April 17, 2018

The Adjustment And Reset That’s Needed

A report from Real Estate Weekly on New York. “A new report is showing a pause in Manhattan’s new development market, but that isn’t deterring a stream of buildings entering the city in the next few months. Halstead’s vice president of research and analytics Matthew Petrallia said it will generate more accurate pricing in the long run. ‘It’s good not to see a lot of inventory launching,’ Petrallia said about Manhattan. ‘Pricing is being revised down to a more realistic figure and we’ve continued to see that come down.’ Petrallia added that new developments in Manhattan tend to start with a high ‘aspirational pricing’ and eventually adjust to more appropriate prices.”

“When looking at quarter-over-quarter, average price per square foot in Brooklyn actually declined 5.29 percent year over year. But, Brooklyn’s available inventory doubled, mostly in part because of Brooklyn Point at 138 Willoughby adding 458 new units. Even with all the new developments expected to come online within the next few months, Petrallia said he expects both boroughs to remain relatively flat as long as a glut of new developments are spread out timewise.”

From Biznow. “Residential construction in New York City has slowed significantly since 2016’s cracking pace, and multifamily developers say it is a welcome development that will help soak up supply. The New York City Building Congress has predicted residential construction spending will hit $11.6B this year, and then slide down to $10.6B in 2019. By comparison, housing builders spent $16B on construction in 2016. ‘I expect construction prices to fall off a cliff in 2019 and 2020. It’s a good thing if you can find land to build on,’ Douglaston Development Chairman Jeffrey Levine said. ‘Land has stopped selling. Banks have stopped financing condos.’”

“Levine, whose developments include a 554-unit rental building at 2 North 6 Place in Williamsburg, Brooklyn, believes there is no doubt building rentals will pay off. The population is increasing, there is strong rental demand from baby boomers and millennials who do not want to be tied down with a home. Meanwhile, the tax law changes have made homeownership in the city much less attractive, he said. But, he describes the Affordable New York policy as worthless and unlikely to spur more multifamily development. ‘Rents have got to go up, land has to go down and tax abatements have to get better,’ he said.”

From Curbed New York. “Renters can take comfort that concessions are now the norm in the New York City market—and even better, prices are on the slow decline. In Manhattan, prices are down across the board: This past month saw the largest year-over-year decline in net effective rent tracked in six-and-a-half years, the fourth consecutive monthly year-over-year decline in median face rent, and the third highest recorded landlord concession market share in seven-and-a-half years.”

“‘Despite record concessions, we’re seeing the face rent sliding too,’ says Jonathan Miller, the author of Douglas Elliman’s report. ‘It means the concessions have kept the rate of [price] decline somewhat in check, but have not stopped it.’”

“In Brooklyn, concessions are also being offered for roughly half of all rentals, and the size of concession was 1.5 months of free rent or equivalent. Rents are falling in Brooklyn, too—March marked the fourth consecutive decline in the year-over-year net effective median rent, which dropped 6.3 percent to $2,629.”

“Finally, Northwest Queens hit a new record for landlord concessions. “The most mind-blowing numbers are in Queens,” Miller says, with the share of new rental transactions with concessions at a whopping 63.3 percent, up from 42.7 percent. The size of concession was 1.8 months, up from 0.9 months. This was the fourth consecutive month with year-over-year decline in net effective rent, while the existing median rent stabilized as new development median rent slid. As long as the rental market is flooded with luxury apartments, you can count on rental concessions being the norm, Miller says.”

From Bloomberg. “Here’s some good news for New York City apartment-hunters: Manhattan rents dropped 3.8 percent in March from a year earlier, the most since 2011. The news is even better for tenants looking in Brooklyn and northwest Queens. Rents dropped 6.3 percent and 6.4 percent respectively, and landlords offered so many move-in incentives that they set records for giveaways, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. ‘For the renter, it’s a pretty good time to jump in,’ said Hal Gavzie, Douglas Elliman’s executive manager of leasing. ‘For the landlords, it’s a little stressful.’”

“Property owners across the three boroughs are contending with an avalanche of new apartment supply, giving them no choice but to cut prices. They’re stepping up discounts in the name of attracting renters, who are hunting as much for the best deal as they are for a place to live. And that’s not a bad thing for the market, Gavzie said. ‘This is what has to happen,’ he said. ‘It will help absorb quite a bit and will do the adjustment and reset that’s needed.’”

From Bisnow. “Two and a half years after listing it for sale seeking a $700M-plus return, SL Green and Ivanhoé Cambridge are selling a Midtown Manhattan office property for tens of millions less than they hoped. The joint venture is under contract to sell the 674K SF office condominium at 1745 Broadway to an institutional owner. The building’s decline in price might have been a result of poor timing; in 2015, New York City investment sales hit record levels in pricing and volume, but those numbers dipped slightly in 2016 before plummeting last year. The market has since picked up, but, as experts have told Bisnow, that is more of a result of sellers being willing to drop their asking prices than any underlying change in investing conditions.”




RSS feed

142 Comments »

Comment by Mortgage Watch
2018-04-17 09:00:01

Mount Vernon, VA Housing Prices Crater 17% YOY As Record High Housing Inventory Floods NoVA/DC Area

https://www.zillow.com/mount-vernon-va/home-values/

*Select price from dropdown menu on first chart

Comment by ja
2018-04-17 09:24:40

*dismissive wanking motion*

Comment by Mafia Blocks
2018-04-17 11:30:13

Hello my good friend.

Redwood City, CA Housing Prices Crater 12% YOY As Bay Area Tech Wreck Advances

https://www.movoto.com/redwood-city-ca/market-trends/

 
 
Comment by Taxpayers
2018-04-17 11:20:24

my zip has low inventory w quick sales
dc area is flooded w $ from omni bust bill

Comment by Sean
2018-04-17 12:25:34

I’m seeing a higher than normal amount of homes under contract then after a few weeks “Back on the market - buyer couldn’t perform” type sales. Found a great house for sale too! Not too big or small, great neighborhood and schools. It could be all mine for 615,000 crackers.

Comment by Carl Morris
2018-04-17 13:46:47

Me too. You see these open house feeding frenzies and then a month later suddenly it’s back on the market. I will say that Redfin seems good compared to the other sites at knowing immediately when a house goes back on the market. In several cases if I was watching the house previously, I knew immediately (via email) when it was no longer pending even if the other sites didn’t get updated for several days.

(Comments wont nest below this level)
 
Comment by Rental Watch
2018-04-17 13:52:11

Any sense of why the buyers aren’t performing (anecdotally or otherwise)?

Cold feet? Can’t get the loan? Problem with the house (needs too much work)?

Those seem like the logical three options.

(Comments wont nest below this level)
Comment by Carl Morris
2018-04-17 14:02:50

So far all I’ve gotten from an agent was a mumbled yes when I asked if the buyer had issues that prevented getting the loan that they hadn’t disclosed prior to their offer being accepted.

 
Comment by MGSpiffy
2018-04-17 14:49:39

Based on what I had to go through a few months ago - all the stories of loosing sub-prime loan standards be damned .. getting a good rate prime loan is getting painful. Even the slightest issue will scuttle the process.

I was about 20 days in with my first lender - one of the big national ones - when we hit a snag on what should have been a minor thing and it scuttled it. Now I like to think I’m a pretty solid borrower (and I once worked in loan origination and know the drill), and this seemed like overkill.

For example: my FICOs averaged out to about ~802 (3 different reports). We are debt free, and loan was for about ~2.2x income. If I added my wife to the application, her FICO of ~745 (only been in career for 6 years) and $150k/yr income upped the rate 3/8th (37.5 basis points).

Another issue was having to fully explain and document a $26.13 (twenty six dollars) 1099-MISC that reported when they pulled my tax return from 3 years ago. Now I didn’t have that 1099 when I filed, and the IRS never asked, so I didn’t know it even existed, yet the loan officer treated it like a huge red flag and it hung things up for days. Turns out it was a royalty check from 2 chapters I contributed to a book back in 2002 - the publisher would wait until accumulated royalties exceeded $25 before cutting the check. The previous check I got for it was in 2008 or so, and they didn’t have my updated address. Twenty six bucks out of a few returns that added up to over $1M income and otherwise totally checked out and the whole process stopped.

Anyway, it felt like they were only interested in giving the best financing to unicorns or near-unicorns, and this was one of the bigger lenders. Now granted, it was Jumbo, and that was a factor, but that describes a lot of loans in many places these days.

After it finally fell apart, a local lender was able to help me out, thought I had to buy down the rate a bit to get the same as I had previously locked (rates were rising). Interestingly, the local lender did a bunch of ‘investigating’ into my background and there was an interview-like part of the process where they already knew a bunch of the answers I gave. It helped actually as some of them were personal fans of my work :)

I have to think that unlike the stories from last time of no-doc liar loans and brokers just wanting to close deals no matter what, you are hearing about people who go into the process thinking, with good reason that they should be ok ( maybe even having loan pre-approval letter, etc), and then finding it out it’s all subject to additional items not mentioned and everything being basically perfect, to get the cost/rate they were hoping for. Super paranoid about what used to be the safest class of borrowers.

 
Comment by In Colorado
2018-04-17 15:11:54

MGSpiffy - I’ve heard similar stories from coworkers.

 
Comment by Rental Watch
2018-04-17 15:17:43

I refinanced about 5.5 years ago. At the time, I had recently transitioned from being a salaried employee to an owner in the business. Our loan officer advised us that they were going to seek approval entirely on my wife’s income (of which the loan was less than 2x), so they wouldn’t need to get into the weeds of the business of which I was now a part owner.

While we still needed to jump through hoops to make sure there were no unanswered questions, there was a slightly less bright light shown on my contribution to family income.

Pretty high degree of paranoia then too…but overall I think healthier than the opposite stance: “jumbo loans for all!”

 
Comment by BlackSwandive
2018-04-17 15:34:00

It’s easy to get a loan, it’s just not easy to get a low rate loan. That doesn’t mean that standards aren’t loose, it’s just the bank squeezing every last penny out of every borrower they can.

 
Comment by TIC TOK
2018-04-17 18:25:06

I went from salaried to 1099 then bought a house 6 months later. Even with 800+ fico, $200k income and $500k in liquid assets, I almost didnt get a mortgage. I finally got it but with many, many hoops jumped through. And this was for a $400k loan with 20% down.

So to anyone who thinks lenders ha e lowered standards and were back to NINJA loans circa 2005….think again.

 
Comment by Karen
2018-04-17 19:38:58

It’s amazing how many high rollers we have on this blog.

Wonder who Quicken is making all those loans to?

 
Comment by MGSpiffy
2018-04-17 21:18:28

You can be in the top 2% of household income and never feel like a high roller. Especially in a HCOL area, or post-Divorce.

 
Comment by BlueSkye
2018-04-18 05:54:28

It’s amazing how many high rollers we have…

Grampa used to call them “broke at a higher level”.

 
Comment by rms
2018-04-18 07:06:49

“It’s amazing how many high rollers we have on this blog.”

I think $200k/yr at the top of your career is a successful manager. An anesthesiologist friend in California makes $450k/yr. These are people with pride who applied themselves, not high rollers.

 
Comment by Professor 🐻
2018-04-18 07:19:17

“It’s amazing how many high rollers we have on this blog.

Wonder who Quicken is making all those loans to?”

Seems like a lot of posters here are too wealthy with too high a credit rating to qualify for subprime loans. In today’s topsy-turvy lending market, with taxpayer-funded federal guarantees to protect lenders against losses on dodgy loans to favored borrowers, being a worse credit risk may help you get a loan.

 
Comment by Mafia Blocks
2018-04-18 07:22:03

They may have applied themselves but they’re dumber than a box of rocks when it comes to money.

How does one earn $200k+/yr yet have a negative net worth?

 
Comment by oxide
2018-04-18 08:27:51

It sounds like the hangup was the 1099 income. Gig economy is still gig even at higher levels.

In comparison, my mortgage was pretty easy to get. Sure, they wanted all the W-2s and assets and paperwork, but nothing hung up, even for the low interest rate. My guess is they *really* like those Uncle Sam W2s, which are the opposite of 1099s.

 
Comment by Mafia Blocks
2018-04-18 09:03:45

Hey Donk

 
Comment by Karen
2018-04-18 10:50:37

“I think $200k/yr at the top of your career is a successful manager. An anesthesiologist friend in California makes $450k/yr. These are people with pride who applied themselves, not high rollers.”

I think I need to start applying sarcasm tags to some of my posts.

Do you know any of the people posting here personally? Everyone’s a hero on the internet, and all posters on HBB who respond to Ben’s links and comments about how anyone who fogs a mirror can still get a loan are, amazingly, high-income, high-credit score folks with lots of liquid assets who are given a very hard time when applying for loans. Curious.

OR… maybe not everyone on the internet always tells the truth?

I dunno, I’m just a simple girl.

 
Comment by Carl Morris
2018-04-18 11:06:15

Especially in a HCOL area, or post-Divorce.

Don’t be a slacker, go for both…I know this one all too well.

But it still beats the old situation as I downsized all the way to the trailer park and the ex still wouldn’t take any responsibility for any sort of budget or generating any income to help cover what she was spending.

 
Comment by Mafia Blocks
2018-04-18 11:35:50

There’s a whole bunch of $50k/yr millionaires that paid too much for a house on the HBB.

 
Comment by rms
2018-04-18 12:07:42

“I think I need to start applying sarcasm tags to some of my posts.”

Don’t be too sensitive… you’re online.

“OR… maybe not everyone on the internet always tells the truth?”

Back in 2003, I put 40% down on a 3/2 spec rancher going in with a 820+ FICO on a FSBO purchase, and I closed with Countrywide in 7 business days at the title company… sans appraisal or realtor. Paid in full in 9 years. FWIW, I’m a $100k/yr guy before taxes, benefits and contributions.

“I dunno, I’m just a simple girl.”

Kudos. I can appreciate a low maintenance lady.

 
 
Comment by Mafia Blocks
2018-04-17 18:59:10

Generally sales fall out of contract when the buyer comes to their senses and realizes they’re overpaying.

Handing out subprime mortgages to any sucker than comes along is the easy part and they’ve been doing it all along since 2008.

(Comments wont nest below this level)
 
 
 
Comment by Mafia Blocks
2018-04-17 14:47:29

All my good friends in once place.

Bellevue, WA Housing Prices Crater 11% YOY As Speculators Dump Properties

https://www.zillow.com/bellevue-wa-98005/home-values/

https://snag.gy/m5EzRB.jpg

 
 
Comment by Ben Jones
2018-04-17 09:01:19

Glut, flood, avalanche.

Comment by Mortgage Watch
2018-04-17 09:05:36

With 25 million excess, empty and defaulted housing units in the US and another 35 million just beginning to empty as boomers die off, the avalanche was in the forecast.

 
Comment by Apartment 401
2018-04-17 09:06:42

Realtors are liars.

 
Comment by hwy50ina49dodge
2018-04-17 09:10:43

Psychedelic Hydrological occurrence, once.again …

https://www.worldatlas.com/articles/what-is-the-water-hydrologic-cycle.html

 
Comment by 2banana
2018-04-17 09:12:07

No one could have seen this coming…

 
 
Comment by Ben Jones
2018-04-17 09:04:09

‘Senior Explosion: Developers Look to Cash in on Rising Older Population. With a nationwide 65-plus population on the rise, shrewd developers are building medical offices, hospitals and senior housing. How’s that working out?’

‘Kay said that as it stands the American health care system has already left developers and providers scratching their heads.’

“Projections show that there will be all of these old people in the world and we are going to need to take care of them via assisted living or senior housing. I’ll buy that. But if there is so much demand, why is occupancy in these facilities only 82 to 90 percent?” he said. “The reason is the reimbursements. These places are expensive. On the very low end, depending on what part of the country you live in, they are about $4,700 a month. If you are in New York, they are $12,000 a month. The national average is $6,500 a month. So how does a person afford that? It is very, very difficult when social security or Medicaid only pays $1,200 a month.”

‘The average stay in an extended care facility is one or two years, depending on the type, he said. And that’s because, by that time, most people have blown through their savings. “You have big turnover,” Kay said. “Everyone is trying to figure out models for making this work. How do you lower the cost of taking care of patients?”

‘But even at the current pace, naysayers exist. At a conference last year, David Park, the senior vice president of real estate and construction at Novant Health, forewarned of a bubble in the medical office sector, saying, “MOBs are not like bank branches. At some point in time, what you start looking at is: When does that population growth, that bell curve, start down?” he said at the Bisnow event in Atlanta. “At some point that number is going to drop.”

Comment by Ben Jones
2018-04-17 09:07:54

‘if there is so much demand, why is occupancy in these facilities only 82 to 90 percent?’

Kinda like the luxury student and apartment market. You believed your own horse hockey. Check this part out:

‘It’s a prospect that has developers eager to cash in on a niche within the commercial real estate market that is virtually guaranteed to blossom. Better still, health care is virtually recession proof, since, rich or poor, people will always get sick.’

Comment by Karen
2018-04-17 10:07:44

Better still, health care is virtually recession proof, since, rich or poor, people will always get sick.’

One private emergency room near me opened and closed within a year of being built. This was last year. Another one recently had a ‘closed’ sign on it shortly after dark (supposed to be a 24 hour facility). I’m guessing it will close soon. This is just within a couple of blocks of me.

And they’re building a giant new hospital/medical complex right next door to the private emergency room that’s now operating reduced hours.

“If you build it, they will come.” NOT.

Comment by In Colorado
2018-04-17 14:23:35

A lot of people are just going to “tough it out”. Good thing I didn’t last year. A few days after flying back from Europe, my right calf suddenly became swollen. Did a quick looksie online and found that it could be a deep vein thrombosis, AKA a blood clot, so I headed over to the ER, and yup, that’s what it was. Attempting to “tough it out” could have proven to be very dangerous.

(Comments wont nest below this level)
 
 
Comment by Carl Morris
2018-04-17 10:27:49

Better still, health care is virtually recession proof, since, rich or poor, people will always get sick.

That’s one component of demand. Isn’t another one the ability to pay?

Comment by BlueSkye
2018-04-17 11:13:47

Without money, we take care of problems the old fashioned way.

(Comments wont nest below this level)
Comment by Carl Morris
2018-04-17 11:35:28

The army way? Vitamin M (Motrin) and a motivational speech?

 
Comment by Mr. Banker
2018-04-17 11:47:01

Set ‘em adrift on ice floes.

 
 
Comment by octal77
2018-04-17 11:47:41

“… Isn’t another one the ability to pay?…”

With the CEO’s making $20mm a year, and you being charged $100 for an aspirin, what could possibly go wrong?

(Comments wont nest below this level)
Comment by BlackSwandive
2018-04-17 13:15:26

Don’t forget to add the $10 “medical delivery device” (mini Dixie cup) it comes in.

 
 
Comment by rms
2018-04-17 14:07:10

Fentanyl is the new opiate of the masses… compassionate, no struggle.

(Comments wont nest below this level)
Comment by tresho
2018-04-17 15:35:56

If fentanyl is an opiate, carfentanil is the kilo-opiate.

 
Comment by rms
2018-04-17 18:51:51

“…carfentanil is the kilo-opiate.”

Incredible potency. A former coworker’s brother quietly slipped away last year. A druggie for decades until he injected more than he realized.

 
 
 
Comment by TIC TOK
2018-04-17 13:10:12

When illegals get sick they don’t pay for their care. Hence ER closes.

 
 
 
Comment by 2banana
2018-04-17 09:06:29

Connect the dots…

GENERATION RENT Third of millennials face renting for their ENTIRE lives as home ownership plunges 80 per cent

https://www.thesun.co.uk/money/6069081/millennials-tenants-renting-entire-lives/

Government stats show mass migration has pushed up house prices by 21%

https://www.westmonster.com/government-stats-show-mass-migration-has-pushed-up-house-prices-by-21/

Comment by Albuquerquedan
2018-04-17 09:46:15

Yes, the true cost of excessive immigration is still being measured. Here is a hopeful sign, unlike the millennials the next generation is learning to work since the flow of immigrants to the country is being slowed:

https://www.msn.com/en-us/money/companies/facing-historic-labor-shortages-companies-snap-up-teenagers/ar-AAvYbqr?li=BBnbfcN&ocid=spartandhp&ffid=gz

 
 
Comment by 2banana
2018-04-17 09:08:06

Not giving it away phase of the bubble deflating…

******

“When looking at quarter-over-quarter, average price per square foot in Brooklyn actually declined 5.29 percent year over year. But, Brooklyn’s available inventory doubled,

 
Comment by Ben Jones
2018-04-17 09:10:12

A letter to the editor:

‘I wrote last week about the problems my neighborhood has had with a foreclosed home that is fallen into a bad state of disrepair. Obviously it’s not a new problem around the state and country thanks to the housing bubble’s burst in the late 2000s, but it has been an increasing source of angst for those of us who live near an abandoned home.’

‘I got a few tips from readers who had taken action in similar situations, with some success. Kingsbury Supervisor Dana Hogan suggested the state Department of Financial Services’ mortgage complaint program, which has a website to easily make complaints about mortgagor issues. He said he has seen them state take action based on those complaints in less than a week. ‘

‘Another reader who works in a local municipal program to hold banks accountable in these situations said there are options that towns, villages and cities have to force the banks to maintain properties, but that some municipalities are more aggressive than others. He offered to reach out to the town of Queensbury to offer some help.’

‘Another reader told me that banks drag their feet in foreclosure processes because they claim going through a foreclosure costs them up to $70,000 apiece. I don’t know how that could be true, but seeing the fees that banks charge at every turn, I would imagine everyone involved is imposing every fee they can.’

Comment by Ben Jones
2018-04-17 09:14:11

Rental watch got some crow served up this morning on the previous comments. One thing he and many overlook is these lenders don’t foreclose. Instead of showing up in the numbers, they sit on the balance sheet as an asset. And they are allowed to do this year after year, where it used to be absolutely verboten. Both by regulators and accounting rules.

Comment by 2banana
2018-04-17 09:17:27

But…but…only bigger government with more regulations can solve this..

 
Comment by hwy50ina49dodge
2018-04-17 09:17:58

” they sit on the balance sheet as an a$set.”

@ what valuation$?

Pre$ent, pa$t, … Or future$?

Comment by Carl Morris
2018-04-17 10:32:00

@ what valuation$?

Pre$ent, pa$t, … Or future$?

Whichever one keeps the lights on and the bonuses flowing.

(Comments wont nest below this level)
 
Comment by Rental Watch
2018-04-17 10:46:40

Based on Wells Fargo’s latest SEC filing, they carry them at approximately FMV.

Wells Fargo sold $231 million of foreclosed property off their balance sheet in Q4 2017, and realized total gain of $4 million on the sales.

In Q3, they sold $257MM, took a loss of $4MM.

In Q2, they sold $330MM, realized gain of $3MM.

In Q1, they sold $307MM, took a loss of $36MM.

In 2016, they sold $1.5B, realizing a gain of $77MM.

(Comments wont nest below this level)
 
Comment by bobby mac
2018-04-17 10:48:37

Whatever valuations the auditors let them get away with. They essentially suspended mark to market accounting on these. “The perceived market value of those securities has been severely depressed, in part by ballooning defaults on the underlying mortgages but also because investors have simply shied away from trading the securities, making them difficult to price.” So in effect, they no longer have to reflect the true current market value. If they did, the bank would have to Debit a loss and Credit the Asset…….effectively shielding the banks from taking losses. (Of course when the market was riding high….there was no issue with the banks booking mark to market gains……no rigging going on here!)

(Comments wont nest below this level)
Comment by Ben Jones
2018-04-17 10:57:56

Notice they don’t report HAMP/HARP re-defaults anymore. And the bubble peak loans still make up over 40% of current foreclosures!

 
Comment by Rental Watch
2018-04-17 11:06:31

Whatever valuations the auditors let them get away with. They essentially suspended mark to market accounting on these.

WFC purchased a “Pick-a-Pay” portfolio of loans (garbage).

Unpaid principal balance was about $30 Billion.

They are carrying them at $26 Billion.

Doesn’t seem like a crazy carrying value to me given the loans.

 
Comment by bobby mac
2018-04-17 11:24:46

Two questions:

1) What did they pay for it?

2) How much could they sell it for? (assuming you would say the $26M carrying value)

 
Comment by Taxpayers
2018-04-17 11:26:11

what’s a May 2005 LAS VEGAS worth?

 
Comment by bobby mac
2018-04-17 11:26:19

26B not 26M

 
Comment by Rental Watch
2018-04-17 12:20:33

bobby mac, I couldn’t find a good summary of what they paid for the overall “pick-a-pay” portfolio (acquired from Wachovia in 2008), but they do have the following disclosure on page 182:

“Changes during 2017 also reflect a $309 million gain on the sale of $569 million Pick-a-Pay PCI loans in second quarter 2017.”

So, that implies that their basis was approximately $260MM on $569MM loans…so perhaps they paid 45 cents on the dollar? Now valuing at 90 cents?

 
 
 
Comment by Carl Morris
2018-04-17 10:30:59

And they are allowed to do this year after year, where it used to be absolutely verboten. Both by regulators and accounting rules.

And then people say “it’s their asset, they can do what they want with it”. Which ignores the rule change that enabled it to make financial sense for them to never allow/force the market to clear.

 
Comment by Rental Watch
2018-04-17 10:43:35

they sit on the balance sheet as an asset. And they are allowed to do this year after year, where it used to be absolutely verboten. Both by regulators and accounting rules.

What accounting rules? Are you talking about the suspension of “mark to market” rules? Because that doesn’t apply to the value of foreclosed homes–ONLY “hard to value” assets that are thinly traded…homes don’t qualify.

CDO-squared’s qualified for suspension of MTM accounting. Homes do not.

Show me a bank’s balance sheet and where this shows up. Of course there will be something there…but orders of magnitude less than would make any difference.

Here is Wells Fargo’s information:

https://www.wellsfargo.com/assets/pdf/about/investor-relations/sec-filings/2017/exhibit-13.pdf

They have $277B of first DOTs (page 45). Loans 30 or more days delinquent was $5.3B (page 73), or 1.6% of their total (when including HELOCs).

Page 79 shows the non-accrual and foreclosed assets.

Non-accrual residential loans are the ~$5.3B noted above.

Foreclosed assets total $642 million.

Page 82 shows what happened each quarter with the “foreclosed assets”

In Q4, they started with $706 Million, got $17 million from the GSEs, foreclosed on another $180 million, but sold $231 million worth.

But here is the important part. On the $231 million of foreclosed assets sold off the balance sheet, they realized gain of just $4 million.

IF THE CARRYING VALUE FOR THE FORECLOSURES WAS FAR LESS THAN MARKET VALUE, THEY WOULD HAVE NEEDED TO REALIZE FAR GREATER GAINS THAN JUST $4 MILLION WHEN DISPOSING OF THE ASSETS.

In other words, Wells Fargo, one of the largest mortgage lenders in the US, has less than $1 Billion of foreclosed real estate on their balance sheet…REPORTED AT FAIR MARKET VALUE.

This is nothing.

The whole idea that banks are holding onto massive numbers of homes and carrying them at fake (low) numbers because accounting rules allow them to do so is baloney.

Comment by Mafia Blocks
2018-04-17 10:47:29

With foreclosure moratoriums in effect in all 50 states they’re not required to disclose.

(Comments wont nest below this level)
 
Comment by Ben Jones
2018-04-17 10:54:27

OK Cap Lock Watch, so they are reporting these low losses in 2017? This is what foaming the runway for the banks is all about: drag it out and let Mel Watt and the boys blow a bubble and save their biscuits.

‘Geithner responds that Treasury’s program was adequate. The banks could only manage so many foreclosures at a time, he explains, and his goal was to “foam the runway” and allow them to absorb losses more slowly…If banks can handle a certain number of foreclosures per month, you try to prevent only enough to keep the trickle steady, and ultimately, you end up spreading out foreclosures over time.’

https://www.politico.com/magazine/story/2014/05/what-geithners-new-book-wont-tell-you-106404_Page3.html

I didn’t make up these words. The guys running this scam said it as they were putting it to work. Eat your crow!

(Comments wont nest below this level)
Comment by Rental Watch
2018-04-17 11:12:09

Yet you claim there is still lots of shadow inventory held by banks on their balance sheets. Where is the shadow inventory? Where are all the homes that are held off the market?

I’ve shown that based on the small gain/loss on sale, that Wells Fargo is carrying their foreclosed property at a fair market value.

At an average of $200k per home, their inventory of foreclosed properties is approximately 3,000 homes. That is nothing.

And Wells Fargo is one of (if not THE) largest bank mortgage lenders in the US.

Where is all this supposed shadow inventory?

 
Comment by Ben Jones
2018-04-17 11:20:35

I’ve made several videos of shadow inventory. I have found it everywhere I’ve looked.

 
Comment by Rental Watch
2018-04-17 11:41:36

I don’t doubt that there is shadow inventory. There always is some (homes are always foreclosed and owned by lenders for a short time before sale).

I’m looking for orders of magnitude.

Based on Wells Fargo’s balance sheet, it’s not there…and if WFC’s balance sheet is similar to other major bank lenders, large numbers of homes are NOT residing on traditional bank lenders.

So, if not on the balance sheets of traditional banks…who owns these homes? I submit they are owned by the investors in the loan pools, and those investors (and their servicers) are going to do whatever they want with those homes…and accounting rules and bank regulators have nothing to do with it.

 
Comment by BlackSwandive
2018-04-17 13:21:05

Look at the balance sheet of the Fed. They were buying everything from the banks. The Fed may be the single largest real estate owner in the country. Oh, that’s right, we can’t audit them, so we have no idea what’s going on.

I’m starting to think Rental Watch is connected to these people.

 
Comment by BlackSwandive
2018-04-17 13:22:30

Somebody needs to build a program which can query property tax payments by owner for every county in this country. That would tell us exactly who owns what.

 
Comment by Rental Watch
2018-04-17 13:35:21

The Fed may be the single largest real estate owner in the country.

The Fed owns $1.75 TRILLION of mortgage backed securities–all guaranteed by Freddie/Fannie/Ginnie. If they bought from the banks, they bought paper, not property.

 
Comment by Neuromance
2018-04-17 16:07:54

Rental Watch: So, if not on the balance sheets of traditional banks…who owns these homes?

The mortgage lending model is “originate to distribute.” So whoever is trading those MBS is temporarily holding the mortgage. Or, it could be the Federal Reserve, which has a healthy amount of MBS. I see a very large number of foreclosures and pre-foreclosures around DC and Baltimore. And Maryland has a purposely byzantine foreclosure process.

I came across the following article:
——————————————-
The Mortgage Business Is No Fun Anymore
By: Matt Levine
April 17, 2018
Bloomberg

But if an aspect of the mortgage business — say, the originate-to-distribute model that many commentators blame for creating moral hazard, loose underwriting standards and a bubble in house prices — seems to be pervasively bad and dangerous for the broader economy, and if every bank involved in the mortgage business seems to be getting in trouble for the same sorts of misbehavior, then maybe you do want to add to the costs of doing business. Maybe the way to think about it is not as anomalous crime but as a bad business model that imposes social costs, and to force banks to internalize those costs in the form of huge and frequent fines.

There is still plenty of mortgage interest from loans held on Bank of America’s balance sheet, “but the business of making mortgages to sell them — the specialty of subprime lender Countrywide Financial Corp. that Bank of America bought in 2008 — has largely become a relic.” Regulators and prosecutors made it incredibly tedious for Bank of America to be in that business, and now Bank of America … just … isn’t.

Of course this is not purely a story of the fines; the decline of demand for private-label mortgage securitizations matters too. Nor is it a story of the decline of the originate-to-distribute model generally: Nonbank lenders like Quicken Financial have stepped in to replace the big banks in the originate-to-distribute model. (Nor is it even that new: After all, Countrywide was an originate-to-distribute upstart that competed with the big banks, until Bank of America bought it.)

https://www.bloomberg.com/view/articles/2018-04-17/the-mortgage-business-is-no-fun-anymore

 
Comment by Neuromance
2018-04-18 04:34:17

Maybe the way to think about it is not as anomalous crime but as a bad business model that imposes social costs

It occurs to me that calling it a “bad business model” deflects blame from individuals. It is a bad business model with core perverse incentives (i.e. the road to profit is generating as much debt as possible, regardless of its quality, and selling it off). But individuals - business unit leaders - are choosing to act on those perverse incentives.

 
 
Comment by BlueSkye
2018-04-17 11:24:37

It is an interesting technique, using Wells Fargo’s own report to prove that they are not hiding anything.

If suspending accounting rules was not about hiding housing losses, the timing is rather curious.

(Comments wont nest below this level)
Comment by bobby mac
2018-04-17 11:38:00

From my own personal experience, even with the old accounting rules it was near impossible to get a banker/trader to mark down some of their holdings. They always hid behind the “illiquid” security BS. “Well we only sold a fraction of it (at a 30% discount) so that isn’t the true market value of the asset so we are just going to keep it where we currently have it marked”. Extend and pretend to get another years mega bonus…..it’s all a big friggen game to them….always has been.

 
Comment by Ben Jones
2018-04-17 11:38:13

For about 6 years I worked every day on foreclosures in N Arizona. Often 7 days a week for 30 days straight or more. I saw this runway foaming as it happened. I’ve explained it here over and over and did so at the time. At first, it was a rush to secure the shacks, get them winterized and onto the market. After about a year, the urgency started to wane.

Remember I was usually the first person in. I started seeing signs of a year passing since the FBs left. Then 2 years, then 3. I don’t have to sit here on the internet arguing about shadow inventory. There’s probably not one single person in this country who witnessed it more firsthand than me.

 
Comment by Rental Watch
2018-04-17 11:44:34

Of course they foamed the runway. I’m not disputing that.

Of course they trickled homes onto the market. I’m not disputing that.

However, we’re 10 years into this, and you are still saying there is a lot of shadow inventory…who owns it?

 
Comment by Rental Watch
2018-04-17 12:10:11

If suspending accounting rules was not about hiding housing losses, the timing is rather curious.

Suspending the accounting rules was specifically for the crazy securities that no one could figure out. CDO-squared’s, etc.

When everything went to crap, the “bid” on these securities dropped by 90%, trading ceased, and there was no way to effectively value them based on actual market transactions.

The suspension of mark-to-market valuation required certain things to be true, including the market being thinly traded, with few to no arms-length transactions occurring.

Homes were never thinly traded, with almost no arm’s length transactions.

Even in the worst of the downturn, homes could be valued based on recent comps.

So, when banks foreclosed on property, under the accounting rules, they were still required to value them based on comparable market transactions.

 
Comment by Mafia Blocks
2018-04-17 12:18:57

“They were still required to value them based on comparable market transactions.”

I can ask $50k for my used up 10 year old Chevy truck but where is the buyer at that price?

So it is with all depreciating assets like houses.

 
Comment by BlueSkye
2018-04-17 12:37:17

Wells Fargo doesn’t take a loss, yet they held the shack I bought off the market for six years and sold it to me for a small fraction of what was owed on the mortgage.

If they had written it down to what they actually got for it on day one they would have still taken a bath. They paid taxes and other expenses for six years. It doesn’t make any sense for them not to unload it immediately.

Banks taking years to unload bad assets is simple proof they were not keeping honest books.

 
Comment by Ben Jones
2018-04-17 12:54:21

‘who owns it’

I don’t care. If you do go spend the time and effort to find out.

 
Comment by cactus
2018-04-17 13:08:36

“Banks taking years to unload bad assets is simple proof they were not keeping honest books.”

At first I thought it was because banks were lame but now I agree with you.

 
Comment by Rental Watch
2018-04-17 13:21:32

I find it funny that despite all the commentary about how home prices would be lower if shadow inventory was released onto the market, you don’t care who owns the shadow inventory.

That’s the key to understanding 1) how much there is; and 2) whether or not it will ever come to market fast enough to have a meaningful impact on the market.

Those two things seem pretty important to me.

So far, I haven’t seen any evidence that, in the context of a market the size of the US, there is a meaningfully large number of homes in “shadow inventory”.

 
Comment by Karen
2018-04-17 13:29:34

It is an interesting technique, using Wells Fargo’s own report to prove that they are not hiding anything.

Like their assertion that it “costs” them $70,000 to process a foreclosure. Who verified these numbers? Costs them in what sense? Court filing fees aren’t that high, nor is service of process. And they already have employees on their payroll they have to pay regardless… I think they just make up numbers.

 
Comment by Karen
2018-04-17 13:47:53

Even in the worst of the downturn, homes could be valued based on recent comps.

So, when banks foreclosed on property, under the accounting rules, they were still required to value them based on comparable market transactions.

Homes are “valued” by appraisers, whose primary interest is in securing further work for themselves. Who’s paying the appraisers making these valuations? What happens to appraisers who don’t hit the numbers?

 
Comment by Rental Watch
2018-04-17 13:53:20

Who’s paying the appraisers making these valuations? What happens to appraisers who don’t hit the numbers?

MAI=”Made As Instructed”

You don’t hit the numbers, you don’t get hired again.

It is remarkable how often an appraised value is precisely the price in the contract.

 
Comment by Mr. Banker
2018-04-17 14:15:52

“What happens to appraisers who don’t hit the numbers?”

They, too, should be set adrift on ice floes.

 
Comment by Ben Jones
2018-04-17 15:27:18

‘So far, I haven’t seen any evidence that, in the context of a market the size of the US, there is a meaningfully large number of homes in “shadow inventory”

One, you don’t follow this blog very closely and I’m not going to spoon feed you what I’ve already posted. There’s been plenty of information posted about who owns what. Second, why not just sell them? Why do a foam the runway thing at all if the shadow is so small? Why am I still finding reports of abandoned, vacant, non-foreclosed shacks? Why do I find UHS telling the reporters straight out that foreclosures are held back in order to keep prices higher? There has been dozens of those over the years.

February 13, 2017

The News Review in Oregon. “Driving through Roseburg’s Mill-Pine District, it seems like every other house has boarded-up windows, lawns overrun with weeds and sinking roofs layered with moss. The historic Mill-Pine District is nestled between downtown Roseburg and the South Umpqua River. Most of its homes were built in the early 1900s and are distinctively American Craftsman: low-pitched gable roofs, spacious porches, tapered columns. The types of homes people in Portland are scrambling to snatch up for hundreds of thousands of dollars, cash in hand.”

“Abandoned properties, sometimes called ‘zombie homes,’ make the Mill-Pine District less appealing. They sit vacant for months, sometimes years. These abandoned homes and many others peppered around the county and state are lingering ghosts of the nation’s 2007 financial crisis. ‘At one point, in about 2010, there were so many that (banks) started withholding some homes from the market,’ said Victoria Hawks, a Roseburg Realtor. ‘And that’s why we ended up with problems further down the road.’”

“Douglas County is not alone in the vacant and abandoned home issue. Portland City Council decided to speed up the foreclosure process for five homes last year, after it voted to use eminent domain to foreclose on them, reads an Associated Press article from June 2016. The mayor has his eye on another 25 to 30 houses.”

“Hawks, who was a Roseburg city councilor until last month, said there might be some unintended consequences if Roseburg used a similar tactic. ‘I don’t think they would want us to flood the market again with less desirable homes at cheaper prices, which then turn around and make other homes worth less,’ she said.”

“The county’s abandoned homes, no matter how derelict they become, will eventually get on the market and they will get multiple offers, she said. That’s because the housing market is tight, even in rural Douglas County. ‘They aren’t just left forever, it just feels like forever those first few years,’ Hawks said.”

http://thehousingbubbleblog.com/?p=9996

 
Comment by Rental Watch
2018-04-17 16:47:26

One, you don’t follow this blog very closely and I’m not going to spoon feed you what I’ve already posted. There’s been plenty of information posted about who owns what. Second, why not just sell them? Why do a foam the runway thing at all if the shadow is so small? Why am I still finding reports of abandoned, vacant, non-foreclosed shacks? Why do I find UHS telling the reporters straight out that foreclosures are held back in order to keep prices higher? There has been dozens of those over the years.

1. Non-bank (unregulated) lenders are going to do what is in their best interest–as they can’t be pushed around by regulators. They are clearly better off FIRST foreclosing on homes in markets with the highest prices–and waiting to foreclose if they think they can recover a greater percentage of the outstanding balance by doing so.

2. IMHO, the banks landed on the foamed runway years ago. The foam is now slowly being scraped away, but is no longer necessary for the banks…but is being slowly scraped away as to not upset the rest of the market that fed off it.

3. I’m going to beat the same drum again, but frankly, the only shadow inventory that I care about is the empty shadow inventory (the zombies). The rest of the un-foreclosed, but defaulted homes are occupied by people that will move somewhere else once they are kicked out…it’s just a game of musical chairs–and has no bearing on the overall supply/demand balance of a market, which I believe is a strong driver of prices.

 
Comment by BlueSkye
2018-04-17 19:12:11

Spoon feeding would do no good when the information cannot be digested.

 
Comment by Karen
2018-04-17 20:01:12

3. I’m going to beat the same drum again, but frankly, the only shadow inventory that I care about is the empty shadow inventory (the zombies). The rest of the un-foreclosed, but defaulted homes are occupied by people that will move somewhere else once they are kicked out…it’s just a game of musical chairs–and has no bearing on the overall supply/demand balance of a market, which I believe is a strong driver of prices.

They may very well end up homeless, which certainly does have a bearing on the ‘overall supply / demand balance of a market’.

 
 
 
 
Comment by 2banana
2018-04-17 09:15:36

Banks could care less as their mortgages/foreclosures are guaranteed by the taxpayer.

Making banks eat their bad loans would solve this problem.

But you can’t buy votes that way…

Comment by Mr. Banker
2018-04-17 11:50:26

“Making banks eat their bad loans would solve this problem.”

Bahahaha … you and your jokes.

 
 
 
Comment by 2banana
2018-04-17 09:10:42

Ok. So pretty much everyone is getting two free months a year…

********

“The most mind-blowing numbers are in Queens,” Miller says, with the share of new rental transactions with concessions at a whopping 63.3 percent, up from 42.7 percent. The size of concession was 1.8 months, up from 0.9 months.

 
Comment by Ben Jones
2018-04-17 09:29:30

‘I was glad to hear Mayor de Blasio recently say he was “very interested in fighting for a vacancy fee or vacancy tax” to penalize landlords who leave storefronts empty for long periods, seeking top-dollar rent. This national crisis, with retailer bankruptcies and closures in malls and department stores across the country, is caused by exorbitant rental prices, the proliferation of online shopping and tax write-offs that perpetuate the problem.’

‘Certain swaths of Manhattan have 25% vacancies, while 5% is considered normal. Manhattan Borough President Gale Brewer has suggested legislation to help combat the blight. It’s about time.’

‘This retail real-estate gluttony is not only punishing good tenants and eviscerating many mom-and-pop stores, it’s ruining neighborhoods, like Greenwich Village, where I’ve lived for 37 years (and work three jobs to afford).’

‘Walking around my block on 8th St., the vacant buildings are depressing and scary. Gone are my favorites: Ibiza Fashion, St. Mark’s Bookshop, Posman Books, Shakespeare & Company and the Broadway Panhandler, along with lingerie, shoe and clothing boutiques.’

‘The lack of open stores lowers property values, since who wants to live on a street filled with boarded-up windows? Less foot traffic leads to more empty spaces, roaches and rats. Friends in Soho, the Upper West Side and Park Slope complain of the same issue. Sometimes it feels like the whole city is in foreclosure.’

Comment by 2banana
2018-04-17 11:03:32

Without the massive obama bailouts, not one banker in jail, too big to fail and insane deficits - that is where NYC should be.

******

“Sometimes it feels like the whole city is in foreclosure”

 
Comment by MGSpiffy
2018-04-17 18:08:37

Can you legislate businesses or individuals to operate at a loss? or put the genie back in the bottle?

The “problem” has multiple causes, almost of which can’t be fixed be edict..

 
 
Comment by Mortgage Watch
2018-04-17 09:45:06

Highland Beach, FL Housing Prices Crater 8% YOY As The Bottom Falls Out Of Retirement Property Market

https://www.movoto.com/highland-beach-fl/market-trends/

 
Comment by ibbots
2018-04-17 10:02:09

D-FW homes sell at one of the fastest rates in U.S.

With an average home sales time of just 55 days, North Texas ranked sixth nationally in 2017 among markets with the shortest selling time.

While nationwide inventory of homes for sale has fallen on a year-over-year basis for 37 consecutive months, Zillow said that D-FW home listings are 15 percent higher than a year ago.

Last year 40 percent of homes sold in the D-FW area fetched more than the listing price, according to Zillow.

Nationwide, just 25 percent of houses went for higher than the original asking price.

https://www.dallasnews.com/business/real-estate/2018/04/17/d-fw-homes-sell-one-fastest-rates-us

 
Comment by Rental Watch
2018-04-17 10:50:56

Housing starts up to approximately 1.3MM annual pace…still waiting for this number to get up to 1.6MM and stay there for a while before we will have a national balancing of supply/demand.

Comment by BlueSkye
2018-04-17 19:57:36

Adding more overpriced high density “luxury” dwellings will only add to the flotsam that must be washed away.

 
 
Comment by Mortgage Watch
2018-04-17 10:52:51

Murphy, TX Housing Prices Crater 10% YOY As Foreclosed Properties Flood Dallas Market

https://www.zillow.com/murphy-tx/home-values/

*Select price from dropdown menu on first chart

 
Comment by jeff
2018-04-17 11:22:13

This kinda sh#t is why Rain Man would only fly Qantas.

Engine shrapnel broke a window and tried to suck a lady out of a Southwest Airlines flight today.

Southwest Airlines flight makes emergency landing in Philadelphia

PHILADELPHIA — A Southwest Airlines jet made an emergency landing at Philadelphia’s airport Tuesday with part of the covering from its left engine ripped off and a window damaged. Neither the airline nor the Federal Aviation Administration explained what went wrong. (I think they just did)

Passenger Marty Martinez told CBSN from the plane that a woman was injured and was taken off the plane.

“There was blood everywhere,” Martinez told CBSN’s Anne-Marie Green.

https://www.cbsnews.com/news/southwest-airlines-flight-emergency-landing-today-2018-04-17-live-stream-updates/

Comment by In Colorado
2018-04-17 14:14:50

Southwest seems to have a lot of these near disasters.

As for Qantas, they almost lost one of those double decker super jumbo A380’s a few years ago when an engine exploded. IIRC, they didn’t have full control of the bird but were able to safely land it.

Comment by jeff
2018-04-17 14:41:37
 
Comment by hwy50ina49dodge
2018-04-17 14:54:28

Only x1 fatalities in 50 years … True or false?

 
 
Comment by 2banana
2018-04-17 14:17:02

The first thing I thought about was the poster here on this blog who worked on airplanes (sorry - forgot his handle - Xfer?).

Nearly ALL mechanical work (especially engine work) is now “shipped (as in the airplane is flown)” to third world sh!tholes for maintenance.

Poor quality control, little oversight, clueless mechanics and even more clueless supervisors, cheating all day long…

But globalization!!!!

Comment by rj not in chicago anymore
2018-04-17 14:44:14

2 b -
I recall this guy as well - he worked I think on Corporate size aircraft and was based in Kansas somewehre. I too remember that he was concerned about the 3rd world working on aircraft maintenance - austensibly because the 3rd world is in warm climes and a/c can be worked on at anytime.

I recall that the FAA had oversight on maintenance checks referred to as MRO in the business. My question was always - what bureaucrat from DC is gonna hang in say Honduras whilst said a/c is being checked out - plus the language issue on the checklist etc.

I get nervous now every time I step on an airplane not knowing if hte thing is gonna get me from point a to b safely.

Comment by In Colorado
2018-04-17 15:34:28

I think he was gs-fxer?

I get really bad vibes from Southwest. As I mentioned above, they seem to have a lot of near disasters: planes skidding off the end of runways, the engines blowing up, etc.

As bad as United treats its customers, if you don’t count the planes lost on 9/11 or United Express (which is a contractor that flies regional jets), United’s last crash was on July 11, 1983.

(Comments wont nest below this level)
 
 
Comment by Carl Morris
2018-04-17 15:15:47

Xfer?

GSfixr I believe. I’ve wondered a couple of times if he’s still lurking.

Comment by scdave
2018-04-17 16:30:03

Yes I believe that is correct. GS stands for Gulf Stream. He worked on private aircraft. My recollection is he was in CAli. Got layed off and had to move to KC for work. I also think he has children in tow without a Mrs.

(Comments wont nest below this level)
 
Comment by Mafia Blocks
2018-04-17 16:34:55

Lurking? GSF is still posting. ;)

(Comments wont nest below this level)
 
 
Comment by MGSpiffy
2018-04-17 18:04:35

2banana - that’s the first think I thought of as well.

In a more ideal world, there would be a number of things that just are never shipped out to low bidders or privatized (like prisons), and I think that reflects some big generation changes - profit and short term thinking over long term stability and public interest.

We’re going to get our asses handed to us in a future conflict due to the giving away / outsourcing / theft of our key computer and networking technology. There are other entities out there that are playing a very long game. And this is something that has been known for decades actually…

I remember a book from 1985 (David Gerrold, A matter for Men) that was set in a near future with the US on decline, but turned to the world’s cheap production center (sound like anyone we know?). A key plot thing at one point was the backdoors that were installed in all the weapon systems that laid dormant… until the SHTF. Discussions when I was in college about ARPAnet with my profs at the same time also indicated a lot of national security thinking was going on.

So.. WTF happened since? everyone sold out I guess.. Or maybe not. There are layers upon layers of things going on, only some of which have come to light recently.

 
Comment by Anonymous
2018-04-17 20:06:52

Sad as it is…it has been nine years since there was a fatality on a domestic flight. There are 20K-25K or so commercial flights in the US every day. Seems like the planes aren’t falling out of the sky due to maintenance (or any other reason).

Personally, I still think (and said when GSfxr was posting that stuff) that the chicken little talk had more to do with fear of layoffs or wage cuts, than with any real danger that the aircraft wouldn’t receive satisfactory maintenance.

 
 
Comment by toby
2018-04-17 20:26:04

SWA has an enviable safety record…………believe its the safest airline around

Comment by azdude
2018-04-18 07:30:46

they are amazing people.

 
 
 
Comment by Ben Jones
2018-04-17 11:42:25

Some spam just tried to comment on this post, so I thought I’d bring it up:

February 5, 2006

A ‘Rash Of Cancellations’ In Fresno

The Fresno Bee has the latest on that bursting housing bubble. “Some home builders, trying to keep home prices down and responding to a possibly slower and highly competitive market in 2006, are planning to unveil new, more affordable designs. ‘If [builders] see things taper off, they could shift the product a couple price points to midmarket or entry-market homes,’ said John Karevoll.”

“Lower-priced offerings would be welcome in Fresno County, where the percentage of families that could afford a median-priced home sank to record lows in 2005, the pinnacle of a five-year real estate boom in the central San Joaquin Valley.”

“Rich Wathen expects more competition this year among builders, and without the escalating prices that frustrated many home buyers the last few years. ‘Air is coming out of the bubble,’ he said. ‘There will be a lot of competition, and more as the year goes on. That will definitely have an impact on sales and prices.’”

“How much of an impact? Wathen thinks sales in the central San Joaquin Valley could fall 10% to 15%. Developers say the long waiting lists and campouts at model home sites that characterized the past few years have mostly evaporated. ‘We were allowing contingency buyers over the last three years, but in October, November and December we got a rash of cancellations as homes were getting completed,’ said Steve Lutton, division president of Lennar Homes.”

“The greatest increase was in Fresno County, where cancellations doubled. Karevoll acknowledged the dangers of trying to assess this real estate market. ‘2006 will be an interesting year for the number crunchers,’ he said. ‘The arrows in the grass are pointing in all different directions. I’ve never seen the measures of uncertainty so high,’ he said.”

http://thehousingbubbleblog.com/?p=17

 
Comment by 2banana
2018-04-17 14:18:35

Words I would swear I would never been seen glued together in an article on housing…

+++++

“Some home builders, trying to keep home prices down…”

 
Comment by Mortgage Watch
2018-04-17 15:20:25

Boston, MA 02114 Housing Prices Crater 21% YOY As Housing Correction Arrives In Major Cities

https://www.zillow.com/boston-ma-02114/home-values/

*Select price from dropdown menu on first chart

 
Comment by rj not in chicago anymore
2018-04-17 15:23:40

Referencing the debate above on shadow inventory - I have spent a bit this afternoon lurking in the county assessor website and treasurer website for my county here in CO. Very hard to find out who really owns properties placed in foreclosure and length of time on banks books but I did come across tax lean information that might give a hint.

Link here….
https://www.douglas.co.us/treasurer/record-of-sale/

 
Comment by Taxpayers
2018-04-17 15:43:56
 
Comment by MWR
2018-04-17 15:44:08

I’ve made several videos of shadow inventory. I have found it everywhere I’ve looked.

But is the shadow inventory on the Bank Balance sheets or the MBS owner’s balance sheets.

I believe Wells sell almost all there non-Jumbo loans to Fannie/Freddie so they are no longer held as an asset on the Balance sheet. The Servicing Value (say 1.5% of the loan) is on the balance sheet but not the actual loan. If the Too Big to fail banks had a large % of bad loans on the balance sheet the regulators would be all over them

For our Troubled Debt Restructure (TDRs) we had to hold17% equity against them. Banks need leverage to make money and at 17% equity on a trouble loan they “ain’t” making any money.

Corporate was heavily involved in monitoring the TDRs. (circa 2010-2013)

 
Comment by Mortgage Watch
2018-04-17 15:51:40

Brooklyn, NY 11231 Housing Prices Crater 17% YOY As East Coast Housing Correction Accelerates

https://www.zillow.com/new-york-ny-11231/home-values/

*Select price from dropdown menu on first chart

 
Comment by jeff
2018-04-17 18:55:04

I’m glad the backup singer was clapping over her head at the beginning of this song or else I might not have listened to the whole thing.

Fannie Mae Live in Australia (Remastered) | Playing For Change Band

https://www.youtube.com/watch?v=n-Lc6k_MXjs

Comment by Mafia Blocks
2018-04-17 19:21:19

Donk Craterton & The Stampedes- Feasting On Crow and CraterTaters

https://youtu.be/gtQLIU4ze0g

Comment by jeff
2018-04-17 22:27:39

I speak Donkey.

he is saying…

Lend me your ears and I’ll sing you a song, I will try not to sing out of key.

 
Comment by jeff
2018-04-17 22:33:24

Actually the …

“I’m gonna Blues you until I lose you”

choice was for the blog owner.

 
 
 
Comment by Larry Littlefield
2018-04-17 19:07:03

“‘Rents have got to go up, land has to go down and tax abatements have to get better,’ he said.”

The sonofabitches spread enough money around to city and state pols that new buildings with some “affordable” units are exempt from property taxes for something like 45 years? And who is going to pay for the public services for those 45 years? This city is going broke, and then what?

Rents have got to go down, and land has got to go down.

 
Comment by Neuromance
2018-04-18 04:39:26

One important fact to consider when understanding what monetary policy does is looking at “purchasing power”. You can have two people, person A with 10 dollars, and person B with 10 dollars in debt. With inflation, no money changes hands, yet the person A becomes poorer and person B becomes less poor.

Monetary policy does also print and distribute currency or course, but at the core, it attempts to manipulate/redistribute purchasing power either overtly with handing printed money to certain companies or covertly via inflation and interest rate manipulation.

Comment by BlueSkye
2018-04-18 07:07:43

Person A receives the money that is printed and lends it to Person B.

 
 
Comment by aNYCdj
2018-04-18 06:16:44

One more for KaliforNye A

Trump’s tax cut not for everyone: 1 million Californians will owe $12 billion more next year

http://www.sacbee.com/news/politics-government/capitol-alert/article209015539.html

Comment by Professor 🐻
2018-04-18 07:28:28

My household is one of those, as we have to kiss our exemptions good bye, and our standard deduction barely increased from what we previously itemized. Who knew the new tax law was rigged to make middle class households pay more?

Comment by azdude
2018-04-18 07:32:29

u knew someone would pay for more freebies. dont act like u didnt know someone would get hosed.

 
Comment by aNYCdj
2018-04-18 08:01:43

I kinda disagree, it was designed to toss it back to the states, power to the people.

I would love to see a complete audit of welfare medicaid non payment of hospital bills, and make the sanctuary cites and states pick up the tab. Do bill collectors hound illegals,take them to court get judgments and report them to Ice?

local control means local taxes and you vote accordingly

 
Comment by Carl Morris
2018-04-18 11:12:24

Who knew the new tax law was rigged to make middle class households pay more?

It’s all about who gets to define middle class. Apparently you’re now upper class…perhaps you were all along and just didn’t know it.

 
 
 
Comment by Mr. Banker
2018-04-18 06:17:21

Read, and weep …

Zombies and the end of the ‘global synchronized recovery’

http://gnseconomics.com/en_US/2018/04/18/zombies-and-the-end-of-the-global-synchronized-recovery/

 
Comment by Albuquerquedan
2018-04-18 06:35:03

http://www.breitbart.com/2018-elections/2018/04/17/business-squashes-e-verify-ballot-florida/

Bipartisan globalists. I wish that blacks and Hispanics would wake up to the reality that the democrats by promoting open borders have crashed their wages and left many of them unemployed. Republicans still are divided on this issue. Blue collar people need to unite behind Trump on this issue and vote for people that will support his policies whether they are democrats or republicans. The Republican businessmen understand that closed borders mean higher wages, they are being selfish and short sighted but it makes sense, but I cannot see any logic in a blue collar black man or woman supporting open borders. However, he or she does make the Koch brothers and George Soros happy.

 
Comment by Professor 🐻
2018-04-18 07:31:38

Hot stock market investing tip of the day: When playing a rigged game, employ an investment strategy which the rigging favors.

Comment by azdude
2018-04-18 07:34:37

it sure feels like some people know there is no risk involved. This is a big powder keg market.

 
 
Comment by azdude
2018-04-18 07:45:26

does economic recovery basically mean rising stock and home prices these days?

Comment by Albuquerquedan
2018-04-18 10:12:06

The only part of the US economy that is doing quite well outside of both of those areas, is the energy sector and related industries. That is mostly the result of geology but trump has not stood in the way. We also do have additional investment in capital goods due to the tax cuts. However the world as a whole is adding debt faster than it is growing so something has to give. While it is true that something that cannot go on forever will eventually end, we do not live forever so timing is important.

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

Trackback responses to this post