June 14, 2018

Desperate Sellers Watch Their Properties Languish

A report from Bloomberg on Australia. “Australia’s east-coast property bubble is showing signs of deflating at a faster clip as home-lending data recorded the longest losing streak in almost a decade. Housing finance fell 1.4 percent in April, the fifth straight monthly drop and the longest stretch of declines since September 2008. A key factor weighing on Sydney’s market is tighter credit, as regulators force banks to cut back on the riskiest mortgages. Fewer interest-only loans — which are cheaper in the early years because borrowers don’t repay principal — means Sydney prices are now out of reach for many investors. Chinese buyers, a previous driver of demand, have also receded due to difficulties in moving cash from the mainland.”

“For Australian borrowers, there’s little prospect of relief for household income as wage growth has stagnated for the past five years. The economy’s private debt-to-income ratio is also at a record 189 percent, leaving little scope to increase leverage anyway.”

From the Daily Telegraph. “Desperate apartment sellers in the Greater Parramatta area have had to watch their properties languish unsold for months after listing them due to rampant building creating an oversupply of high rise units. Research showed the region has Sydney’s largest pipeline of residential building projects in the works, despite a recent drop in demand from buyers. This has ramped up competition among sellers to bait buyers and made it difficult for them to offload properties quickly without offering major price adjustments.”

“High levels of development were also ‘cutting in’, said Realestate.com.au chief economist Nerida Conisbee. ‘We’re seeing very low demand for apartments in Sydney at the moment — there has been a significant drop off driven by far fewer local and offshore investors,’ Ms Conisbee said. ‘Far fewer people looking to buy means properties take longer to sell and eventually that leads to prices declining.’”

“A report released by property consultants Urbis showed plenty more homes are on the way for Parramatta. The area had Sydney’s largest future housing supply with over 11,000 apartments in the pipeline. This included 2,048 apartments in the application phase and a further 4,555 with development approval, the report showed.”

From the Daily Mail. “Location Score analyst Jeremy Sheppard said in an interview with real estate talk, ‘over the last few years the location score has been steadily declining. Sky high prices subdue demand like nothing else.’ A lack of urgency also seems to be aiding in the steady decrease in the housing market. Suburbs with high numbers of apartments continuously getting released onto the market, such as Parramatta and Blacktown, are among the riskiest to buy investment properties. ”

“‘We’re seeing very low growth if anything at all and that’s because the demand has been very much balanced with the level of supply,’ Sheppard said. ‘The results reveal Sydney’s market slowdown is well and truly entrenched with buyer demand waning. Vendors must become realistic about their pricing, or risk seeing extended days on market until they reprice appropriately.’”

From Domain News. “Australian property owners are likely to hold on to their properties longer than they should in a declining market due to the fear of making a loss, new research suggests. This will be particularly painful for highly leveraged investors who bought at the peak of the market with the expectation that prices would keep rising. Dr Daniel Richards, lecturer of Wealth Management at RMIT University found investors often sold too early, or held on too long in a falling market due to feelings of regret.”

“‘People don’t sell at a loss. Emotion is what’s driving that, particularly regret,’ he said. ‘And housing is almost the most emotional investment you’ll ever make.’ Dr Richards said that many investors will try to ride out this downturn, but that it would cost them. ‘If you’ve bought a house and it’s gone down in value you should get out rather than wait for it all to go bad,’ he said.”

“APRA’s tightening lending standards present a pivot point for those who bought with interest-only mortgages, particularly given the Reserve Bank has flagged some borrowers will be unable to roll over their loans to cover the principal and the interest.”

From the Courier Mail. “Queensland richlister Tony Quinn, and wife Christina, have made a $470,000 loss on the sale of their luxury Main Beach apartment. The Quinns sold the sub-penthouse just before it was scheduled to go to auction and now we can reveal the sale price was $2.15 million. Property records show the Quinn family bought the three-bedroom apartment in Main Beach’s Axis building for $2.62 million back in 2006.”

From ABC News. “A central Queensland man impacted by the collapse of a local building company says he did not know his family’s half-built ‘dream home’ would not be finished — until he read a note in the company’s window. Metro Builders put the note in its Yeppoon office window over the weekend, informing people that its business had ‘become unsustainable.’ Local man Luke Renshaw said he had so far paid the company $350,000 — including a payment of $80,000 just a few weeks ago — to build a new home with a pool and shed for his family in Tanby.”

“The company was officially put into liquidation this week. Master Builders’ regional manager, Dennis Bryant, estimated at least 24 homes had been left in various stages of building. Mr Bryant said this process could take months, and if people decided to pay other companies to finish or even protect their half-built homes in the interim, they would not be compensated. ‘People are paying rent while they’re waiting for [QBCC to act]; they’re paying interest on their loans,’ Mr Bryant said. ‘And their structure is subject to the elements and to vandalism. I know that occasionally happens.’”

“Yet Mr Bryant said it was sub-contractors and tradespeople owed money by Metro who he had the most sympathy for. ‘They’re the blokes who are really copping it,’ he said. Mr Bryant said he did not expect sub-contractors to recoup much of their losses. ‘They’ve basically got to suck it up. I’m not saying that in a derogatory fashion. It’s tragic for them,’ he said. ‘People in small businesses have very little ability to absorb a big financial hit, and it could mean that one or two of them might just go under.’”

From the Katherine Times. “Katherine house prices have dropped about $39,000 in the past year, the NT Parliament has been told. NT Treasury information shows median house prices have fallen from $349,000 down to $310,000 on average in Katherine. Treasurer Nicole Manison said the NT Government is soon to release a population strategy to try and boost population across the NT.”

“‘Ultimately you need people to create that housing demand and to stimulate that growth and that need for investment,’ she said. ‘What we need to do is ensure that we have more people moving to the Northern Territory and buying into the Territory.’”

RSS feed


Comment by Ben Jones
2018-06-14 08:44:03

Occasionally I check in on Gladstone:

‘ENCOURAGING signs have emerged that the Gladstone real estate industry’s long-promised market rebound is more than just wishful thinking. The report notes a three-bedroom, two-bathroom townhouse in Telina sold for $176,000 in April 2017, and was then resold for $185,000 in March 2018.’

‘Similarly, a 1990s three-bedroom, one-bathroom brick house in the same suburb was sold in January 2017 for $226,500, then resold last month for $259,000. The report also cites the continued drop in Gladstone’s rental vacancy rate, which sat at 4.1 per cent in March and has since dipped to 3.4 per cent at the end of May, as well as a “sharp decline” in mortgagee-in-possession transactions.’

“There is a general lack of land available in Gladstone but seemingly good demand,” valuer Regan Aprile said. “This is likely to push the value of land upwards and perhaps… larger developers will start to release lots in estates typically in a holding pattern over the past several years.”

From the comments:

‘In the 2 examples given the sellers have managed to get their money back plus their stamp duty and legal fees.
Not exactly making a profit.
There’s plenty of land available.
Just look at Hill Close and Little Creek.
Land for sale but no takers.
I also have it from a reliable source that there will be another stage released at Kirkwood in the near future.’

‘A simple sold history search for recently sold properties shows the house prices are at about the same prices as sold in 1999-2002. So if going backwards 15 years in market growth equals a recovery then….. Hooray for the recovery!! Unfortunately there is a lot of people that are living in homes where the debt far out weighs there market value. I can’t imagine how stressful that must feel. I left for the boom and reentered the market last year. I love Gladstone as a town but I don’t think raising people’s expectations about market growth is necessarily a positive thing. I think Gladstone is going through a new exciting phase but not based on economic boom.’

Comment by Ben Jones
2018-06-14 08:45:09

‘The Quinns sold the sub-penthouse just before it was scheduled to go to auction and now we can reveal the sale price was $2.15 million. Property records show the Quinn family bought the three-bedroom apartment in Main Beach’s Axis building for $2.62 million back in 2006′

Did you see that? Twelve years of bubble go poof!

Comment by Mafia Blocks
2018-06-14 08:47:16

A $500,000 housing loss in 12 years.

Housing is never an “investment”. Housing is a rapidly depreciating asset that eats you alive.

Comment by 2banana
2018-06-14 09:02:22

I bet the alligator ate well on that one too!

Comment by Mortgage Watch
2018-06-14 08:45:13

Austin(Allandale), TX Housing Prices Crater 9% YOY As Tech Wreck Accelerates


*Select price from dropdown menu on first chart

Comment by foobarbaz
2018-06-14 11:04:42


From your link “The median home value in Allandale is $488,100. Allandale home values have gone up 5.4% over the past year”

Also: https://www.statesman.com/business/austin-area-home-sales-median-price-climb-may/JsqDv9OUyu2AlCw8Cbi3II/

Comment by jeff99az
2018-06-14 11:29:19

tech wreck? what are you talking about? tech industry is doing well. Nasdaq at new highs.

Comment by TIC TOK
2018-06-14 16:04:15

AMZN is over $1700 a share. If that is a wreck, I want nothing but wrecks for now on. I remember a year ago people saying AMZN at $1000 was the mostest biggest overvalued stock evah!!!! 70% later it’s a tech wreck.

You are a national treasure of comedic ability my man.

Comment by Mafia Blocks
2018-06-14 16:51:17

And still unprofitable.

How bout it…

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Comment by TIC TOK
2018-06-14 19:55:51

Net income. $1.6b last quarter my good amigo.

Comment by Mafia Blocks
2018-06-14 11:33:15

Hello my friends

San Diego, CA 92122 Housing Prices Crater 6% YOY As Emerging SoCal Housing Bust Accelerates



Comment by jeff99az
2018-06-14 12:57:46

your link shows that in San Diego, there is a +11.0% change in the Home Value Index. Furthermore, it shows Home Values rising since bottoming out in 2012.

Comment by Mafia Blocks
2018-06-14 12:58:55

Prices my friend. Prices.

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Comment by oxide
2018-06-14 13:14:59

He always does this. Ignore him.

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Comment by Mafia Blocks
2018-06-14 16:47:45

Housing Donk…. Housing.

Hallandale Beach, FL Housing Prices Crater 28% YOY As Boomers Liquidate Housing


Comment by 2banana
2018-06-14 08:48:34

Kinda like getting a mortgage with no income verification or credit check?

The college bubble keeps rolling along…


University of Chicago eliminates SAT/ACT requirement
Chicago Tribune | 6/14/2018 | Nick Anderson

The University of Chicago will no longer require ACT or SAT scores from U.S. students, sending a jolt through elite institutions of higher education as it becomes the first top-10 research university to join the test-optional movement.

Numerous schools, including well-known liberal arts colleges, have dropped or pared back testing mandates in recent years to bolster recruiting in a crowded market. But the announcement Thursday by the university was a watershed, cracking what had been a solid and enduring wall of support for the primary admission tests among the two dozen most prestigious research universities.

The private university in Chicago’s Hyde Park neighborhood admits fewer than 10 percent of applicants and ranks third on the U.S. News & World Report list of top national universities, after Princeton and Harvard and tied with Yale. It has required prospective freshmen to take a national admission test since 1957. Before that, it screened applicants with its own tests.

U-Chicago is also expanding financial aid and scrapping in-person admission interviews, which had been optional. Instead, it will allow applicants to send in two-minute video pitches, in an effort to connect with a generation skilled at communicating via cellphone clips.

“Testing is not the be-all and the end-all,” said James G. Nondorf, U-Chicago’s dean of admissions and financial aid. He said he didn’t want “one little test score” to end up “scaring students off” who are otherwise qualified.(snip)

Comment by oxide
2018-06-14 11:03:22

And a side snippet:

“U-Chicago’s full price for students without aid is more than $70,000 in the coming school year.”


Comment by hwy50ina49dodge
2018-06-14 11:13:57

Hopefully those kid$ will have plenty$ of bunk bed$ in the dorm$ on campu$, soes they aren’t $tre$$ing them$elves & their parent$ with having to rent$ a $tudio in town. Yike$!!!

“The total outstanding student loan debt in the U.S. is $1.2 trillion, that’s the $econd-highe$t level of con$umer debt behind only mortgage$. Most of that is loans held by the federal government. About 40 million Americans hold $tudent loan$ and about 70% of bachelor’$ degree recipient$ graduate with debt.Jan 19, 2016
America’s growing student-loan-debt cri$i$ - MarketWatch

Comment by Neuromance
2018-06-14 16:51:45

University students are pass-through entities for government money firehosed at the higher education system.

The students receive both a world-class education and world-class debt.

Comment by Professor 🐻
2018-06-14 22:48:10

Money talks, bullshit walks.

Comment by MGSpiffy
2018-06-14 11:04:31

Here, let me find the full quote…

“Testing is not the be-all and the end-all, the ability to write the check and have it clear is.” said James G. Nondorf, U-Chicago’s dean of admissions and financial aid

Comment by Ben Jones
2018-06-14 08:49:55

I don’t have a subscription, but here’s the lead in:

‘Townsville house prices have fallen off a cliff’

‘TOWNSVILLE homeowners have lost millions of dollars, or the housing market has become more economical. Either way you want to spin it, it’s clear Townsville house prices have fallen off a cliff.’

Comment by 2banana
2018-06-14 09:00:49

40:1 leverage + cliff = Kaboom, jingle mail and “we are victims”

And the question of “what does a full recourse mortgage really mean?”

Comment by Professor 🐻
2018-06-14 22:50:06

And the question of, “what does a foreclosure moratorium really mean?”

Comment by 2banana
2018-06-14 08:53:02

Rising interest rates + New tax laws + QE unwind = The Tipping Point (TTP)


Fed hikes rates, points to two more increases by year’s end
CNBC | 06/14/2018 | Jeff Cox

The Federal Reserve hikes its benchmark short-term interest rate a quarter percentage point. The Fed says in a statement that economic growth has been “rising at a solid rate,” an upgrade from “moderate” in May. The central bank points to two more hikes, which would bring the 2018 total to four increases.

The Federal Reserve hiked its benchmark short-term interest rate a quarter percentage point Wednesday and indicated that two more increases are likely this year.

The move pushes the funds rate target to 1.75 percent to 2 percent. The rate is closely tied to consumer debt, particularly credit cards, home equity lines of credit and other adjustable-rate instruments.

“The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term,” the statement said.

Markets had been waffling over expectations for a fourth rate hike this year — the FOMC also increased the funds rate target in March — and prior to the meeting were pricing in a 46.5 percent chance. The latest projections from committee members indicate the funds rate to rise to 2.4 percent by the end of the year, a 0.3 percentage point increase from the March forecast.

The committee also indicated it continues to expect three more rate hikes in 2019, even with the fourth one this year.

Despite the added hike, officials still see the long-run funds rate at 2.9 percent after peaking at 3.4 percent in 2020. The extra hike, though, pushes the rate past “neutral” in 2019, a little sooner than anticipated. They still see GDP rising 2.4 percent in 2019 and 2 percent the year after, and longer-range growth at 1.8 percent.

Comment by ibbots
2018-06-14 10:21:42

There’s a local credit union offering 2.5% on a one year CD, only requires a savings account be at the same credit union.

Comment by In Colorado
2018-06-14 11:07:08
Comment by taxpayers
2018-06-14 10:43:05

how far will fed let inflation run ?

cash looking good

Comment by TIC TOK
2018-06-14 17:11:19

Cash looking good during inflation…..do tell.

Comment by 2banana
2018-06-14 08:57:39

QE ending in Europe too…


CB Unveils End Of QE: Will Halt Bond Purchases By End Of 2019; Keep Rates Unchanged Until Summer 2019
ZeroHedge - 06/14/2018

As extensively previewed, jawboned and leaked, the ECB - which kept all of its rates unchanged as expected and as the ECB detailed, remain unchanged until the summer of 2019 - ended the drama over the end of its QE, and moments ago announced that while “the Governing Council will continue to make net purchases under the asset purchase programme (APP) at the current monthly pace of €30 billion until the end of September 2018, after September 2018 the monthly pace of the net asset purchases will be reduced to €15 billion until the end of December 2018 and that net purchases will then end, all of which of course is “subject to incoming data confirming the Governing Council’s medium-term inflation outlook.”

Comment by BlackSwandive
2018-06-14 11:20:51

The central bankers of the world realize the jig is up. Populism and outright public anger have not gone unnoticed, and they are not dense to the fact that their policies have resulted in massive imbalances and distortions in wealth, and a serious decline in the quality of living for the masses.

The gargantuan credit bubble over the course of the past 25 years will go down in history as perhaps the largest financial swindle of mankind.

Comment by brazendetre
2018-06-14 17:04:14

Like a school of fish, the biggest one turned first - forcing others to change direction and follow. All were going down the path of weimar but with Trump/Powell hitting the brakes all the others have to abandon their debasement - not just of money but of culture.

The (((tribe))) is fuming.

Comment by oxide
2018-06-14 19:48:24

Who was the fish that turned? Trump, I guess. (but really, I think the first warning sign was Brexit)

By the way, there’s a mini-war going on in another large sector off culture: the Star Wars fanhood. Hardcore and casual fans alike HATED Stars Wars VII: The Last Jedi, because of bad character arcs and bad plot, and said so. Lucasfilm bigwigs responded by going full-on SJW on the fanhood. The creators said that fans were a bunch of racis white males, who hated diversity and repressed women.

Fans are insulted because they believe that they were judging the movie on the content of its character, only to be dismissed as deplorables.

This is quite related to the rest of cultural shift. The question is whether this is a seismic shift back to merit-based, or just the two fringes shouting ever louder and not accomplishing much.

I’m confused about the tribe thing. My understanding is that the tribe (maybe) just wants to make more money. But how does all this new SJW-ish stuff make them more money??

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Comment by MacBeth
2018-06-15 06:34:01

“The creators said that fans were a bunch of racis white males, who hated diversity and repressed women.”

I dunno the exact ties, but apparently, the same people who own/produce Star Wars are tied to ABC, who got Roseanne taken off the air for her supposed racism.

We’re going to see more of this kind of hysteria, oxide. There’s a great deal of power and money riding on the media/political correctness complex.

Comment by OneAgainstMany
2018-06-15 15:10:49

Not shedding any tears about Roseanne getting taken down.

Comment by Ben Jones
2018-06-14 08:59:04

‘house prices have fallen from $349,000 down to $310,000 on average in Katherine’

Jeebus, they really have no clue as to what’s happening. I wouldn’t give 50k Australian pesos for these shacks. BTW there’s a chart at this link. Yes Darwin etc continue to fall but are still higher than many US metros.

Comment by BlackSwandive
2018-06-14 11:22:30

There are dumpy manufactured homes on desert wasteland in CA and NV selling for close the $300k. Seems reasonable, right? Pffft….

Comment by Apartment 401
2018-06-14 09:31:42

An electrician I know in Denver is leaving the trade to become a Realtor. His wife is a Realtor. This can only end badly…

Comment by b
2018-06-14 10:14:20

oh i think you are confused Apartment 401.

Always go all-in. It works during the world series of poker - this is a proven approach.

Comment by 2banana
2018-06-14 10:23:09

Rising interest rates + New tax laws + QE unwind = The Tipping Point (TTP)

Comment by taxpayers
2018-06-14 10:39:44

timing !
there’s a realtor per deal here

Comment by MGSpiffy
2018-06-14 11:14:19

Did I tell you guys what happened to my brother, who married a realtor just before the last crash? It wasn’t pretty (though she was).

Comment by Professor 🐻
2018-06-14 23:07:51

What happened?

Comment by Mafia Blocks
2018-06-14 11:19:58

That electrician has rocks in his head. He’ll make a good Realtard.

Comment by redmondjp
2018-06-14 11:23:45

And I was just in Denver yesterday with some local electricians on a pre-bid walkthrough. You’d have to be an idiot to leave the trade right now - those guys are slammed and are raking it in right now with as much work as they want.

Comment by Apartment 401
2018-06-14 11:31:46

He has his 8,000 hours and 2 years of school, already sat for his license exam once and failed. He’s not even getting his license now even though he’s eligible. That Realtor kool-aid is pretty bad…

Comment by BlackSwandive
2018-06-14 11:25:05

Save your money. I remember during the last depression an electrician who lost everything. There was no work whatsoever, and he ended up working at Sportsmans Warehouse at near minimum wage - a far cry from the six figures he had been making. His wife didn’t leave him, though.

Comment by Ben Jones
2018-06-14 09:51:08

‘Australia’s east-coast property bubble is showing signs of deflating at a faster clip’

Bubble? Why you doom and gloomers! Well, better late than never Bloomberg.

Comment by MGSpiffy
2018-06-14 11:12:22

This popped up today, and I’m not surprised.


Management of the 654-unit Via6 residential high-rise near the Amazon Spheres informed residents that they’ll need to be out of their units from 9 a.m. to 6 p.m., five days a week, for a month, while the building’s piping problems are dealt with in a wide-ranging fix-it job.

When I was house hunting 15+ years ago, I received some strong advice not to buy a house that built during a furious boom, as lots of corners would likely be cut and quality control during construction lacking. I then got a lot of specific examples from slab issues to sub-standard materials painted or drywalled over. All stuff just to last long enough to not be the builder’s or supplier’s problem.

Given how furious the race has been to build all the new apartments around here and complete on schedule, and the competition for labor and contractors, I expect to see or hear stories like this one pretty regularly.

Comment by redmondjp
2018-06-14 11:29:14

I just finished reading the article and the comments. A lot of people are blaming the building inspectors too which I just can’t see.

These piping systems are finicky, and require precise tolerances and proper crimps at every connection. My hunch is that some of the connections weren’t made properly, but this can be difficult if not impossible to visually verify, especially by a building inspector that would have to have previous experience with that brand of piping system and its connections.

The real way to solve problem or to prevent it anyways, is for the city codes to be super strict. For example, the city code could require that soldered heavy-wall copper piping is required in any multi-family or commercial building within city limits. But of course this would cost $$$$ so we all know why this will never happen.

Comment by redmondjp
2018-06-14 11:51:06

Whoa, here’s a full-meal-deal serving of crow - look at this article on that very same building from 2014:


I’ve lived in Seattle for a long time and never even knew that we had “aggressive water” here. Maybe that explains Seattle voters and the politicians they elect, LOL!

Comment by MGSpiffy
2018-06-14 12:14:36

That article sounds a lot like a press release. If Aquatherm pipes are so wonderful and proven, I’d really like to know what the cause of such widespread failures is.

Tried and true tends to be called that for a reason.

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Comment by MIke in Carlsbad
2018-06-14 21:24:43

from that article:

“This makes testing much more reliable. Aquatherm pipe cannot be “dry fit” and if it is fused incorrectly, an initial test reveals this fact immediately. However, metal pipe installations may take months or even years for a flaw to manifest as a leak or blowout. By that time, the consequences can be catastrophic and costly to repair. Aquatherm also comes with a 10-year multimillion dollar warranty that covers everything down to incidental damage and personal injury.”

I suspect they will file BK instead of paying out the multimillion dollars. Same thing happened here in my complex and all around North County San Diego. Builder used substandard thin walled copper which now 20 years later is failing in every unit up and down the coast. The company declared BK a decade earlier.

Comment by hwy50ina49dodge
2018-06-14 11:31:38

Maybee this would bee a good client car for a cla$$y real e$tate $eller per$on?

Here’s the fake noise the Jaguar I-Pace makes when you hit the throttle
Warp speed ahead into a world where artificial noise is becoming the norm

By Sean O’Kane @ jalopnik on June 13, 2018

There’s nothing worse than discovering that your car pumps in fake or weirdly amplified noise. Sure, I know isolation from other road sounds is a luxury, but it just sounds completely fake. Unfortunately, many electric cars have picked up this baton of sadness and ran with it, as Jaguar’s new I-Pace makes some of the worst fake car sounds I’ve ever heard—and it won’t be the last one to lie to you like this.

Honestly, it sounds like Jaguar wanted to license The Jetsons’ flying car noises, but couldn’t, so they put Jim Carrey through a sound board instead. Hear the resemblance? It’s bad, and not to mention a new level in fakery

Comment by redmondjp
2018-06-14 12:33:41

BMW has been piping fake engine noise through their sound systems for years now.

So it’s not just Jaguar. Heck, if there was an app that could do that to make my 4-cylinder Honda Civic sound like a V8 Mustang from inside, I’d be all over it!

Comment by In Colorado
2018-06-14 12:58:43

Yeah, but when you step on the gas, nothing happens.

Comment by redmondjp
2018-06-14 16:19:44

Not until VTEC kicks in, yo!

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Comment by Carl Morris
2018-06-14 17:15:11

Not until VTEC kicks in, yo!

Nice :-). Another veteran of the late 90s tuner wars I see.

Comment by TIC TOK
2018-06-14 17:33:17

911s have it as well these days. Le Sad!

Comment by jeff99az
2018-06-14 11:35:00

housing bubbles popping in Australia and Canada. Things are stable still in the US but the overbuilding going on over the last few years is building another bubble … when it pops is anyone’s guess … but mine is sometime in the next 5 yrs. lots of factors at play right now such as rising interest rates (negative), and foreign $ coming into the US (positive for housing demand). With all the chaos going on in Europe (end of QE, some nations starting to rebel against the tyrannical EU’s ‘open borders’ policies), I would expect housing in some countries over there to start to take a hit and follow the political changes going on. Anyone in Europe on this blog care to comment?

Comment by foobarbaz
2018-06-14 12:33:04

5 Years? That is a long time to wait it out. Take Vegas for example. At the current appreciation rate of 10%, in 5 years the median price would be 450K. With interest rates going up and projected to be pushing 6 percent in the next 12-16 months affordability is going to fall off a cliff. I don’t see how the average middle class American is going to b able to afford those payments.

Comment by strawman
2018-06-14 16:08:17

Friend in Norway bought at the top and is already under water by double digits. I’ve been keeping my eye on a particular area in the Netherlands, and while many properties are still selling quickly, I’ve noticed a couple of really swank center-of-town type houses on the market that up until a few months ago were realty offices. I don’t think we’re far from crater time.

Comment by jeff99az
2018-06-14 16:39:38

we’ll top out and stall for awhile before the downturn. so i wouldn’t expect Vegas to continue to appreciate at 10%. there are signs already that some markets are starting to slow/stall.

Comment by jeff99az
2018-06-15 07:44:59

was pondering about the last RE bubble in the US: as I recall (I’m relying on memory here, so data might show slightly otherwise) prices rose from 2002 into 2006 period. prices rose dramatically in 2004, 2005 and into 2006. we started to stall in 2nd half of 2006 through mid 2007, then we started to gently pullback into the mid 2008 timeframe, then starting in late part of 2008 prices started to slide hard into the bottom of early 2012, though there was a brief period of stabilization in the interim. so the ’stall out’ period was only about a year — 2 if you count the ‘gentle’ pullback period of mid2007 to mid2008. That doesn’t mean things will play out that way — timeframe wise — in the current housing bubble. the economic factors are multiple which make it complex … and while some factors are similar to back then, there are also factors that are different.

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Comment by Mafia Blocks
2018-06-15 08:40:10

Sorry my friend but it’s not different this time.

Comment by jeff99az
2018-06-15 13:29:45

friend — the end result will be the same, but the timeframe and contributing factors are not necessarily. dont be blind to ‘what is’ just because you have a desire to see ‘what will (eventually) become’. you seem to have a strong wish that the housing market will crash in the US right now. Are you so sure? Have you sold all of your real estate holdings? Are you short real estate via market instruments? How heavy? Be careful — As the old saying goes : “Markets can remain irrational longer than you can remain solvent”.

Comment by Mafia Blocks
2018-06-15 16:26:05

Falling housing prices are what they are my friend.

Pullman, WA Housing Prices Crater 21% YOY As State Economy Slows


Comment by jeff99az
2018-06-15 07:47:31

… and I lived (and still do) in one of the ‘bubble’ areas. But other bubble areas followed a very similar pattern. non-bubble RE areas likely didn’t follow this pattern so much .

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Comment by OneAgainstMany
2018-06-15 15:12:49

I would agree that some markets are definitely frothier than others. I read a Forbes article yesterday that was showing that vacation home areas have not rebounded near as strong as urban areas since 2008.

Comment by TIC TOK
2018-06-14 17:27:48

Last time it was about 5 years from top to bottom. Varied from city to city but generally late 2006 to late 2011. But by 2010 the biggest hit was already taken. The last 2 of 5 years were small declines, barely more than flatline.

I think the top is still a year away.

So if the past is any indication by 2022 prices should be at a good buy point. Then like 2010, start loading up for the next bubble run. But just like some people in 2011 were convinced another 30% drop was coming, and missed out, people will miss out again, convinced a house in La Jolla will be had for $175k by 2030 or something ridiculous like that.

It is virtually impossible to time markets perfectly. Best play is go with the trend and dont worry if you are 5% off either high or low. In the long run it doesn’t matter.

Comment by Carl Morris
2018-06-14 18:55:45

But just like some people in 2011 were convinced another 30% drop was coming, and missed out, people will miss out again, convinced a house in La Jolla will be had for $175k by 2030 or something ridiculous like that.

Where do you think the bottom would have been if the Fed hadn’t stepped in and started buying stuff nobody wanted? I think 30% more was actually pretty conservative. But I think this time I’ll recognize when the fix is in. It caught me by surprised last time.

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Comment by Ben Jones
2018-06-14 19:20:32

‘In the long run it doesn’t matter’

Yeah, nobody will remember all your anonymous predictions anyway (you can just change your screen name!) and you can say you called it, however it turns out. That’s the gist I get from posters like you.

‘just like some people in 2011 were convinced another 30% drop was coming, and missed out, people will miss out again’

And you called that to a tee I’m sure.

“So in America when the sun goes down and I sit on the old broken-down river pier watching the long, long skies over New Jersey and sense all that raw land that rolls in one unbelievable huge bulge over to the West Coast, and all that road going, and all the people dreaming in the immensity of it, and in Iowa I know by now the children must be crying in the land where they let the children cry, and tonight the stars’ll be out, and don’t you know that God is Pooh Bear? the evening star must be drooping and shedding her sparkler dims on the prairie, which is just before the coming of complete night that blesses the earth, darkens all the rivers, cups the peaks and folds the final shore in, and nobody, nobody knows what’s going to happen to anybody besides the forlorn rags of growing old…”


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Comment by Mafia Blocks
2018-06-14 19:24:49

I love housing liars like my good friend Rocks.

Comment by TIC TOK
2018-06-14 19:49:12

I dont really care who remembers what. These boom bust cycles repeat themselves with a fairly predictable schedule. Buying real estate 2010 to 2012 was a no brainer. Nd buying in the 2021 to 2023 period will be as well.

Comment by Ben Jones
2018-06-14 20:02:37

‘Buying real estate 2010 to 2012 was a no brainer.’


‘The Quinns sold the sub-penthouse just before it was scheduled to go to auction and now we can reveal the sale price was $2.15 million. Property records show the Quinn family bought the three-bedroom apartment in Main Beach’s Axis building for $2.62 million back in 2006.’

Double click!!

‘The real estate bust of the 90s lasted about 5 years. The 2000s bust was 5 years.’

Comment by oxide
2018-06-14 19:53:06

Heh, I thought prices would bounce along the bottom for at least five years, till 2017. I wasn’t really expecting much appreciation. I certainly wasn’t expecting the blow-ups in Denver and Seattle. (MD burbs are appreciating at 3%/year, which is near historical.)

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Comment by TIC TOK
2018-06-14 20:00:32

The real estate bust of the 90s lasted about 5 years. The 2000s bust was 5 years. As Mafia would say….patterns my friends, patterns.

Comment by Ben Jones
2018-06-14 20:58:53

‘I wasn’t really expecting much appreciation’

But you said you expected that you couldn’t afford your shack when you sold it. Hmm.

Comment by hwy50ina49dodge
2018-06-14 21:33:10

ticktok$, what’s the Federal fund$ rate in the (CE) current era$? …look$ like the ability to go lower, start$ lower … So much for pattern$ idea$.

“The 2000s bust was 5 years…patterns my friends, patterns”

“The target rate remained at 5.25% for over a year, until the Federal Reserve began lowering rates in September 2007. The last cycle of easing monetary policy through the rate was conducted from September 2007 to December 2008 as the target rate fell from 5.25% to a range of 0.00–0.25%.

Federal funds rate - Wikipedia

Comment by oxide
2018-06-15 05:49:41

Ben… even at 3% appreciation, my house value would increase 90% by the time I paid it off in 2033 (I’m working toward a payoff in 22 years). I don’t think my salary would keep up with the PITI. And I *definitely* won’t be able to afford such payments when I retire and my salary cuts in half.

THAT’s why I said I wouldn’t able to afford the house when I sold.

Comment by oxide
2018-06-15 06:00:38

OK, to update. Even if my area didn’t appreciate for the first five years, at the end of 22 years, my house value would have increased 60%. I could probably afford that on my salary now (barely), but still not after retirement.

And I would still come out ahead of paying rent. I might still come out ahead of paying rent even if I stayed in a 1-bed apt.

Comment by Get Stucco
2018-06-15 07:07:34

“…even at 3% appreciation,…”

That’s would be way higher than the historic long-term average, and I am pretty sure that the numbers are misleading, due to failing to account for physical depreciation and maintenance, not to mention other PITI components of ownership costs.

Comment by Peter
2018-06-14 14:50:42

Yeah, UK, Sweden, Norway already feel the pain.

EM countries (Hungary, Czech Rep, Poland, Slovakia) are building their new bubbles.

If Italy goes down then we get a really serious recession in Europe, so, in my opinion the next recession will start in Europe, it’s much more overpriced than the USA.

France, Italy, Spain are candidates to become a new Grecce (if you guys are looking for a extremally cheap properties try Greece, it’s warm, pretty safe and nice people there).

Comment by foobarbaz
2018-06-14 15:03:32

What kind of prices are we talking about for property in Greece?

Comment by Peter
2018-06-15 07:15:18

You can easily find a seaview apartment for $50k.

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Comment by Sam (SW)
2018-06-14 14:55:07

I give the US two years. Maybe less if the Euro implodes soon.

Comment by jeff99az
2018-06-14 16:43:29

the declining Euro and fallout of the EU will very likely send $ to the US to support its markets. this will play out before the US implodes IMO. but I agree, eventually the USA RE market will get wacked again. Case-Shiller index is already very near 2006 levels.

Comment by Mortgage Watch
2018-06-14 11:44:37

Alameda, CA Rental Rates Crater 8% YOY As Housing Inventory Floods Bay Area


*Select price from dropdown menu on rental chart

Comment by Mike
Comment by hwy50ina49dodge
2018-06-14 21:25:19

China, ( x4 the USA ) ha$ a 100 year plan … The U$A, has a 24hour tweet$ plan.

Go Africa!

Comment by In Colorado
2018-06-15 07:32:50

Does China’s 100 year plan include all the ghost cities it builds and the widespread air, water and ground pollution?

Comment by hwy50ina49dodge
2018-06-14 22:13:26

Hwy offer$ his 2 cent$: ” eh, what$ up doc?”

The my$terious trader known as ‘50 Cent’ appears to be back betting on more $tock market chao$

Joe Ciolli … Business InsiderJune 14, 2018

But he took a self-imposed leave of absence after he was able to cash in on his long-standing bets back in February. That was immediately after a 10% correction rocked all major US indexes, sending the VIX skyrocketing and allowing 50 Cent to pocket more than $183 million on a mark-to-market basis

Seemingly unable to rest, 50 Cent has been back up to his old tricks this week. It started early Tuesday, with the purchase of 50,000 call options with strikes prices of 28, bought at $0.50 and $0.51 apiece. Then, on Wednesday morning, an identical trade was made at a price of $0.49.

Considering that the VIX closed at 12.28 on Wednesday, these trades are essentially wagers that the so-called stock market fear gauge will double sometime this summer. And since the VIX trades inversely to the S&P 500 roughly 80% of the time, a bullish VIX bet can be construed on a wager US equities will drop.

If a summer sell-off seems like a far-fetched prospect at this point, consider that many experts across Wall Street have made similar prognostications in recent months.

Comment by Taxpayers
2018-06-15 04:24:27

After 13 years some areas are back to 2005 peak
Minus 20% for inflation


Comment by Professor 🐻
2018-06-15 04:33:22

So long as everyone forgets about inflation, or that the bubble has another leg down ahead before it finally ends, all is well.

Comment by Get Stucco
2018-06-15 05:38:35

‘Far fewer people looking to buy means properties take longer to sell and eventually that leads to prices declining.’

If the sellers decide to hold out for top dollar, properties will never sell and prices will never decline. This is where U.S. housing is headed: Towards a permanently high plateau with a liquidity freeze.

Comment by jeff99az
2018-06-15 13:35:25

it is not unreasonable to expect RE sale prices in the USA to slow down and plateau in the next 1 to 2 years. Im not so sure prices are going to start a big decline immediately as some here think. (we’ll get there eventually as RE is cyclical). That being said, if you are looking to sell, I wouldn’t get too greedy right now and would seriously consider good offers.

Comment by taxpayers
2018-06-15 07:12:26

does anyone have a rate % that the fed got for their 80 billion sale?

1 /gazzilionth of the 4.5 trillion in sewer bonds

Comment by Professor 🐻
2018-06-15 07:13:31

Are Mr Market’s undies in a knot more because of Fed rate hikes or the looming trade war?

-161.41 -0.64%

S&P 500
-10.81 -0.39%

-30.08 -0.39%

U.S. consumer-sentiment gauge higher in June: University of Michigan

Dow suffers triple-digit skid at Friday opening bell after Trump announces new China tariffs

Comment by jeff99az
2018-06-15 13:36:35

who knows, but I bought a little more into today’s carnage. BTW — those numbers aren’t that bad of a drop.

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