SHP

(Comments wont nest below this level)
Comment by jeff
2018-03-09 07:15:21

“I’m going to be sleeping in my car, what my grandson calls my “really big car”, for the next few. Headed for the warm down south for an adventure.”

If it’s an adventure you’re after OK I guess, otherwise I’m going to…

Comment by azdude
2018-03-09 07:38:45

you took a bath on your speculative bitcoin bets didnt u?

(Comments wont nest below this level)
Comment by Mortgage Watch
2018-03-08 18:33:52

Napa, CA Housing Prices Crater 8% YOY As Residents Flee Crime, Taxes And Failing Economy

Comment by azdude
2018-03-09 06:31:26

haySTAcks take that bs elsewhere please

Comment by Mafia Blocks
2018-03-09 06:44:11


Springfield, VA Housing Prices Crater 7% YOY

Comment by taxpayer
2018-03-09 06:55:31

236 237 226 +4% per sq ft
tx, I’m almost at a 3 bagger here
DOD spending big in this hood

(Comments wont nest below this level)
Comment by Mafia Blocks
2018-03-09 07:37:01

Housing my friends.

Auburn, MA Housing Prices Crater 24% YOY

Comment by taxpayer
2018-03-09 06:53:53

gov hiring way up
spending the last of the real estate tax gains

Comment by azdude
2018-03-09 07:05:52

the biggest export of the US is credit. How would other countries put a tariff on that?

Comment by azdude
2018-03-09 07:18:45

where is the skunk in the woodpile?

Comment by jeff
2018-03-09 09:24:49

More meaningful insight from azdud

Comment by jeff
2018-03-09 09:33:37

Comment by azdude
2018-03-09 07:18:45

“where is the skunk in the woodpile?”

Oh Dear

I take my comment back.


You either should have researched that or you may be the most racis person I know.

skunk in the wood pile

An old saying that means that someone has a little black in them somewhere. Skunk refferring to an African American relative and wood pile representing the family tree.

Comment by Professor 🐻
2018-03-09 09:30:52

Does the Wall Street bull’s renewed vigor give you FOMO?

Name (required)
E-mail (required - never shown publicly)
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post