Local Flippers Competing Against Wall Street Flippers
A report from MarketWatch. “The National Association of Home Builders’ monthly confidence gauge ticked down one point to a reading of 69 in April, the group said Monday. The closely-watched sentiment tracker from the home builder lobby group hit its highest point since 1999 in December, and has fallen every month since then. The 69 reading is still quite strong. In the go-go days of the housing bubble, between 2004 and 2005, sentiment averaged 68. Still, the fact that confidence is declining so steadily is notable. When NAHB’s index started to fall in late 2005, it was one of the signals that foreshadowed the coming housing bust.”
From Inside NOVA. “The housing inventory is low nationwide, with a three-month supply that’s half what’s considered the equilibrium rate. Permits to build single-family homes have been down ever since the recession of the late 2000s, said Ken Wingert, senior legislative representative for the National Association of Realtors. People also are staying in their homes an average of 10 years, double the tenure that occurred in 1980, he said.”
“Retiring Baby Boomers trying to downsize their living quarters are competing for the same smaller housing units with Millennials just entering the real estate market, Wingert said. In addition, huge student-loan burdens have led young people to delay purchasing homes by about five years, he said. Perhaps most ominous was this statistic: Average incomes rose 15 percent between 2011 and 2017, but housing prices increased 48 percent during that period, Wingert said.”
“‘There has got to be a tipping point,’ he said. ‘This is not sustainable.’”
From CNN Money. “Zillow is the site you go to when you want to know how much more the house you bought a few years ago is now worth. But the real estate information company is planning to get into the business of buying and selling houses too. The company announced it was looking to potentially flip homes in the Phoenix and Las Vegas areas, saying in a press release that ‘when Zillow buys a home, it will make necessary repairs and updates and list the home as quickly as possible.’”
“The practice of flipping a home — buying it, fixing it fast and then selling it — can be very lucrative. But it is also risky. That seems to be the reason why shares of Zillow plunged 8% Friday. It didn’t help matters that the company also warned it would lose money in the first quarter — even though it boosted its sales forecasts. Zillow CEO Spencer Rascoff defended the shift in strategy though, arguing that it makes complete sense for Zillow to be involved in buying and selling homes. ‘The days of pushing a button and generating an email to a real estate agent is no longer as magical as it was in 2005,’ Rascoff said.”
From the Tennesseean. “Multi-billion-dollar real estate investment firms own nearly 1 percent of single-family homes in the greater Nashville area and have converted 3,060 houses into rental properties, according to a new study. But, since entering the Nashville market in 2015, their business model has shifted, said Tennessee State University associate professor Ken Chilton. The firms are buying spacious homes near good schools in suburban communities that attract well-educated families with incomes of roughly $75,000. They’ve shifted from buying homes at the lowest-end of the market to snatching up houses for $300,000 and more, Chilton said.”
“The increasing popularity of rental housing is mirrored in the growth of short-term rental companies such as Airbnb. ‘Some people are waking up to find out that 10 homes on their street have been bought out by rental companies in the last five years,’ Chilton said. ‘This is no longer our parents’ or grandparents’ housing market, where a Realtor puts a sign in the yard. Now we’re fighting against the Airbnb people who are competing against the local flippers and the Wall Street flippers.’”
From Bloomberg. “The biggest buyers of leveraged loans are weakening safeguards that limit how much risk they can take, amping up the potential pain for investors when the economy slows. The buyers, known as collateralized loan obligations, are beginning to erode protections in their funds that, for example, prevent them from purchasing too many smaller loans that can be hard to sell later on, according to market participants. The CLOs are dialing down these limitations to boost profits for the money managers that put the complicated structures together.”
“The shifts mean that investments designed to be relatively safe, namely highly-rated bonds sold by CLOs and backed by loans, could end up being riskier than they appear. That has some echoes with structured securities sold during last decade’s housing bubble, which often ended up being stuffed with mortgages that were weaker than investors had expected, even if CLOs are still seen as being far safer than last decade’s collateralized debt obligations.”
“Another relatively new change is the notion of ‘deemed consent,’ according to S&P CLO analyst Sean Malone. To make changes to CLO documents, the manager usually has to track down enough bondholders who agree to the shift. Under the deemed consent principle, if bondholders don’t respond to a manager notice of a change, they are deemed to have agreed. While this provision makes sense in some cases where the burden of getting 100 percent approval is too high, the language opens the door for misuse, according to Vaibhav Kumar of Silverpeak Credit Partners.”
“‘As the CLO documentation went to majority consent, the language was too loose and could be abused down the line by bad actors,’ Kumar said.”
From The Real Deal. “Manhattan isn’t the only part of the U.S. with a slowing luxury real estate market. High-end homes across the country are taking longer to sell, according to a new report by Concierge Auctions. A whopping 72 percent of luxury homes in the U.S. spent more than 180 days on the market in 2017, up from 59 percent in 2015.”
“Westchester County’s market is particularly sluggish. Homes that spend more than 180 days on the market sell for 62 percent of the asking price on average, compared to 71 percent countrywide. Luxury properties in Westchester spend 798 days on the market on average, according to the report, a total only surpassed by Nashville, Cape Cod and Atlanta.”
“Miami homes take 608 days to sell on average, while properties in San Francisco take a paltry 55 days. Beverly Hills luxury homes averaged 347 days on the market while luxury properties in Belair typically stay on the market for 251 days, according to the research. Luxury homes in Palm Beach, Florida averaged 476 days on market.
“In Manhattan, luxury homes priced at $4 million and up spend an average of 359 days on the market, according to Olshan Realty.”
From the Milwaukee Biz Times in Wisconsin. “Milwaukee was one of 53 metropolitan areas that posted a year-over-year increase in foreclosures in the first quarter with a 21 percent increase over the first quarter of 2017. Indianapolis, Indiana led the pack, up 148 percent in foreclosures during the first quarter, followed by Minneapolis-St. Paul, which was up 64 percent; Louisville, Kentucky up 36 percent; Austin, Texas, up 30 percent, and Oklahoma City, up 23 percent.”
“Nearly half, 45 percent, of all properties in foreclosure as of the end of the first quarter were tied to loans originated between 2004 and 2008, according to the report. ‘Less than half of all active foreclosures are now tied to loans originated during the last housing bubble,’ said Daren Blomquist, senior vice president at ATTOM Data Solutions. ‘Meanwhile we are beginning to see early signs that some post-recession loan vintages are defaulting at a slightly elevated rate, a sign that some loosening of lending standards has occurred in recent years.’”
From the Alton Daily News in Illinois. “More than a decade after the national housing crisis, four Illinois communities still have some of the worst foreclosure rates in the nation. Attom Data Solutions’ quarterly foreclosure report shows that Rockford, Peoria, Cook County and the Quad Cities are all in the top 20 metropolitan areas in terms of foreclosures per total homes in the first quarter of 2018. Vice President Daren Blomquist said the housing crisis is so far gone that Illinois’ foreclosure woes can longer be blamed on that.”
“‘[Illinois] loans originated in the last seven years since the end of the Great Recession are performing not as well as the rest of the country and falling into default at higher rates,’ he said.”‘
“At one foreclosure for every 335 homes, the Rockford metropolitan area has the seventh-highest foreclosure rate in the nation. Illinois had the fourth-highest percentage of foreclosed homes in the nation, behind New Jersey, Delaware and Maryland.”
“Bob Nieman, a veteran Rockford real estate agent, said his area’s lagging economy and high property taxes are the biggest reasons for so many bank-owned homes. ‘Add high taxes with high crime and you’ve got an exodus from the state of Illinois and the Rockford area,’ he said, adding that banks are extraordinarily hesitant to list homes that they’re sitting on.”
‘Vice President Daren Blomquist said the housing crisis is so far gone that Illinois’ foreclosure woes can longer be blamed on that. ‘[Illinois] loans originated in the last seven years since the end of the Great Recession are performing not as well as the rest of the country and falling into default at higher rates,’ he said.’
Got crow rental watch?
Ahem…
‘banks are extraordinarily hesitant to list homes that they’re sitting on’
Why would banks be hesitant to list homes when prices are at the peak?
Because this article is about one small part of the country…not about the country as a whole.
Here is the whole quote:
““Add high taxes with high crime and you’ve got an exodus from the state of Illinois and the Rockford area,” he said, adding that banks are extraordinarily hesitant to list homes that they’re sitting on.”
The article starts off by saying:
“More than a decade after the national housing crisis, four Illinois communities still have some of the worst foreclosure rates in the nation.
Attom Data Solutions’ quarterly foreclosure report shows that Rockford, Peoria, Cook County and the Quad Cities are all in the top 20 metropolitan areas in terms of foreclosures per total homes in the first quarter of 2018.”
—————-
I don’t understand why you continue to counter my broad perspective–that 1.2MM housing starts is too few generally for the country and that generally foreclosures have been cleared up–with articles specifically about certain markets that have localized problems.
Both can be true at the same time. The market can be broadly undersupplied, with some local markets being undersupplied. Loans can be generally in good shape, with some local markets doing poorly.
With 25 million excess, empty and defaulted housing units, nobody is going to build more unless they’re getting a contract up front.
With 25 million excess, empty and defaulted housing units, nobody is going to build more unless they’re getting a contract up front.
What percentage of the “excess, empty, and defaulted housing units” have essentially rotted into the ground in the past decade? I know of a few, that my parents had speculated on, that still haven’t completed foreclosure…
….. Not to mention the 35 million rotting houses just beginning to empty as boomers head to the grave.
Culver, OR Housing Prices Crater 26% YOY
https://www.movoto.com/culver-or/market-trends/
It must be close to a full decade now since you were called out on this stat. Pleading to P Bear to back you up and nothing. Posting a link to Barry Ritholtz that didn’t support your nonsense statistic.
Housing my good friend. Housing.
Henderson (Foothills), NV Housing Prices Crater 6% YOY
https://www.zillow.com/foothills-henderson-nv/home-values/
https://snag.gy/m5EzRB.jpg
‘this article is about one small part of the country’
Sound like more than that:
‘Milwaukee was one of 53 metropolitan areas that posted a year-over-year increase in foreclosures in the first quarter with a 21 percent increase over the first quarter of 2017. Indianapolis, Indiana led the pack, up 148 percent in foreclosures during the first quarter, followed by Minneapolis-St. Paul, which was up 64 percent; Louisville, Kentucky up 36 percent; Austin, Texas, up 30 percent, and Oklahoma City, up 23 percent.’
‘Nearly half, 45 percent, of all properties in foreclosure as of the end of the first quarter were tied to loans originated between 2004 and 2008, according to the report. ‘Less than half of all active foreclosures are now tied to loans originated during the last housing bubble,’ said Daren Blomquist, senior vice president at ATTOM Data Solutions. ‘Meanwhile we are beginning to see early signs that some post-recession loan vintages are defaulting at a slightly elevated rate, a sign that some loosening of lending standards has occurred in recent years.’
‘Nearly half, 45 percent, of all properties in foreclosure as of the end of the first quarter were tied to loans originated between 2004 and 2008,”
There’s a schlonging on the horizon.
Yeah, they haven’t even cleaned up from the 2000’s and here we go again. And today’s delinquency rates are multiples of historic norms. All this la-de-dah about shack loans being solid is bogus and always has been. How bout that 10% delinquency rate in Florida? They mention it and change the subject.
Context…
“a total of 189,870 U.S. properties with a foreclosure filing during the first quarter of 2018, up 4 percent from the previous quarter but still down 19 percent from a year ago and 32 percent below the pre-recession average of 278,912 per quarter from 2006.”
And going to the source document:
https://www.attomdata.com/news/market-trends/foreclosures/q1-2018-u-s-foreclosure-market-report/
“The report also shows a total of 74,341 U.S. properties with foreclosure filings in March 2018, up 21 percent from an all-time low in the previous month but still down 11 percent from a year ago — the 30th consecutive month with a year-over-year decrease in U.S. foreclosure activity.”
However, not all is rosy:
““Meanwhile we are beginning to see early signs that some post-recession loan vintages are defaulting at a slightly elevated rate, a sign that some loosening of lending standards has occurred in recent years. Consequently, foreclosure starts are trending higher compared to a year ago in an increasing number of local markets — some of which are a bit surprising given the overall strength of housing in those markets.””
And:
“Counter to the national trend, 82 of 219 metropolitan statistical areas analyzed in the report (37 percent) posted year-over-year increases in foreclosure starts in the first quarter, up from 20 percent of markets posting year-over-year increases in foreclosure starts in Q1 2017.”
—more markets are losing ground this year than last.
It is worth noting that in an overall flat market (not getting better or worse), you would expect roughly half of markets with an increasing foreclosure rate, and half with a decreasing foreclosure rate. We’re getting close to that point, but not there yet.
And BTW, the article got one fact wrong…Milwaukee is not 1 of 53 markets that had an increase in foreclosure rate, it is one of 82 that had an increase (out of 219 total markets).
It is one of the large markets with such an increase, of which there are 23 (of 53 total large markets).
The most concerning stat in the entire article?
….that the 2018 FHA foreclosure rate is higher than that of FHA loans written in 2017.
Usually it takes a while for loans to start going bad…foreclosure rates rise with time for any given vintage (an older vintage should have a higher percentage than a more recent vintage)…this means that the 2018 underwriting is meaningfully worse than 2017….a trend worth watching.
That all sounds get but when there are foreclosure moratoriums in effect in all 50 states, what good is that data?
“Because this article is about one small part of the country…not about the country as a whole.”
LMFAO. You didn’t even answer the question.
Your question assumed incorrect facts…in Illinois, home prices are not back to peak.
https://fred.stlouisfed.org/series/ILSTHPI
Illinois back to ~92% of peak.
The high foreclosure rate in these locations implies that these parts of Illinois are even worse…or else people would simply sell their homes rather than have a foreclosure on their blemish.
Which the data supports…
https://fred.stlouisfed.org/series/ATNHPIUS17031A
Cook County at 80% of peak.
https://fred.stlouisfed.org/series/ATNHPIUS40420Q
Rockford at 85% of peak.
They don’t have data on the others.
Oh, please….close enough to make my point completely relevant. You’re like a smarmy politician at times.
“close enough to make my point completely relevant. You’re like a smarmy politician at times.”
The question was that of a crooked lawyer…”when did you stop beating your wife?”
When 0% to 3% down payments and neg-am were prevalent pre-crash, being 20% below peak is VERY relevant.
Your question implied that “banks” could simply sell and be made whole…so, why aren’t they?
Being 20% below peak in Cook County means that when you factor in cost of fix-up, sale, neg am, etc, a large percentage of low/no down payment loans that were made between 2004 (home index value of 130) to 2009 (home index price value of 131) are underwater (current home index value of 127).
That’s 5 years of mortgages at great risk of being underwater for lenders who could foreclose and sell if they wanted.
I suspect that the pools of loans that include Cook County mortgages may not have been very diversified from a borrower profile perspective (lots of low/no-doc loans), but are probably very diversified from a geographic standpoint.
In other words, if you were a special servicer on a pool of loans that were scattered across the country, and 1,000 of those loans defaulted (again across the country), and you were serious about your fiduciary duty to the investors in that pool, which ones do you take through the foreclosure process most quickly?
That’s easy…you foreclose on the homes that promise the most recovery first, and hope that the rising tide of home prices helps on the rest while you work through the low hanging fruit. And the more recovery you accomplish for the investors, the more patient they will be with you as you work through the rest.
BTW, “bank” I suspect means “lender” in the journalist vernacular…none of this stuff is showing up in the FDIC data, but is being managed by non-bank servicers/lenders–as the loans were packaged up and sold into MBS pools.
Geezuz, you sure do blather on. You sound like you’re the one orchestrating this giant scam. This is nothing even remotely resembling how lenders or the housing market have historically worked. What you’re describing isn’t even possible without massive collusion between banks and big government. Yuck.
PS- You hilariously discount the impact on pricing of houses which have sat empty for years upon years and have fallen into disrepair - the low hanging fruit for squatters. By the time the bank goes to sell them, they’re going to be worth pennies on the dollar if they’re not complete teardowns.
You’re like one of those engineers who never works on his product, and can’t understand why it’s garbage. “But it all looked good on paper…”
How bout that 10% delinquency rate in Florida?
Florida - The Grifter State
PS- You hilariously discount the impact on pricing of houses which have sat empty for years upon years and have fallen into disrepair
Except there were only 1,000 such Zombie foreclosures in the entire state of Illinois in 2016.
There simply aren’t that many of them.
What you’re describing isn’t even possible without massive collusion between banks and big government.
Only if you believe that banks hold all these mortgages. They don’t.
You seem to have forgotten that the banks were making the loans, packaging them up, getting them rated, and selling the resultant sh*tty securities as quickly as possible…passing on the risk to the investors.
That was a hallmark of the problem…the banks that were underwriting the loans never expected to be taking any risk on them (because they were selling them), so they didn’t give a crap about sound underwriting.
What is happening now has far more to do with choices that servicers of the loan pools make, than with choices banks are making.
‘there were only 1,000 such Zombie foreclosures in the entire state of Illinois in 2016. There simply aren’t that many of them’
This guy has been following Chicago shadow inventory a long time and has this just this morning:
Chicago Shadow Inventory
Despite the increase in bank repossessions noted above, which should have moved a bunch of foreclosures out of the pipeline, the number of Chicago homes in the foreclosure process actually rose once again to the highest level in 5 months. The graph below shows the long term history of this “shadow inventory” and, after a long term decline, it has ticked up the last couple of months.
You’re full of crap as usual.
“You’re full of crap as usual.”
Except there were only 1,000 such Zombie foreclosures in the entire state of Illinois in 2016.
Where does that data come from, RW?
What is happening now has far more to do with choices that servicers of the loan pools make, than with choices banks are making.
Aren’t the big banks actually the servicers for most of these loan pools? In other words, it IS choices banks are making.
Ben, I thought RW was referring only “Zombie foreclosures”; I could be reading it incorrectly, but it looks like your graph is for all foreclosures. I think those are apples and oranges.
I was criticized for not thinking about VACANT foreclosed homes, and the effect on prices of their disrepair. ZOMBIE foreclosures are such vacant homes in the foreclosure process.
Zombie foreclosures are not the same as shadow inventory, which the guy you posted about tracks–which are homes in the foreclosure process, but may very well be occupied by someone–we’ve all heard the stories of people living in their home for years after they stop paying on their mortgage.
https://www.realtytrac.com/news/q2-2016-u-s-residential-property-and-zombie-foreclosure-report/
“States with the most vacant “zombie” foreclosures were New Jersey (4,003), New York (3,352), Florida (2,467), Illinois (1,074), and Ohio (1,064).”
PIC…RealtyTrac used to post about this frequently, but stopped…the most recent article I found from them was in 2016, which I just posted (which will show in a few minutes).
My guess is that they stopped posting about it because the total numbers became insignificant in the grand scheme of things.
Eat your crow. Eat up.
BTW, the guy who was at RealtyTrac posting about zombie foreclosures, was the same Daren Blomquist that contributed to the story and data from Attom (his new gig).
Aren’t the big banks actually the servicers for most of these loan pools? In other words, it IS choices banks are making.
Not always…there are non-bank servicers as well…Ocwen, Nationstar Mortgage, etc.. However, it’s a fair point…WFC is a monster in servicing–well over $1.5 Trillion in loans.
It is important to understand though that these loans are not on the bank’s balance sheets…they don’t own them. There is no “nudge, nudge, wink, wink” from the regulators that allow banks to simply sit on massive numbers of homes that the banks foreclosed for themselves.
They are servicing the loan pools for third party investors–which is outside the oversight of bank regulators–and they need to act in the best interest of the investors that actually own the loans/homes.
So, when people are upset that banks aren’t dumping the homes to “clear” the market, and claiming that the regulators are complicit, they are missing the fact that the loans (and accordingly the homes following foreclosure) are not owned by the banks, or regulators, but third party investors.
If the government stepped in to force these banks and non-bank servicers to process the foreclosures rapidly…against the interest of those who actually own the debt/property, can you imagine the lawsuits?
They are servicing the loan pools for third party investors–which is outside the oversight of bank regulators–and they need to act in the best interest of the investors that actually own the loans/homes.
Doesn’t that assume that the trustees of the mortgage pools are paying attention, and forcing the servicers to act in their best interests? I had definitely gotten the impression somewhere along the way that the servicers actually get paid _more_ for mortgages that are in the foreclosure process, and thus they have no incentive to move things along to a conclusion; it’s directly against their interest to do so. So as long as the trustees will let them drag it out, they’re incented to drag it out.
Portland, OR Housing Prices Crater 14% YOY As Land Prices Plummet
https://www.zillow.com/portland-or-97239/home-values/
*Select price from dropdown menu on first chart
‘A whopping 72 percent of luxury homes in the U.S. spent more than 180 days on the market in 2017, up from 59 percent in 2015′
That’s quite a shortage. And it mentions - Nashville!
What is interesting, at least here in my little burg, is that houses under 250K sell fast. But the local builder boyz seem only interested in building 400K+ McMansions, which arenow sitting unsold. Also, from what I can see anecdotally, new home construction has come to a screeching halt here. Lots of apartment construction still going on, and commercial too.
The few subs I know say they’re still turning down work and are not bidding on everything that comes their way. On the surface they seem to be doing well, driving 70K pickups, new big azz boat, Harley, etc.
This does remind me of an HVAC guy I used to know. During the previous bubble he was doing great. All the toys, mega house on acreage, pricey vacations, the works. Then the music stopped and he lost everything.
Waaaay less profit in that $200k-250K home compared to the $400k-650K homes. And it’s all about maximizing profit now before the other guy does.
And…
“Retiring Baby Boomers trying to downsize their living quarters are competing for the same smaller housing units with Millennials just entering the real estate market” Wingert said.
Don’t you just hate all those people wanting to buy something that’s not the most profitable for all the people involved in building and selling them? They deserve those profits! S-class ain’t going buy itself…
And all the older starter homes < 200k are snapped up by the landlord class for rentals.
Sucks to be seeking a reasonable modestly sized house to buy now.
“luxury homes”
Code language for overpriced irrespective of the fact all these houses use all the same materials costing the same ($50/sq ft for lot, labor, materials and profit).
If you want to sell, start slashing because housing demand is at a 20+ year low and falling fast.
Yeah, right. Every lot is just dirt, every house is built the same.
Please go back to your trailer park.
DebtDonkey
Mount Vernon, VA Housing Prices Crater 17% YOY
https://www.zillow.com/mount-vernon-va/home-values/
Luxury is oversupplied.
Not housing generally.
BTW, I spent the last week in NYC…tons and tons of building STILL going on (long construction cycles). Even some folks I know that have been in/around the city for a couple of decades noted that there was a lot of construction going on—the pain in NYC will continue for a while.
after 30 days there’s usually a price drop
Nashville and portland are the remaining supposed hot markets
that’s all folks
Denver, CO 80211 Housing Prices Crater 8% YOY As Loans Originated Since Great Recession Fail To Perform
https://www.zillow.com/denver-co-80211/home-values/
*Select price from dropdown menu on first chart
“According to U.S. Census data, 85% of Idaho’s 15,784 net new arrivals from other states came from California in 2016.”
https://www.wsj.com/articles/boise-idaho-feels-the-growing-pains-of-a-surging-population-1523793600
“85% of Idaho’s 15,784 net new arrivals from other states came from California in 2016.”
I wonder how many of them have Fat Clownifornia Pensions to spend in Idaho?
Plenty. Add to that fact, the related housing sale. The californian leaving leaves with the equity in the house and has a lot of cash to spend in Idaho. The person that bought the house in California has a huge loan backed by the shaky collateral of the house. This will not end well for California. Of course, it has been the huge housing bubble that has fueled a lot of the growth in California for the last 11 years so it is just payback time.
They bring their debt with them.
And many are also bringing a portable job/income, which far surpass local earnings. Very crazy market here right now. I want this thing to tank. Trying to be patient.
I know two different long time families in the bay area that moved to Idaho in the last 90 days…
I’m sure that many are equity locusts. Sell the shack in San Jose for 1.5M, buy a Mc Mansion for $500K in Idaho, pocket the difference.
That said, I think that a Bay Area transplant to Idaho, even Boise, is in for some serious culture shock.
No bums on the street, few illegals, reasonably priced homes, low taxes, $2 gas,…..the horror!!!!
Don’t worry, they’ll get right to work dragging Idaho down to CA’s level - turn that blue state red and welcome *all* the illegals, homeless and criminal organizations with open arms…
/Can you guess who has had their fill of liberalism for the week already?
You mean turn the red state blue? You must be really distraught.
“Can you guess who has had their fill of liberalism for the week already?”
Then vote them out. King County just can’t seem to find it within them to do just that. So more of the same you will get.
lol, yep - just like the 50’s they find so deplorable.
Be curious how long it is before they whine about “muh ethnic foods” and that house doesnt clean itself - who’s going to maintain the yard? We need Maria and Jose!
Truth is a lot of what I call the middling class tried to live like royalty, with third worlders as their serfs. Keeping a big house/yard takes work, work which they are not equipped to do and they sure wont let their precious snowflakes partake of manual labor.
oxide - yeah.. having that kind of day today.
BlackSwandive - the trend is there, but we’re a good ways away from any tipping point around here.
The explosion in homeless is starting to wear people out along with taxes, etc. A good example is my wife… she’s as much of a liberal democrat progressive as you can get.. but has been increasingly harassed by the homeless when going to and from her job in Lower Queen Anne. Not that long ago she asked me “Should I get a Concealed Carry Permit?” At that moment I was scanning the horizon for airborne swine.
Plenty of Mexicans in Idaho. They came for the ag decades ago.
“A good example is my wife… she’s as much of a liberal democrat progressive as you can get.. but has been increasingly harassed by the homeless when going to and from her job in Lower Queen Anne. Not that long ago she asked me “Should I get a Concealed Carry Permit?””
She’s getting exactly what she voted for. Poetic justice.
Yes - Belltown, Lower Queen Ann, Leschi, Wallingford etc. …
It is amazing how may people for the last 20 years have been voting for ‘progressive folks’ and are now feeling the impact.
We have a friend that is half-owner in a yoga studio. The wierdos have broken in 4 times since August 2017. They trash the place overnight
We have a friend that is half-owner in a yoga studio. The wierdos have broken in 4 times since August 2017. They trash the place overnight
That’s weird, alright. Most break-ins are junkies looking to score—and everyone knows that there is a ton of valuable stuff to steal at a yoga studio, right? Hmm, now that I think about it, maybe homeless looking for a good supply of mats to sleep on?
There’s a fine line between Led Zeppelin and homeless. Either way the room gets trashed.
That said, I think that a Bay Area transplant to Idaho, even Boise, is in for some serious culture shock.
A coastie can experience culture shock in the central valley.
I grew up north of SF in Sonoma County, and I felt right at home when visiting friends in Northern Idaho.
“I grew up north of SF in Sonoma County, and I felt right at home when visiting friends in Northern Idaho.”
What does that even mean, “felt right at home?” Because the Idaho Panhandle is NOTHING like Sonoma County. Like zilch.
I was in Idaho for a few days in 2010. You couldn’t even give a house away the market was so dead. I talked to a guy who had purchased a house at the peak thinking he and his wife were going to flip it. They got stucco and the thing was worth 50% of what they paid at the time we were talking. Idaho is going to be a slaughterhouse once this thing turns.
“Idaho is going to be a slaughterhouse once this thing turns.”
Agreed. Same fate for Colorado too.
Central Denver is going to be especially schlonged.
Well that explains why Idaho mortgage default rate is higher than every state surrounding it.
Hailey, ID Housing Prices Crater 26% YOY As Mortgage Defaults Accelerate
https://www.zillow.com/hailey-id/home-values/
https://snag.gy/m5EzRB.jpg
According to this link, Idaho’s foreclosure rate is better than average, and that Delaware, New Jersey, Maryland, Connecticut and Illinois are the five worst, with Idaho at #36
The five best are South Dakota, North Dakota, Montana, West Virginia and Vermont.
https://www.bankrate.com/finance/real-estate/foreclosures-by-state/default.aspx
West Virginia is a surprise, you think between the state of the coal industry and the opioid epidemic, it would be high.
Alta Loma, CA Housing Prices Crater 7% YOY As Housing Correction Ravages Los Angeles Area
https://www.movoto.com/alta-loma-ca/market-trends/
WSJ has an article about a national housing “shortage.” But when you dig into it, its a puff piece the source for which is an industry group of builders.
But these days, nobody can tell what’s real anymore. I call BS on WSJ.
“The increasing popularity of rental housing is mirrored in the growth of short-term rental companies such as Airbnb. ‘Some people are waking up to find out that 10 homes on their street have been bought out by rental companies in the last five years,’ Chilton said. ‘This is no longer our parents’ or grandparents’ housing market, where a Realtor puts a sign in the yard. Now we’re fighting against the Airbnb people who are competing against the local flippers and the Wall Street flippers.’”
It’s very sad that this is what’s become of shelter in the United States.
This got me wondering if there are any AirBnB’s in my neighborhood, so I took a look. There are three; Two rent rooms for $80 and one rents the whole house for $200. All are withing a three block radius.
There’s just one in my neighborhood, but it’s only six blocks away. I had no idea.
I wonder if this will be the reason that real estate price will not likely to come down since there are a lot of investors with deep pocket. I keep hoping that when the rent decrease the investors will dump their houses, hence normalizing/ correcting the real estate prices. However, I think these investors are just looking for stable returns (rent) on their down payment for the long haul.
Imagine what a major PITA running an AirBnB would be. You need to clean it every day after somebody leaves. Fawk that.
It is true but Airbnb does provide a mechanism for people in some locations to hang on to the house longer. I think it will mean less foreclosures in areas such as San Diego than occurred last time. Of course, I think it will have very little impact in areas such as Toledo, Ohio. Nothing wrong about living there but it usually is not identified as a tourist destination.
I could see airbnb getting the hammer if people are using it for human trafficking in this country, look at what happened to backpage. And as I said above, how many people are using third world slaves to clean their homes & maintain their yards, including these places? Take that supply of cheap labor away and you think these moguls are going to be cleaning the toilets between stays? LMAO!
I’ll do a bigger post at the bottom. But I visited some model homes over the weekend and they are definitely marketing the extra room with its own entrance now as part of the house you can use to make money when the inlaws/parents aren’t there.
Carl, etc …
If Everyone in the neighborhood has an ADU / MIL unit, what percentage of them will be vacant nearly all the time?
Much like the Apple iOS app store - there are nearly 3 million apps, but Apple doesn’t care that 99.9% of them will be all but totally ignored. They make their money on the total pass through, not the success of the individuals.
And don’t get me started on asking the pertinent question: How desirable and useful is that subdivision you visited the model homes in for someone needing a short term rental - is it close to events or stadiums, national parks or tourist attractions? Or just another boring suburb away from things?
Sell the sizzle and upsell the buyers on visions of sugar plumbs.. er dollars they will be making …
marketing the extra room with its own entrance ??
Next Generation house. Most production builders offer this design now.
They were marketing it as multigenerational housing. But then on a completely separate note they were also blatantly marketing it as a money maker.
Ahh, I didn’t consider that - good to know that’s much more of a thing now.
Wait.. what does that say about the expected future?
How desirable and useful is that subdivision you visited the model homes in for someone needing a short term rental - is it close to events or stadiums, national parks or tourist attractions? Or just another boring suburb away from things?
Good point. The area is kind of a boring suburb. The exception to that is skiing at Tahoe. Particularly spring break. It’s still a drive up there. But refer to the $2000 parking ticket post for south Lake Tahoe. There are advantages to being in a sane area farther away where the community wants your business.
So yeah, it’ll be empty most of the year, but desirable on occasion. But that doesn’t stop sugarplums from dancing in heads.
Downtown seattle here.
I have a friend here with a very nice 2 br condo in downtown seattle. He is in high-tech. When he has 2-3 weeks consecutive on the road, his wife will stay with here parents (4 miles away) ….
They will AirBnB (either for a single stays or multiple). This is how they are building up savings for their retirement.
When he has 2-3 weeks consecutive on the road, his wife will stay with here parents (4 miles away) ….
It seems like those short stays would force you to keep all of your actually personal stuff under lock and key. I wouldn’t want to live as though my own place were a hotel room.
I believe AirBnB and it’s ilk (VRBO, etc) are a structural gamechanger, and we haven’t figured all of it out and caught up to the impact it is having (and will have going forward).
A lot of things we could say about it- more than we have time for here.
You guys (Ben, you too!) should definitely read this if you haven’t already
Here’s how South Lake Tahoe became home to the $2,000 parking fine for Airbnb renters
https://www.rgj.com/story/money/business/2018/04/09/vacation-home-rentals-airbnb-lake-tahoe-vhr-fine-ordinance/460517002/
Another thing AirBnB has made significantly more popular is “unofficial middlemen landlords” - People who rent out an apartment or house on a regular longer term lease, claiming they are living there, but are actually turning around and renting it back out short-term via AirBnB - i.e. two layers of rent-seeking, with one doing it by deceiving the other. I’ve found multiple examples of this around Seattle, and even had a friend who took advantage of one such setup to live in the U-District for 3 months. Usually these are individuals who are “renting” several places simultaneously.
Just looking around here, I’ve seen several apartments on Mercer Island (just off I-90) pop up on AirBnB - the listings are cagy & hand-wavy about the actual location, but I know those buildings well enough to id from the photos, and know that subletting and re-renting is prohibited. It just doesn’t stop people trying to make a buck as the middleman.
Another thing AirBnB has made significantly more popular is “unofficial middlemen landlords” - People who rent out an apartment or house on a regular longer term lease, claiming they are living there, but are actually turning around and renting it back out short-term via AirBnB - i.e. two layers of rent-seeking, with one doing it by deceiving the other.
That seems to be what Casey Serin is now trying to make a living teaching other people how to do just down the road from here.
Haven’t you heard? Everyone is supposed to have a “side hustle” these days.. maybe two or three even..
( The crime of course that that “main gig” is cutting it less and less for the middle and working classes at time goes on, leading to more and more of these behaviors. )
maybe two or three even
How uniquely American…
Everyone is supposed to have a “side hustle” these days
AKA “career portfolioing”. So in addition to the day job, people are expected to also drive their car for Uber, deliver for Amazon, pick up dry cleaning or walk dogs on Task Rabbit, rent out a room in their house via AirBnB, groom dogs, teach a yoga or tai chi class at the community center and maybe sell stuff on Amazon or Ebay.
Colorado - It just makes step back and say “What the hell happened to us?”
Ok, in my case I know what happened - my ex-wife is mostly to blame - but what’s everyone else’s excuse?
(and my ’side-hustle’ is better than 99.8% of everyone else’s so
)
Property rights
If u own it rent it out however u like
The landlords will find out about this illegal subletting and there will be a heavy price to pay. The people who do it will get sued for damages and lose. All rental contracts specifically state that you cannot do it.
Allen, TX Housing Prices Crater 6% YOY As Market Floods With Inventory
https://www.movoto.com/allen-tx/market-trends/
Holy cow. Went to several homebuilder subdivisions with model homes over the weekend in the Folsom/El Dorado Hills area.
First off, expensive. You can have 3br, 4br, or 5br. But no matter which you choose they are all 4000 square feet and start at just under 800k (think almost a million by the time you take delivery). Just after seeing a spectacular older home in Granite Bay for 750k it made no sense to me. And this wasn’t some frou-frou custom builder. This was Toll Bros.
There was always one small token choice on the list that was 1 story 3br for “only” low 700s to start. But they made sure that wasn’t the one you would choose.
We were looking for anybody interested in building 3000 square feet or less for under 600k and there was nothing. We did get a few ideas for flooring options that we liked but what’s up with these huge kitchen islands that you would have to climb on top of to clean the middle? It all looked designed to cater to a socialite party fantasy with little provision for daily reality. Model home pools (add another 100k) perfectly placed under balconies at just the right distance for the neighbor kid to try to jump off drunk while you’re away and end up a quadraplegic.
At this point it seems better to wait for land to crash and buy a lot.
As I said above - it’s to maximize the profit and ROI on all the land purchase, all the fees and permits, etc etc.
Which again, as noted above, leads to more of demand crunch on the smaller (and cheaper ) homes.
I had a 4500sq ft house once near Dallas - really nifty thing, 14 rooms, 1400 sqft 2-level deck (with connecting spiral staircase), 12 foot deep pool, 3.5 car garage, yada, yada, yada…
This was early 2000s - It cost me at least $600 a month to heat/cool (all year round) despite 5 separate high-efficiency (18+seer) HVAC systems. Property taxes were ~$9K a year and always something needed maintenance. And the things was - I barely used half the house. We had 2 very small kids and a dog. Some rooms went weeks without anyone going in to them.
Never again.
Thank god I was able to sell it before the worst of the ‘08 cratering (in part due to this blog - thanks Ben!) even though I brought a check to closing (I also knew I would be divorcing her cheatin’ azz soon - extra motivation).
My new house? ~2800 sq ft, and it could be 300-400 sq ft smaller if done correctly and still feel wonderfully spacious. Room utilization is near perfect for us… Cheaper taxes and way cheaper energy costs/operating costs.
…and none of the builders around here are making anything near this size (oo smaller), either speculative or to order.
The moral of my rant? We don’t need so many huge stinkin’ homes (but builders and sellers “Need” the highest profits) - Future inventory will be at even more of a mismatch to future demand.
seems better to wait for land to crash and buy a lot ??
Make sure you do complete “due diligence” if you decide to venture down this road Carl. It’s a mine field of potential “Why did I do this”.
It’s a mine field of potential “Why did I do this”.
Point noted. It’s not my area of expertise. Just seemed like a good way to actually get the house you wanted. The other way being to find a beater of the right size and layout and then make it what you wanted. I’m fortunate that I actually like the stuff from the 90s rather than considering it hopelessly small and out of date.
And compared to that new Toll Bros development the older neighborhood in Granite Bay was so nice I wanted to cry just looking at it. Could be a lot of ugly neighborhood politics hiding in the background but man it looked good.
Your eyes are not deceiving you. Granite Bay is sweet.
This was the one we liked. The pictures don’t even do justice to the back yard pool looking out across the water. And the streets through the neighborhood were impressive. Everything looked really good compared to a new cookie cutter McLuxury subdivision. And “only” 2700 square feet with “outdated” everything.
https://www.zillow.com/homedetails/9691-Swan-Lake-Dr-Granite-Bay-CA-95746/17722549_zpid/
04/06/18 Price change $750,000-3.8% $280
03/14/18 Listed for sale $779,900 $291
02/07/17 Listing removed $3,395/mo
01/25/17 Listed for rent $3,395/mo
10/13/16 Listing removed $749,000 $280
09/08/16 Price change $749,000-4.0% $280
09/05/16 Price change $779,900+4.1% $291
07/02/16 Price change $749,000-4.0% $280
05/23/16 Price change $779,900-3.7% $291
04/28/16 Listed for sale $810,000 $303
07/17/07 Sold $810,000 $303
05/26/06 Sold $810,000+113% $303
07/28/99 Sold $380,000+513% $142
10/06/95 Sold $62,000 $23
Last record was probably the lot. Just can’t give up on overpaying back in 2007.
I wouldn’t have enough milk crates to furnish that place.
Stanley Johnson lived in Granite Bay didn’t he?
https://www.youtube.com/watch?v=PV_YAeXOSiw
That Granite Bay house is a perfect example of different strokes for different folks. I absolutely despise it. Not only the architecture, but the complete and total lack of privacy in the backyard. I would be miserable living there, but then again I do not like spending a lot of time indoors, I like to be outside in the yard, etc.
Bradenton, FL Housing Prices Crater 30% YOY As Seniors Liquidate Retirement Homes
https://www.movoto.com/bradenton-fl/market-trends/
Jeff Bezos is the richest man in the world, keep shopping at Amazon:
“Amazon warehouse staff are peeing in bottles because bathrooms are hundreds of yards away.
One ex-worker said staffers fear they’ll get into trouble for taking too long away from the job.
The Amazon warehouse in question measures 700,000 square feet, and some of the 1,200 workers face a 10-minute, quarter-mile walk to reach the two toilets on the ground floor of the four-story building.”
https://nypost.com/2018/04/16/amazon-warehouse-workers-pee-into-bottles-to-avoid-wasting-time-undercover-investigator/
Sounds like a pretty piss poor design for the building. I blame city planners.
“I blame city planners.”
Really Dave?
I blame the developer and Amazon for piss poor tenant improvement plans.
And yes, I recognize that it’s expensive to cut into concrete to lay more pipe in the case of a one-story building (and no fall in the pipe for sewer to flow, etc.). But these are 4-story buildings–you could easily ad bathrooms on the upper 3 floors without losing much square footage.
and Amazon for piss poor tenant improvement plans ??
Common RW. You know better. Planning had to approve those tenant improvement plans. Not seeing ADA compliance for bathrooms on every floor is piss poor oversight.
This property is in the UK….no ADA.
“Planning had to approve those tenant improvement plans.”
Of course they did, but it’s not the planner’s responsibility to design usable interior improvements for every user…each user has their own needs, it lies on the user’s shoulders primarily.
Amazon knew best how they were going to use the space and did space planning with the developer. If they proposed bathrooms on each floor, the planners would have approved that plan too (assuming the plans were proper).
The fact of the matter is that Amazon and the developer cared more about floor loads, stacking, cost of improvements, and probably sprinklering to protect all the GI Joe’s with the Kung Fu Grip.
They didn’t give a thought at all to the people who would occupy the building.
Remember, Amazon’s 1-2 hour delivery is performed by minimum wage workers, trying to survive on tips–they are hardly fighting first and foremost for workers.
Oops. My bad. I did not see it was in UK. Still piss poor planning.
“Still piss poor planning.”
Hehe… literally.
Blame lack of math.
It takes the average person less than 20 minutes to walk a mile casually, more like four for a quarter mile.
If the four story building is 700,000 ft2, it would be 400 ft or so on a side. If the bathroom is sort of in the middle, 300 ft max from the distant corner. Do you need to take a pee bottle with you if you go 300 ft from your comfort station? That ain’t no quarter mile.
Bathrooms in these buildings are typically not in the middle of the building, they are usually in a corner.
And the floors are usually mazes of shelving, so not usually straight lines (I’ve walked through one of these kinds of buildings).
Quarter mile is 1,300 feet.
Under your ideal circumstances, it’s 600 feet round trip.
I can easily see how it can be a quarter mile round trip when you factor in shelving, stairs, etc.
Do you pack a pee bottle when your comfort station is 300 feet away? Is 300 ft a quarter mile if there is shelving? No wonder the NYPost is still in business.
“Zillow is the site you go to when you want to know how much more the house you bought a few years ago is now worth. But the real estate information company is planning to get into the business of buying and selling houses too. The company announced it was looking to potentially flip homes in the Phoenix and Las Vegas areas, saying in a press release that ‘when Zillow buys a home, it will make necessary repairs and updates and list the home as quickly as possible.’
…
Zillow CEO Spencer Rascoff defended the shift in strategy though, arguing that it makes complete sense for Zillow to be involved in buying and selling homes.”
____________________________/
Isn’t there a gigantic potential conflict of interest here? Could Zillow tailor its website to make a market look “hot,” or represent prices in such a way as to spur interest for properties it’s trying to flip?
Centreville, VA Housing Prices Crater 19% YOY As DC Area Developers Slash Prices
https://www.movoto.com/centreville-va/market-trends/
my signing is thursday. Then I just watch cash roll in my friend.
Mom is happy AZdude. That’s what’s important right now for you. Happy Wife = Happy life. 👍
“That’s what’s important right now for you.”
A very interesting philosophy. Woman sells husband into slavery for a big house. This is your place. You forgot to call him grasshopper. Maybe you think he is the piss-ant.
“No kids, no wife, no troubles in life.”
Housing DumpsterFire….. Housing
Mesa, AZ Housing Prices Crater 6% YOY
https://www.zillow.com/mesa-az-85207/home-values/
https://snag.gy/m5EzRB.jpg
life is good yoda.I want u to be homeowner someday.
DumpsterFire….. Housing.
Paso Robles, CA Housing Prices Crater 11% YOY
https://www.movoto.com/paso-robles-ca/market-trends/
“The closely-watched sentiment tracker from the home builder lobby group hit its highest point since 1999 in December, and has fallen every month since then. The 69 reading is still quite strong. In the go-go days of the housing bubble, between 2004 and 2005, sentiment averaged 68. Still, the fact that confidence is declining so steadily is notable. When NAHB’s index started to fall in late 2005, it was one of the signals that foreshadowed the coming housing bust.”
Buckle up, because it’s a LONG way down to the bottom of the roller coaster from here.
Prices are still hyperinflating around Seattle.
Indian River Shores, FL Housing Prices Crater 9%YOY As National Housing Reaches Record High
https://www.movoto.com/indian-river-shores-fl/market-trends/
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
“Today this country took an historic step, one that had been delayed for much too long, to help American banks better meet the needs of our people, our communities and our economy.” —Bill Clinton, September 29, 1994