Defying Expectations Still, But In A Different Direction
It’s Friday desk clearing time for this blogger. “Mortgage companies have already started cutting their staff as business has dried up due to the decline in home refinancing. That’s particularly bad news for North Texas, which is one of the employment capitals for the country’s home loan business. ‘We are starting to see some consolidation — some of the smaller lenders are simply going out of business,’ said Rick Sharga, executive vice president with Carrington Mortgage Holdings. ‘We expect the mortgage volumes to be off by hundreds of millions of dollars. There are significant layoffs anticipated.’”
“Brian Simmons, one of the founders of an online mortgage platform, called Ask A Lender, said mortgage companies will have to find creative ways to lure homebuyers as they try to make up for the drop in refinancing. He also worries that, since the head of the Federal Housing Finance Agency is expected to step down soon as his term expires, the Trump administration could appoint a much more conservative overseer of the government-sponsored home finance companies including FHA, Fannie Mae and Freddie Mac. ‘This person could take a negative view on the government’s involvement on mortgages,’ he said. ‘They could make a number of moves to make it more unaffordable.’”
“A surprise surge in home inventory means some good news for house hunters in King County. The May numbers show an increase that’s late in the home selling season. ‘Big jump. 36 percent jump year over year in active inventory and so it’s almost 1,000 new units came online in King County,’ said Matthew Gardner, Windermere Real Estate Chief Economist. Rebecca Carlson, a Coldwell Banker Bain broker, noted as inventory was going up last month, she said many buyers took a break. ‘Depending on the area and the neighborhood, we’re just seeing fewer buyers looking.’”
“The boom in inventory shows developers meeting a demand for luxury high-rise living, with the market now listing 3,166 condominiums compared to 2,800 last year. The 30-month supply means about 100 condos are sold ever month. Fisher Island, South Beach, Surfside and neighboring Bal Harbour remain popular choices among luxury buyers. ‘The main reason we’re seeing this renewed activity is because our sellers have finally come to the realization that our inventory was growing and that we needed to reduce prices. The average single-family home this past year is sold for 79% for its original asking price. The average condo priced over $1 million sold for 82% of the original asking price. What we’re seeing is sale prices being discounted even 35% from the original asking price,’ said Ron Shuffield, president of EWM Realty International.”
“‘With our Northern Virginia local economy in a great place regarding employment numbers, we do not think our region’s economy is at risk to overheat any time soon, said Lorraine Arora, NVAR Chairman of the Board. Heather Embrey, associate broker at Better Homes & Garden Real Estate Premier, saw tons of action from her serious clients. ‘Sellers became over-confident and priced properties unrealistically, only to feel frustrated when savvy buyers passed them by,’ she said. Embrey remains optimistic that the June market will have a better balance, especially with her seller clients who have unrealistic expectations.”
“The failed Napa Oaks Subdivision proposal of 51 monster $2 million luxury homes above Old Sonoma Road is up for a City Council vote again next Tuesday, despite the Planning Commission’s vote against this unwanted and unneeded project. The Association of Bay Area Governments determined that the city of Napa needs 403 ‘Above Moderate’ units and it shows that there are 1,307 potential units within existing zoning. In the City of Napa, the available land supply remains adequate to meet future housing needs at all income levels. So why change the zoning of the Napa Oaks site and develop one of our last undeveloped ridgelines? This report proves there’s plenty of land available to meet this alleged demand without taking our ridgeline.”
“Realtors in New Canaan, Connecticut, have voted to ban For Sale signs throughout the community about 40 miles north of Manhattan where several high profile figures including David Letterman, Harry Connick Jr and Paul Simon have estates. Experts say the move may be a feeble attempt to cover up a real estate market that’s oversaturated with sellers. ‘I haven’t heard of anyone who thinks this is crazy,’ one local told Fox News. ‘If you drive around this town, it looks like a yard sale. It just looks bad. It starts to look ugly and desperate.’”
“In Greenwich, down the road from New Canaan, commercial signage has also been banned in residential areas under an ordinance for ‘cosmetic purposes and to avoid drive-bys’.”
“Even though tighter lending rules have helped cool the market, condos remain hot, particularly in Toronto and Vancouver, with evidence of potential speculative activity by rental investors, says the Bank of Canada. About 45% of those who have a mortgage and took possession in 2017 have negative cash flow, according to an April CIBC report. ‘They lose money on a monthly basis, at times a large amount of money—more than $1,000 a month,’ says CIBC deputy chief economist Benjamin Tal. ‘The big question mark is to what extent those investors will continue to buy, or even maybe they will start selling,’ says Tal. The answer is important, he adds, noting rental investors accounted for a record-high 80% of new GTA home sales last year.”
“The number of homes on sale for more than £1 million in London has risen to a record high as buyers walk away from ‘vanity’ asking prices, figures reveal today. North London agent Jeremy Leaf said: ‘This is definitely something we are seeing on the ground. More expensive properties have become harder to shift. It is probably taking double the time to sell them, and even that is only after there has been a couple of reductions in price to get it to a level where it is going to move.’”
“The rate of sales suggests it would take seven and a half years for all the £1 million properties to find a buyer.”
“Swedish apartment prices fell 8 percent in the March-May period from the same period a year earlier, data from an association of Swedish real estate agents showed. Property prices in the Nordic country has risen for almost two decades, making Swedish households among Europe’s most indebted. However, a surge in building and tighter mortgage rules has cool the housing market in recent months.”
“House prices contracted for a third straight month in March by 8.8%, the sixth contraction in the last seven months, Josephat Nambashu, Analyst at FNB Namibia announced. The decline meant the price of the average home was cut by N$109,941 from what it was this time last year to N$1,136,030. Meanwhile, Windhoek property prices fell for the second time in twelve months, whilst Okahandja prices contracted by as much as 13.7% y/y. Moreover, coastal property prices fell for the ninth month in a row- this time by 38.0% y/y.”
“‘Sellers seem to remain denial on pricing shifts, as 91% of homes sold in the period, sold for below asking price, which points to overly optimistic prices in an ultra-cautious buyers’ market,’ Nambashu explained.”
“Time has stood still for the ghost housing societies of Greater Noida. Three years ago when this correspondent walked the broad roads of Sector MU-I in Greater Noida, with their lovely service road trees leading to gated communities, he had found few people actually living in the fully finished housing societies. Now in June 2018, nothing much has changed. What looks like an ideal picture perfect housing dream—villas, trees, roads, parking, community centre, parks—has one thing missing: human beings. If at dusk, the sight of the empty lightless windows gives the ghost town its name, even in the bright June day there were hardly any people in the area to point out directions.”
“Four out of five houses are vacant and many of the empties are badly dilapidated. Despite the existing empties, a little ahead of the existing residential block, another block of low-rise government housing with about 1,000 apartments is under construction. Several private developers are also building high-rise residential apartments in the area. The multi-crore question to this correspondent came from the befuddled cab driver—if already people are reluctant to live, who will buy the new flats?”
“The ghost complexes of suburban Delhi are part of a larger pan-India story. According to the 2011 Census of India, out of 331 million houses in the country, 25 million were vacant. The highest number of vacancies were seen in Maharashtra with about 3.7 million vacant houses, followed by UP with 2.4 million vacancy. Above 95% of the houses surveyed were in a good and livable state, still there are so many vacant houses.”
“What’s going on? The demand for housing is very high,but the price point needs to be right. Why are there fully loaded homes in which nobody is living, why don’t prices come down?”
“There is a new clue about where the Australian housing market is headed, and it must be said, the outlook is ominous. About 100 people showed up at the auction and I reckoned $1.9 million was plausible. This guess was based on a bunch of auctions where I had thought the place was worth a bit over a million, and seeing them go for well over two (or more). Instead of $1.9 million, the place went for $1.76 million. (Which is a huge sum, don’t get me wrong. I sure as heck could not afford it!) When bidding began to dry up about the $1.7 million mark, I knew that I was seeing something. The market was defying my expectations still, but in a different direction to what I expected.”
“The evidence backs up my hunch. The property market in Australia has changed in a real way. We see prices falling slightly in Melbourne, Adelaide, Brisbane and Perth so far this year, but especially in Sydney where prices are down more than 2 per cent. That is dragging down the national average into negative territory. It has fallen for the last seven months.”
“That’s a sign of caution in the market but it also leaves the amount of new building being done at a high level. If prices start falling fast, there will still be a lot of new supply hitting the market. Builders and developers have probably taken into account that prices can’t rise forever with wages growth being so meagre. What they may not have considered — and fair enough because nobody really expected it — is the effect of the Banking Royal Commission.”
“Banks have to get back on the straight and narrow and that is going to mean handing out fewer home loans. That hurts first home buyers, and if prices of existing homes are falling too, that cuts into the amount second-, third- and fourth-home buyers can spend when they move. It is a tricky situation. If they had anticipated this, the building industry might have scaled back supply even more.”
‘Big jump. 36 percent jump year over year in active inventory and so it’s almost 1,000 new units came online in King County’
Wow, that’s some shortage. Waa happened?
Waa happened?
“Not giving it away!”
‘Rebecca Carlson noted as inventory was going up last month, she said many buyers took a break. ‘Depending on the area and the neighborhood, we’re just seeing fewer buyers looking’
Funny how that works.
Wow, that’s some shortage. Waa happened?
Part of it is that the numbers were just that bloody small it makes the percentage amount bigger - Tim’s seattlebubble blog regularly publishes some great charts showing King County monthly history and trends back to 2000. (Very useful to compare vs different points in the previous bubble and crash)
But in absolute numbers, it’s the biggest month over month increase in 11 years, and that’s absolutely something to wake up and pay close attention to.
Remember my mentioning my neighbors the other week who decided get “get off the fence” because they were getting nervous? It looks like they have a lot of company. I wouldn’t be surprised if even more inventory comes online next month as a reaction to this (weather’s helping too - we’ve had a delayed summer)
Couple that with my comment about mortgage rate increase pushing a lot of buyers down a band of affordability (thanks in part to $750K+ median prices) we could easily see a big shift in tone around home sales before the summer’s over. As T.O. used to say.. “Bring a big bowl of popcorn”.
How are those half empty towers doing? Some shortage.
There’s a big shortage Ben…
… A shortage of single, 20-something recent grads without cars working at downtown tech companies who want to overpay for a undersized unit complete with ‘luxury’ amenities they likely won’t use.
Never was an inventory shortage.
It was an overabundance of gamblers (speculators).
“It was an overabundance of gamblers (speculators).”
This group will rapidly shift from the demand to the supply side of the market once it reaches the tipping point. The result is something like an avalanche…once the snow begins sliding downhill, additional snow joins the flow until everything in its path is leveled.
Belltown, SouthLake Union, Bellevue etc. are starting to fill out - but very slowly compared to initial expectations.
For instance in SLU, the young tech workers from India and China are moving in. They had no expectation to save - it is all living expenses (for now). I cycle by to get to my gym - and see folks moving in.
The problem is all the new capacity for instance in Capital Hill, 15th along the Rapid Ride D line etc. These are going for $2K - $3K/month for a ‘luxury’ 2 bd room and there are very few takers
“Couple that with my comment about mortgage rate increase pushing a lot of buyers down a band of affordability…”
For the same monthly payment, higher mortgage rates translate into a lower home purchase budget constraint. This, in turn, means that effective home purchase demand drops when interest rates go up. The predicted effect is a lower equilibrium price, though I know it’s different in this case, because the good is housing, and housing is, well, different.
US long-term mortgage rates jump; 30-year at 4.62 percent
By The Associated Press
WASHINGTON — Jun 14, 2018, 11:53 AM ET
Long-term U.S. mortgage rates jumped this week after two straight weeks of declines, reaching their second-highest level this year.
Against a backdrop of rising interest rates in the economy, long-term loan rates have been running at their highest levels in seven years. And the Federal Reserve on Wednesday raised its benchmark interest rate for the second time this year and signaled that it may step up its pace of rate increases.
Mortgage buyer Freddie Mac said Thursday the average rate on 30-year, fixed-rate mortgages was 4.62 percent, up from 4.54 percent last week. By contrast, the 30-year rate averaged 3.91 percent a year ago.
…
“…..Part of it is that the numbers were just that bloody small it makes the percentage amount bigger….”
Good point MG. My community has a 34% increase in for sale inventory. However, the Days on Market (DOM) for the average listing is 43.
We are moving in the right direction to obtain some balance, but it will likely be 2020 before we get there.
‘the numbers were just that bloody small’
It’s coming from a low base.
Check!
“Wow, that’s some shortage. Waa happened?”
Record high housing inventory, record low demand, falling prices.
Priceless!!!
Bellevue WA Housing Prices Crater 11% YOY As Tech Wreck Ravages Seattle Economy
https://www.movoto.com/bellevue-wa/market-trends/
Yes, HA, no one knows what to do with all the houses for sale in Bellevue!!
Your link shows they languish on the market for….17 DAYS.
HA! You’re so funny. 17 days. What should a seller do? Drop the price on day 16?
DegenerateGambler
Austin(Allandale), TX Housing Prices Crater 9% YOY As Tech Wreck Accelerates
https://www.zillow.com/allandale-austin-tx/home-values/
*Select price from dropdown menu on first chart
Austin…..Days on market = 43
Sounds like the sellers are having a good time. Inventory must be in short supply. 180 days is a balaniced market!!
HA! You’re a funny guy.
Housing.
Falls Church, VA 22046 Housing Prices Crater 14% YOY As Housing Depreciation Ravages DC/NoVA Homeowners
https://www.zillow.com/falls-church-va-22046/home-values/
And don’t forget to select price from dropdown menu on first chart my good friend.
Inventory down 24%
DOM = 32
You can’t seem to find a buyers market HA!
Keep looking. It may take you up I’ll 2020. HA!
Housing
Addison, TX Housing Prices Crater 14% YOY As Dallas/Fort Worth Housing Demand Collapses
https://www.movoto.com/addison-tx/market-trends/
Keep looking HA!
DOM in Addison = 43!!
Get back to me by 2020 please!
HA!
Falling prices are what they are my friend.
Arlington, Va Housing Prices Crater 13% YOY
https://www.movoto.com/arlington-va/market-trends/
’some of the smaller lenders are simply going out of business…We expect the mortgage volumes to be off by hundreds of millions of dollars. There are significant layoffs anticipated.’
’since the head of the Federal Housing Finance Agency is expected to step down soon as his term expires, the Trump administration could appoint a much more conservative overseer of the government-sponsored home finance companies including FHA, Fannie Mae and Freddie Mac. ‘This person could take a negative view on the government’s involvement on mortgages…‘They could make a number of moves to make it more unaffordable.’
By all means, you fence sitters stick your head into this buzz saw.
‘The boom in inventory shows developers meeting a demand for luxury high-rise living, with the market now listing 3,166 condominiums compared to 2,800 last year. The 30-month supply means about 100 condos are sold ever month…’What we’re seeing is sale prices being discounted even 35% from the original asking price’
But the 30 month supply is getting worse. And if you look at the $3m and up market, it’s more like 20 years.
’What we’re seeing is sale prices being discounted even 35% from the original asking price’
Could it be that the original asking prices were just a little crazy?
“And if you look at the $3m and up market, it’s more like 20 years.”
I guess the guys who are rich enough to invest in $3m and up homes can also afford to HODL their investments forever?
Washington, DC (Capitol Hill) Housing Prices Crater 14% YOY
https://www.zillow.com/capitol-hill-washington-dc/home-values/
*Select price from dropdown menu on first chart
‘We see prices falling slightly in Melbourne, Adelaide, Brisbane and Perth so far this year, but especially in Sydney…It has fallen for the last seven months…If prices start falling fast, there will still be a lot of new supply hitting the market. Builders and developers have probably taken into account that prices can’t rise forever with wages growth being so meagre.’
‘Builders and developers have probably taken into account that prices can’t rise forever’
Such statements reflect the current insanity.
‘What they may not have considered — and fair enough because nobody really expected it — is the effect of the Banking Royal Commission.”
How many people outside of Australia know this commission is going on? And why not?
May 25, 2018
“In his corner of American finance, where hard selling meets hard luck, Angelo Christian is a star. Each time Christian sells a home loan, the company he works for, American Financial Network Inc., takes as much as 5 percent. Many of Christian’s customers have no savings, poor credit, or low income—sometimes all three. Some are like Joseph Taylor, a corrections officer who saw Christian’s roadside billboard touting zero-down mortgages. Taylor had recently filed for bankruptcy because of his $25,000 in credit card debt. But he just bought his first home for $120,000 with a zero-down loan from Christian’s company. Monthly debt payments now eat up half his take-home pay. ‘If he can help me, he can help anyone,’ Taylor says. ‘My credit history was just horrible.’”
“Christian can do this kind of deal because he is, in effect, making the loan on behalf of the federal government through its most important affordable housing program. It’s a sweet deal: He gets his nearly risk-free commission. Taylor puts no money down. If things go south, the government ultimately bears the risk. Many borrowers ‘are living paycheck to paycheck and, if they lose their jobs, they go into default immediately,’ says John Burns, a housing consultant.”
“One reason more borrowers may be stretching: Real estate prices are soaring again.”
http://thehousingbubbleblog.com/?p=10443
‘It’s a sweet deal: He gets his nearly risk-free commission. Taylor puts no money down. If things go south, the government ultimately bears the risk. ‘Many borrowers ‘are living paycheck to paycheck and, if they lose their jobs, they go into default immediately’
This is a Bloomberg article. And yesterday Bloomberg used the B work. Of course they aren’t US media. More globalist really. But seeing that the global housing bubble is crashing, maybe they woke up?
“If you don’t buy now, you will be priced out forever!” lol … I remember that phrase being bandied about circa 2006!
possibly they are hearing the 2006-born phrase: “If you don’t but now, you will be priced out forever!” . we all know how well that worked out back then.
A long but good article.
What strikes me is how little these flippers made - some over two years of work on a flip. $40,000 profit sounds like alot of money…
But they talk about their gross profit (after fees). But this “profit” is going to be taxed by Uncle Same and when you calculate their time - they probably made about minimum wage.
++++++
For House Flippers, Reality Meets Reality TV
What Does It Take to Flip a House?
NYT - Ronda Kaysen - June 15, 2018
Watch enough HGTV and flipping houses starts to look easy.
Just talk to Joshua Levitt, who spent the better part of 2014 sitting on his couch in South Orange, N.J., watching shows like “Flip or Flop” and taking notes as the charismatic stars frenetically bought distressed properties and, with the right mix of anxious looks and Carrara marble, successfully flipped one by the end of every episode.
“It was like a combination of ‘Storage Wars’ and ‘Flip or Flop,’” Mr. Levitt said. “It was a disaster.”
“There are definitely more people interested in flipping because they watch these shows on HGTV,” said Elizabeth Kee, an associate broker for CORE real estate, who frequently works with buyers of investment properties and now regularly fields calls from people with no real estate experience who are interested in investing.
The shows “make it look very easy,” Mr. Levitt said, pointing to deceptively short timelines and unrealistic cost estimates. Where a show might describe a six-week renovation schedule from start to finish, the real world moves at a slower pace.
“You could spend four weeks with an architect before you even get started,” he said. “Then you have to pull permits and that can take another month.”
During that time, an investor is paying property taxes, insurance and interest on a mortgage or construction loan.
At a South Orange six-bedroom that the team flipped in 2017, a toilet started backing up after the house was in contract. An investigation revealed that the waste pipe had been mistakenly removed earlier in the renovation. The error cost $10,000 and meant ripping up a newly laid driveway.
“I was not making a TV show, so it was only horrifying,” Ms. Di Lullo said.
Four contractors estimated the work would cost around $120,000 and tried to steer her toward a more traditional look, raising concerns that creativity could cost her buyers. The fifth contractor, however, shared her creative vision and offered to do the work for half the price.
“So, obviously, I hired the $65,000 contractor,” Ms. Blumstein said. “That was a huge mistake.”
’successfully flipped one by the end of every episode’
There should never be TV shows on flipping shacks. It’s crazy on the face of it. Yet it’s a multi-billion $ global biz.
I personally love it when they knock down walls without consulting an engineer or architect - and permits/inpections are for losers anyways.
What possibly could go wrong???
I occasionally see these shows in passing. I’ve noticed a fixation on tearing down drywall versus actually building something. You can see it over and over, usually it’s women. Got to be some Freudian thing going on.
It is the trend for the last 10 years.
Open floor plan!!! Every HGTV’s viewers fantasy!!
I fell for it too. Mrs 2banana wanted an open floor plan so when we fixed up our I house I gave her one.
Being an engineer - You should see the beams! Well, actually, you can’t unless you go into the attic because I designed them to be all hidden except for a few that have about an two inches to give some architectural style to the open floor plan.
So guess what I do when my engineer friends come over…we go up in the attic to check out the beams!
They are beautiful - And WAY, WAY WAY OVER-ENGINEERED. They could up a few tractor trailers driving on the roof.
But they were not that much more expensive than going “cheap” or the HGTV way - and they bring a smile to my face.
The shack I bought was post ripout of century old plaster and lath. All the dirty work was done for me, and the flipper’s bank lost a small fortune.
Yeah right away, it’s always “we need to OPEN this room UP!” Every freaking time.
Uh no, I like my private spaces.
Gut job gut job”
Then if it needs appliances they can’t afford it?
0-3% down mortgage is the screed
Hivtv
I actually like watching these shows, because if you read between the lines of the episode there’s almost always a cautionary tale about why flipping houses is a bad idea.
Me too…cautionary tales…
I hear Zillow is getting into the home flipping business. I guess that means their Zestimates, will be even more worthless. Seems wrong they can purchase & flip and be a real estate valuation source too.
I know a couple flippers. They’ve done pretty well. Of course, it helps when the market is popping off at 15% a year. One of them is at it full time now. Dallas dirt money he calls it.
“Joshua Levitt” - any relation to this?
https://en.wikipedia.org/wiki/Levittown
I still hesitate to call these “flips.” The days of buying cheap (often in a shady deal) and slapping in paint and carpet were gone 5 years ago. All that’s left are the dregs that need major renovations, rehabs, and overhauls. Rehabs are only profitable in locations where the land is valuable. The land value jacks the base price of the home so that it’s worth pouring upwards of $40 into the structure. Tarek and Christina would never have made money if they Flipped or Flopped in, say, Louisville.
Donk,
There’s a globe full of land where 95% of it goes undeveloped. That’s why land is considered worthless dirt.
If they paid more than$500 to$1000 per acre, they got burned.
Those shows are fake,even though there’s the dramatic budget killing ,discovery they always make a profit.
Anyone remember when the liberal rich were almost begging obama and congress to tax them more…?
++++++
Rich Looking to Dodge Property Tax Caps Turn to Alaskan Trusts
Bloomberg - Lynnley Browning - 15 June 2018
Blattmachr plans to put his two New York residences — in Garden City and Southampton on Long Island — into a limited liability company. Then he’ll transfer interests in the LLC to five separate trusts set up in Alaska, with each taking the maximum $10,000 deduction. By doing so, he says he’ll be able to preserve the write-off for about $50,000 in property taxes he and his wife pay each year on both homes.
“This is an under-the-radar thing and it’s novel,” said Blattmachr, who’s written several books on estate planning.
The provision most bitterly opposed during the legislative debate was the $10,000 limit on federal deductions for state and local taxes, or SALT. Since the law took effect, half a dozen wealth planners say they’ve seen a surge in interest in so-called non-grantor trusts among residents of high-tax states such as New York, New Jersey and Connecticut.
While trusts are generally used by the richest Americans, non-grantor trusts for property tax deductions make the most sense for the merely well-off who have property taxes totaling up to $100,000, tax experts say.
Still, the Internal Revenue Service could issue guidance that would prevent taxpayers from using the trusts to get around the SALT cap. An existing provision says that multiple non-grantor trusts with identical beneficiaries and identical grantors — and whose primary purpose is to avoid taxes — can potentially be considered a single entity, with just one $10,000 SALT deduction. But the measure has never been bolstered by regulations, leaving it vague.
Some caveats: If the home placed in the non-grantor trust is sold, the trust recognizes the gains on the sale and has to pay taxes on it — and it won’t be able to take advantage of a special home sale exclusion that’s available under a separate tax rule. For those with New York residences, putting the home in the LLC or the trust could potentially trigger the state’s 1 percent mansion tax, which is levied on sales of homes of at least $1 million.
Anyone remember when the liberal rich were almost begging obama and congress to tax them more…?
Even then, they never really believed THEY would actually PAY more…
…They gots theirs, so their version of how the rest of the world should be must be the right one…
2banana’s Rule
Conservatives and more than happy to live under the same laws and taxes they want for everyone else.
Liberals/Progressives expect to be exempted from the same laws and taxes they want for everyone else.
“Conservatives and more than happy to live under the same laws and taxes they want for everyone else.”
Sure…as long as those same laws and taxes disproportionately benefit the 1%.
That is saying something with Denver, SF and LA in the mix…
++++
Las Vegas home prices most overvalued in US, report says
Eli Segall - Las Vegas Review-Journal - June 13, 2018
Las Vegas home prices are rising at one of the fastest clips in the country, with builders fetching record dollar amounts and resale values approaching prior highs.
The growth is so fast that, according to a new report, prices here are the most overvalued in the country.
Southern Nevada home prices were 20 to 24 percent overvalued in the first quarter, Fitch Ratings reported Wednesday. That’s up from 15 to 19 percent overpriced in the same period last year and 10 to 14 percent overvalued in the first quarter of 2016.
Locals often wonder whether Las Vegas is in another bubble, and Fitch’s report might be viewed as a warning of sorts about the valley’s increasingly heated housing market.
Despite a plunging availability of houses for sale, around 46,600 homes traded hands in Southern Nevada last year, the third-highest tally on record, according to the GLVAR.
“We have consumers all day long, ready, willing and able to purchase homes in Southern Nevada,” Bishop said.
I’m sad this is happening in Las Vegas. I saw an article recently about a “buying frenzy” out of the same newspaper. Having spent some time there a few years ago, this is the last thing they need. So Review Journal, do you have any journalistic integrity? Can you not remember the thousands of abandoned houses in every neighborhood? All the sob stories?
Las Vegas home prices most overvalued in US, report says
Las Vegas Review-Journal-Jun 13, 2018
By almost any measure — among them, builders’ sales totals and mortgage lending volume — Las Vegas’ housing market remains below its …
Las Vegas home prices won’t tumble anytime soon, expert says
Las Vegas Review-Journal-Jun 5, 2018
Las Vegas’ housing market is gaining speed with fast-rising prices and … Las Vegas house prices were up 16 percent year-over-year in April.
Story image for las vegas housing from Las Vegas Review-Journal
Las Vegas’ housing market reaches most heated levels in years
Las Vegas Review-Journal-Jun 1, 2018
Seven or eight years ago, Las Vegas’ housing market was all but dead. Banks were foreclosing on homes all over town, property values were …
Las Vegas house prices may hit pre-recession peak in 2018
Las Vegas Review-Journal-Jun 7, 2018
Las Vegas among most popular places in US to flip houses
Las Vegas Review-Journal-Jun 9, 2018
Las Vegas is one of the most popular places in America to flip houses, … Las Vegas, as we know, was ground zero for America’s housing boom …
Check this out:
DR Horton buys 43 lots in rural Nevada town for $1.5M
Las Vegas Review-Journal-14 hours ago
The project was launched during the housing bubble last decade, and … D.R. Horton, Las Vegas’ top-selling builder last year with more than …
LOGANDALE — The Valley Heights subdivision here is a quiet place. It’s mostly empty, and several vacant lots are overtaken by weeds.
But that hasn’t stopped one of America’s biggest homebuilders from wanting in on the action.
Texas-based D.R. Horton acquired 43 of Valley Heights’ roughly 100 lots, property records indicate. The $1.5 million sale, by Elation Homes owner Ted Price, closed last month.
Valley Heights has around 20 houses, and locals say it’s the only active, suburban-style housing development in the Moapa Valley, some 60 miles northeast of Las Vegas. The project was launched during the housing bubble last decade, and Foremost Realty co-owner Janet Marshall, a longtime Logandale resident, said D.R. Horton could finally “bring it to fruition.”
D.R. Horton, Las Vegas’ top-selling builder last year with more than 1,200 closings, is trying to “get a foothold in as many markets and submarkets” as it can, Smith said.
“I’m sure they’d be happy,” if the company sold one house a month in Logandale, but even if the project flops, it’s “not a huge loss,” he said.
D.R. Horton’s sign at the Whipple Avenue project — across from Elation’s faded and peeling sign — advertises homes from 2,430 to 4,425 square feet (“Call now!” it proclaims), and its website describes Valley Heights as “a highly anticipated community of new houses.”
D.R. isn’t the first national builder to buy land in Logandale, but others ventured here during the bubble years, when developers were snapping up property in small towns sprinkled outside Las Vegas for projects that, for the most part, never materialized.
Atlanta-based Beazer Homes bought 40 acres in Logandale in 2005, and Los Angeles-based KB Home bought 18 acres here the same year. Both properties are still open desert, and it’s unclear what the builders plan to do with them.
KB spokesman Craig LeMessurier indicated this week he was trying to check with the Las Vegas division president about the land but had not heard back from him.
Beazer’s Las Vegas marketing manager, Meghan Ramos, said “we aren’t in a position to comment on it at this time.”
Jessica Minogue, who lives in Valley Heights with her husband and four kids, said most of the residents are families with young children.
Valley Heights might have dozens of empty lots, but among those with houses, several are occupied by police officers, according to Minogue. “So it’s a safe neighborhood,” she said.
Middle of the desert pipe farms - check!
I’ve had several patients from Logandale and Overton at my hospital. It’s a pretty small place.
“…journalistic integrity…”
Is that really a thing?
It could be if Dianne Feinstein signed your paychecks.
I’m missing your point.
Northern NV is even worse, with higher prices. It’s all the CA money/Yellenbucks looking for a place to go die.
A house with A/C is considered pretty rich in most of the rest of the world.
Here in America - it has become a constitutional right guaranteed by the government to buy votes.
You can see where that vote buying eventually will end…
+++++
Workers Flee and Thieves Loot Venezuela’s Reeling Oil Giant
NYT - William Neuman - June 14, 2018
Desperate oil workers and criminals are also stripping the oil company of vital equipment, vehicles, pumps and copper wiring, carrying off whatever they can to make money. The double drain — of people and hardware — is further crippling a company that has been teetering for years yet remains the country’s most important source of income.
But while Maduro has firm control over the country, Venezuela is on its knees economically, buckled by hyperinflation and a history of mismanagement. Widespread hunger, political strife, devastating shortages of medicine and an exodus of well over 1 million people in recent years have turned this country, once the economic envy of many of its neighbors, into a crisis that is spilling over international borders.
Now workers at all levels are walking away in large numbers, sometimes literally taking pieces of the company with them.
No more. Carlos Navas, 37, worked on a drilling crew outside of this oil city, El Tigre. He had a house here, with air-conditioning, and a car. He never imagined he might not make enough money to buy food for his wife and three children.
“Before, you worked and you were rich,” Navas said of his oil company job. “Your salary bought anything you needed. Now you can’t buy anything, not even food.”
Inflation in Venezuela is projected to reach an astounding 13,000 percent this year, according to the International Monetary Fund. When The New York Times interviewed Navas in May, the monthly salary for a worker like him was barely enough to buy a whole chicken or 2 pounds of beef. But with prices going up so quickly, it buys even less now.
And at home, Venezuela has had so many troubles with refineries and other oil installations that it has had to import gasoline for the domestic market, spending dollars it can hardly afford.
Workers said that lifelong health insurance was now worth little, because the state oil company had largely stopped paying private clinics. Field workers complained that lunches sometimes failed to show up because the company did not pay the provider. Then there is the theft of essential equipment. A tour of oil installations around El Tigre showed a devastating toll.
Many leave without giving notice. Often, they are not replaced. When they are, the new workers frequently have little or no experience.
When she retired, she said, her monthly salary couldn’t buy two cartons of eggs.
“You want to go into a corner and cry,” she said. “It’s a time bomb. I would sit in meetings and think to myself: Ticktock, ticktock.”
A house with A/C is considered pretty rich in most of the rest of the world.
Here in America - it has become a constitutional right guaranteed by the government to buy votes.
Huh? Are there Obama A/C Units out there, or did I miss something? I know plenty of lower income folks who do not have A/C in their homes and plenty of not so low income folks who keep the thermostat at 75 or higher in the summer.
I guess you missed QE1, QE2, QE3, QE4, HARP, HAMP, TARP, Operation Twist, bank bailout after bank bailout, GE (UAW) illegal bailout, Freddie/Fannie nationalization, trillion+ dollar per year deficits, adding more to the deficit than all administration COMBINED and accounting for inflation, etc.
So in other words, you could borrow money to buy one. Sorry, you made it sound like they were freebies, like Obamaphones.
Like I said, I know a lot of people who don’t have A/C, and others who have it but rarely use it, because it costs $$$, even a near zero interest rates.
I live in a dry area where it drops into the 50s and even 40s at night in summer. So even if it gets into the 90s during the day the house rarely gets above 75 since at night it cools down to the low 60s or even 50s inside. And it is dry so the ac isnt needed to dehumidify like in the midwest or south. So because of that ac isn’t a must have around here. I have it but almost never use it.
‘keep the thermostat at 75 or higher in the summer’
Ugh, my wife is warm blooded so she likes to keep it at 75 or 76, anything lower and she says it physically hurts her! You believe that? I learned to live with it. I had 2 -3 ft of insulation blown in a while back which helps a lot.
It’s not just the warm blooded. I know many who keep it high because, in their own words, it’s expensive to run. And yeah, it is expensive. My electric bill can go up $100+ during the summer. For some people, that’s a deal breaker, and I don’t recall Obama ever offering to pay for it.
Luckily I have a cold-blooded wife. A 60 degree cave to sleep in at night would suit her perfectly, provided she had a warm blanket.
“Ugh, my wife is warm blooded…”
My wife is a cold blooded euro blonde with pale blue eyes. Even if it’s minus 10-degrees F the bedroom window is open about 4-inches. There’s often a layer of ice from out breathe condensing on the inside of the window. She loves those bright sunny walks in the icy cold air.
Are we married to the same woman?
I sometimes doubt my decision to marry someone whose ancestors survived in cold, dank castles of Europe and Denmark. Luckily I have offsetting warm blood to keep us from freezing in cool weather.
My electric blanket saved our marriage.
Still perky in 22151. Oxide is makin bank too
You remind me of this guy I knew in Austin. He was in his 30’s and had never been out of the county. We had to make a trip to the landfill and he said, “look, there’s cows!”
Poor Donk. Poor poor Donk.
Downtown Los Angeles, CA Housing Prices Crater 7% YOY
https://www.zillow.com/downtown-los-angeles-ca/home-values/
*Select sale price from dropdown menu on first chart
‘About 45% of those who have a mortgage and took possession in 2017 have negative cash flow, according to an April CIBC report. ‘They lose money on a monthly basis, at times a large amount of money—more than $1,000 a month,’ says CIBC deputy chief economist Benjamin Tal. ‘The big question mark is to what extent those investors will continue to buy, or even maybe they will start selling,’ says Tal. The answer is important, he adds, noting rental investors accounted for a record-high 80% of new GTA home sales last year’
‘The path to real estate bubble panic’
‘by Andrew Hepburn and Murad Hemmadi Apr 26, 2017′
‘We trace the growing concern over Canada’s housing market—particularly Toronto’s—as shown by quotes from policymakers, economists and analysts’
‘The emojis in the graph represent the various stages of bubble anxiety—from calm to frantic—for the six individuals we looked at. Tap each to read their quote from that time.’
https://www.thinglink.com/scene/913180803662348291?buttonSource=viewLimits
The alligator…
Ignored by most flippers and “investors” - because they are going to be rich, rich rich on sweet appreciation.
It needs to be fed every month.
And its appetite is never sedated nor decreases…
“The path to real estate bubble panic
We trace the growing concern over Canada’s housing market—particularly Toronto’s—as shown by quotes from policymakers, economists and analysts”
Isn’t losing one’s shirt in a real estate crash a private concern? At what point did the gubmint decide it had a duty to make all U.S. households wealthy by encouraging them to buy houses, then adopting policies to make the decision look smart through the lens of the rear view mirror?
RE: Toronto market. Yes i know that there are ‘investors’ and flippers.
I have made this observation on HBB before - based on spending time with my parents in the Toronto suburbs.
The most insidious part of this bubble is because of how many people are in the industry. Construction, sales agents, mortgage brokers, renovators, land scaapers etc. Toronto used to have a lot of light / medium industry - now there is so housing industry oriented
The insidious part is that parents, siblings are encouraging couples (even not married) to buy condos, town houses, houses while in their early 20’s, late 20’s and early 30’s —- when they are stretching themselves financially. Their instincts, common sense is being worn down by this pressure. In my opinion, they are not being greedy - there are just not enough people speaking caution
The Canadian collapse has started and will be epic.
No one could have seen this coming!
+++++
Canada Has a Subprime Real Estate Problem, You just Don’t Know It
Wolf Street • Jun 15, 2018 • Stephen Punwasi
A few weeks ago, a real estate agent told me about his client. Relatively wealthy older dude, closed on not one but two townhouses he plans on flipping. After some questions regarding who financed such a deal, he explains it was a private lender. Right before adding, “don’t worry, it’s not like in the US. This guy has good credit, he just couldn’t get enough money from his bank.”
These were mostly middle class investors. Whole textbooks will be written on the topic, but what you need to remember today is not all subprime loans are to people with bad credit. However, all have insufficient credit for the size of loan they’re looking to borrow.
Canadian subprime lending is often done through private lenders, you access through a mortgage broker. Good brokers always start at the best lender, that usually has lower rates than your bank. When you don’t qualify for these, they move up the chain. If your credit profile won’t even work at “bad credit” lenders like HomeTrust, they’ll suggest a private lenders. Bad credit, no credit, no problem. There’s usually a private lender that’s willing to make a deal.
Despite being off of record low interest rates, these lenders charge upwards of 8% and we’ve seen mortgages well into the 20s. The broker also gets 1%-3% of the loan, so there’s little reservation suggesting them. If you can do math, you’re probably wondering how people make money on these deals? They can only do so if they hold it for a short period of time. If you’re bad at math, you may be one of these borrowers not realizing you’re only paying interest on your loan, and not reducing your debt. Regardless, this is where Canada’s subprime borrowers lurk.
Interest rates are just above record lows, but a lot of people aren’t paying low rates. CIBC Economics numbers show that over 1 in 10 Toronto condos registered in 2017 were attached to astronomically high mortgage rates. Over 17.4% of owner occupied condos registered in 2017 had a mortgage rate above 9%. Over 16.2% of condo investors with units that registered last year were paying more than 9% as well.
That’s a lot of units with unusually high interest rates buying condos – not a great sign of buyer quality. These buyers are likely waiting to flip at the first sign of buying weakness, or don’t realize how difficult it’s going to be to make a profit at that rate.
The average price of single-family house plunged 13%, or C$160,000 from the peak. Sales of homes priced over C$1.5 million collapsed by 63%. Condos are still hanging on.
“Good brokers always start at the best lender…”
I betcha they start where the gravy is the thickest.
Housing is 13 % of Canada’s economy
Why worry
Whoops oil down to $65
Worry!
Not to worry, as Albuquerque Dan offers his assurances that peak oil is behind us and prices north of $80/BBL will soon be here to stay.
Meanwhile, check out the new Jaguar i-Pace. That is one beautiful car.
Check out sales volume.
Off a freaking cliff.
Inventories at a year high.
And some people are starting to give it away…
+++++
Vancouver Real Estate Trends
Housing Market Report for June 2018
Current Vancouver MLS stats indicate an average house price of $1,222,892 and 1,755 new listings in the last 28 days. As of today, Vancouver housing data shows median days on market for a home is 18 days.
https://www.zolo.ca/vancouver-real-estate/trends
This is the kind of crap we have to put up with. Prices off more than $100k and we are supposed to believe the days on market is 18? What if we looked at last years numbers? Off more than $100k then too IIRC. Canadian REIC is among the most corrupt on the planet.
Days on market can be a joke.
Play the game of high price - no sales. Pull off market for a few days. Put back on market at slightly lower price - clock re-starts.
Realtors then play the “new on the market - won’t last long” game…
And thats saying a lot.
Frankly I dont get the appeal of Vancouver. The city itself is nothing special - most buildings have views of one another now. Asians everywhere, and not the friendly kind - more the thieving kind. The suburbs are nice with good looking homes and yards but you can go elsewhere and get the same for 1/2 the price or less.
In my neck of the woods I’m getting emails of price reductions, which is new. I keep track of a few properties from time to time and if they languish they *always* get relisted to reset the Days on Market. Some land parcels have been for sale for maybe 3-5 years with no takers but you’ll see them listed every 6-8 months for a month or two. Good news is some developments are finally breaking ground, which means that will add to the downward pressure on prices just as the market is going down and interest rates are rising. Maybe all those who lose their jobs can thank Yellen in person!
Van is near 3rd world in terms of people, corruption, crumbling infrastructure. It looks nice, with the mountains and water. Other than that it’s shithole-esque.
You have to check the foliage
Hmmm … fewer refis means fewer cash outs, which means fewer vehicle sales, fewer vacations, fewer motorcycle and boat sales, etc.
Sounds like we’re finally reaching the inflection point. By next year the “no one could have seen it coming” stories will be popping up everywhere.
On the plus side, it’ll be a great time to get a bargain on a used pickup or Harley.
Rising interest rates + new tax laws + QE unwind = the tipping point
Seattle, WA 98121 Rental Rates Crater 9% YOY As Real Estate Industry Fails To Conceal Housing Correction
https://www.zillow.com/seattle-wa-98121/home-values/
*Select price from dropdown menu on rental chart
“The number of homes on sale for more than £1 million in London has risen to a record high as buyers walk away from ‘vanity’ asking prices, figures reveal today. North London agent Jeremy Leaf said: ‘This is definitely something we are seeing on the ground. More expensive properties have become harder to shift. It is probably taking double the time to sell them, and even that is only after there has been a couple of reductions in price to get it to a level where it is going to move.’”
“The rate of sales suggests it would take seven and a half years for all the £1 million properties to find a buyer.”
But there’s a housing shortage they said!
I just did a search for properties available for sale in London between 1-2 million and there are 9,495 listings. Wow!
solving the homeless problem 1 tent at a time The industrial-sized tent holds 324 people in neatly spaced, numbered bunks.
https://www.theguardian.com/us-news/2018/mar/29/san-diego-homelessness-big-tents
And all this time I thought “big tent” was just a political saying.
The Democrats are the big tent party. Now, it means when the wave of foreclosures starts and the home equity spigot is shutoff, they will be naming the tent cities after Gov. Brown
Brighton Beach Brooklyn Rental Rates Crater 9% YOY As Global Housing Bust Ravages Coastal Cities
https://www.zillow.com/brighton-beach-new-york-ny/home-values/
Select price from dropdown menu on rental chart
“…since the head of the Federal Housing Finance Agency is expected to step down soon as his term expires, the Trump administration could appoint a much more conservative overseer of the government-sponsored home finance companies including FHA, Fannie Mae and Freddie Mac.”
The prospect of restoring prudent banking practices to the mortgage arena is an excellent development.
Finance & Investment
Lending
Fannie-Freddie Overhaul Plan Is Dead for This Year, Senators Say
Republican Bob Corker of Tennessee and Democrat Mark Warner of Virginia commented on the status of the two companies Wednesday at a Senate Banking Committee.
Bloomberg | May 24, 2018
(Bloomberg)—Two U.S. senators who have played key roles in trying to advance housing-finance reform are acknowledging the legislative efforts to end government control of Fannie Mae and Freddie Mac are dead, at least for now.
Republican Bob Corker of Tennessee and Democrat Mark Warner of Virginia commented on the status of the two companies Wednesday at a Senate Banking Committee hearing with Federal Housing Finance Agency Director Mel Watt.
Corker and Warner tried to develop a bill that would have largely preserved the operations of Fannie and Freddie while opening the market to new competition. That effort foundered after failing to win support from progressives, who wanted to preserve the companies’ affordable-housing mandates, and Congress has little time left to consider major legislation before November’s mid-term elections.
“My sense is that these institutions may well stay in conservatorship for some time,” Corker said, adding that he believed President Donald Trump’s administration might take some sort of action on Fannie and Freddie.
…
The Fallout from hedge funds who lose billions
https://nypost.com/2018/06/15/another-cash-strapped-nyc-cabbie-commits-suicide/
https://nypost.com/2018/03/21/cabbie-blamed-uber-lyft-for-financial-woes-before-hanging-himself/
Ochisor backed his home mortgage on his medallion, and planned to use the license to finance his retirement — but his dreams faded as the value of medallions plummeted from $1 million to around $180,000 over the last five years.
I knew a few. Poor guys. When I knew them, the price was already insane.
This makes me profoundly sad. The medallion system is a total racket, but my heart aches for those whose financial situation is dire and who feel they have no way out.
There are twice as many suicides in the US as there are homicides, so it is a bigger health crisis. Guns are used in 49% of suicides.
If you have a gun, store it safely and keep it away from those who shouldn’t be getting into it, especially kids.
“The most effective help [for suicide], though, remains the support of friends, family and neighbours, especially if they can learn to detect warning signs such as withdrawal, talk about wanting to die or the sudden misuse of booze or pills. “The solution lies in social, economic, spiritual and other connections,” says Jerry Reed of the National Action Alliance for Suicide Prevention, echoing Émile Durkheim, the sociologist who wrote the first study that treated suicide as a health problem, rather than a religious or moral one.”
Suicide is born of despair. Suicide prevention is far from hopeless
The Economist
June 14, 2018
If you have a gun, store it safely and keep it away from those who shouldn’t be getting into it
Way back (90’s, NYC), I got into work one morning, opened the safe and saw a gun in there (we never had one; would have liked to have had one a few times.) I was a little surprised. Turns out it was a customer’s gun from the night before, a cop, so upset that his fellow policemen and our employees took it away from him. That night a poor young policeman had been killed by a bucket of spackle thrown off a roof. The cop was so distraught they felt it was the best thing to do.
“If you have a gun, store it safely and keep it away from those who shouldn’t be getting into it”
Like this FBI agent did last week.
https://www.youtube.com/watch?v=srktFyi_ru0
Wow, hadn’t heard about that. I don’t know which is scarier, the fact that this agent fired his gun into a crowded room of onlookers or his dancing moves…
“The medallion system is a total racket, but my heart aches for those whose financial situation is dire and who feel they have no way out.”
For all of them?
June 4, 2018 12:01 a.m.
Foreclosed ‘Taxi King’ medallions going on the block
Investors will look for yellow-cab value signals at the June 14 auction
By Matthew Flamm
Taxi King Evgeny “Gene” Freidman
Evgeny “Gene” Freidman, once known as New York’s “Taxi King”—now better known as a potential witness against President Donald Trump’s embattled lawyer, Michael Cohen—will get a farewell from the yellow-cab industry June 14. That’s when 139 taxi medallions he once owned will go on the block at the Sheraton LaGuardia East in Flushing, Queens.
The auction of the foreclosed assets comes at a time of growing stress and uncertainty for the industry as medallion values have fallen and some owners cannot meet payments on their loans. Five drivers—including two medallion owners—have taken their own life in recent months under the pressure of declining income and relentless competition between cabbies and e-hail drivers.
Investors will be watching the auction closely to see whether prices continue to fall.
…
June 14. That’s when 139 taxi medallions he once owned will go on the block at the Sheraton LaGuardia East in Flushing, Queens.
NOT GOOD
http://www.nydailynews.com/new-york/ny-metro-taxi-medallion-evgeny-freidman-20180614-story.html
Trump’s lawyer, Michael Cohen, has a ton of these medallions and used them as collateral to buy real estate. The money that has flowed to Cohen seems an awful lot like bribery to me. I wouldn’t be surprised to see laws and regulations go up to protectors of these medallions, or the owners of these medallions even though they are little more than rent-seekers.
Kensington, MD Housing Prices Crater 11% YOY As Washington DC Subprime Mortgage Meltdown Accelerates
https://www.movoto.com/kensington-md/market-trends/
“So why change the zoning of the Napa Oaks site and develop one of our last undeveloped ridgelines? This report proves there’s plenty of land available to meet this alleged demand without taking our ridgeline.”
Build, baby, build. It’s the only thing that a fawking real estate developer knows how to do. And unless zoning is sufficiently strong, they will use their easy money loans to fund building out every undeveloped parcel of land in response to ephemeral mania demand, right up until the point of outright bubble collapse.