More Are Looking At An Asset That Won’t Gain In Value
An opinion piece by Alex Pollock in The Hill. “After the peak of the housing bubble in 2006, U.S. home prices fell for six years, until 2012. Are these memories getting a little hazy? The Federal Reserve, through forcing years of negative real short-term interest rates, suppressing long-term rates, and financing Fannie Mae and Freddie Mac to the tune of $1.8 trillion on its own vastly expanded balance sheet, set out to make home prices go back up. It succeeded. Indeed, it has overachieved. Average home prices are now significantly higher than they were at the top of the bubble, as shown by the S&P Case-Shiller national home price index.”
“After 2000, in real terms the housing bubble expanded and contracted quite symmetrically, bottoming out in 2012 just about on its trend line. But it did not resume its trend behavior. The Fed was on the case, and up real home prices went rapidly again, rising over 5 percent a year on average from 2012 to 2017. Their current real level is equal to that of mid-2004, when the bubble was already well inflated, and it is far over — 28 percent over — their trend line as extended from 2000.”
“What can the Fed do about this? Nearly a decade after the 2008 crisis, it needs to withdraw its radical interest rate and investment interventions. I am certain that the Fed does not want to find out what would happen in the market if it actually put its mortgage-backed securities and long-term Treasuries out for bids from Wall Street. So about all, it can continue with the gradualist program, keep up its rhetoric about how very gradual everything is, and hope home prices have a soft landing. It is said that ‘hope is not a strategy.’ But that’s the best the Fed has at this point.”
From The Mercury News in California. “When Nicole Nuss saw the little yellow house in Vallejo, with its white picket fence and huge yard for her beloved dog, she knew she wanted to live there more than she’d ever wanted anything. But in a real estate market where homes fly off the shelf in days and buyers compete with cash offers that are tens of thousands of dollars over asking price, the 38-year-old owner of Cinnaholic bakery in Berkeley worried she didn’t stand a chance.”
“So at the suggestion of her real estate agent, Nuss did something that, at the time, she thought was a bit weird: She wrote the seller a ‘love letter.’ The time-honored practice, in which prospective buyers pour their hearts out while simultaneously trying to flatter the sellers, has become an unofficial requirement of Bay Area real estate transactions.”
“‘You have to write,’ said Oakland and Berkeley-based real estate agent Debra Alber. ‘If you don’t write them, it kind of shows the sellers that you don’t care.’”
From NBC DFW in Texas. “A labor shortage in McKinney is shining the light on a bigger problem in North Texas: Business owners have been posting ads for months, hoping to fill vacant positions. ‘This problem has been going on for a few years, but it’s getting worse because housing prices continue to rise,’ McKinney Mayor George Fuller explained. ‘You can get a job, but you can’t afford housing. The average price for a home in McKinney is $340,000. Just think about the salary it takes to afford a house like that, and then to maintain it. You just can’t do it.’”
The Post and Courier in South Carolina. “Low inventory and escalating prices haven’t depressed home sales in the Charleston area — until now. While still healthy, residential real estate transactions slid 12 percent in February from the same period in 2017, according to preliminary data from the Charleston Trident Association of Realtors. ‘The ongoing low inventory and ever-climbing higher prices are making it more and more unaffordable for many people,’ said Kimberly Lease, president of the association. ‘Those things coupled with rising rates are further pricing people out of homes.’”
From KTVN in Nevada. “The City of Fallon has launched a campaign called ‘Closer Than You Think.’ Fallon is located an hour from Reno and 40 minutes from the growing Tahoe-Reno Industrial Center. While it’s no secret that home and rent prices in the Reno-Sparks area have skyrocketed in recent years, this campaign aims to show both developers and aspiring homeowners alike, that Fallon is full of opportunities, including an incentive program.”
“Mayor Ken Tedford explains, ‘You don’t have to pay your building permit fees up front, when you get done building your house and you close–then you can pay your building fees and loan when you’re done.’ Tedford adds that this applies to developers, too. They do not have to pay building permit fees up front, only when the house has been sold.”
“Tedford says there are currently 300 vacant lots in Fallon, ready for future development, just waiting for developers to build upon them. In the more rural areas of Churchill County, the mayor says Housing Development Authority can give aspiring homeowners grants of up to 5 percent for their down payment.”
From Greenwich Time in Connecticut. “Not long ago, the home rental market in Greenwich rose and fell in contrast to the wider housing market. Pre-recession, about 30 percent of single-family home transactions in town were rentals. By 2009, after the housing collapse, that number jumped to 60 percent before settling back to 36 percent in 2013. Lately, though, the trends have started to diverge — the housing market is relatively healthy, but the number of rentals is still rising. No one is quite sure why, but it’s clear the phenomenon goes far beyond Greenwich.”
“‘To me, renters are on the sidelines. We’re talking about four out of 10 buyers last year who jumped on the sidelines,’ said Kevin Sneddon of Private Client Realty. ‘Half of them are uncertain if they want to live in Greenwich and the other half don’t know where the market is going; they view renting as a protection strategy. … They see real estate as more of an expense than investment.’”
“For now, his examples are mostly anecdotal. Sneddon said one of his clients chose to pay $600,000 in rent over two years because ‘he didn’t want to buy a big-ticket house until he’s certain where he wants to be.’ In his client’s view, Sneddon said, it’s less risky to pay more than a half-million dollars in rent than purchase a home. ‘To me, the most alarming part of this for Greenwich is that it basically speaks to the fact that would-be buyers are renters because they’re unsure about values,’ he said.”
“Of particular concern are situations where homeowners have sold their home for less than they bought it. There are people waiting out the market for one reason or another. Some in those category are like Sneddon’s client who are suspicious of home values; others can’t afford to buy right now. ‘A house that would have been $500,000 20 years ago is now $2 million and salaries haven’t kept up with that,’ said Jane Brash of Coldwell Banker’s Old Greenwich office.”
“On the landlord side of renting, there are several categories: institutions, such as Elk Homes, that have built up portfolios of rentals; individual investors; and homeowners Sneddon says are ’stuck.’ Those are people who ‘can’t sell so they’ll rent because they just need to get out,’ he said. For some home renters, avoiding that scenario is why they haven’t become owners, Sneddon said. ‘There’s a lot of those stories out there, and people want to have less cash tied up in an asset that’s not going up in value. More people are just looking at real estate as an asset that won’t gain in value.’”
From the Greenfield Recorder in Massachusetts. “The story of Bob McCollum and the foreclosure of his Bernardston home is far from a rare case, regional housing experts say. In 2017, there were 103 auctions for properties facing foreclosure in Franklin County, according to data from a western Mass. grassroots advocacy group, ‘Springfield No One Leaves!’ ‘It’s more common than people think,’ said Rose Webber-Smith, lead organizer for the group that tries to prevent evictions in parts of western Mass.”
“As it turns out, McCollum, who is facing a possible eviction from his home after the bank bought it back last Tuesday, is not alone in Bernardston. In 2017, five homes in Bernardston went to auction. And as one might expect in bigger towns, there were more foreclosure proceedings. In Greenfield, there were 22 auctions and in Orange, there were 31.”
“Executive Director of the Franklin County Regional Housing and Redevelopment Authority Frances Pheeny concurred with Webber-Smith, saying her government-funded organization has seen an ‘uptick’ in people they’ve worked with over foreclosures in recent months. ‘For some folks, it’s a misconception that the foreclosure issue is done with,’ Pheeny said, 10 years after the housing bubble burst. ‘but I don’t think it is.’”
“Pheeny said the housing and redevelopment authority hasn’t seen the issue limited to foreclosures from the housing bubble. Instead, it’s ‘generally situations where individuals had some major life change, whether its a loss of a job or a medical issue or a divorce.’”
“In McCollum’s case, he took out a $153,000 loan on an adjustable interest rate in 2003 and later fell ill with cancer, forcing him to stop working and fall behind on his payments. When it’s older people, it’s more likely to be as a result of the housing bubble, Webber-Smith, while with younger people the loans tended to be taken out more recently. ‘When you have a mortgage and one significant life event that can set you back,’ Webber-Smith said.”
‘In 2017, five homes in Bernardston went to auction. And as one might expect in bigger towns, there were more foreclosure proceedings. In Greenfield, there were 22 auctions and in Orange, there were 31′
I’ve found and posted several articles in obscure Massachusetts newspapers regarding falling prices and increased foreclosures for at least 6 months now.
Kenmore, WA Housing Prices Crater 10% YOY On Slumping Seattle Housing Market
https://www.movoto.com/kenmore-wa/market-trends/
Try posting again when you have something correct and useful to add, Haystacks.
Hello my good friend.
Santa Clarita Housing Prices Crater 7% YOY As California Economy Weakens
https://www.movoto.com/santa-clarita-ca/market-trends/
What exactly do you think this shows? Inventory is smaller, houses are smaller, and the price per square foot is higher in that area. That the total price is lower….who cares? The houses are on average 400 sq foot smaller….
In other words, people are selling bottom of the barrel, and smaller, real estate garbage for a higher price than they were a year ago.
I’ll take 13 square foot.
Do you deliver?
In other words, people are selling bottom of the barrel
Or maybe that’s the only thing that’s selling, meaning we’re getting close to the day of reckoning.
The future your betters have in mind for your family:
http://www.businessinsider.com/kowloon-walled-city-photos-2015-2
That’s an extreme example but to me it seems like a lot of working class southeast Asia operates that way as long as they stay below the radar of the authorities. It’s pretty high on the libertarian scale…if there’s profit in it, it happens there. I kinda hate to see that stuff get torn down and replaced by people who kissed up to the authorities.
Not going to add the dramatics of “cratering” ” slumping” and “diving” ….Nor point out markets with only 5 properties…..but there are numerous areas with substantial inventory that are seeing declines of 3% to 19% all over the nation
https://www.movoto.com/tarpon-springs-fl/market-trends/
https://www.movoto.com/kansas-city-mo/market-trends/
https://www.movoto.com/minneapolis-mn/market-trends/
https://www.movoto.com/new-braunfels-tx/market-trends/
https://www.movoto.com/fort-myers-fl/market-trends/
Tarpon Springs…1 home in active inventory…I wouldn’t call this substantial inventory.
KC…Price per square foot down from $115 a year ago to $105 psf today. Legit question about the market here.
Minneapolis…no data from a year ago…hard to draw a trend from a one month difference of a couple of $’s per square foot.
New Braunfels…up $1 psf over a year.
Fort Meyers…up $1 psf over the year.
Trying to match your comments with the links…
Again.$/sq ft valuation is a poor performer as it excludes all items in the transaction except for the structure and the area of dirt directly under it.
Castle Rock, CO Housing Prices Crater 9% YOY
https://www.movoto.com/parker-co/market-trends/
https://www.movoto.com/georgetown-tx/market-trends/
https://www.movoto.com/harrisburg-pa/market-trends/
So, Georgetown is down $1psf year on year…no biggie.
Harrisburg on its face is down 17% year on year, but the sample size a year ago was 5.
Great posts. These are legitimate downward trends. It’s starting in some parts of the country for sure.
I drove up to Salt Lake City and was talking to a friend. His extended family is from Korea. His brother is living with them and he is doing drywall. My friend is frustrated because he keeps going out and looking for $400k houses. My friend tells him that he can only afford something at around $200k max (this is too high, in my opinion). Anyway, my friend’s brother-in-law is convinced that he can stretch for a $400k place, all he needs to do to make the mortgage is AirBnB some rooms regularly.
Lately I’ve noticed a huge trend in the AirBnB to make your mortgage. Where I live (Southern Utah) a lot of the new developments going up aren’t even condos, townhouses, or single family homes. They are zoned vacation rental housing, which are basically condos but the developer charges an extra $100k because, well, nightly rentals! I have no data on this, but I would imagine that we are going to have a massive glut of shadow hotel inventory in many parts of the country.
Lately I’ve noticed a huge trend in the AirBnB to make your mortgage.
It was inevitable when combined with a housing bubble, I think.
It also has a major effect on the rental market, at least it did in San Jose. In the old days the premium for an extra bedroom was only a little more money. Now with Airbnb an extra room is always an extra thousand a month in the bay area. So families that need extra rooms pay through the nose compared to the old days.
“So families that need extra rooms pay through the nose compared to the old days.”
The opportunity cost of having a couple of sprogs?
The opportunity cost of having a couple of sprogs?
Maybe. Just noting that it didn’t used to be that way.
why would anyone buy a 60+ year old house that’s been converted to 4 condos
where’s the hope for an economy of scale?
even big condo projects I’ve been involved w they over pay for everything
Kinda wish I’d have bought a failed cndo conversion about 5 years ago. it was an 8-plex converted to condos, only 2 of which sold before the original owner bailed. I think the other six sold as a package for $400K.
I would’ve used it as apartment rentals and eventually bought out the other 2 but not sure how complicated that would have gotten nor, given the stupidity of prices in Portland, did i want the risk of the 2 owners trying to sell at nosebleed levels as would be the case the past few years.
Did you have a family member pass and leave you considering buying a house from your family or did I dream that?
Either way, are the house prices still as high as they were a few years ago in your hood?
No, that wasn’t me but I vaguely remember someone posting that.
Portland has gotten stupid again. I’ve been tracking the $750k - $1M range because to me, that’s the realistic high end here (above around $1.5M and it’s all over the map) and once it rolls over, prices below that should as well.
This past fall I was seeing drops of 15-25% in that range but the dum-dums seem to be back. Hopefully it’s just and early spring pop and the 25%-off sale resumes.
The prices in Seattle this time around make the last bubble look like child’s play.
Yup. 1987-built 3BR 2BA 2400sf, not improved, sold for $1.1M just a few months ago about a block away from me.
That was a $550K - $750K home not too long ago.
Seattle is absolutely nuts.
I have a 1200+ sq foot condo in belltown (downtown seattle). 2 Points:
1. Between HOA and property taxes (including McCleary decision) - i am looking at $20K in 2020. I have been working on convincing my wife to sell and rent for $3500/month. We can probably get $1.2 M (before realestate agent fees)
2. There is a lot of rental apts (especially in SLU around Amazon). I dont know if rental rates will drop, but i cannot see them rising. I can wait out 3-4 yeras
Realtors are liars.
“‘You have to write,’ said Oakland and Berkeley-based real estate agent Debra Alber. ‘If you don’t write them, it kind of shows the sellers that you don’t care.’”
——————————–
So now not only will these people pay through the nose for this house, but you have to beg, flatter and plead with them?
I’ve heard the “I’ll feed the squirrels” joke before, but if this is common practice these people are absolutely F’ed.
Getting a deal on real estate is made at the buy. This chick ain’t getting a deal.
The “Love letters” were common in the previous bubble.
I have a former coworker who put her Arvada, CO house on the market about four years ago, before the Denver bubble got really frothy. In just one day she received multiple offers, and many had “love letters” telling how they had a family with small kids and they would love the house, etc.
In the end she accept a no contingencies offer, and the buyer paid cash, no loan was involved and no appraisal was made (I believe it was California transplant).
Four years ago.
Living in the Front Range is so overrated.
“Living in the Front Range is so overrated.”
True, but I skied Telluride for the first time last month and
I must say that place is spectacular! I wouldn’t mind a home there if I had an extra $5-$8 million laying around and could pay $36k per year in property taxes. Oh, never mind I’ll just visit.
You could rent a *very* nice apartment in Telluride for $36K/year. You could probably live in a hotel and have your sheets done too.
Then you wouldn’t need to buy a house at all.
Telluride isn’t on the Front Range.
“…but I skied Telluride…”
See any homeless beggars, spent needles or sidewalk stools?
I hear the beer in Telluride is pretty good.
I imagine Telluride and Squaw Valley have a lot in common, and both are very nice places. If you have to ask how much… you can’t afford it.
If you want to see a lot of turned up noses, Squaw Valley is a great place to go.
APT 401 - this from just a couple of days ago in the Denver (com)Post:
https://www.denverpost.com/2018/03/05/metro-denver-average-home-price/
Article points out that average Denver metro home price is now at 1/2 million pesos!!! No wonder folks are moving outta here.
“Show me the money” You can keep yer letters.
“…You have to write,’ said Oakland and Berkeley-based real estate agent Debra Alber…”
It’s never been a better time to be a squirrel.
The only letters I have written and will ever write to owners are of the, “do you want to sell yer beat up shack to me for peanuts?” variety.
Braintree, MA Housing Prices Crater 8% YOY On Failing Subprime Mortgages
https://www.movoto.com/braintree-ma/market-trends/
“…going into 2002, Lakes Powell and Mead were nearly full…today they are 1/2 full.”
And when California gets expelled from the Union, they will be empty
The Fed treasury will be a lot emptier that’s for sure.
Just one of the many lies Clownifornians tell themselves to justify living in a third world asylum. No one would look at both assets and liabilities of that sh!thole and want any part of it. The myriad of bond issues and the pension obligations make it Venezuela 2.0. 37 million people with a majority of them parasites - no thanks.
The few unicorn companies that have a business model that almost prints money can sprout wings like a pegasus and go somewhere else with ease. Hollywood? Lol. But hey, it never rains - which is why they have to drink their own waste now. Genius!
Please secede, your corrupt state will not be missed. I’ll look forward to the videos of you fighting a hundred other people for a bag of rice on liveleak
You need medication. All the spite you spew out all the time. Get help.
Housing my friend.
San Francisco, CA 94109 Housing Prices Crater 13% YOY
https://www.zillow.com/san-francisco-ca-94109/home-values/
https://snag.gy/m5EzRB.jpg
Go away HA
DebtDonkey
Andover, MA Housing Prices Crater 12% YOY
https://www.movoto.com/andover-ma/market-trends/
Didnt respond to a single point - which is the typical libtard tactic that shows youre allergic to facts and hopelessly stuck in your rage cage. Kinda like Hillary
Even taking away my political differences with Clownifornia elites (could say the same about corrupt Illinois), the math sucks and fortunately I realized that in my late 20s and started plotting my escape to a much nicer place and lifestyle. Whenever I go back it really IS like seeing a bunch of rats, clawing at each other for that little piece of cheese. Tough way to live, so I can understand y u mad bro!
“The Fed treasury will be a lot emptier that’s for sure.”
“California is, indeed, a donor state, but just barely. It receives $0.99 in federal expenditures per dollar of taxes paid,”
More than willing to bet there is more Govt. cheese flowing to Cali that isn’t showing in this accounting.
Does California give more than it gets from Washington D.C.?
By Chris Nichols on Tuesday, February 14th, 2017 at 1:04 p.m.
In January 2017, the California Legislative Analyst’s Office said by several measures California is, indeed, a donor state, but just barely. It receives $0.99 in federal expenditures per dollar of taxes paid, which is below the national average return for states of $1.22 per dollar paid, according to its review of a 2015 New York Comptroller study.
http://www.politifact.com/california/article/2017/feb/14/does-california-give-more-it-gets-dc/
it actually put its mortgage-backed securities and long-term Treasuries out for bids from Wall Street
what is a May 2005, las vegas ,zero down 30 yr worth ?
any bids?
isn’t there any market established for this sht?
We’ve been asking this for years. When the Fed finally tries to sell all the QE paper, or whatever, who is going to buy it?
Then again, maybe all the bad loans have been flushed out by now and the remaining paper will be in better shape overall. How many of those 2005 Vegas no-down (and I/O neg-ams) are actually still paying on the mortgage anyway? Wouldn’t they have walked by now.
Or is most of the feds mortgage paper nasty stuff?
Even sold over a ten schedule it’s a lot of paper
Does the Fed have to sell the QE paper?
If I had some and needed cash, I could see having to sell. But unlike the Fed I can’t conjure money out of thin air.
We’ve been asking this for years. When the Fed finally tries to sell all the QE paper, or whatever, who is going to buy it?
You still think they are ever going to sell this paper?
IMHO, they aren’t.
So, far, they have only telegraphed reducing their holdings by not repurchasing paper when debt matures/gets paid back.
See page 32 of this report:
“This program is gradually and predictably reducing the Federal Reserve’s securities holdings by decreasing the reinvestment of the principal payments it receives from securities held in the System Open Market Account (SOMA). Since October, such payments have been reinvested only to the extent that they exceeded gradually rising caps (figure 44).
So, the initial cap for RMBS was $4B…so, in excess of $4B in any given month will be reinvested…then to $8B, etc.
Eventually (see figure 44), the cap will exceed the amount of debt maturing each month…and so they won’t be buying any new debt.
According to this figure, that point will be reached by Q4 2018…at which time the Fed will be out of the business of buying new RMBS….however, they have not said they will be active sellers of RMBS to continue the reduction in the holdings at a more accelerated pace.
https://www.federalreserve.gov/monetarypolicy/files/20180223_mprfullreport.pdf
And this re the SOMA fiasco and pensions….
http://investmentresearchdynamics.com/is-fed-pumping-stocks-to-keep-pensions-solvent/
I ran into a guy in charge of real estate investments for GE’s pension fund just after the crash. He is quite smart, and I thought he’d be able to really dig through the post-crash rubble of real estate markets to really buy some great assets…he noted that he was not buying broken assets. He went on to say that GE needed assets that generated cash flow–they needed to pay pensioners…and so, he wasn’t buying broken assets on the cheap to fix them, he was buying stabilized assets. And he seemed bummed about it.
And this was 8+ years ago. There was already demands on pensions then due to required payouts for an increasing number of retirees.
It is also worth noting that real estate has really been one of the few places that pension funds could get meaningful current cash flow. Not everything is a 3% cap rate apartment in SF. A stat that I heard a few years back was that pension funds globally increased their allocation to real estate (I’m guessing for the cash flow)…however, there wasn’t enough available investment property around the globe to fill the institutional allocation to real estate–a force that continued to push cap rates lower and lower and lower.
And now we see the 10-year going up…at what point will pension funds abandon the push to RE, and start buying debt (or perhaps becoming a lender)?
Well, we’ve had 2 years of declining life expectancy in the US, so if this continues then the pension crisis might just take care of itself. The US government could just continue to subsidize the sugar industry and continue to push down life expectancy while at the same time creating nice revenue streams for health care conglomerates and pharmaceutical companies.
OMG - so evil
But clever
OK thanks rental watch, that makes more sense. So they aren’t buying any new paper; they are just waiting for borrowers to pay the loans back and putting the cash into some other account.
But I thought the original hitch was that the borrowers wouldn’t be able to pay the loans back because the loans were so risky. So when all is said and done, the Fed will have still have some debt, but no more principle will be coming in. Maybe by then, inflation will render that debt to be only a small hit. And in the meantime, the Fed could buy some higher quality paper and fill in the hole with principle payments from the new loans.
Hey Donk
But I thought the original hitch was that the borrowers wouldn’t be able to pay the loans back because the loans were so risky.
That was never my understanding…but certainly the Fed’s critics’ main battle cry. But, every month, $10’s of billions of principal comes back to the Fed, that they have been dutifully re-investing in more paper.
My understanding is that they are not directly lending to borrowers…they are buying bonds that are backed by loans made to borrowers (which is why the rate they are getting paid is less than 3% on the mortgage paper).
And those bonds (sold by the GSEs) are explicitly guaranteed by Uncle Sam.
And so if there is a default on the bonds…the US Government borrows more money to make good on the bonds. And for now, a major buyer/holder of that paper is…the Fed.
Oh, what a tangled web we weave.
Mountlake Terrace, WA Housing Prices Crater 9% YOY As Seattle Area Housing Correction Expands
https://www.movoto.com/mountlake-terrace-wa/market-trends/
Again with the lies. There is no housing correction in Seattle.
It’s coming, and it’s going to be horrendous.
Hello my good friend.
Newcastle, WA Housing Prices Crater 23% YOY As Seattle Area Housing Inventory Skyrockets
https://www.movoto.com/newcastle-wa/market-trends/
‘You can get a job, but you can’t afford housing. The average price for a home in McKinney is $340,000. Just think about the salary it takes to afford a house like that, and then to maintain it. You just can’t do it.’
We’ve got posters who can twist themselves up into a pretzel with statistics (my favorite ones: “Oh, this is not like 2005!”). But the mayor put his finger on the only thing that matters.
Just think of the salary it takes….
It doesn’t take much thinking. It takes about $120K income — and you can spread that out over two spouses. So it’s possible. Couple of 35-year old teachers could probably do it, or one middle-manager with wifey at Costco, or a single lawyer.
The problem is that $345K is the average. Two teachers is not average. Lawyer is not average. High-pay middle management is not average.
Incorrect.
Based on historical price and price/income ratio, It’s $170k/yr income necessary.
Hey Cheeto. Based on present-day interest rates, $120k/year is the income necessary.
Incorrect.
The long term historic trend is 2x income irrespective of debt rates.
morts qualify at 4x income these days
not a good idea but……low rates
Not to mention the high property taxes in Texas. What would it be on that 340K house?
A quick looksie on zillow shows $5500 per year for house assessed at 300K.
https://www.zillow.com/homes/-8305-Desert-Dunes-Trl,-McKinney,-TX-75070-_rb/
My friends moved from Yonkers to Tomball tx, $550K house $12K+ taxes so half the price less then half the taxes they are very happy
That $5500 in property tax is more than we pay all year in rent. So yeah, I wouldn’t move there for the low pay jobs.
You are renting for less than $500/mo? I know you’re in Utarrr and all but that doesn’t compute.
Yeah, I am. Good deal. Cedar City still has $500/month places (2 beds/ 2 bathrooms).
Yeah, I am. Good deal
Didn’t you say you’re renting from a family member? Given that, I don’t think any statements concerning what you pay in rent are broadly applicable — it’s just simply not representative of your local market or pretty much anyone else’s situation.
(that’s not to criticize your situation — by all means, take advantage of it)
Yes, that is correct. And I largely agree with your point. I pointed out Cedar City to the north is more in line with what we are actually paying. It’s not our area, but within commuting distance.
Market rate in our area is about $900/month, up from about $550/month 3 years ago. However, there have been a bunch of new student developments and so I think things are dipping a bit.
Some interesting tidbits on McKinney from wikipedia:
The median income for a household in the city was $63,366, and for a family was $72,133.
So the price to income ratio is about 5X. Not good.
As of 2009, 70% of McKinney’s total population born outside of the United States had arrived to the U.S. in the 1990s
So, most are immigrants, and are probably poorly educated, with next to no prospects for upward mobility.
Indians and Asians. They tend to cluster.
In their own groups yes. With each other not so much. But neither are the poorly educated with no prospects referred to.
“The average price for a home in McKinney is $340,000.”
No money left to spend at Skydive Spaceland, in Whitewright.
McKinney is way out from Dallas. It’s the last decent-sized town until you reach Oklahoma. Lots of demanding retirees moving there (entitled older folks with an I’ve-got-mine-to-heck-with-you attitude), but not too many jobs nearby that will support those prices. It’s basically just a giant endless suburb dotted with strip malls on the side of 75 that has all the growth (west, towards Frisco) and a semi-slum with bars on the windows of the buildings on the other side of 75.
One of the attractions of it was that, up until now, the main north-south highway running through it (75) has been toll-free, unlike all the other highways in the northern suburbs. But now there’s a big push on to make it yet another toll road. And that just ads to your monthly expenses.
And it’s one of those towns Obama’s HUD sent a bunch of Section 8 people to hoping to improve their lives. I don’t know if it has improved their lives any, but it certainly has made the town more “interesting”.
downtown mckinney a slum? you need more medication
lots of JPMC and Toyota folks settling in McKinney
They have good upper middle class salaries.
Rancho Cordova, CA Housing Prices Crater 10% YOY As Greater Sacramento Area Housing Correction Broadens
https://www.zillow.com/rancho-cordova-ca/home-values/
*Select price from dropdown menu on first chart
Weekly Summary: HBB-Reported Purchase Price Declines
Posted every Tuesday. Key and quarterly summary posted the last day of the quarter.
–
March 7-13
> -43% Ontario - Richmond Hill / AVG (17P-Feb18)
> -37.8% [Manhattan - Upper East Side / PCA COP (Feb18)]
> -30% Ontario - Aurora, Markham, Vaughan / AVG (Apr17-Feb18)
> -24.2% [Manhattan - Midtown / PCA CND (Nov16-Mar18)]
> -18% Australia - Zuccoli / SP LND DEV (Feb18)
> -15.5% Manhattan / AVG SP (yoy -Jan18)
> -14.3% Manhattan / AVG SP (yoy -Dec17)
> -12.4% Toronto / AVG EXT (yoy -Feb18)
‘So about all, it can continue with the gradualist program, keep up its rhetoric about how very gradual everything is, and hope home prices have a soft landing. It is said that ‘hope is not a strategy.’ But that’s the best the Fed has at this point’
I’ll note that foreclosures are way higher than historical averages and have been for over a decade.
July 26, 2006
Some housing bubble reports from Wall Street and Washington. “Downward momentum in the U.S. housing market is leading some of America’s biggest mortgage lenders to launch new cost cuts and risk reduction strategies that suggest growing concern that the outlook is worsening for the $9.5 trillion home mortgage industry.”
“‘I’ve never seen a soft-landing in 53 years, so we have a ways to go before this levels out,’ Countrywide CEO Angelo Mozilo said on a Tuesday conference call. ‘I have to prepare the company for the worst that can happen.’”
“At New Century, one of the nation’s biggest subprime lenders, CEO Brad Morrice told Reuters the company has tightened some credit requirements as it puts ‘more thought into loans you want to make or don’t want to make.’”
The Union Tribune. “An avalanche of investors paying top dollar to buy office buildings, San Diego’s commercial real estate market may be showing signs of slowing. GreenPoint Mortgage vacated 110,000 square feet on Willow Creek Road along the I-15 corridor. And Capital One is leaving several floors in the First National Bank tower downtown.”
From MarketWatch. “Pulte Homes announced today net new home orders for the quarter were 9,455 homes, which represent declines of 30% and 29%, respectively, from prior year second-quarter results. ‘Our second quarter results reflect the changing dynamics being experienced in the homebuilding industry,’ said Richard Dugas, Jr., CEO.”
“‘The supply of homes for sale continues to increase, while greater buyer uncertainty about purchasing a home at this time is being further impacted by their inability to sell existing homes and the effect higher prices and interest rates are having on overall affordability,’ Dugas said.”
“Meritage Homes today announced second-quarter results for the period ended June 30, 2006. ‘Demand from investors and speculative buyers has decreased dramatically; inventories are up; and price concessions have increased. These conditions make it more difficult for our buyers to sell their existing homes, resulting in higher order cancellations. While gross orders for the second quarter of 2006 were down 17% compared to the previous year’s quarter, higher cancellation rates reduced net orders by 28% for the same period,’ said CEO Steven Hilton.”
“For the first time in more than a decade, home prices could start to fall around the country in coming months, the NAR said Tuesday. David Lereah, NAR’s chief economist, said he expects ‘price numbers to start deteriorating.’”
“On Thursday, the Commerce Department will report new-home sales for June, and economists such as Phillip Neuhart of Wachovia expect those figures, too, to show continuing weakness. ‘The numbers are not fully counting cancellations, which builders are reporting at a very high level,’ Neuhart said.”
From Bloomberg. “The National Association of Homebuilders ‘believes that the Federal Reserve has been relying on deficient inflation measures to rationalize the interest rate hikes that have been taking a serious toll on the housing sector,’ Joseph M. Stanton, the association’s chief lobbyist, wrote.”
“‘Ironically, much of the recent increase in `core’ consumer price inflation that the Federal Reserve is trying to control with higher interest rates is coming from a weakening housing market, which is increasing the demand for rental units. That translates into a sizeable increase in the large `owners’ equivalent rent’ components of the core inflation measures,’ Stanton said.”
“‘Fighting an increase in core inflation stemming from this component is an inappropriate use of monetary policy, since tighter policy will cause rents to rise further and put additional upward pressure on the core inflation measures,’ he argued.”
“Tens of thousands of new and existing condo units are on the market, and thousands more are under construction. In other instances, some older apartment complexes, which were to be converted to condos, will be renovated and remain on the rental market.”
“The Commerce Department reported yesterday that the number of unsold homes on the market rose to 3.725 million units, almost 40 percent more than a year earlier. ‘This implies that we are only at an early stage of home sale problems,’ economist Ken Mayland told his clients. ‘At some point along the way, prices could crack big time.’”
http://thehousingbubbleblog.com/?p=1134
OMG
You cannot realize the amount of confusion. Condos in downtown Seattle are just so unrealistic in raw price - let alone the HOA and property tax
it is just so nuts - but buyers are so kewl / high-tech that it does not matter ???
hope home prices have a soft landing
Turns out you CAN simulate a “soft landing” if you blow a bigger bubble and make everything worse. If you call that a landing. I don’t. Solid ground is still nowhere to be found when you’re falling at terminal velocity through a terminal velocity updraft.
Sarasota, FL 34321 Housing Prices Crater 7% YOY As Market Floods With New Inventory And Builders Slash Prices
https://www.zillow.com/sarasota-fl-34231/home-values/
*Select price from dropdown menu on first chart
Gotta love it. My former LL is trying the “it fell through escrow..let me try raising the price and see if that draws ‘em in” approach:
2/22/18: Listed for sale at $1.65m
2/26/18: Pending Sale
2/26/18: Back on market
3/10/18: Price change to $1.7m
Now would be an awesome time for the market to crash….
(this is East side of Seattle, BTW)
What was the rent on the place?
$3600, if I remember correctly.
So a back of the envelope calculation from an investor’s standpoint puts the fair market value, based upon rent, at $360,000. The real estate crash here is going to be epic.
The real estate crash here is going to be epic.
Sure hope so. Owner bought the house for $950k in April, 2006, and I don’t believe did any updates/upgrades.
“Their current real level is equal to that of mid-2004, when the bubble was already well inflated…”
Good Lord Oxy, cover your eyes.
Thanks, but I’m OK. Denver/Austin/DFW/Seattle has been blowing up the average, while DC has been rising a steady 3%/year. My house is probably closer to a real value of 2002.
“Tampa Realtor Indicted For Foreclosure, Bankruptcy Fraud”
https://www.inman.com/2018/02/16/tampa-realtor-indicted-for-foreclosure-bankruptcy-fraud/
https://finance.yahoo.com/m/5e04b226-0818-3adb-b7ce-cbbf5cdeabfd/mortgage-refinances-fall-to.html
pickup truck and granite going down,yo
“Buyers can expect to see more of their paychecks go to their mortgage payments this year,” said Danielle Hale, chief economist for Realtor.com. “This spring’s homebuyers will have to decide: Do they give up some desired home features to get into that lower price range, or do they dig deeper into their wallets?”
I move that they dig deeper into their wallets. Much, much deeper.
😁
Another day, another 100+ point drop in the DOW…
I have to chime in on the McKinney comment. A $340k home there is still laughably cheap. True taxes are around 2.4% so the carrying cost is over $2k per month, but the salaries of professionals can handle it with ease.
I was offered relloaction to Dallas from San Diego to work as a middle level software engineer in Dallas. They offered me the same salary I was getting in SD. And that $340k 4 bedroom home cost $1000 less dollars per month than my 2 bedroom condo in San Diego.
On top of that selling the San Diego condo would bet at least a 30% down payment on that $340k ho.e. Dallas locals may think those prices are high. But for transplants getting offered nearly the same slaley in Texas as in Cali the prices are stupidly cheap still even for a single income earner.
Companies like Texas Instruments are easily paying their average engineer enough to carry a $450k home, in Frisco at their nastiest prop tax rate, on a single income. The fact that you can save money and still buy a nice house for under $350k just makes things all the better. So I am not sure how they can say that no one can pay those prices.
I was surprised to see that truely expensive Dallas homes in the $600k+ range are running into the same issue as California. In that the new tax law is losing them money because of the huge break they used to get on very high property taxes. California’s housing problems are real and rooted in the inability to build moderately priced single family homes. A problem completely foreign to North Texas. But I would take California income tax over Texas property tax any day of the week. If my taxes are going up I want it to be because I am making more money. Not because everyone thinks my house is suddenly worth more…