The Zombie Houses Are Everywhere
A report from Q Fox 13 in Washington. “Even though the average price of a house is about $800,000 in King County, real estate brokers say spring and summer may offer a window of opportunity for homebuyers. ‘There’s a little bit of a dip, but if we’re at a 10 now, it’ll be an 8.5 or a 9 during the summer months,’ said Michael Ackerman, real estate agent for Coldwell Banker Bain. On the Eastside, ‘I am noticing that,’ said Nelya Calev, a real estate agent with John L. Scott. She agrees with Ackerman that the market may slow slightly in the summer, but it may impact sellers more than buyers. ‘I don’t know if I would call it a slowdown, instead of seeing 15-20 offers, as a seller you may get two or three offers, which is still great,’ said Calev.”
The Herald Tribune in Florida. “Home prices cooled in the Sarasota-Manatee region during the opening months of 2018, failing to keep pace with statewide gains. Sarasota-Manatee posted the second-lowest price gain among the 22 metro areas covered in the report. Only Cape Coral-Fort Myers was lower. ‘Buyers in the market for mid- to upper-tier single-family homes are having a much easier time of it, as they’re facing less competition, and there’s a relative abundance of both new construction and re-sale inventory available,’ said Brad O’Connor, chief economist at Florida Realtors.”
From Boise Dev in Idaho. “Bob Piazza has spent all of his 74 years living in California - married for 53 of those, and operator of a business for 46. His roots in the Sonoma Valley north of San Francisco are as deep as those of the nearby grape vines that define surrounding wine country. But soon, Piazza, his wife and many of his employees will pull up those roots and transplant to the Treasure Valley. This November, Price Pump will move to a new facility in Caldwell. And in a surprise to Piazza, half of his California-based employees will come along.”
“‘Six months ago when we made this decision I thought we’d only get one to go - and that one is me. We got 18,’ he said. One employee had worked for the company for 46 years, and at 66 will be one of the new Idahoans. ‘He said ‘I looked at finances living in California, I can’t afford to live here. At 66 I’m not going to find another house. I’m going to have to sell my house and move… Boise is just as good as any.’”
From The Real Deal on New York. “Manhattan’s luxury residential market recorded 24 contracts at $4 million and above last week, according to Olshan Realty’s luxury market report. But discounts are driving deal activity, and the week’s top two deals went into contract for less than the sellers originally paid for their properties. Two deals were tied for the week’s priciest contract, both with an asking price of $18.75 million.”
“At the Baccarat Hotel and Residences, condominium unit 44A’s asking price was nine percent lower than the $20.62 million the seller paid for the 4,545-square-foot home in May 2015. The mystery buyer of the building’s penthouse earlier this year listed the home for $40 million, less than the $43 million the buyer paid in June 2016.”
“And for the townhouse at 39 East 67th Street, the $18.75 million asking price was nearly 17 percent lower than the $22.5 million it last sold for in 2014. The five-story, 11,455-square-foot home had an asking price of $31 million when it hit the market two years ago. Luxury homes spent an average of 289 days on the market, with an average discount of 11 percent from the original asking price to the final asking price.”
From News 5 Cleveland in Ohio. “Thousands of homes around the City of Cleveland are falling apart. These abandoned buildings are more than just eyesores – they’re safety hazards that breed crime and destabilize neighborhoods. To reduce the distress they bring to communities, the city encourages residents to call 311 to alert them when they see open, vacant or vandalized properties. There have been 4,600 people who have called 311 about vacant and abandoned homes since 2016, according to city data.”
“Cleveland resident Debbie Gordon said she called and complained several times to the city about the abandoned home on 8016 Whitehorn Avenue. ‘It’s just disgusting,’ Gordon said. The house on Whitehorn Avenue is just one of many properties 5 On Your Side Investigators visually inspected as part of our investigation into how long it takes for a home to be boarded up after a 311 complaint is filed.”
“From the 4,600 total calls, we selected a sample of homes in the city’s data and checked the status of those calls. We inspected all 42 properties categorized as open, vacant, and/or vandalized (OVV) that residents called about in February of 2018. During our team’s inspections in April, we found 14 — or one-third — of the properties were not completely boarded up. Close to a decade after the crisis, the latest estimates show there are approximately 7,159 vacant homes in Cleveland.”
“Ward 12 Councilman Tony Brancatelli acknowledged the system has flaws, but said it has worked for him, especially considering the scope of the problem. ‘We have been doing a great job of keeping up with the freaking mess of the foreclosure crisis,’ he said.”
From WBGO in New Jersey. “Over forty years ago the New Jersey Supreme Court’s Mount Laurel decision was hailed nationally. It proclaimed it was unconstitutional for local zoning to exclude housing for its poor and working class. Yet, decades later New Jersey is in a full blown affordable housing crisis and leads the nation in foreclosures. And despite the scarcity of affordable housing there are tens of thousands of vacant homes just wasting away.”
“For Tim Johnson, his life was upended when his father came down with pancreatic cancer and in just a few months died. His mother fell behind on the mortgage payments. ‘I had a similar story with foreclosure too my mother was foreclosed in 2002,’ he said. ‘When my father passed away our house was foreclosed. She had to sell it before it was foreclosed.’”
“Johnson’s mom’s home in Middletown is still listed as vacant. It is one of close to 40,000 empty homes throughout New Jersey. In places like Newark and Atlantic City the crisis is so acute vacant homes threaten public safety and depress property values. Activists are pushing for a moratorium on foreclosures which can leave families homeless and their homes vacant.”
“Carolyn Bailey, know on line as the ‘hurting homeowner’ has been working with the Citizens Coalition. She has been fighting to hold on to her Cliff Street home in Newark. ‘My husband bought the house,’ she said. ‘My children were raised there so it home. That is the connection. I have been there now over twenty-five years.’”
“Bailey sees what’s happened in New Jersey’s poorer neighborhoods is a manifestation of systemic racism continuing to play out. ‘So, the urban area has been cratered out. The zombie houses are everywhere,’ said Bailey. She has been fighting her foreclosure pro se in the courts since 2006. She says for many African-American homeowners their current foreclosure problems were the consequence of underlying predatory lending practices that go back decades.”
“‘There was red lining long before there was the Great Recession,’ she said. ‘And so, in the urban communities if you managed to get a house you paid a higher price. You paid a higher percentage on the mortgage. You got terms from the beginning from the closing where you were being gouged. So, you started out behind the eight ball and you never really caught up. So, this took us over the edge and has left us just swimming out in the ocean. But we will survive. We are a people that have survived.’”
‘I had a similar story with foreclosure too my mother was foreclosed in 2002,’ he said. ‘When my father passed away our house was foreclosed. She had to sell it before it was foreclosed.’ Johnson’s mom’s home in Middletown is still listed as vacant. It is one of close to 40,000 empty homes throughout New Jersey’
So 16 years just sitting there. Some shortage.
‘Close to a decade after the crisis, the latest estimates show there are approximately 7,159 vacant homes in Cleveland’
We were reading about multiple offers over asking just a couple of days ago.
I was in Cleveland last weekend.
There are a few shiny new buildings, but it doesn’t mask the post-industrial economic rot and abandoned buildings everywhere. Thanks, NAFTA.
2banana’s Law.
Long term democrat rule + public unions + free sh!t army = misery, despair and bankruptcy
True credit goes to giving China WTO status. Thank you Bush I and Clinton. capitalism or at least a handful of multinationals really did sell the hangman’s noose to a communist country.
Wikipedia shows Cleveland’s population declining since 1950.
The biggest decline was between 1970 and 1980 (23% decline). If memory serves me right that was when offshoring and imports really began to take off. I recall a friend’s dad back then calling Radio Shack “Taiwan Shack”
Energy crisis, many people and companies moved to Texas. particularly since it marked a period of really cold winters with the MSM announcing a new ice age. The higher oil prices really opened the door to Japanese cars which hurt not only Detroit but the suppliers of steel and auto parts which included Cleveland.
new ice age in the 70’s and a global warming crisis in 2000.
The earth is 14,000,000,000 years old.
It can’t possibly go from us Freezing to death to boiling to death in 25 years.
Crazy stuff. I remember reading/hearing (science major in the 70’s) that by 2020 we would need to be living underground in order to survive the cold.
Doesn’t look like that forecast is gonna happen.
“The earth is 14,000,000,000 years old.”
Er… no.
Insane property taxes on a run down crack shack.
Why can’t we sell it?
I suspect that this one of the reasons so many houses are abandoned. Given that a locale is in permanent economic depression, property taxes are the coup de grace that makes a property utterly worthless.
One would think that this would serve as a lesson to places like Illinois that keep raising property taxes, to insane levels. And I’m sure those in charge do understand, but also see the impending future issues as “someone else’s problem”, they always do.
$250k house RE tax
IL 8k
WI 5k
IN 2K
right to work state next to union states is easy pickins
New Jersey:
$125,000 house taxed at $6,680/year (5.35%). You get $400 off if your are a veteran.
Criminal……
Interesting distortion which will impact the ability of Colorado to keep residential taxes down:
http://www.dailycamera.com/boulder-business/ci_31851412/crushing-burden-property-taxes
They would have to repeal the 55/45 rule. Voters would not be happy about that. And since it wouldn’t bring in even an extra penny, they won’t do it.
Notice that the article is about Boulder, which has Bay Aryan prices which have risen faster than in other cities. While TABOR keeps the state aggregate tax collected in check, taxes rise in Boulder while in some cases they go down in other places.
As I’ve said before, with TABOR, even if your assessment goes up, you taxes can actually be reduced if the assessment increase is less than the average. In Boulder’s case, their prices have risen far more than the statewide average.
One would think that this would serve as a lesson to places like Illinois that keep raising property taxes, to insane levels.
I just saw a story that they are trying to add another 1% for the next 30 years.
Another link to higher mortgage rates:
https://www.cnbc.com/2018/05/15/mortgage-rates-are-surging-to-the-highest-level-in-7-years.html
“…higher mortgage rates…”
4.875% is spectacularly LOW.
“So 16 years just sitting there. Some shortage.”
That’s the scam. It’s collusion, but it’s ok because it’s the banks.
Falls Church, VA 22046 Housing Prices Crater 10% As Housing Market Tanks
https://www.zillow.com/falls-church-va-22046/home-values/
*Select price from dropdown menu on first chart
‘Despite a drop in numbers across much of the United States since the recession, vacant and abandoned properties continue to dog struggling postindustrial cities, tearing apart neighborhoods with growing intensity, according to a report published by the Lincoln Institute of Land Policy.’
‘The report analyzes U.S. Census and Postal Service data for 15 legacy cities — ten large and five small — as well as for magnet cities such as San Francisco and Boston, and Sunbelt cities such as Phoenix and Dallas. The report focuses especially on two indicators: hypervacancy, the condition in which at least one in five properties sits vacant, and so-called “other vacancies,” a Census term for properties sitting unused and not for sale or rent — effectively abandoned.’
‘A few decades ago, hypervacancy was limited to a handful of neighborhoods but now characterizes large swaths of many cities. In 2015, more than 49 percent of Census tracts in Flint, Michigan, 46 percent of tracts in Detroit, and 42 percent of tracts in Gary, Indiana, suffered from extreme hypervacancy, with more than a quarter of units vacant in each tract.’
‘At such levels of vacancy, “the market effectively ceases to function,” Mallach writes in the report. “Houses sell, if they sell at all, only to investors at rock bottom prices while the neighborhoods become areas of concentrated poverty, unemployment, and health problems.”
‘Meanwhile, the number of units that are effectively abandoned has increased by 2.1 million units nationally, from 3.7 million in 2005 to 5.8 million in 2016, an increase roughly equal to five times the entire housing stock of San Francisco. These properties represent less than a third of all vacant properties in magnet and Sunbelt cities, but about half of all vacancies in large legacy cities and roughly two thirds of vacancies in the smaller legacy cities, which face the greatest economic challenges, as detailed in the report.’
‘The Empty House Next Door describes barriers to addressing vacancies, including cumbersome property tax foreclosure processes, and state laws and bank practices that lead to thousands of properties being stuck in foreclosure limbo.’
Meanwhile, the number of units that are effectively abandoned has increased by 2.1 million units nationally, from 3.7 million in 2005 to 5.8 million in 2016
Almost 6 million. I suspect most are in flyover. Also, not quite the 20 million number that gets repeated on this blog ad nauseum, but still a sobering number.
Don’t stop reading there.
“These properties represent less than a third of all vacant properties in magnet and Sunbelt cities”
That sounds kinda like 20 million just in not-flyover.
But why are those properties vacant? How many are vacation homes? How many are properties held for speculative purposes? How many are zombie properties? How many are properties that don’t sell? It would be interesting to see a breakdown.
So, are you still mocking or not?
Mocking? He is asking legitimate questions.
In 1993 I sold my deceased grandmother’s house for $2,300. It was in a small South Dakota town where the population was cut in half from 1960 to 1990.
1200 SF for $1.91/SF. When I asked my aunt if the value seemed right, she replied “We are lucky to get that much. Walk around town and look at the abandoned houses with their roofs collapsing.” I did, and there were!
We sold it to a farmer wanting to move closer to the town school for his 3 children. $500 down and $100/month.
Supply and demand.
Not to mention the fact all these excess, empty and defaulted houses are where people are…. within 200 miles of the coast.
What they refer to as “hypervacancy”… Is this a part of the 25 million excess, empty and defaulted housing units or in addition to?
Easy solution.
Make banks eat their bad loans.
ZERO government guarantees on mortgages.
The problem would solve itself rather quickly AND bring back affordable housing.
But it is hard to buy votes that way…
+++++
‘Meanwhile, the number of units that are effectively abandoned has increased by 2.1 million units nationally, from 3.7 million in 2005 to 5.8 million in 2016,
2banana
Yep, couldn’t agree more.
“…But it is hard to buy votes that way…”
No to mention that local governments would have a hissy fit because total property tax intake would decline.
Less pork and fat to fund bloated local government salaries and pensions.
2banana
Couldn’t agree more.
“…But it is hard to buy votes that way…”
Not to mention local government taxing agencies who will throw a major league hissy fit in face a decline in property/local tax intakes.
Less tax take means less money for bloated government salaries and pensions.
“But it is hard to buy votes that way…”
Bingo. It’s hard to run for office without the banksterz’ cash lining your campaign coffers.
Taibbi has a great new article on that in Rolling Stone that just came out. He talks about the sausage making inside the D party primaries and how it’s all about how much money you can raise. But not just for your own campaign…they only care if you can kick a bunch of money upstairs to the party. Otherwise you’re nobody.
Same with the R party at the national and state legislatures. If you are not bringing in the cash you will not be selected for committee seats.
Realtors are liars.
You can say that again.
Realtors lie alot.
‘I don’t know if I would call it a slowdown, instead of seeing 15-20 offers, as a seller you may get two or three offers, which is still great’
‘And so, in the urban communities if you managed to get a house you paid a higher price. You paid a higher percentage on the mortgage. You got terms from the beginning from the closing where you were being gouged. So, you started out behind the eight ball and you never really caught up. So, this took us over the edge and has left us just swimming out in the ocean.’
‘if you managed to get a house you paid a higher price’
You know that’s kinda how it’s set up. Play up the snake oil stuff: shortage, urgency, and next thing you know you’re out there swimmin’ in the ocean!
“And so, in the urban communities if you managed to get a house you paid a higher price.”
To counter this just say no.
“You paid a higher percentage on the mortgage.”
Again, just say no.
“You got terms from the beginning from the closing where you were being gouged.”
Once again, just say no.
“So, you started out behind the eight ball and you never really caught up.”
That’s because you are a dummy that just cannot say no.
‘Carolyn Bailey, know on line as the ‘hurting homeowner’ has been… fighting her foreclosure pro se in the courts since 2006.’
Look at the bright side Carolyn. You haven’t paid anything for 12 years.
Geezuz, based upon a 30 year mortgage, she’s almost half way to a free house. Lady, you are one lucky SOB.
https://law.justia.com/cases/new-jersey/appellate-division-unpublished/2016/a0239-14.html
Here’s a snippet: “At all times relevant to this appeal, plaintiff Carolyn Bailey resided in the home her husband purchased in 1987 for $88,000. He paid an initial $7000 down payment and financed the balance. The record does not disclose the terms of this purchase-money loan. Plaintiff’s husband passed in 2005.
In August 2005, Bailey decided to refinance her home. By that time, she had retired from her position as a teacher. Despite her limited financial resources, Columbia Home Loans, L.L.C. (Columbia), approved Bailey’s application to refinance the debt secured by her residence. Columbia lent plaintiff $207,000 secured by a mortgage on her property and a promissory note payable over fifteen years, with the last payment due on September 1, 2020. Columbia thereafter assigned the note and mortgage to Wells Fargo Bank.”
Carolyn Bailey is a thief.
The hurtin’ homeowner.
Realtors and MT pockets successfully colluding to bring housing crime prime time.
crime_is_uncontained.
Ms. Bailey’s website is a hoot.
http://hurtinghomeowners.com/
——————–
CAVEAT 1 - Under no circumstances is this posting meant to support or encourage any homeowner to intentionally default on his/her/their mortgage….
CAVEAT 2 - During the 12-year ordeal #HurtingHomeOwner retained an attorney for 3 months. That was either her smartest, or her dumbest strategy.
——————–
I bet that attorney from Caveat 2 advised her to write Caveat 1. And then he probably ran away. He knew that she would be laughed out of any court.
She’s even got an email address. Anyone want to email her to ask what she did with the $207K?
“Anyone want to email her to ask what she did with the $207K?”
Reporters used to follow the money… before their editor(s) started pimping yellow journalism.
“…Look at the bright side Carolyn. You haven’t paid anything for 12 years….”
It is no fun to live that way.
We rented a house in 2006 (thanks to the HBB) and watched it foreclose in 2007 (thank you Countrywide, Recon Trust and Angelo Mozilo). While we did not have an ownership stake, my wife was beside herself not knowing if and when the house would be taken by the lender.
“…left us just swimming out in the ocean.”
Just how did you get in over your head?
You couldn’t make the payments. The debt did not make you rich. You got a higher interest rate because you had a lousy credit rating already, which is now completely in the toilet. As a people, Debt Donkeys are hard to learn.
Equity locust destroying everything they touch…
And trying to change the new place into the hell hole they left…
+++++
Forget Florida: More Northern Retirees Head to Appalachia
‘Halfbacks,’ former northerners who left Florida, boost local economies but chafe some locals
WSJ - Cameron McWhirter - May 15, 2018 5
For the 57-year-old Mr. Stefanelli, the area’s draws included moderate weather, a lack of traffic and low costs on everything from property prices to restaurant bills to taxes.
The twist is that the Stefanellis weren’t moving from New York but rather from West Palm Beach, Fla., part of a movement known as “halfbacks”—northern transplants to Florida who are retiring in mountain communities of western North Carolina, northern Georgia and eastern Tennessee. These retirees are reshaping local economies, boosting everything from tax revenues to restaurant receipts to sales of electric chair lifts for the elderly. Along the way, they are chafing locals who say the migration is pricing them out of homes and bringing in a sort of big-city brusqueness.
Mr. Stefanelli says he pays about $3,000 in taxes a year for his Georgia house, compared with about $20,000 for his home in Florida. He also maintains a home in New York that costs him about $30,000 a year in taxes. He plans to make Georgia his main residence in a few years.
“I bought a pickup to fit in,” he said.
Nathan Fitts, a local real-estate agent and newly elected city councilman, said the influx has helped raise tax revenue and revive the local economy.
The median home sales price in Fannin County last year jumped 75% from 2012 to $250,000, according to Attom Data Solutions, an Irvine, Calif., property-data provider. During the same period, the U.S. median home sales price rose 51%, to $236,000.
Jeremy Jones, a 34 year-old auto mechanic whose family has lived in Fannin County for four generations, complained that the influx has driven up rents making it tough for locals.
“This used to be a very tightknit community, the Bible Belt. Now it’s about money,” he said. “Us, the regular people who are here, are struggling.”
Terry Stonecipher, a 43-year-old mechanic who has lived in the area most of his life, said area residents have bristled at some of the newcomers. “People that have no manners,” he said. “Go back where you came from.”
“I bought a pickup to fit in,” he said.
I’m sure he fits in real good with his Ridgeline :-).
Nothing like buying a $55,000 pickup to “fit in” with locals who don’t make that much in a year…
Probably $75,000.
You can get a Honda Ridgeline in the 30’s. Of course any self respecting redneck will tell you that the Ridgeline isn’t a real pickup truck.
Neither is a Tundra or Titan.
Dell McCoury has a great song about this issue, “40 Acres and a Fool”
Just how many of those has Honda been able to sell?
I don’t know. But I used to see them around in Colorado hauling bicycles and small loads of mulch around the burbs.
I can’t remember the last time I saw one. Of course, you’d get laughed off the street in Loveland if you drove one.
Sold 35,000 Ridgelines in 2017.
Chevy sold 900,000 trucks the same year
Fannin is one of several red state counties to approve teacher carry
in the blue states you pile up desks and blow whistles
When seconds count School Resource Officers are only 20 minutes away hiding in the bushes. So we don’t need armed teachers. A 17 year old says so. He was 1000 feet from someone who was shot, hence he is an expert in school safety.
Did you agree and sign a contract or not?
Did you pay on time or not?
There is no “fighting for your house” is you replied positive to the above.
++++
She has been fighting her foreclosure pro se in the courts since 2006. She says for many African-American homeowners their current foreclosure problems were the consequence of underlying predatory lending practices that go back decades.”
The simple truth is if you do not pay then “Alice does not line here anymore.” She needs to take it up with Barney Frank who when confronted with the fact that government programs were driving up housing and putting people into homes they could not afford chosed to deny the obvious.
“Live” damm autocorrect
Report finds cases of STDs reach all-time high in California:
http://www.sacbee.com/news/article211121954.html
This is the “fundamental transformation” that you were promised.
Advanced syphilis could explain the voting pattern of the average Californian.
Lol! Break those numbers out by race and people will really see whats going on.
Said it before, look at hiroshima and nagasaki and compare to detroilet and other s-tholes. We need to nuke ours and import a bunch of japanese people and our cities will be humming again.
import a bunch of japanese people
They don’t make ‘em like they used to.
I am here to officially declare the Refi market dead…we are now back to 8 year levels on rates…this could be the beginning of the slowndown
Cash out refis *are* the economy.
A lot of buying has been due to people trying to beat the rate increases, when you look at the inflation rate and today’s mortgage rate, I think we are close to being normalized. The Fed is much more willing to do its job now that Trump is in office which is good:
https://www.msn.com/en-us/money/markets/mortgage-rates-surge-to-their-highest-levels-in-7-years/ar-AAxkwO2?ocid=spartandhp&ffid=gz
“A lot of buying has been due to people trying to beat the rate increases…”
That is the dumbest thing ever. People are not qualified based upon the purchase price, they are qualified based upon the payment. So, as rates go up, so does the payment, so prices go DOWN. You can refi the rate, you can’t refi the purchase price. Smart people WAIT while rates rise to get a cheaper price.
Smart people WAIT while rates rise to get a cheaper price.
You answered why so many people are rushing to buy.
https://www.usatoday.com/story/money/personalfinance/real-estate/2018/01/24/mortgage-applications-jump-4-5-buyers-rush-beat-higher-rates/1061039001/
Of course, it is just another example of dumb people making life difficult for smart people so you just have to be smart enough to calculate their behavior into your decisions. I wanted to buy a house in Williams, AZ in 2005 and made a reasonable bid on the house but lost it because the madness had already begun. I did nothing wrong logically but dumb money cost me the house. The house probably went up 30 to 40% % after I failed to buy it before it crashed in value in 2008 or 2009. If I had owned it I would have sold it because it was so overvalued.
I waited for the crash and wanted a large crash, however due to the Obama administration doing everything in the book to avoid a correction including the $8000 tax credit, I decided in early 2010 to buy. I think Oxide did the same. I bought a new energy efficient small house. I refinanced the house in 2012 and achieved around a 3.5% mortgage on a thirty year loan. Due to large charitable deductions the house has saved me a lot of taxes over the years and it is worth more than I paid for it, even ignoring the tax credit.
However, do I feel that I won the rigged game? No, because houses are still overvalued and I never achieved the deal I should have had dumb money been punished by market forces.
So dumb money still drives up houses and the people that ignore all the rules such as houses should only appreciate 1% over inflation over the long run have done well.
I do not regret buying the house since I wanted my own property and I am paying less now per month due to the refinancing then when I bought the house and I can assure you that is not true for rents over the last seven years. However, I would have much rather have had the crash that we thought was going to occur in 2007, probably would have the same size house but on a bigger lot. Interesting, all the lots sizes in my development are the same despite the size of the house so I have about the most free land but I would still like more. The manipulation is clearly there for an intelligent person to see but it is harder to see when and how housing is going to revert to the mean and trade normally when government refuses to allow the free market to work and people are calling for more intervention not less.
Very little of my wealth is in real estate so a real housing crash would still be beneficial to me. The buying of a small house meant more money into other investments. However, life goes on and ten years from now I doubt I will even care to buy a house with bigger lot, I probably want to live in the exact house I am living in now.
Why buy it when you can rent it for half the monthly cost? Buy it later after prices crater for 75% less.
“So dumb money still drives up houses and the people that ignore all the rules such as houses should only appreciate 1% over inflation over the long run have done well.”
“When you combine ignorance and leverage, you get some pretty interesting results.”
~Warren Buffet
So, as rates go up, so does the payment, so prices go DOWN. You can refi the rate, you can’t refi the purchase price. Smart people WAIT while rates rise to get a cheaper price.
And those smart people will be waiting 15 years, paying rent the entire damn time. A cheaper price is not enough to make up for 15 years of rent. We hashed through this argument six years ago, when I revealed that I had bought a house, and was lambasted for it.
Donk,
You were lambasted for using Fools Math.
A cheaper price is not enough to make up for 15 years of rent.
That’s not true if renting is significantly cheaper than owning. If you save that extra you will be ahead.
I think there was a Florida International University finance paper that I posted a few months ago to this site that argued that buying a home as an investment is always worse than renting historically. The rationale that was given was that in rapidly appreciating housing conditions (a.k.a. housing bubbles), the stock market has tended to increase even more, and the two asset classes are tightly correlated. Buying a house is a tantamount to forced savings in a sense, but the authors concluded that it would make more sense to channel such forced savings into equities which has, historically, had a better return rate when accounting for the hidden costs of home ownership.
90 days ago I was cursing myself for not having done a better job in securing financing, and upset that I wound up with 4.375% for a jumbo. I could have hustled to get the deal done and listened to the agent’s advice to use the lender I ultimately did and been able to close 5-6 weeks earlier, and and eighth or two lower on the rate.
The average contract rate on the 30-year fixed will likely end the day as high as 4.875 percent for the highest creditworthy borrowers and 5 percent for the average borrower, according to Mortgage News Daily.
…Now, I’m not feeling so bad how things worked out for me. (Honestly, I expected to get more ribbing from everyone here for having bought this year, but you guys are fairly understanding)
(Honestly, I expected to get more ribbing from everyone here for having bought this year, but you guys are fairly understanding)
We think you should buy 10 houses. Or 20 or 30. Why stop at one and limit your potential? I’m sure Mr. Banker will be happy to bring you an espresso and go over your options.
“Now, I’m not feeling so bad how things worked out for me. (Honestly, I expected to get more ribbing from everyone here for having bought this year, but you guys are fairly understanding).”
I don’t really care who buys what, when or where. However, I really find it shocking when people buy at the peak, which is right now. If you were concerned about such a small difference in the rate, how are you going to feel when your house is worth 30% of what it is today?
“…how are you going to feel when your house is worth 30% of what it is today?”
Bailout-worthy?
In the relative scheme of things around here, I bought in what’s generally considered a very blue-chip location, and I bought on the (very) cheap - probably the lowest $/sq ft for a SFH in the entire zip code in the past 6 months (extra large lot as well). I have no regrets for that.
Best I can tell looking at a bunch of historical data (and I’ve tracked the zip code for years), in 2011 it would have sold for ~80% of what I just paid for it. So if the ‘value’ drops down to 30% of what I paid, I guarantee you that we’ve got bigger problems to deal with and I will be far more concerned about my stockpiles of food and ammo.
But all that misses the point.
I bought it to live in and stay in the area for decades if I can, and the monthly delta between rent and purchase was very small. Enough that if I get into such a bad situation that I can’t make the mortgage, I would also be screwed if I was renting. At some point, you take your chances and make the best of it. I didn’t buy the house to make money and I don’t speak of it as ‘an investment’, I bought it because I needed a place to live, and this is a place I very much enjoy living in.
As for the ’small difference’, the lower the rates, the larger the difference each point makes
With all that said, I’ll admit to the basic human nature of wanting to get the best deal I could and feeling good or bad based on how it appears I did. At the start of the year, just after rates began their current climb, it was “oh man, I could have gotten an even better deal had I been smart enough to hurry things along” (it was an off market purchase and we took about 6 months pulling it all together). A few more months go by, and I get to go “well, at least I didn’t wait much longer… it would have cost me $xxx more”
Now we’ve been hearing/saying for years that rates would have to eventually rise, and bracing for it but the fed has kept the hoses pumping. With word of 30-year rates hitting the 5%+ for the first time in years, I know it’s more than just me wondering “Is this finally it? Are we going to get away the new zero rates at last?” It could just be another red-herring blip, who knows… only time will tell…
But as long as I live here, to paraphrase REM, I’ll feel fine…
If you paid more than construction cost($50/sqft for lot, labor, profit and materials) less depreciation, you paid too much.
Always the same discussion over the best way to overpay. Hardly ever the conversation about how to shelter modestly at least until the overpricing storm passes.
Ahh, there’s the friendly ribbing I was looking for
Actually, BlueSky, I suspect the current and next waves of people hitting retirement age are going to be asking how to do that more and more.
how to shelter modestly at least until the overpricing storm passes
I thought that is what cemeteries are for
One thing I’ve come to realize is that people always curve fit and rationalize their decisions after the fact, including myself. The stories we tell are very interesting and we talk ourselves into the “rightness” of a decision. I think the wisest among us can own up to making a bad decision.
Nassim Taleb in Fooled By Randomness talks about rational decision making and probabilities and gives a hypothetical about putting a loaded gun in one’s mouth that has a 1 in 6 chance of discharging. If a man offers $1 million to you to play Russian roulette in this scenario, would you do it? The pay off is immense, but the risk is utter ruin and possible death. The proper way to judge whether this is a “good” risk or a “bad” risk is not with hindsight (eg, did you land the 1 out of 6 case where you put a bullet into the back off your head), but rather what the impact would be in the worst case scenario (possible death).
Too often we as humans tend to look at someone who took a similar risk and say that such and such decision didn’t turn out disastrous (e.g. the degenerate gambler to use the lingo on this site), so we and say that was a decent risk or a good bet. But that is the wrong way to look at decision making. Don’t analyze the decision on how it turned out, but on the probability of disaster and the impact said disaster would have on your life. I cannot say what your choice to purchase was for you, but I think this way of evaluating life possibilities is useful in the sense that each individual person is a sample size of one, so we have to be cognizant of having an adverse distribution of randomness imposed on us.
If you paid more than construction cost($50/sqft for lot, labor, profit and materials) less depreciation, you paid too much.
So… based on that, it sounds like a lot in a terrible location and a lot in a great location are priced identically?
They are in California that is for sure. Can Jerry Brown get out of office before the bubble bursts is the question.
Once these bought down artificially low rates normalize back to the 10-13% range you’ll see employment ramp up and the economy finally recover from this 18 year long recession.
10 to 13 percent? Holy hell, that’s 1978-1989 territory. I don’t think our economy as it currently is could handle that.
Digging a bit, it’s hard to find rate info prior to 1971 (coincidence with going off the gold standard>), but here’s one interesting article:
https://www.thetruthaboutmortgage.com/check-out-these-mortgage-rate-charts-from-the-early-1900s/
It looks like 6% give or take was closer to the ball park 50-100 years back, but loan length and LTVs were significantly different that what we are used to seeing today.
To the contrary; artificially low bought down rates have bankrupted the nation.
10 to 13 percent? Holy hell, that’s 1978-1989 territory.
I remember those days. Those were tough times, especially in the late 70’s, which really hurt Carter. Remember Reagan asking if you were better off than 4 years before?
Interestingly enough we had near full employment then. Now? 100 million unemployed and rising.
Low rates have had all sorts of nasty/unexpected side effects the past decade, but swinging the pendulum far back to the other side to historically high rates will cause a whole bunch of new problems and fallout.
I think 6-8% is a lot safer, and event that will have a huge impact on RE/Housing.
10 to 13 percent? Holy hell, that’s 1978-1989 territory.
1978 17% with 20% down and a good credit rating here. Price of a 3 BR on 1 acre was only $24K.
I believe that we are living through the first point in American history when the Fed used deliberate asset price inflation as a wealth redistribution policy tool.
If you disagree, please provide some evidence to back up your argument.
The homeless encampment I came upon today is indicative of the Fed’s handy work. The rents are well beyond the grasp of many.
My sense is that the army of homeless people is as large as I have ever seen in my entire life, and this is almost a decade into the Fed’s loudly heralded recovery.
Something is rotten in the state of Denmark.
@BlackSwandive, @Professor - where (city) are you seeing the homeless at?
The homeless here in Seattle, and in LA and SF get a lot of press, but I’m suspecting their numbers are up all over.
Around here it’s a weird split - maybe half-ish of them are people who choose to be homeless - the junikies, twerkers, whatever, that group has been growing because this town is bending over backwards giving them stuff. (and lining the pockets of the organizations that service them)
But the other half - the (sometimes formerly) working class who just want get by - that group clearly has been growing in size the last several years and it’s getting scary. And that definitely reflects something going rotten at structural level.
@Professor - I think I agreed with you the other day with my ’stock dilution’ analogy - only I’d call it “wealth concentration” instead of “wealth distribution”
Homeless are all over SoCal, including tony La Jolla, where beggars openly panhandle outside of Starbucks, and Long Beach, where numerous homeless tramps openly wander the city streets.
Of course, Berkeley and San Francisco have ginormous homeless communities, as does LA. The homeless are a substantial, highly visible, omnipresent part of the California population.
more stories of gov programs that don’t work
do any?
single payer anyone?
Single payer
That is what California is going for, one taxpayer Rich enough to pay all the state income taxes. It is getting close, it is to a point where if just one taxpayer dies or moves it will run a deficit. BTW, yes I do know what the term truly means.
There was a ballot issue here in the Centennial State in 2016 for a single payer system for the whole state.
79% voted no.
https://www.vox.com/policy-and-politics/2017/9/14/16296132/colorado-single-payer-ballot-initiative-failure
If you want a taste of some
zombie and pre-foreclosed properties, go to zillow and filter-in the ‘potential listings’ (blue dot).
There are a lot. Everywhere.
It also shows how many days they have been ‘pre-foreclosed’…..many for over 650 days.
It appears the banks continue to manipulate the velocity of listings, sales, and pricing. Still trickling them to market it seems.
Ashford, WA Housing Prices Crater 27% YOY
https://www.movoto.com/ashford-wa/market-trends/
Poors can’t afford $4 gas:
https://www.zerohedge.com/news/2018-05-15/wsj-sounds-alarm-theres-no-getting-over-gas-4-gallon
But California poors have to pay it. Interesting, articles seem to ignore the state taxes on gasoline and the fact that California’s environmental laws dictate a unique blend of gasoline which fattens refiners profits more than it cleans the air.
Meanwhile, car makers are focused on massive trucks and SUVs. They learned nothing last recession, when you couldn’t even give a truck away. They’ll be caught with their pants down again.
This time around they will probably focus on making CNG versions of their vehicles.
The more I looked into CNG (and some are attractive), the more I was dissuaded by them. John Huntsman (ambassador to China under Obama and now ambassador to Russia under Trump) made a big hoopla about his CNG converted SUVs when he was governor of Utah, but my math always showed electric as being a better deal long-term. CNG fuel cost was about 2/3 that of gas, but electric in my neck of the woods is about 1/4 that of gas.
Meanwhile, car makers are focused on massive trucks and SUVs. They learned nothing last recession, when you couldn’t even give a truck away. They’ll be caught with their pants down again.
A certain amount of blame needs to be laid at the feet of the Trump administration on this one for abdicating the fuel efficiency standards. Scott Pruit’s EPA is totally beholden to the fossil fuel industry and they want to decimate any movement towards increasing fuel efficiency as that will reduce the demand for the product they sell.
A gallon of premium is $3.70 right now.
A certain amount of blame needs to be laid at the feet of the Trump administration on this one for abdicating the fuel efficiency standards.
And exactly which Obama-era fuel-efficiency standards has the Trump administration waived or repealed?
Obama era-CAFE targets:
http://www.autonews.com/article/20180402/OEM11/180409926/trump-epa-cafe-standards
‘At the Baccarat Hotel and Residences, condominium unit 44A’s asking price was nine percent lower than the $20.62 million the seller paid for the 4,545-square-foot home in May 2015. The mystery buyer of the building’s penthouse earlier this year listed the home for $40 million, less than the $43 million the buyer paid in June 2016.’
‘And for the townhouse at 39 East 67th Street, the $18.75 million asking price was nearly 17 percent lower than the $22.5 million it last sold for in 2014.’
I’d bet 5 bucks these people didn’t even live there.
Exactly. Vacancy tax….
The Economist had an interesting book review of “Radical Markets: Uprooting Capitalism and Democracy for a Just Society” last week. I like the radical view of land ownership and taxation:
Mi casa, su casa
Take land. An owner of a valuable plot in, say, the Bay Area of California is inherently a monopolist. Should an entrepreneur need a lot of space to build an office block or houses, the owner of a single parcel can hold her to ransom. Property may not be theft, but it is monopoly.
The authors think this applies to all property, not just land. Their solution is a new wealth tax. Every individual would put a value on each item she owned, down to the last pencil (potentially a laborious exercise), and would be taxed on her total declared wealth. The twist: she must stand ready to sell any item at its declared value, should a buyer emerge. To see off interested purchasers, she would have to set the value high, and thus incur a hefty tax that would compensate society. If she set the price low, to minimise her tax burden, her assets would be bought up.
https://www.economist.com/books-and-arts/2018/05/12/dont-shrink-the-role-of-markets-expand-it
It’s neither a bull nor a bear market.
It’s a shark market. Try not to get eaten alive.
Here’s what stock-market investors can do to prevent a ‘shark attack’
Published: May 15, 2018 3:03 p.m. ET
‘Prepared investors should be thinking about being a contrarian’: Schwab’s Kleintop
Schwab’s Kleintop: “A shark attack could take a big bite out of unprepared investors’ portfolios who don’t rebalance”
By Anora M. Gaudiano
Reporter
Selling off some stocks that provided years of good returns to buy underperforming assets is a difficult task for many investors, but it’s exactly what they should be doing right now to avoid pain later, according Jeffrey Kleintop, chief global investment strategist at Charles Schwab.
Comparing the process of portfolio rebalancing to avoiding a shark attack—something that swimmers cannot predict but can take steps to prevent — Kleintop, in a note, said investors should take action by being a contrarian and swimming against the trend.
…
With the slow, grinding meltup in the dollar playing out at a turtle’s crawl against the backdrop of the inevitable normalization of interest rates off their historic basement floor, it’s not a bad time to HODL some dollar-denominated cash in your portfolio.
The Financial Times
US Treasury bonds
US Treasury yield hits highest level in seven years
Emerging markets currencies fall as US dollar is buoyed by higher rates
…
This could get very interesting and could turn a proxy war into a real war between Saudi Arabia and Iran:
https://oilprice.com/Geopolitics/Middle-East/Could-This-Be-The-Next-Proxy-War-In-The-Middle-East.html
Not even running out of other people’s money can stop him:
https://oilprice.com/Latest-Energy-News/World-News/Maduro-Buys-Oil-To-Help-Cuba-While-Venezuelans-Starve.html
https://www.yahoo.com/news/fiery-cleric-sadr-taps-anger-over-iran-lead-171222227.html
Blue skies Tom Wolfe
https://www.theguardian.com/books/2018/may/15/tom-wolfe-journalist-and-author-dies-aged-87
Bonfire Of The Vanities was one of the greatest fiction novels of my lifetime.
Great book, and I rather enjoyed A Man in Full as well.
Alameda, CA Housing Prices Crater 9% YOY As Depreciation Ravages Homeowners And Landlords
https://www.zillow.com/alameda-ca/home-values/
*Select price from dropdown menu on first chart
Q: Why are property taxes so insane? Why can’t we afford a house? Why are public “servants” now the 1%ers?
A:
+++++++
Scot Peterson, disgraced Parkland school cop, starts getting $8,702-a-month pension
Nicole Darrah - Fox News - 5.15.2018
Scot Peterson, a former deputy with the Broward County Sheriff’s Office, has reportedly started to receive a hefty pension — three months after he retired amid the aftermath of the mass shooting in Parkland, Florida.
Peterson, a 33-year law enforcement veteran, was the resource deputy stationed at Marjory Stoneman Douglas High School on Feb. 14 when 17 people were killed by gunfire.
As one of the largest mass shootings in modern U.S. history unfolded, Peterson never entered the building where alleged gunman Nikolas Cruz was opening fire and instead took up a position outside the building that was under attack.
Peterson was named in a wrongful death suit last month by Andrew Pollack, father of shooting victim Meadow, who tweeted the former cop “let those children and teachers die.”
School officials failed to send Nikolas Cruz to court after he violated Obama-era diversion program
https://www.washingtontimes.com/news/2018/may/14/nikolas-cruz-violated-obamas-promise-diversion-pro/
I see we are back to “it’s racist that poor people with bad credit get worse mortgage deals than rich people with good credit” story line.
Ben Jones, it’s time to take out the trash. Antifa are communist trash:
https://www.rollingstone.com/culture/features/antifa-activists-anti-fascist-movement-trial-college-professor-w519899
President Drumph speaks in Elkhart, Indiana:
https://www.c-span.org/video/?445385-1/president-trump-vice-president-pence-campaign-mike-braun-indiana
Antifa, admit that you are loosing, and will be resoundingly destroyed
I hope clanton spends a decade as a pincushion for the Mexican Mafia (that is, if the Aryan Brotherhood doesn’t kill him first)
“Popular Tower District Realtor Charged With Sexual Battery”
http://abc30.com/popular-tower-district-realtor-charged-with-sexual-battery/3410902/
California. Realtor. Felony. It all makes sense.
Consent makes all the difference. We know what they do to people all the time but if you do it without consent it is rape.
aaaaaand, we’re back. Maintenance complete. Took a while, but the landlord came through. Just in time for the rain.
https://www.youtube.com/watch?v=5VlGyMG0ksg
Lol, jeff, thanks. Big doings.
Hope it wasn’t as bad as this (there’s popcorn, though):
Scene from Money Pit
Couldn’t lampoon a chicken in every pot these days.
quit beating your head against the wall and fighting the FED.
Another day, another 4% drop in the Bitcoin price…
Bitcoin fans troll Warren Buffett with ‘Rat Poison Squared’ clothing line
By Shawn Langlois
Published: May 15, 2018 1:35 p.m. ET
Ecoinmerce
On sale now: ‘Rat Poison Squared’ t-shirts.
“We don’t know exactly what ‘rat poison squared’ is supposed to mean. What we do know is that Bitcoin created a very productive ecosystem and spawned the entire cryptocurrency revolution, which is driving innovation in nearly every industry.”
That’s how ECoinmerce COO and crypto believer Rex Chen responded to Warren Buffett’s slam of bitcoin (BTCUSD, -3.96%) as “rat poison squared” at the Berkshire Hathaway (BRK.A, -0.17%) annual meeting earlier this month.
https://www.marketwatch.com/story/bitcoin-fans-troll-warren-buffett-with-rat-poison-squared-clothing-line-2018-05-15