April 22, 2018

The Result Of Excessive Exuberance And Relaxed Lending

A report from Drumheller Online in Canada. “With mixed national and provincial headines stating that the buyers market is not a place for new home owners, Don Rosgen with Century 21 in Drumheller said the local market is, in fact, a buyers market. ‘Right now, we’re in the buyers market. Normally we have(an amount of listings) in the 110 to 120 range. Total now, we have over 150,’ he continued. ‘It’s a supply and demand situation. The supply exceeds the demand right now. I think that’s where we are in Drumheller. ‘When you have excess market product. you’re then going to have to reduce your price if you want to get ahead in the market.’”

From the St. Albert Gazette in Canada. “Sales decreased overall across the entire Edmonton region. Year over year there was an 11.73 per cent decrease in sales across single family, condo and duplex/rowhouse housing sales. Darcy Torhjelm, chair of the Realtors Association of Edmonton, said he was surprised to see sales slump. ‘My assumption would be just that buyers are taking their time. I think there’s activity out there where people are looking at properties, but buyers are just not pulling the trigger on purchasing as quickly as they have in the past,’ he said.”

From Globes in Israel. “After a decade during which housing prices more than doubled, prices have finally halted their upward march, and have even changed direction. Anyone in Israel who has to sell a housing unit - a contractor who can get no more credit in money or time from a bank, or a family that has already bought its next housing unit and has to sell its old home, has to compromise on the price. It can be stated with certainty that the supply of housing for sale currently outstrips the demand - a situation that has not occurred in the Israeli market for many years.”

“Minister of Finance Moshe Kahlon, who ran in the elections on a single crucial promise - to lower the price of housing - can finally talk about a downtrend in prices, and no longer has to fear elections in this coming summer or winter. A cumulative 2.4% drop in prices in the past six months must, however, be assessed in the light of the 127% increase during the decade ending last August. The decline quite marginal - a further drop of 55% is needed merely to reach the level of prices in 2008.”

From The National on Dubai. “Keren Bobker advises a reader who wants to negotiate a lower interest rate on his mortgage for a Jumeirah Lake Towers property. Q: I bought a one-bedroom apartment in Jumeirah Lake Towers for Dh1.2 million in September 2008. The payments were initially Dh9,200 per month. Since the rental income was low, I asked the bank to give me a reduced mortgage payment of Dh5,000 per month. This continued for a period of two years and then I went back to the full mortgage payments. By this time I had accumulated Dh200,000 because of the reduced payments with interest.”

“I am now paying the mortgage in full, at a rate of Dh11,200 per month, with 60 per cent of that covered by the rent, and 40 per cent from my own pocket. I also pay the annual maintenance costs of Dh13,000 to Dh15,000 to the developer. What is the way forward with negative equity? I have approached the bank two times to refinance, but have been told the property to loan value needs to be 70 per cent, but it is currently around 100 per cent. If I sold the property, I would not make enough money, and would need to put in another Dh200,000 to fully repay. I cannot change banks, as no other bank is willing to take this on. Current mortgages are around 3 to 4 per cent, while I am paying 9 per cent. Is there anything I can do to get out of this situation legally? Can I just hand the property over to the bank? RM, Dubai.”

“A: It sounds as though the bank has previously been amenable as they have permitted RM to make reduced interest payments. The bank is not permitted to refinance the mortgage as under Central Bank of the UAE rules the maximum loan to value for any property with a value of up to Dh5m is 75 per cent and clearly no other bank can assist either. Banks do not permit borrowers to just hand over a property when monies are outstanding and RM is legally liable for all costs even if he sells the property. If the sale price is lower than the total outstanding then he must repay the bank in full before he is released from his liability.”

From the Korea Times. “Construction firms are increasingly concerned about the increasing number of unoccupied apartments in recent months as buyers face greater difficulties getting mortgages or finding tenants. With more owners delaying their payments to builders, this has begun adversely affecting the profitability of Samsung, GS, Hyundai, Daewoo, Daelim and other apartment builders. This phenomenon is particularly apparent in provincial areas in line with the increasingly unfavorable housing market amid interest rate hikes and the oversupply of new apartments.”

“GS and Daewoo each have nearly 20,000 apartments scheduled to receive residents in those areas this year. Their volume is almost twice that of Hyundai E&C with 10,000 apartments. Adding more concern, the outlook for the occupancy rate remains grim for this month too. The housing institution’s Housing Occupancy Survey Index for April stood at 70.4 points, down 3.4 points from a month earlier. A higher reading means builders are positive about occupancy. ‘The increase in the number of unlived-in apartments leads to builders’ financial difficulties,’ the construction firm official said. ‘And that can also deflate the entire housing market.’”

From Jing Travel on China. “China’s sharing economy is on the rise in a big way. However, arguably just as important is the growth of the real estate industry in China. Yang Changle, COO of China’s largest home-sharing company Tujia, noted that his company provides services for 130,000 landlords and operators. However, of that figure, 80,000 operate more than one shared home. Real estate prices in China have been soaring in recent years, although there is some speculation that the market is slowly ‘cooling.’”

“This has led to millions of vacant homes across the country and a seemingly endless rise in the price of homes, despite the fact that housing supply is largely on the rise. There is substantial debate over the exact number of ‘vacant’ homes and what constitutes such a property, although some estimates put this figure at well over 50 million. This, of course, has serious implications for the Chinese economy as a whole and arguably places an unfair burden on consumers, both renters and home buyers who are looking for affordable housing, while others are simply buying as much property as possible and inflating prices.”

From Edge Prop Malaysia. “The volume and value of small size, non-landed residential properties have escalated last year as oversupply looms. Data from AuctionGuru.com.my showed that there were 1,023 units of serviced apartments and serviced suites worth RM493 million put up for auction in 2017. The record-high figures were about two times the volume and value of the figures recorded in 2016 which saw 342 auction cases of such units worth RM146 million.”

“‘Unfortunately, there is an oversupply of this type of serviced apartments and serviced suites in the market which has pushed down rentals as their owners are rushing to rent them out. But some were forced to abandon their mortgage commitments when they failed to offload them on the market,’ says AuctionGuru executive director Gary Chia.”

“Chia says there is no quick solution to the rising number of foreclosure properties which was the result of the excessive exuberance in the property market and the more relaxed lending policy in the past. ‘We do not foresee any change to market conditions in the short term. Nonetheless, we view this trend positively as this is part of market adjustment which will put the property market in a better footing after this,’ he concludes.”

From News.com.au on Australia. “Straight-talking judge on The Block Neale Whitaker is set to make a loss on his luxury inner-Sydney pad. The interiors guru and his partner David Novak-Piper have listed their warehouse apartment in Alexandria for $1.6 million — $105,000 less than what they paid for it in 2016. The couple paid $55,000 over the asking price when they bought the apartment for $1,705,000 just over 18 months ago.”

From Your Mortgage on Australia. “There’s an oversupply of apartments in Melbourne, and this is creating plenty of opportunities for savvy buyers, according to numerous analysts. Buyers will soon be in a position to purchase units in medium and high-density buildings for below their replacement cost, according to Brian Capp, a professional buyer with Statewide Property Advocacy. He added that hundreds of apartments are listed for sale in Southbank, Docklands, Richmond, and other areas in inner Melbourne.”

“‘There will be some bargains to be found in the next six to 12 months in the high-rise buildings in the inner suburbs,’ Capp told the Domain Group. ‘Some of the second-hand two-bedroom apartments in the already established buildings, even though they are very small, are going to become an attractive buy because the replacement cost is greater than the price the owners are asking.’”




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138 Comments »

Comment by Ben Jones
2018-04-22 09:13:58

‘listed their warehouse apartment in Alexandria for $1.6 million — $105,000 less than what they paid for it in 2016. The couple paid $55,000 over the asking price when they bought the apartment for $1,705,000 just over 18 months ago’

I guess they “won” that bidding war.

‘even though they are very small, are going to become an attractive buy because the replacement cost is greater than the price the owners are asking’

Remember when we had to suffer the foolish trolls who insisted this was unpossible?

Comment by Professor 🐻
2018-04-22 09:59:51

‘I guess they “won” that bidding war.’

The Winner’s Curse strikes again!

“Remember when we had to suffer the foolish trolls who insisted this was unpossible?”

This reflects a fundamental misunderstanding of demand. Just because some lender is foolish enough to loan some builder the money to build another unwanted, unneeded luxury apartment complex on top of an existing glut, doesn’t mean that there will be buyers available to pay the wishing price for a purchase.

 
 
Comment by Apartment 401
2018-04-22 09:15:09

1 In 4 Millennials Rely On Their Parents To Pay Some Bills - Even While Working Full Time:

https://www.zerohedge.com/news/2018-04-19/1-4-millennials-rely-their-parents-pay-some-bills-even-while-working-full-time

No “pent-up demand” for $500,000 starter homes happening here

Comment by Tik Tok
2018-04-22 10:49:14

Today an article says this, tomorrow a new one will say millenials are the most well off generation evah!! I remember 2 “studies” within about a week of each other. One said millenials don’t save enough, the other said millenials save more than their parents and grandparents.

Millenials are like eggs used to be. One day they were bad for you, then a new study would say they’re good, then bad, then good.

Comment by MGSpiffy
2018-04-22 11:20:11

Tik Tok - see my comment below about fragmentation. tl;dr Economic inequality reaches down to people starting out in their 20s.

I deal with hot shot 20-something programmers and engineers that this town is full of, then I see the updates on fb from about the children of the people I went to school with in the rustbelt. These kids of ours are the same age but living in different worlds.

Comment by Carl Morris
2018-04-22 15:59:31

I’m from Wyoming and went into tech after an army enlistment. It’s been different worlds for quite a while.

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Comment by MGSpiffy
2018-04-22 20:16:49

At a recent gig, I had a number of mid 20s ( < 27 )software engineers that we were paying 120-150k.

I remember 26-yr old engineer one whose fiance (same age) was over at google and pulling in a good deal more. Definitely over $300k combined. It was her first proper post-school job.

I also spent some time getting to know the guys working security for the building (this was near Columbia Tower) - I remember one guy in particular - he was 25 and a single dad who had a kid when he was 19 ( mom bailed and he didn’t want to put his daughter up for adoption ). Making $13/hr and had a benefits problem as he couldn’t afford health ins, and on his birthday he would go off his parents insurance, and I think that impacted his daughter.

He didn’t complain a bit about his circumstances and he worked his ass off to get all the hours he could. They both considered themselves ‘middle class’ if asked, but the lives of those 2 Millennials clearly was worlds apart.

/Sappy Story time:
One of the last times we talked, he was going on about plans for a Christmas trip to San Diego with his daughter to see extended family. I asked about him what they would do while there and he was happy to just take it easy, but he confided it took all he had saved up just to make the trip. He disappeared for a bit - transferred to a different building, but showed back up one day mid-December. I went across the street to the drug store, got a card, stuffed $250 into it, and signed it as from our entire floor with a note not to open until in San Diego, and inside a note that we hoped he would take his daughter for something special. (My wife and I try to do a couple random things like that each year for people struggling)

 
Comment by oxide
2018-04-23 04:46:31

Where is this? Bay area? $120K -$150K is serious coin. Most of the GenX and younger Boomers (55-60) don’t make that unless they have a couple STEM degrees and 15+ years experience.

 
Comment by MacBeth
2018-04-23 04:49:10

“Tech” is successfully siphoning wealth out of the rest of the economy. It didn’t used to, but it is now.

Consider that one for a while.

 
Comment by drumminj
2018-04-23 06:56:23

“Tech” is successfully siphoning wealth out of the rest of the economy

Some of it is, for sure. And some tech is also improving the standard of living, creating efficiencies (and thus value), etc. Don’t paint with too broad a brush here!

But yes, a lot of ‘tech’ these days is either about creating a new middleman/gatekeeper, or finding a way to privatize the gains and socialize the costs.

 
Comment by Professor 🐻
2018-04-23 07:05:04

“But yes, a lot of ‘tech’ these days is”… about using seemingly benign platforms to spy on private citizens.

 
Comment by OneAgainstMany
2018-04-23 07:58:03

“We wanted flying flying cars but instead we got 140 characters.” - Peter Thiel

 
Comment by MGSpiffy
2018-04-23 09:18:45

Where is this? Bay area? $120K -$150K is serious coin. Most of the GenX and younger Boomers (55-60) don’t make that unless they have a couple STEM degrees and 15+ years experience.

Oxide - this was downtown Seattle, working for a Fortune 50 company. The gal in question was making $131k I believe, some of the more experienced guys ~150k, and I was a lead making 185k. She had the STEM degree from a good school and internship @ IBM, and was good, but otherwise not that experienced. The diversity people in HR loved her.

My whole point was that, Yes is *IS* some serious coin, and her college BF / Fiance from college was also pulling serious coin. I was illustrating how serious the income inequality gap can be for people in their 20s - already splitting into haves have nots along career, education and location lines.

 
Comment by BearCat
2018-04-23 10:08:36

I’ll just add a warning: it can change in a hurry, those jobs can dry up, and can make it harder to get a new, lower paying job — so I hope those Millennials are saving for a rainy day.

I can still remember the after shocks of 2001 dot-bombs and knew a lot of programmers who left the SF Bay Area. Semiconductors (equipment vendors, chip makers, etc) here has had similar boom-bust cycles for a long time.

 
Comment by rms
2018-04-23 13:47:19

“Where is this? Bay area? $120K -$150K is serious coin.”

That’s about normal in San Jose for a Civil Engineer with 10-yrs of progressive experience. I might add that $120k/yr for a family of four would be barely surviving. A SJ household really needs about $200k before taxes to be middle-class now.

 
Comment by BearCat
2018-04-23 14:58:14

Yeah, and that’s well above medium family income for SJ, which is around $100K

 
Comment by rms
2018-04-23 15:42:27

Depends on your employer’s benefits too. For example, if you have to pay full freight for dental and vision for your family of four, $10k/yr disappears like ashes in the wind. Then comes the braces!

 
Comment by MGSpiffy
2018-04-23 16:39:49

Bearcat - it sure can change in a hurry, but that also applies to the guy manning the security desk. I’ve lived through those as well - it was the 08 mess that forced me to move to Seattle to find work.

The lady engineer had already saved enough cash to live on for well over a year in an emergency (this came up in a later convo with her), and the guy working security was paycheck to paycheck.

Again, I’m picking these real people that worked in the same building to make my point about inequality reaching all the way down to 20-somethings.

rms is right about SJ being so HCOL. I really wonder - have we have such a gap (ratio-wise, total numbers affected) between HCOL and LCOL areas in our history? My gut is saying this phenomenon matches or exceeds the peaks previously seen in the last 250 years.

 
Comment by Prime_Is_Contained
2018-04-23 20:55:23

Again, I’m picking these real people that worked in the same building to make my point about inequality reaching all the way down to 20-somethings.

Sure—but it’s worth acknowledging that those 20-somethings you contrast also made very different choices in terms of birth control, focusing on and valuing their educations, picking marketable majors to pursue, etc.

 
Comment by drumminj
2018-04-23 20:58:44

Sure—but it’s worth acknowledging that those 20-somethings you contrast also made very different choices in terms of birth control, focusing on and valuing their educations, picking marketable majors to pursue, etc.

Yep. It’s not all luck/roll of the dice, and those who make wise decisions and are good at making risk/reward trade-offs a) deserve to come out ahead IMO, and b) likely will be all-right in a downturn.

 
Comment by Karen
2018-04-24 08:08:39

I’m totally sure that security guard would’ve been a Harvard MBA if not for the fact that he had a baby.

But then, someone would still be needed for that job. Someone would still have to live on that salary, baby, “poor choices”, or no.

 
 
 
 
Comment by MGSpiffy
2018-04-22 11:00:18

The trend isn’t as new as it sounds. I believe it was the book The Millionaire Next Door that documented a lot of economic transfer to young adults from parents going on back 1996.

That said, there are multiple forces at work that indicate the situation for people starting out has deteriorated and fragmented over time.

I say fragmented because the environment our young people are coming into reflects the overall increase in income inequality. If they come out with a degree in a hot tech field, for some there’s a decent chance to land a starting job at over the national household average income and the path ahead looks inviting.

But for the majority, the labor market is objectively worse. In a lot of places, especially rural areas, there aren’t as many non-highly skilled jobs as existed a generation ago, and for those jobs that remain, and in generations past were mostly filled by young people, you find a lot of them filled by people old enough to be their parents or grandparents.

In our current world of global competition, pushes for efficiency and stealth inflation via central banks, average wages have deteriorated in terms of the “total basket of goods #X hours of labor can purchase”.

Now lets mention the situation with benefits. Funny thing that it’s now mandate by law to have health insurance. Pricey stuff, and even with subsidies it takes a nice slice of pie before the pie gets taken home. And daring to go to the ER or have kids when you are in your 20s and haven’t built up reserves? Risky as all get-out with anything less than triple-platinum coverage, with all the bills that come back as ‘out of network’, ‘not covered’ etc.

Well, they can always borrow to get through those tough times, except they are staring out at the most indebted generation ever. Between student loans and getting credit cards thrusted at them when they first showed up on campus, more of their future earnings were spoken for on their first day of work than any generation before them had ever seen.

Am I cynical? Or just worried about my own kids in the years ahead?

Comment by Mr. Banker
2018-04-22 11:34:58

“Between student loans and getting credit cards thrusted at them when they first showed up on campus, more of their future earnings were spoken for on their first day of work than any generation before them had ever seen.”

The dumbest generation ever.

Comment by Mortgage Watch
2018-04-22 12:28:25

Denver, CO 80210 Housing Prices Crater 8% YOY

https://www.zillow.com/denver-co-80210/home-values/

*Select price from dropdown menu on first chart

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Comment by MGSpiffy
2018-04-22 12:55:46

I’d argue that we would have been as equally dumb if the lenders had let us be back then. There’s been a deliberate decision to target getting young people into debt before they’ve finished growing up in the last few decades.

Before that, I think the prevailing attitude was “Can’t loan to them, they don’t have the means to pay it all back” and now it’s more of “lock them in on the perpetual debt servicing treadmill before someone else does”.

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Comment by Professor 🐻
2018-04-22 14:59:02

My parents made a personal loan as part of the downpayment on our first house in the Midwest, and may have made a couple of other small short-term personal loans since we were newlyweds, but otherwise we have stood on our own four feet regarding household finance.

I can say that a number of the families in our circle who bought homes in San Diego relied heavily on Mom and Pop Trust for financing. I wouldn’t go there given the amounts needed and the risk involved.

 
Comment by BearCat
2018-04-23 10:11:11

I just hope those hot shots remember that “hot” tech fields can quickly become cold….think about what was hot in 1995, in 2000, and 2005 — are those “hot” specialties still the hot ones? Or the outsourced ones?

 
 
Comment by b
2018-04-22 11:08:33

a little misleading in that the 1st category is cell phones. a lot of this is from family plans - so i discount that.

However, it does probably leave 1 in 6 that are getting help from their parents on regular bills. It does not also account for hand-me downs (cars etc) that are being given to millennial.

Comment by rms
2018-04-22 11:48:07

“It does not also account for hand-me downs (cars etc) that are being given to millennial.”

When my daughter was ready to drive I bought her nice low-mileage Honda Accord coupe while my wife and I continued driving our 200k and 330k, respectively, Toyota(s).

 
 
 
Comment by Mortgage Watch
2018-04-22 09:23:57

North Palm Beach, FL Housing Prices Crater 16% YOY As Vacation Property Demand Collapses

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

 
Comment by Ben Jones
2018-04-22 09:30:36

I can’t keep up with all the bubble popping news these days:

‘Analysis of ABS data by the Housing Industry Association (HIA) has revealed that due to investors being impacted by regulatory interventions, there’s been a reduction in appetite for apartments. ‘Investors have been the target of a number of regulatory interventions and we are now seeing this impact on residential building activity,’ said Geordan Murray, HIA senior economist.’

‘The situation is likely to worsen, too, with a record high of 33,800 dwelling projects approved for the year so far. ‘There were still over 150,000 multi-unit dwellings under construction at the end of 2017, which is only slightly below the 155,000 level at the peak of the cycle. There are a further 33,800 dwellings in projects that have been approved and are yet to start work. This is a record high,’ Mr Murray said.’

‘With additional taxes on foreign investors and regulators clamping down on investor lending, investors have retreated from the market,’ the senior economist said.’

Comment by Professor 🐻
2018-04-22 10:02:40

Any chance of reading similar news about California housing any time soon?

Comment by BlackSwandive
2018-04-22 10:14:51

It seems that this global housing bubble sees money run from one country to another, and that US real estate is again in vogue, hence the 20%+ moves up in the west coast YOY, while Canada is in the tank.

It wasn’t long ago that the US was in the tank and Canada was all the rage. I’m hopeful that someday every place will be in the tank, and that there’s no speculative price bubble to be found anywhere with only fundamentals such as wage incomes driving prices.

Comment by Professor 🐻
2018-04-22 10:29:35

There certainly was plenty of contagion this time on the way up. Whether this works the same on the way down, as it has every previous time, remains to be seen.

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Comment by Ben Jones
2018-04-22 10:17:42

’similar news about California housing any time soon?’

April 20, 2018

“A major Petaluma housing project is in limbo after a developer decided to sell the venture. It is the largest housing project in Petaluma currently under development. But construction of the first phase is on hold as builder Comstock Homes and its investment partner, Real Capital Solutions, are seeking to sell the project to ‘a national home builder,’ according to Troy Busse, director of purchasing for El Segundo-based Comstock Homes. ‘It’s not good news. The investment group decided to sell,’ he said. ‘They didn’t think it would bring in the returns they were hoping.’”

http://thehousingbubbleblog.com/?p=10408

Comment by Ben Jones
2018-04-22 10:23:15

I got this news in an email:

11951 Crest Pl, Beverly Hills, CA 90210

For Sale
$29,000,000
Price cut: -$6,000,000 (4/10)

Date Event Price $/sqft

04/10/18 Price change $29,000,000 -17.1% $1,950
01/09/17 Listed for sale $35,000,000 $2,354

https://www.zillow.com/homedetails/11951-Crest-Pl-Beverly-Hills-CA-90210/20032189_zpid/

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Comment by Professor 🐻
2018-04-22 10:34:52

Thanks.

When it comes to these individual cases, it’s hard to tell at first glance whether you are looking at evidence of a declining market, or just a deluded seller whose realtor finally talked him down from the ledge of a wishing price for which the home would never sell.

 
Comment by Ben Jones
2018-04-22 10:48:18

But the Petaluma project was hundreds of shacks. If there’s so much demand, why would it stall?

 
Comment by Professor Bear
2018-04-22 11:03:34

My comment was addressed at your Beverly Hills anecdote.

“‘It’s not good news. The investment group decided to sell,’ he said. ‘They didn’t think it would bring in the returns they were hoping.’”

We can look forward to seeing a lot of variations on that theme over the next several years.

 
Comment by Professor 🐻
2018-04-22 15:07:08

Related example: On our drive home from church today, I pointed out to my son how many For Lease signs I noticed — basically one in front of every commercial real estate complex over the two mile drive home, and there’s a lot of commercial RE over the route.

The last time I recall seeing this many For Lease signs so densely concentrated was during the 2007-2009 financial meltdown. It is too early to say whether my observation is part of a larger pattern, or just a local anomaly.

 
 
Comment by rms
2018-04-22 11:53:05

“But construction of the first phase is on hold as builder Comstock Homes and its investment partner, Real Capital Solutions, are seeking to sell the project to a national home builder…”

Sounds like it’s time for that welder’s spark to happen. :)

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Comment by Professor 🐻
2018-04-22 10:44:40

If it’s really the Trump tax law changes plus stock market volatility that brought down Manhattan lux, I don’t understand why California wouldn’t experience the same effects.

Manhattan Sales Slump to Recession Levels
Brokers peg the decline on the new tax law, stock market volatility and a lull in new development closings
By Beckie Strum
Originally published on April 03, 2018|Mansion Global | New York City Market Reports
A view of Downtown Manhattan, where a lull in new development closings has caused a decline in average and median price in the first quarter.
Alexander Spatari / Getty Images

Manhattan’s home sales in the first three months of the year dropped to Great Recession levels, with uncertainty around the new tax law driving most of the slowdown, the city’s real estate brokerages said in reports Tuesday.

The borough recorded 2,180 sales in the first quarter, a 24.6% decline over the same period last year, according to Douglas Elliman’s quarterly report. It was the lowest number of home sales since 2012 and the steepest year-over-year decline since 2009, according to Jonathan Miller, president of appraisal firm Miller Samuel.

“All segments saw large sales declines,” said Mr. Miller, author of the Douglas Elliman report. “This was a market-wide phenomenon, not just a luxury phenomenon.”

Manhattan’s luxury apartment market—or the top 10% of condo and co-op sales—echoed the general sales slump. In the first quarter, the number of luxury home closings dropped 24% over this time last year to 220, according to the Douglas Elliman report.

In December, the federal government overhauled the U.S. tax law, including limiting the amount homeowners can deduct in mortgage interest. That has effectively lowered the value on homes in expensive coastal regions like New York City—but by how much, the market has yet to decide, Mr. Miller said.

“The consumers will do this dance that I call ‘price discovery’,” Mr. Miller said. Buyers will try to leverage the reduced tax deductions to negotiate a lower price, while sellers will resist making concessions. He estimated it would take into next year before prices settled.

As a result of slowed activity, luxury inventory jumped 15%.

Comment by Ben Jones
2018-04-22 10:55:57

‘The borough recorded 2,180 sales in the first quarter, a 24.6% decline over the same period last year, according to Douglas Elliman’s quarterly report. It was the lowest number of home sales since 2012 and the steepest year-over-year decline since 2009, according to Jonathan Miller, president of appraisal firm Miller Samuel.’

‘All segments saw large sales declines,” said Mr. Miller. ‘This was a market-wide phenomenon, not just a luxury phenomenon.’

‘a 24.6% decline over the same period last year’

Yeah, and 2017 was a crappy year for airboxes in NYC.

Comment by Professor Bear
2018-04-22 11:06:14

If the old saying, “A fish rots from the head first,” applies to the situation at hand, then Manhattan is the head.

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Comment by b
2018-04-22 11:28:11

what about the clever hipsters that bought houses/condos in Brooklyn and Queens? Why dont those prices go down immediately

 
Comment by Lurker
2018-04-22 16:28:19

There was a post last week that the average price per square foot in Brooklyn was down -5.29% year-on-year. And rentals in Queens/Long Island City have been an early harbinger of rental concessions and outright discounts. Still early days though.

 
Comment by Professor 🐻
2018-04-22 17:02:06

“Still early days though.”

Oh yeah. Once this thing starts unraveling again, it’s gonna be a long, slow, painful way down. I don’t expect the Trump Fed will ride to the rescue the way the Obama Fed did, either, as that would be a violation of traditional Republican free market principles which must be restored in order to make America great again.

 
Comment by rms
2018-04-22 17:28:51

“…traditional Republican free market principles…”

Nothing more than window dressing for the plebs.

 
 
Comment by Professor 🐻
2018-04-22 15:09:08

“…the steepest year-over-year decline since 2009…”

That line seems to show up with increasing frequency as of late.

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Comment by Mortgage Watch
2018-04-22 12:34:36

Middle Village Queens NY Housing Prices Crater 6% YOY As Manhattan Housing Correction Expands To Outer Boroughs

https://www.movoto.com/middle-village-ny/market-trends/

 
 
 
Comment by Ben Jones
2018-04-22 09:33:41

‘In its 67-page semi-annual report, the Reserve Bank of Australia (RBA) said the incidence of household financial stress is not widespread, largely thanks to recent regulatory steps to head off a debt-fueled property bubble. Australia’s household debt to income ratio has sky rocketed to an all-time high 190 percent, ringing alarm bells and prompting regulators to intervene.’

‘They intensified pressure on the country’s biggest banks to slow lending, forcing them to put home loan rates higher specially for speculative property investors. That has had the desired effect, the RBA said. House prices across Australia’s major cities have come off highs with Sydney suffering a run of monthly falls since late last year.’

‘The RBA pointed to the large stock of risky interest-only loans as a potential area of concern. Much of that stock comes due for conversion to principle-and interest, which carry much higher repayments, between 2018 and 2021. Loans expiring interest-only periods are estimated to average around A$120 billion a year or close to 30 percent of the current outstanding mortgage credit.’

‘Still, the RBA expects most borrowers to be able to meet the higher repayments.’

‘It singled out commercial property as a sector to watch, following reports of settlement failures and delays in some cities including Brisbane which has experienced “pronounced price declines”, largely due to an oversupply of apartments.’

 
Comment by Ben Jones
2018-04-22 09:35:43

‘There has been a surge in properties hitting the market in Brisbane, as homeowners head for the exit in a bit to take profits. But Sydney was the standout, with listings jumping 11.8 per cent from February to be up a whopping 23 per cent compared to a year ago as home sellers try to escape the city’s housing slowdown.’

Comment by b
2018-04-22 11:32:05

i would love to know if the increase in listing come from 1) long time owners that are looking to cash out - good for them, or 2) investors that are worried about cash flow.

 
Comment by Mortgage Watch
2018-04-22 12:57:12

“Property Prices Drop 40% in Australian City”

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11846339

 
Comment by 2banana
2018-04-22 13:07:45

The exit door is small and narrow when housing bubbles pop.

And they don’t want to give it away!

 
 
Comment by Ben Jones
2018-04-22 09:41:54

‘The tourism hotspots of Eungella and Finch Hatton have been revealed as two of the most disadvantaged suburbs in Queensland, new data has revealed. Collinsville, Eungella, Finch Hatton and Calen rank in the top 20 percent of the states most disadvantaged postcodes according to the Australian Bureau of Statistics.’

‘Meanwhile the struggling mining towns of Glenden and Middlemount have emerged as two of the most advantaged postcodes. The disadvantage rankings were calculated using education, employment, occupation, housing and income information collected in the 2016 census.’

‘Member for Burdekin Dale Last said statistics like these need to be taken with a grain of salt. He said the average income in mining towns is generally higher than other places but that does not mean they are not without their troubles. “Glenden is struggling, certainly there are a significant number of vacant homes,” he said. “What we desperately need is families to get back into Glenden and give it that much needed shot in the arm… for the schools, for the shops, we’ve lost a number of business over the past couple of years.”

‘Mr Last said the situation was similar in Middlemount, where school enrolment numbers have dropped “dramatically”. “I door-knocked all of Middlemount during the election campaign, and you certainly notice the number of empty houses.”

‘Joanne James from the Collinsville Community Association was surprised to hear Glenden was the most advantaged town. “Have you been there lately? Glenden is really struggling,” she said.’

 
Comment by Mortgage Watch
2018-04-22 09:44:17

Bellevue, WA 98005 Housing Prices Crater 11% YOY As Seattle Economy Stumbles

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

*Select price from drop-down menu on first chart

Comment by redmondjp
2018-04-22 22:00:36

No Stumbling in Seattle, Haystacks . . .

Comment by Mafia Blocks
2018-04-23 03:48:04

Hello my good friend.

Tukwila WA Housing Prices Crater 7% YOY On Ballooning Seattle Subprime Mortgage Defaults

https://www.movoto.com/tukwila-wa/market-trends/

 
Comment by drumminj
2018-04-23 06:58:36

Agree in general, but happy to see my former LL still doesn’t have their house under contract. Just reduced the price another $50k (now at $1.6m) after 2 months on market.

Comment by Professor 🐻
2018-04-23 07:09:21

I remain hopeful that the San Diego market will turn or we will decide to move before our landlords try to cash in on their investment. The youngest graduates from HS in two months, which removes a constraint on our side.

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Comment by Ben Jones
2018-04-22 09:46:58

‘Almost half of Toronto condo investors are committing to negative cash flow, according to a CIBC Economics study. One of the city’s most prominent mortgage brokers pointed out, this is a disaster in the making. If you can’t make the deal work at an all-time low for interest rates, when can you make it work? This got me thinking, what’s the likelihood of these investors making money from here, in a best case scenario? Let’s crunch some numbers. It’ll be like the real estate wealth expo, but for people that like math.’

‘Since nearly half of condo investors are cash flow negative, they’re depending on the appreciation to payout. In order to do that, the rise in prices would have to at least cover their cost basis, before producing any profit. CIBC economics provided us with the data on a range of what these investors were paying. It looks like Calum is right, it’s going to be very difficult to make a profit on some of these deals.’

‘Quite a few investors are benefiting from our record low interest rates, but a lot aren’t. The largest bracket of investors, 30.6% of them, are paying between 2.51% and 3.00% in interest. However, 32.3% of investors are paying over 6% – which is practically a biblical amount of interest. Even worse, 16.2% of those investors are paying over 9%. You don’t need a comprehensive risk model in order to assess how risky borrowing at this level is, you really just need to do some napkin math. (okay, maybe some tablecloth math).’

‘The price we’re going to be using is the Toronto Real Estate Board (TREB) benchmark condo. This is the price of a “typical” condo on December 2017, which was $490,500. We’ll also factor in the cost of commission at 5%, but we won’t be adding other fees that would also reduce profitability.’

‘If you’re paying 2% interest, you would need prices to rise 7.03%. At 2.75%, you need a 7.66% increase. 4.5% would need a 9.13% increase. After that, you’re getting into double digit gains required. 7.5% interest, would require an increase of 11.66%. 9%, would require a massive 12.92% increase. If you’re a real estate professional from a non-Canadian market, you’re probably cringing. Let’s see how this compares to our positive biased, historic price increases.’

‘Charting it against historic 12 month returns, we see this is really hard to do – even at the lowest interest rate. At 2%, only 34% of 1 year periods would have gone past breakeven. At 2.75%, that drops to 27%. If you’re paying any more, the ratio drops to less than 1 in 5. Basically, if Toronto’s real estate market was restricted to acting how it has over the past 12 years, you would break even just over a third of the time.’

‘Looking at investors that plan to hold for a 5 year mortgage term, the return required is a huge range. At 2%, you would need a 13.24% increase, which isn’t all that bad. However, at 9% you would need to see a 42.55% return.’

‘Once again, this using only a positive outlook. If Toronto real estate isn’t immune to a typical real estate cycle, you should expect negative numbers to balance that monster year we just observed. Now don’t get the wrong takeaway. Real estate can and does still produce wealth for a large number of people, but you need to do a little more work than just follow the herd.’

Comment by MGSpiffy
2018-04-22 11:08:51

Greater Toronto seems like one of those front line/canary in the coal mine locations.

No one story or report is conclusive, but the aggregate of all the news points to a change in the overall situation. It’s reminding me of graphing equations in calculus class - at this point for f(X), the curve is still going up, but the derivatives already say that will change soon …

Comment by Professor Bear
2018-04-22 11:13:33

Yep. We’ve passed the point of inflection, where the first derivative is still positive, but the second derivative is definitively negative.

Comment by b
2018-04-22 11:38:01

i am more interested in the impact when the price top hits.

Will it be a slow decline and a many years stagnation in prices? so much of the GTA (great toronto area) is dependent on the all-up housing industry, that this will cause many years of rot.

Will it be a 20-40% decline within 2 years? I think that this is much better - so that thing reset - and the housing industry re-calibrates.

I have mentioned a family member that quick a great chemical engineer job in Toronto, as being an agent paid 3x more (granted, he had both an aunt and uncle to help him get started). This is such a waste of human capital.

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Comment by Professor 🐻
2018-04-22 15:11:53

NOBODY seems interested to measure the human capital costs of property bubbles. It has to be a ginormous figure!

 
Comment by Lurker
2018-04-22 16:49:34

“i am more interested in the impact when the price top hits.”

Most news reports on Canadian RE now refer to the peak as around March/April 2017.

“Greater Toronto seems like one of those front line/canary in the coal mine locations. No one story or report is conclusive, but the aggregate of all the news…”

Here’s a list of every Toronto-area price decline stat posted on HBB since Jan 1, 2018:

> -30% Ontario - Aurora, Markham, Vaughan / AVG (Apr17-Feb18)
> -27% Toronto - Richmond Hill (yoy -Apr18)
> -25% Toronto - Newmarket (yoy -Apr18)
> -22% Toronto - Marham (yoy -Apr18)
> -21% Toronto - Newmarket / AVG PCS RLP (Apr18)
> -20.9% Toronto sub - Mississauga / AVG (Mar17P-Jan18)
> -20% Toronto sub - King City / AVG (yoy -Mar18)
> -19.8% Toronto / AVG (Apr17P- Feb 18)
> -18.7% Toronto / AVG SFR DEV (yoy-Feb18)
> -18.5% Toronto sub - Mississauga / AVG SFR (Mar17.P-Jan18)
> -17% Toronto / AVG SP SFR (yoy -Apr18)
> -17% Toronto exb - Burlington / MED (Mar17.P-Jan18)
> -15.5% Toronto exb - Hamilton and Burlington / AVG SP SFR (yoy-Mar18)
> -14% Toronto / AVG SP (yoy -Apr18)
> -13.8% Toronto exb - Hamilton and Burlington / AVG SP (yoy-Mar18)
> -13.4% Toronto sub - Mississauga / AVG SFR (yoy -Jan18)
> -12% to -13% Toronto / AVG PCS RLP (APR18)
> -12.4% Toronto / AVG EXT (yoy -Feb18)
> -12.4% Toronto (yoy -Mar18)
> -12.3% Toronto exb - Hamilton-Burlington / MED (Apr17.P-Jan18)
> -12% Toronto - 905 ac / AVG SFR (Feb18)
> -11.8% Toronto exb - Hamilton / MED (Apr17.P-Jan18)
> -8 to -10% Greater Toronto - Whitby / LP DEV EST NBY (yoy -Jan18)
> -9.8% Toronto sub - Mississauga / AVG (yoy -Jan18)
> -9% Toronto / SFR (Feb18)
> -8.9% Toronto / PIX (Q3,4.17)
> -8% Toronto exb - Burlington / MED (yoy -Jan18)
> -7% Toronto - Brampton / AVG PCS RLP (Apr18)
> -6% Toronto sub - Mississauga / AVG (mom -Jan18)
> -6% Toronto / SFR LUX (Q4.17)
> -4.4% Toronto (yoy -Jan18)
> -4.1% Toronto / AVG SPR (yoy Feb18)
> -4% Toronto sub - Durham Region / AVG SP (yoy Feb18)
> -3.9% Toronto - 416 ac / AVG SFR (Feb18)

 
Comment by b
2018-04-22 18:14:38

thanks Lurker,

where are you getting this list (not questioning your stats at all)?

closer to the lake in Burlington and Oakville are not seeing this reduction.

for instance my folks (close to Burloak Drive - divider between Oakville and Burlington can sell at $1.2M for a 3200 ft sq house.

 
Comment by OneAgainstMany
2018-04-22 18:31:11

I love that you continue to post this list and track it. With the ephemeral nature of news and information these days, it’s hard to mental track the ups and downs of it all. But whenever I see this I am reminded of the overarching theme: the bubble is bursting and it has started in some of the most outrageously priced places first.

 
 
 
Comment by rms
2018-04-22 12:02:09

Canada has serious immigration issues that the MSM ignores.

Comment by b
2018-04-22 13:32:52

Actually Canada is very smart on regular immigration. They have a points system that is biased to key jobs, entrepreneurs etc. as well as age (younger)

The issue is

1. refugees. specially from war zones, they take up a lot of social welfare help in the first few years. The one benefit is that they tend to be on the younger side - and if they get into the workforce will pay taxes for 30 years.

2. family reunification. Instead of bringing in younger siblings, cousins, there are are oversubscription to parents/uncles/aunts. This is fine - but they only have 10-15 years to pay into the tax pool, and will withdraw for 20-30 years. Also, if a grandparent dies, their spouse (say the grandmother) can be sponsored if 2 children are in Canada. So you have someone who never paid into the tax system - withdrawing for the next 20 years.

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Comment by In San Diego
2018-04-22 18:46:26

he one benefit is that they tend to be on the younger side - and if they get into the workforce will pay taxes for 30 years.

And if they don’t, they will be on welfare for 30 years.

 
 
 
 
Comment by b
2018-04-22 11:23:53

a few of comments that i have made on previous threads, based on personal observations out of Toronto.

1. People who pulled x% out of the stock market in 2015/16 have doubly suffered as 1) the market then did better, and 2) they sunk $s into condo - where even if it does not go down in price, are cash negative. Were they desperate or greedy? I dont know.

2. Parents who convinced their last 20’s, early 30’s kids to buy a starter (i.e. condo) who are just paying too much the first 5 to 10 years for housing. Parents who were counting on getting the 40-70K that they loaned their kids for the down payment will also not see this money for many years.

3. Condos fees (CDN term for homeowner association fees) have been going up significantly. For many building in downtown Toronto there are huge fights between the owners that live in their unit and want to continue to have better amenities, and landlords who want the absolute min rate.

4. [Note. i dont believe in getting in married until you find the right person] However, there are so many folks in their early 30’s that are more casually dating — than looking seriously. One way to make dents in mortgages is to have couples (married or not) living together and paying off early or saving in other financial vehicles. What does this dynamic do for the country when there are not sufficient kids being born.

Comment by Karen
2018-04-22 13:22:08

“What does this dynamic do for the country when there are not sufficient kids being born.”

Sufficient to what… prop up all the Ponzi schemes?

 
 
 
Comment by Mafia Blocks
2018-04-22 12:26:09

I’ll be in Toronto all next week. I’ll have a concise boots on the ground report by Friday or Saturday. Per my counterparts there, there are a whole lot of 45-65 year old speculators underwater on multiple dwellings.

Comment by b
2018-04-22 17:08:43

hi Mafia - i was in at my folks house in the Toronto area (week before last ). i am super interested in how your extended family is doing.

I am super concerned about how everyone (even on a tangential level) who are on this super hamster-track is doing.

 
 
 
Comment by Ben Jones
2018-04-22 11:01:38

‘It’s a supply and demand situation. The supply exceeds the demand right now…When you have excess market product. you’re then going to have to reduce your price’

Well what do you know, the supply and demanders wake up? Did they build their way to this point? No. Maybe it was cutting back the government gravy and regulating foreign speculators?

And look, here again:

‘It can be stated with certainty that the supply of housing for sale currently outstrips the demand - a situation that has not occurred in the Israeli market for many years. Minister of Finance Moshe Kahlon, who ran in the elections on a single crucial promise - to lower the price of housing - can finally talk about a downtrend in prices’

Did they build their way to lower prices? No, they cut back on government gravy and took policy action against speculation. Gosh, they might be on to something!

And look, in Australia:

‘Investors have been the target of a number of regulatory interventions and we are now seeing this impact on residential building activity,’ said Geordan Murray, HIA senior economist. ‘With additional taxes on foreign investors and regulators clamping down on investor lending, investors have retreated from the market.’

It just keeps happening. I wonder if these supply and demanders are all wet?

Comment by Professor Bear
2018-04-22 11:10:58

‘It’s a supply and demand situation. The supply exceeds the demand right now…When you have excess market product. you’re then going to have to reduce your price’

The recurring problem with real estate manias seems to be a decoupling of supply and demand. The supply is driven to glut levels by euphoric thinking during the boom. By the time the glut is fully evident, there are so many additional projects in the pipeline that the seeds of a hard landing are planted and already sprouting. And buyer hesitation to pay unaffordable wishing prices manifests itself long before demand collapses in the ensuing bust.

It seems like the same thing happens every time. You would think the humans involved in this recurring saga would be intelligent enough to learn from history, but that doesn’t seem to be the case.

Comment by Mr. Banker
2018-04-22 11:39:35

“You would think the humans involved in this recurring saga would be intelligent enough to learn from history, but that doesn’t seem to be the case.”

God’s gift.

 
Comment by BlueSkye
2018-04-23 03:56:06

“to learn from history…”

As we see here on the HBB, people don’t even remember they were in a mania, much less learn from it.

Comment by Prime_Is_Contained
2018-04-23 21:10:37

They were deprived of the learning when they were deprived of the consequences.

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Comment by Apartment 401
2018-04-22 11:45:11

Your $3400-6600 monthly rent comes with an app, LOLZ:

“Monthly rents for a deluxe apartment tower called Argyle House opening next month start at $3,395 for a studio, $4,395 for a one-bedroom and $6,595 for two bedrooms.

The location? Not Beverly Hills, not Santa Monica, but the once-dreary intersection of Argyle Avenue and Yucca Street in Hollywood.

The rent includes package shipping and weekly hotel-style tidying up by a housekeeper. Also covered through a phone app is a weekly order of groceries that will be delivered to tenants’ refrigerators and pantries or laundry delivered from the cleaners to their closets.

Other services such as hanging flat-screen televisions, assembling furniture and walking the dog can be ordered at additional costs through the app.

“Everyone is used to swiping left and swiping right and getting what they want,” Canori said of the phone app. “This way your Saturdays are freed up to do things that are more interesting than errands.”

http://www.latimes.com/business/la-fi-argyle-house-2018021-story.html

Comment by rms
2018-04-22 12:17:19

“The location? Not Beverly Hills, not Santa Monica, but the once-dreary intersection of Argyle Avenue and Yucca Street in Hollywood.”

Just a few blocks from Sunset Blvd’s seedy nightlife.

 
Comment by Mr. Banker
2018-04-22 12:21:50

“After soil tests, the city Department of Building and Safety concurred with Related Cos. and nearby developer Millennium Partners that there were no active faults near the Capitol Records tower.”

The city department of Building and Safety. Check.

Moving on …

“State geologists disagree with that finding, …”

Oh, so now what?

“… but city officials are the final arbiters of whether development is seismically safe.”

I love this blog.

😁

 
Comment by GreenEggsAndSpam
2018-04-22 16:32:05

Seems like the perfect antiseptic place to call home when youre not at work doing 80+ hours/week, coming up with all that fantastic entertainment hollywood is known for, like “pointless movie with plastic libtard hypocrites and CGI ultraviolence part XXVII”, or the latest rap “music” where a crack addict with a 3rd grade education and clothes that dont fit (ever!) mumbles about his stacks, whips and hos with the 3 teeth he has left.

Keep them coming you brainless losers! Havent had tv or watched movies in decades and I write my own music. Thank goodness for the 80s.

Comment by MacBeth
2018-04-22 18:03:48

You’re just jealous, Eggs. Perhaps if you had their skillz…

Part 27?! That’s so April 7. Part 28 drops on April 25. And it’s every bit as organic as Parts 1-27.

 
 
Comment by MacBeth
2018-04-22 17:55:45

You can maintain your own ignorance and lack of social skills forever for just $4395 monthly!

Do renters have access to a toilet paper dispensary as well?

 
 
Comment by Karen
2018-04-22 13:27:03

“With more owners delaying their payments to builders, this has begun adversely affecting the profitability of Samsung, GS, Hyundai, Daewoo, Daelim and other apartment builders.”

Huh, who would have guessed that there are construction firms in Korea with the same exact names as “tech”, car, and appliance companies.

/sarc

Comment by Carl Morris
2018-04-22 16:10:18

Hahah. Until I got to directly witness some efforts to sell Samsung some test equipment I had no idea how incestuous the whole South Korean business/government environment is. Now I see why there are so many scandals there that somehow involve Samsung and the government.

But I will say Samsung is tough to beat at making a good SSD at a good price. Even if they are effectively subsidized by their govt, that doesn’t solve the technical problems quickly that they have managed to solve ahead of everyone else.

Comment by rms
2018-04-22 17:41:30

“But I will say Samsung is tough to beat at making a good SSD at a good price.”

Copy that!

“Samsung EVO Plus 256GB MicroSDXC UHS-I Card 4K Ultra HD”
https://www.ebay.com/itm/152979003989

Only $50 w/shipping included

Comment by In San Diego
2018-04-22 20:52:57

I was explaining to someone the other day that hard disk drives will soon be completely obsolete and will go the way of the floppy disk because of cheap flash memory prices.

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Comment by MGSpiffy
2018-04-22 21:00:03

For consumer use I do think so, and we are almost there.

For data center/mass storage usage, I think we’re a ways out - the cost and capacity need to reach parity, along with longevity and error handling/restore-ability (if that’s a word)

 
Comment by Carl Morris
2018-04-22 22:08:17

I work in the industry and those hard drive guys keep finding ways to stay alive. But they require special testers due to the vibration factor of moving parts affecting the performance when they all share a big box. There was an assumption a couple of years ago that the world had all the big hard drive test equipment it would ever need. But if they keep hanging on somebody may have to build and support another batch. If the old industry leader is still around to do that. They’ve been hanging on by their fingernails for a couple of years now.

 
Comment by BearCat
2018-04-23 10:20:11

If HDDs still significantly cheaper per TB than flash, they will stay around.

Heck, tape is still around, and I believe is still a multi-billion dollar business, because it’s still the cheapest way to archive massive amounts of data.

Also, flash might be running into some issues with scaling slowing down or ending, and going vertical DOES NOT decrease costs the same way (with planar scaling, if you cut the dimension by 1/2, you get 4x more; with 3D, if you double the layers, you get 2x more)

 
Comment by Karen
2018-04-23 10:43:37

If HDDs still significantly cheaper per TB than flash, they will stay around.

Heck, tape is still around, and I believe is still a multi-billion dollar business, because it’s still the cheapest way to archive massive amounts of data.

Don’t confuse the posters on this board with facts. They believe there is some god in the sky who declares things will be done a certain way from now on and so it is.

 
 
Comment by rms
2018-04-22 21:14:50

Think of the capitol investment and technically skilled workforce required to produce a layered chip the size of your smallest finger nail that is capable of storing 256-Gb and able to render access fast enough to stream a 4k video, and finally to sell these at the consumer level for $50 shipped?

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Comment by OneAgainstMany
2018-04-22 18:29:21

A “Chaebol” is what they are referred to in South Korea:

A chaebol (/ˈtʃeɪbɒl, ˈdʒɛbəl/;[1][2] Korean: [tɕɛ̝.bʌl] (About this sound listen)) is a large industrial conglomerate that is run and controlled by an owner or family in South Korea.[2] A chaebol often consists of a large number of diversified affiliates, controlled by an owner whose power over the group often exceeds legal authority.[3] The term is often used in a context similar to that of the English word “conglomerate”.[citation needed] The term was first used in English in 1984.[2] There are several dozen large South Korean family-controlled corporate groups that fall under this definition.

The chaebol have also played a significant role in South Korean politics. In 1988, a member of a chaebol family, Chung Mong-joon, president of Hyundai Heavy Industries, successfully ran for the National Assembly of South Korea. Other business leaders also were chosen to be members of the National Assembly through proportional representation. Hyundai has made efforts to contribute to the thawing North Korean and South Korean relations, but not without controversy.[4]

https://en.wikipedia.org/wiki/Chaebol

 
 
 
Comment by Mortgage Watch
2018-04-22 14:20:50

b>Boston, MA 02114 Housing Prices Crater 21% YOY

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

*Select price from drop-down menu on first chart

 
Comment by Very Long Time Lurker
2018-04-22 15:02:54

I’ve been reading this blog for years, but never posted before today. I’m in West Los Angeles, and we constantly hear about a “housing shortage.” While it’s true there aren’t very many places to buy, I just did a zillow search on a two mile radius from where I live, and 840 listings came up. Even if you narrow it down to places 2 bedrooms and larger, it’s 541 listings. And that doesn’t include landlords — particularly older ones — who don’t even bother with electronic listings and just post a sign (it’s how I found my current rental).

On my street alone, there are three family-sized apartments (3bdr) that have been up for rent with no takers since February, yet they haven’t lowered their askings. And within a half-mile of me, there are at least 5 gigantic apartment building complexes in various stages of construction.

So somebody please explain two things for me: Why does everyone insist on this “housing shortage” narrative? And when will landlords finally capitulate and lower the rents?

Comment by Professor 🐻
2018-04-22 15:16:25

“Housing shortage” = “real estate investor glut” = “property mania of historic proportions”

Comment by Professor 🐻
2018-04-22 15:17:50

This is all a natural consequence of the central bank announcing a plan to “help housing.”

 
Comment by BlackSwandive
2018-04-22 15:33:45

“Housing shortage” = “real estate investor glut” = “property mania of historic proportions”

Nailed it.

 
 
Comment by 2banana
2018-04-22 15:36:49

Now add in foreclosures, short sales and walk-aways.

What happens with cheap and easy money backed by the taxpayer.

Comment by Professor 🐻
2018-04-22 17:05:34

The mania would be long over were it not for the taxpayer backing, which was financially engineered by the Obama-Bernanke-Yellen Fed.

 
 
Comment by Karen
2018-04-22 16:53:02

So somebody please explain two things for me: Why does everyone insist on this “housing shortage” narrative? And when will landlords finally capitulate and lower the rents?

I was going to post this last week: I received my renewal notice, and the asking rent is lower than what they quoted me last year. I’m in Dallas, not California, but it’s really starting to turn everywhere. They’ve been overbuilding here for years, and it’s finally reached the breaking point. The capitulation will start where you are soon enough. Trees don’t grow to the sky.

Comment by Professor 🐻
2018-04-22 17:07:36

Congratulations! Hopefully we will be seeing many similar posts soon.

 
 
Comment by Hotlanta
2018-04-22 18:07:49

Sign spinners are starting to show up on corners advertising apartments..

Comment by Professor 🐻
2018-04-22 18:18:31

That’s another shoeshine boy moment for the incipient denouement of Housing Bubble 2.0.

 
Comment by rms
2018-04-22 20:44:09

You’ll know when the desperation has set-in as the sign twirlers start wearing gorilla costumes.

Comment by tresho
2018-04-23 13:06:19

You’ll know when the desperation has set-in
I won’t believe it until there are attractive young naked women twirling those signs!

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Comment by Mortgage Watch
2018-04-22 18:17:36

Parker, CO Housing Prices Crater 9% YOY As Liquidation Of Retirement/Vacation Properties Accelerate

https://www.movoto.com/parker-co/market-trends/

Comment by jeff
2018-04-22 23:09:37

The Future’s So Bright I’ve got to Wear Shades

https://www.youtube.com/watch?v=65YIlwxBuvM

 
 
Comment by OneAgainstMany
2018-04-22 18:42:04

The Washington Post
Megan McArdle
April 19, 2018

Democrats’ housing problem

“Since the late 1950s, economists have paid attention to “housing starts” — the number of times in a month that ground is broken to build a home. In recent years, however, economists have started to pay closer attention to something we might call “housing stops”: the thicket of laws and regulations that make it harder for communities to build.”

“Since at least 1950, notes housing economist Joseph Gyourko, there has been a growing price divide between low-cost areas where housing is plentiful and cheap, and desirable areas where housing is scarce and expensive. In 1950, housing in the most expensive metropolitan areas cost twice what it did in an average market. By 2000, it was four times as expensive, and Gyourko expects that difference to keep growing.”

“Some of the differences are just high demand meeting physical limits — many of those cities are hard up against one body of water or another. And their ability to spread outward in other directions is constrained by highway congestion, as well as the length of time that people are willing to commute to work each day.”

“Which is why this is one of the rare issues on which economists seem to be pretty much unanimous: American cities need to trim back the legal restrictions that constrain housing supply. As long as landlords have a preference for affluent market-rate tenants over families that are economically struggling — and they do — then there is no housing policy that can keep struggling families in their homes, or slow the pace of gentrification, without fixing supply. It seems stupid to have to say it, and yet clearly it has to be said: To house more people, you need to build more houses.”

https://www.washingtonpost.com/blogs/post-partisan/wp/2018/04/19/democrats-housing-problem/

Comment by OneAgainstMany
2018-04-22 19:00:41

This op-ed adds tows the line of the housing shortage narrative as being principally responsible for bubble prices but says nothing about lax regulations and speculators, all of which are abetted by easy credit and tax policy. But what I think this writer does manage to do well is expose the disconnect between traditionally leaning democratic special interest groups that couldn’t get behind the California housing initiative that failed last week.

Comment by rms
2018-04-22 21:05:03

It’s difficult doing business with struggling families who seem to experience crisis after crisis. Upon a cursory examination it is clear that many people are simply incapable of managing their affairs. If handed a sack of money they’d soon be broke again and mired in another crisis. Affluent tenants don’t require constant attention. FWIW, landlords don’t have it easy.

Comment by MacBeth
2018-04-22 21:42:08

I disagree vehemently with your comment, rms.

The number of struggling families is growing rapidly. Much of this recent growth has little to do with their so-called incompetence.

It has much to do with rapidly escalating fixed costs, brought to them by the Fed and shoveled down their throats by those who have questionable conscious, such as landlords.

Perhaps you need to experience your fixed costs doubling every 3 years or so. How do you think you’d fare? Would you feel the pinch?

You think landlords have it tough now? Just wait. You ain’t seen nothing yet.

Look at it from the renters’ perspective. Why would they want to continually downgrade their standard of living as gamesters and speculators (i.e., landlords) continue to ratchet up their fleecing of them?

I foresee a sizeable revolt against landlords on the horizon.

Creating and encouraging a destitute customer base is not a wise idea.

(Comments wont nest below this level)
Comment by rms
2018-04-22 22:06:33

“Perhaps you need to experience your fixed costs doubling every 3 years or so.”

I moved my family from beautiful coastal California to the desert of the Columbia Basin for the reasons you cite. My mother did not get to see our children grow-up, and our children wouldn’t recognize their cousins on the street.

FWIW, landlords have bills like everyone else; worse actually because their bills are in fact a lien.

 
Comment by BlueSkye
2018-04-23 05:04:01

Having a lien on an investment asset is really not the same as wanting for necessities.

 
Comment by MacBeth
2018-04-23 06:12:35

“FWIW, landlords have bills like everyone else; worse actually because their bills are in fact a lien.”

So, in other words, you’re a landlord yourself.

Who buys nearly new cars for his kids.

 
Comment by rms
2018-04-23 06:40:24

“So, in other words, you’re a landlord yourself.”

No, I am not.

 
Comment by drumminj
2018-04-23 07:02:09

I foresee a sizeable revolt against landlords on the horizon.

What do you think a revolt against landlords looks like? As far as I can see, renters are largely over a barrel. Sure, you can move, but that presumes theres a cheaper place to move to and the net savings exceeds moving cost + hassle.

 
Comment by Mafia Blocks
2018-04-23 07:35:51

Revolt? With rental rates half the cost of buying at current grossly inflated asking prices of resale housing, I fail to see the issue.

 
Comment by OneAgainstMany
2018-04-23 08:00:04

What do you think a revolt against landlords looks like?

I used to think that RV dwellers were fringe, but I think this is the only viable option for a rebellion of some sort. It is mobile and, in many cases, much cheaper. I am starting to notice a lot of RVers who look close to homeless. They shift the location of their vehicle on a regular basis so not to run afoul of local parking ordinances.

 
Comment by Mafia Blocks
2018-04-23 08:15:41

Do those things even have bathrooms? Do they dump in a bedpan? Who empties the bedpan?

 
Comment by tresho
2018-04-23 13:13:50

Do they dump in a bedpan?
They dump into a specially modified sewer drain, which goes either to a septic system or a municipal sewer system. Drain is usually surrounded by a specially installed sheet of concrete to direct all spills in the area into the drain. A non-potable water supply is necessarily available for rinsing the inevitable area contamination. Do not eat off that concrete and always wear protective footwear walking in that area. Wear the longest rubber gloves you can buy, and keep your mouth shut at all times, while doing a “dump” from your “black water” system.
One state park I know of charges $10 per dump for non-campers.
Miscreant black water dumpers just let ‘er rip wherever they think they can get away with it.

 
Comment by tresho
2018-04-23 13:23:35

I am starting to notice a lot of RVers who look close to homeless.
So am I, and I’ve been RV’ing off & on since 1983. The more posh RV campgrounds will only allow late model RV’s (say less than 10 years old) into their cherished facilities — this is one way to keep the riff-raff out. National campground sites have a time limit (14 days more or less with 14 days of not camping there to follow) to prevent low lifes from taking up permanent residence there. There are free federal campsites in very remote areas (too far from possible places of employment) where restrictions are not as severe.
With a senior citizen national park service pass, the basic camping fee is 50% of the regular one. Theoretically I could camp 10 miles from the heart of Washington DC for just $154 for the allowed 2 weeks at a certain NPS CG. I should take that up.

 
Comment by Mafia Blocks
2018-04-23 13:24:02

Wouldn’t a public restroom be easier?

 
Comment by tresho
2018-04-23 19:21:51

Wouldn’t a public restroom be easier?
Actually there are RV toilets trademarked “Portapottis” which can be used inside an RV, and small enough to be carried out and then dumped into a public toilet & flushed away. I used one for quite a while in my old truck camper after the black water mechanism proved too much trouble.
I only used the shower in my truck camper once when I stopped to take a dip in a Minnesota lake one very hot summer afternoon. I came out to discover I had covered myself in green algae. Just stood on the back step & let the shower water go down over me to the pavement.

 
Comment by tresho
2018-04-23 19:24:13

Wouldn’t a public restroom be easier?
Campgrounds in places like Yellowstone do have nice public restrooms. But I would be reluctant to go out after dark to find them. I would just as soon not meet a bear wandering around, looking for something or someone to eat.

 
 
 
 
 
Comment by Professor 🐻
2018-04-22 20:18:43

The scary thing about draining the Fed’s liquidity swamp is that the same punchbowl that fueled the housing bubble also fueled the stock and bond market bubbles. Good luck to you if you are long three or more risk asset bubbles!

 
Comment by Professor 🐻
2018-04-22 23:09:38

I have to say that we have certainly made it easy for our landlords by mailing them a rent check on time every month for over ten years! And though they have hiked our rent over the period, they have done this in line with published average rent increases, not an ad hoc effort to fleece us to the maximum we are willing to pay before walking away. And despite the increases, our rent is lower now as a share of household income than when we first moved in. They have also generally been responsible for repairs and responsive to requests when something needed attention (e.g. upstairs toilet leaking through the ceiling).

Compared to some of the horror stories folks have posted from time to time, our landlord-tenant relationship has been stable and mutually beneficial.

 
Comment by Professor 🐻
2018-04-22 23:35:20

Got shrinkage?

China no longer top US real estate investor
by Janne Suokas
Mar 28, 2018 14:16
INVESTMENT UNITED STATES REAL ESTATE
In February, the Chinese government took control of Beijing-based Anbang Insurance Group, which has bought overseas properties including the Waldorf Astoria in New York City.
Bob B. Brown Flickr CC BY-ND 2.0

Chinese investment into commercial real estate in the United Stated dropped sharply last year, largely due to Beijing’s efforts to restrict capital outflows and so called irrational investment, a new report says.

The total value of investment from the Chinese mainland and Hong Kong into US real estate fell 55 percent in 2017 to US$7.3bn, down from a record US$16.2bn in 2016, according to a new report by American real estate consultant Cushman & Wakefield.

Due to the slump in investment, China lost its position as the top investor into US real estate and fell to third place, behind Canada and Singapore.

Megadeals worth US$1bn and more, as well as hotel acquisitions, declined the most while geographically the sharpest declines were seen in Los Angeles (-67 percent), New York (-54 percent) and Chicago (-20 percent).

New York and San Francisco together accounted for two-thirds of Chinese investment into US real estate.

The dramatic decline was mainly due to the Chinese government’s tightened capital outflow controls and increased scrutiny of overseas deals last year, which resulted in the first drop in the country’s total outbound investment since 2006.

In August last year, Chinese authorities announced guidelines that restricted outbound investments in real estate, hotels, cinemas, entertainment, sports clubs, and investment funds and platforms with no specific industrial projects.

 
Comment by Professor 🐻
2018-04-23 04:15:51

Ready or not, here it comes…

The Financial Times
US Treasury bonds
US 10-year bond yields close in on 3% milestone
Debt sell-off sends Treasuries to 5-year high ahead of major central bank meetings
3 hours ago

Comment by Professor 🐻
2018-04-23 04:22:13

Whose job is it to prop up the major stock market index futures in case they slip in response to rising Treasury bond yields?

U.S. stock futures slip as 10-year bond yield moves higher
By Barbara Kollmeyer
Published: Apr 23, 2018 6:49 a.m. ET
Hasbro, Halliburton and Google parent Alphabet are on the earnings docket
Getty Images
Halliburton earnings on tap for Monday

U.S. stock futures were slipping on Monday, as Treasury yields resumed a move higher and investors waited for another big week of earnings to get underway, with Halliburton Co. coming ahead of the open.

The market is also looking ahead to results later this week from major technology companies — Google parent Alphabet Inc., Facebook Inc. and Twitter Inc. — following losses for the sector in recent sessions.

 
Comment by Professor 🐻
2018-04-23 04:34:47

What prevents the 10-year Treasury yield from crossing over the 3% threshold?

US 10-year Treasury yield jumps to 2.99% as investors bet on inflation, more Fed hikes
Thomas Franck | John Melloy | Alexandra Gibbs
Published 2 Hours Ago
Updated 13 Mins Ago
CNBC.com

The yield on the benchmark 10-year Treasury note started the week on a tear, jumping to 2.99 percent and toying with the key 3 percent yield that could trigger a reaction across global financial markets.

The 10-year yield was at 2.979 percent at 7:05 a.m. ET, after topping 2.99 percent earlier Monday. The yield on the 30-year Treasury bond was higher at 3.167 percent. Bond yields move inversely to prices.

A 3 percent yield on the 10-year note represents both a key psychological level as well as a multiyear high for the Treasury rate. Should the yield hit 3 percent, it would be the note’s highest rate since January 2014; if it tops 3.04 percent, it would be the note’s highest rate since July 2011. The benchmark for mortgage rates and other financial instruments has jumped in April on signs of increasing inflation and as the Federal Reserve signaled more rate increases are to come this year.

 
Comment by Professor 🐻
2018-04-23 04:40:41

3% yield on the 10-year = Rubicon for era of rate normalization

 
Comment by Professor 🐻
2018-04-23 07:27:16

The Lunar New Year is messing up my bubble investments!

World stocks stumble as US Treasury yields near 3%
- World stocks slipped on Monday as investors braced for a blizzard of earnings from the world’s largest firms.
- Investors are also keeping a wary eye on U.S. bond yields as they approach peaks that have triggered market spasms in the past.
- In early New York trading, the 10-year yield was trading around 2.9950 percent.
Published 5 Hours Ago
Updated 1 Hour Ago
Reuters

World stocks slipped on Monday ahead of a blizzard of earnings from the world’s biggest firms and as wary investors watched U.S. bond yields approach peaks that have triggered market spasms in the past.

The on 10-year U.S. Treasurys hit its highest level since January 2014 at 2.99 percent, pushing the gap — or spread — to German bonds to the widest in 29 years and the dollar higher in the process.

Traders were also getting a global round of economic surveys that should show in the coming days if economic softness in the first quarter was just a passing phase linked to wintery weather and the Lunar New Year holidays in Asia.

 
 
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