Some Sellers Are Willing To Take A Significant Loss
A report from The Island Now in New York. “We celebrated this day on July 4th 1776, as the day of the publication of the Declaration of Independence of our 13 colonies from Britain, which eventually led to the formation of the United States. In a July 3, 1776 letter to his wife, John Adams declared that the signing of the Declaration of Independence should be a ‘great anniversary Festival’ and ’solemnized with Pomp and Parade, with Shews, Games, Sports, Guns, Bells, Bonfires and Illuminations from one End of this Continent to the other from this Time on. We have much to be thankful for; however, times have changed and am hoping that our future will be as exciting and invigorating as our first day of independence.’”
“Now on the subject of real estate and what has been going on lately in and around Long Island. Most important has been the price reductions in the overbuilt luxury market in New York City as well as in the burbs, where high end new and old homes are located. S.A.L.T. (state and local taxes) only allows a maximum of $10,000 deduction on your tax returns for 2018. This why there was a rush in December to prepay 2018 real estate taxes, especially those whose taxes were on the higher end way above the $10,000 maximum in 2018, to take the deduction in 2017. I had read that $80,000,000 of taxes were pre-paid in Southampton!”
“Mortgage interest deductions were reduced on new mortgages after Dec. 15, 2017, from $1 million to a maximum of $750,000 (ask your accountant about all the changes that might affect you). This has had a major effect on the higher end luxury market. I would suggest that if you have a home with real estate taxes considerably above the $10,000 allowable deduction, that you do not wait and put your home on the market asap.”
“However, if you are looking to move into New York City and want to try to get a good deal and have the cash to pay with the equity from your sale; wait until this winter (when demand is at its lowest) and you could score an amazing deal in the luxury market (for those individuals and developers, who may have to sell), as prices probably will be reduced from the excessive inventory and the decreased deductions in real estate taxes and interest on mortgages.”
From Deal Makerz on the UK. “Wealthy buyers in London are increasingly shunning luxury homes for cut-price dilapidated properties in the hopes of making a tidy profit. Buying agency Black Brick, which identified the trend, said buyers are looking to find the best possible deal on their London home, enabling them to achieve better value for money and the potential of long-term capital growth. ‘There are some excellent deals to be had at the moment, particularly from vendors who are highly motivated to sell,’ said Camilla Dell, managing partner at Black Brick. ‘That’s why as buying agents, we always find out who the seller is, and what their reason for selling is. This enables us to negotiate far better discounts for our clients.’”
“She added that the agency is also seeing some large discounts being applied to new build properties which are due to complete in the next two or three months and the seller wants to flip it before completion. ‘Some sellers are willing to take a significant loss in order to not complete on the property and face having to pay stamp duty.’”
From The Guardian. “More than 150 estate agency firms went insolvent last year and as many as 7,000 are at risk as high street operators face the triple whammy of online competition, a sagging property market and cuts to letting fees. A study by accountants Moore Stephens found that 153 estate agency firms went insolvent in the year to May 2018, a small increase on the 148 the year before. But it found that more than 7,000 estate agents ‘currently show signs of financial distress.’”
“Last week, shares in Britain’s biggest estate agent, Countrywide Properties, plunged 25% after it issued its fourth profit warning in eight months and called on shareholders to raise fresh funds to cut its debt. Countrywide, the company behind Hamptons, Bairstow Eves, Taylors and Gascoigne-Pees, has been hit hard by a downturn in the housing market in London and the south-east.”
“Chris Marsden, restructuring partner at Moore Stephens, said: ‘Some areas in the UK are appear to have an excess capacity of estate agents, which could mean there is not enough business to spread around as property transactions stagnate.’”
‘I had read that $80,000,000 of taxes were pre-paid in Southampton!’
You eager beavers! I’ve never pre-paid a tax in my life.
‘do not wait and put your home on the market asap…However, if you are looking to move into New York City…wait until this winter (when demand is at its lowest) and you could score an amazing deal’
You guys are fooked.
And quite entertaining…
Some real estate fireworks seem like the perfect way to celebrate the Fourth of July!
“Most important has been the price reductions in the overbuilt luxury market in New York City as well as in the burbs, where high end new and old homes are located.”
Portland, OR Housing Prices Crater 14% YOY
https://www.zillow.com/portland-or-97209/home-values/
Select price from drop-down menu on first chart
Never trust a realtor…
******
. ‘That’s why as buying agents, we always find out who the seller is, and what their reason for selling is. This enables us to negotiate far better discounts for our clients.’”
Know your customer. And know yourself.
Kinda like a movie with Madonna in it - never trust a company with that name
******
“Last week, shares in Britain’s biggest estate agent, Countrywide Properties, plunged 25%..
She added that the agency is also seeing some large discounts being applied to new build properties which are due to complete in the next two or three months and the seller wants to flip it before completion. ‘Some sellers are willing to take a significant loss in order to not complete on the property and face having to pay stamp duty
On a 900K pound shack, stamp duty is 5%, a cool 50 grand. It’s basically a sales tax on the purchase.
They haven’t figured out a British MERS fraud system around the Stamp Duty yet?
Amateurs….
http://www.yesmagazine.org/new-economy/homeowners-rebellion-could-62-million-homes-be-foreclosure-proof
And over 925K, it’s 10%!
The term “stamp duty” sounds so innocent.
If you drive a car, I’ll tax the street,
If you try to sit, I’ll tax your seat.
If you get too cold I’ll tax the heat,
If you take a walk, I’ll tax your feet.
—The Beatles, Taxman
Lennon was pure genius.
I was talking to a guy the other day who lives in California. He told me you have to buy a permit to use a metal detector. Seriously. It’s not just taxes, it’s fees and charges, etc. Big gov is out of control on all levels - local, state and federal.
“Oil Falls As OPEC Output Rises, More Production Planned”
https://www.reuters.com/article/us-global-oil/oil-falls-as-white-house-says-saudi-king-to-raise-output-if-needed-idUSKBN1JR29O
Paging AlbuquerqueDan…
It’s at $74.33 and the 52 weeks high is $75.27. Where is the fall?
I’m as bearish on oil as anybody, but it is at eye-popping highs right now.
I’m hoping oil keeps climbing and climbing. Nothing like making gas more expensive to remind Americans that going hybrid or, better yet, fully EV is the best way to give the middle finger to oil regimes that despise America.
Are you one of those clueless people who doesn’t realize that diesel fuel is what is burned to produce everything needed to create an EV?
It’s true an EV is only as clean as it’s energy source, but it’s vastly cleaner than ICE, even considering the sourcing of battery materials. There is of course an input cost and an interim period where dirty energy will need to be spent to transition to clean energy, just like you would do for wind or a hydro electric dam.
“We sterilized some folks.”
A fried of a fried has some funky plug-in hybrid. If he uses a high-volt outlet, he charges in three hours. If he uses a regular 110 outlet, he charges in 8(?) hours. For 50 miles. EV’s are gonna have to do better.
My sister in South Menlo Park near Stanford has a Toyota Highlander EV. Living in an apartment there’s no charging at home, so she has to rely on charging stations around town. The mapping apps all have charging stations layer.
New EVs are way better than that. The Bolt gets around 270 miles per charge, and battery technology gets better all the time.
It is nowhere near highs since the all time high was $136 in 2008. That is over $150 in 2018 dollars. So the eye popping high you speak of is 50% of the actual eye popping all tine high.
I filled up for $3.04 yesterday. I remember paying close to $5 in summer 2008.
Perspectives are important.
Yes, we may not like it but all shale oil can do is keep oil off the Obama highs for a few years and probably below the 2008 highs for a decade unless EV batteries get a lot better and similar batteries get cheap enough to store wind and solar produced electricity.
Nonsense. Horizontal drilling for tight oil has fundamentally changed the market. The technology will only get better and become more widespread.
There is no shortage of oil, now or for the foreseeable future.
What the Texans are doing is remarkable. Automated, one man doing what used to take dozens, on land thought to have been played out decades ago. Some of them were break even at 20 bucks/barrel - a year ago. They can hedge a year out and make money every day. These A-rabs are going to end up selling camels again.
Is there any chance this remarkable technological innovation will silence the Peak Oil fearmongers? I’ve yet to see the evidence, but I’m holding out hope.
Not to mention the fact that the earth is making new oil every single day, the same way it’s always made oil. The idea that the earth made one batch of oil then stopped is just as ludicrous as the envirowhackos who said we wouldn’t see snow anymore because of global warming - I mean “climate change.”
Peak oil was BS even before this new tech. It’s the same scaremongering that Al Gore peddles.
And feeding the squirrels too…
******
Seattle house boasts Trump countdown clock
CBS News | July 4, 2018
A house in Seattle is attracting a lot of attention for a sign posted outside with a countdown to the end of President Trump’s first term in the White House, CBS affiliate KIRO 7 reported.
The former homeowner made the countdown clock, and its corresponding Instagram account, just after Mr. Trump’s inauguration, according to iKIRO 7.
Since then, the house has been sold to Lily Onnen and her husband. She says that it’s in the contract for she and her husband to maintain the sign…
Link …
http://thehill.com/blogs/blog-briefing-room/news/395482-seattle-house-displays-countdown-clock-showing-days-until
‘In the week since her upset primary win, New York Democratic congressional candidate Alexandria Ocasio-Cortez has turned to elevating and endorsing like-minded contenders around the country. Drew Serres, Harris’ campaign manager, told The Daily Beast on Tuesday that since the Ocasio-Cortez win they saw a “huge spike in numbers.” In the first month-and-a-half since announcing their campaign, Serres said Harris’ camp had raised only $20,000. And in the five days after Ocasio-Cortez’s win, they brought in $15,000 from 429 donors with an average contribution of $35.’
‘According to Alex Goldstein, an adviser for the Pressley campaign, in the 36 hours after Ocasio-Cortez’s victory, the campaign raised approximately $18,000 from 205 contributors—more than three times more than they raised in a similar time span the week prior.’
‘Within about two-and-a-half days of a tweet supporting Kaniela Ing, a member of Hawaii’s State House of Representatives who is running for Congress in the state’s 1st district, he said he got about $10,000 in contributions.’
‘Welder, running in Kansas’ 3rd congressional district which is currently represented by incumbent Kevin Yoder (R-KS), raised $55,951 from online contributions in the week since Ocasio-Cortez ousted veteran Democrat Joe Crowley.’
Meanwhile…
‘I had read that $80,000,000 of taxes were pre-paid in Southampton!’
‘Democratic socialist Alexandria Ocasio-Cortez stunned the political world and rank-in-file Democrats by defeating incumbent Joe Crowley in Tuesday’s New York primary. The platform Ocasio-Cortez ran on was deeply progressive, calling on the abolition of Immigration and Customs Enforcement, nationalized health care, universal jobs guarantee and getting America to 100 percent green energy.’
‘However, footage reveals that Ocasio-Cortez also has associates with regressive views.’
‘One of Ocasio-Cortez’s most enthusiastic campaigners and a man who stood behind her at her victory party, Thomas Lopez-Pierre, is a known anti-Semite and racist. Lopez-Pierre has regularly used slurs against Jewish and black New Yorkers in public forums and while running for office himself.’
‘While running for office in 2017, Lopez-Pierre specifically campaigned on “protecting tenants from greedy Jewish landlords.” Lopez-Pierre’s own campaign website shows his rantings agains “Greedy Jewish Landlords.” His campaign website applauds the arrest of “Greedy Jewish Landlords” and says that “Jewish Landlords” are “punishing” black and Hispanic families.’
‘Lopez-Pierre’s twitter bio says he is protecting people from “greedy Jewish landlords.” In May of 2018, Lopez-Pierre ranted against “Greedy Jewish landlords,” saying Jesus should put them “In Hell.”
‘Democratic socialist’
I used to ask rio, why don’t you just call yourself a socialist like people do in other countries?
Political names can be confusing across countries. Consider the Sweden Democrats, which is a right-wing, nationalist party and is nothing like America’s democrats. Sweden Democrats is closer to UKIP, or even to Trump’s populism/nationalism.
Kenmore, WA Housing Prices Crater 9% YOY
https://www.movoto.com/kenmore-wa/market-trends/
When the blue wave doesn’t hapen in Nov I wonder what the excuse will be.
A.Racism
B. RUSSIA
C. Russian Racists
D. Racist Russians
They’ll need to reset that clock when Trump is re-elected in Nov 2020
Cape Coral, FL Housing Prices Crater 6% YOY
https://www.movoto.com/cape-coral-fl/market-trends/
An economic opinion …
“Michael Pento: When The Yield Curve Inverts Soon, The Next Recession Will Start
“Expected timing: this Fall”
https://www.peakprosperity.com/podcast/114136/michael-pento-when-yield-curve-inverts-soon-next-recession-will-start
A money, currency and bitcoin musing.
Currency started as items which groups of people agreed were valuable. Ornate sea shells - wampum and cowrie shells were used to represent other, less divisible items. Cattle were used as currency, and are used by people today in Sudan, as one example. As metal working became a thing, metals which everyone valued could be shaped into convenient coins and could also be used to represent less divisible items, and could be used to exchange for (purchase) them.
Then paper currency came on the scene and added one layer of abstraction: the paper currency represented gold or silver. Then items for purchase could then be represented in terms of paper currency. Then as people transacted solely in paper currency, the paper was no longer used to represent gold or silver. The paper slips themselves, sufficiently difficult to counterfeit, became the thing that everyone valued.
Then, bring on the advent of the computer, a device which does two things: one, it executes simple instructions in the form of 8,16,32,64 digit strings of ones and zeroes; and allows users to represent information as logical constructs or virtual objects. For example, pixels on a screen can be represented as 1’s and 0’s; a group of those pixels can represent a bouncing ball; as the position of the ball on screen changes, the values of the 1’s and 0’s representing the ball change. Think also of a computer game, Minesweeper or Freecell. The pixels represent cards or mines, and the value and location of those cards or mines are encoded into 1’s and 0’s.
So then, the digital representations of paper currency started to replace the paper currency. So here is the evolution:
1) the mutually valued physical object (e.g. gold/silver)
2) the paper representation of the physical object
3) the paper becoming the mutually valued physical object
4) the digital representation of the paper
Sweden is experimenting with going fully cashless. Here is a list of countries ranked by cashlessness.
So this presents a few challenges:
1) How to create a digital currency unit (DCU)
2) How to guarantee ownership rights on the digital currency units
3) How to transfer ownership of the DCUs only with the owner’s assent.
So, bitcoin. It is a mathematically unique digital object, inextricably tied to a digital ledger object (the blockchain). The key to understanding that article is understanding a “hash”. If you have a string of 1’s and 0’s (say a file), and run it through a hash algorithm, it creates a fixed length string of bytes (a group of 8 bits is called a byte). If you change even one bit (a single 1 or 0) in that source string, a wildly different string of bytes results. This goes for an input string of 2 bytes or 200 billion bytes. Very useful.
So, the bitcoin protocol is able to:
1) create a unique digital object (DO)
2) guarantee ownership rights on that DO
3) Only transfer ownership of that DO with the owner’s assent (mostly - see “51% Attack”)
So - people noticed the similarities to a DCU. Having an object by its very nature automatically solving the challenges of manipulating DCUs is quite exciting.
In term of valuing a bitcoin DO, there are some challenges.
1) It doesn’t represent a mutually valued physical object, like a slip of paper currency, or gold. Meaning there is no exchange where you turn in a bitcoin and obtain the mutually valued object which it represents.
2) The ledger does not scale well. It contains a list of all previous transactions. It currently stands at 163 GB. So a person in Hawaii buying a lei will be recorded on a person-in-Rhode-Island’s copy of the distributed ledger.
3) It exists only as a digital representation.
4) If the device on which one has keys to one’s bitcoin is lost or stolen, there is no recourse. The DOs are gone.
I’m sure there are tasks for which the bitcoin technology will be useful. I don’t think replacing currency is one of them. If it had a stable value in terms of some currency, it could again be used as a proxy for that currency.
On another note, countries going cashless should approach that carefully IMO. Currency has evolved from mutually valuable physical objects to representations of those objects, either as other physical objects or as digital objects. Having a currency which does not represent any physical object, even an elaborately printed slip of paper (which is hard to counterfeit) is uncharted territory. It violates the core underpinning of currency as a mutually valuable physical object.
Money itself can be thought of as a logical construct. A construct which represents purchasing power. Like, 10 pieces of wampum has the equivalent value of a bushel of corn or five salmon. So it can be used to purchase those goods.
Physical currency is a physical representation of that logical construct. Physical currency provides units in which to think of the purchasing power. The elaborate slips of paper or the chunks of shiny metal pounded into coins make it easy to visualize and understand the “unit of purchasing power.” Take away that mutually valued object, even if it is just an ornate piece of paper, and it will IMO erode the durability of the money construct which the currency represents.
So, this is all my Free Internet Opinion. Hopefully it might provoke thought. As always YMMV.
“1) It doesn’t represent a mutually valued physical object, like a slip of paper currency, or gold. Meaning there is no exchange where you turn in a bitcoin and obtain the mutually valued object which it represents.”
What gives the slip of paper a mutually valued worth?
What gives the slip of paper it’s mutually valued worth? IMO the willingness of people to accept it in trade for goods and services. That’s about it. Once sufficient “demand pressure” for the paper built up, it became self sustaining, like a siphon.
————————-
From 1879 to 1933, in the US, dollars could be converted into gold by Americas. Then 1971 only foreign dollar holders could convert dollars into gold. After 1971, the “gold window” was closed by Nixon and the currency became pure fiat: https://www.investopedia.com/ask/answers/09/gold-standard.asp
I’m thinking that eventually policy makers noticed that no one (or very few) were transacting in gold and silver, only paper dollars, and that removing the promise to convert dollars into gold would not break the currency.
I am guessing that the folks at the Fed who regulate interest rates and inflation might disagree with you.
By contrast, I note that the Bitcoin supply is determined by the chaotic, uncontrolled interaction between a (supposedly) fixed limit on total supply and the vigorous internationally distributed, decentralized efforts to mine it as fast as possible. Absent any coordinated, centralized effort to control the supply to maintain a stable value, the value of Bitcoin is extremely unstable, and it fails to qualify as a currency on this criterion.
What will happen after the last Bitcoin is mined against the backdrop of an ever increasing, unlimited ocean of rival cryptofund supply is anybody’s guess. My hunch is that the Cryptotrader herd will eventually find a reason to prefer some new cryptocurrency over Bitcoin, ultimately driving the value of the latter to $0, but this is only an educated guess.
By contrast, I note that the Bitcoin supply is determined by the chaotic, uncontrolled interaction between a (supposedly) fixed limit on total supply and the vigorous internationally distributed, decentralized efforts to mine it as fast as possible.
It is getting harder to mine bitcoin. From the MIT Technology Review article I posted above: “Bitcoin and Ethereum are designed to make it increasingly hard to solve a block over time.”
Here’s a discussion of it: https://bitcoin.stackexchange.com/questions/41276/in-the-asic-age-is-it-worth-starting-mining-bitcoin-at-home
There was a gold rush at first, when mining at home made sense. Now, the increased difficulty in mining bitcoin will temper the enthusiasm for bitcoin.
I think the same thing happens with real estate. When one can buy a house, and a few months later, sell it for a healthy profit, the piling into house-buying will be high - it’ll be a gold rush - a self-reinforcing feedback loop. When that becomes unprofitable for even the professional contractors, then I’m guessing the gold rush mentality will dissipate and the market will turn.
IMO.
Professor 🐻: I am guessing that the folks at the Fed who regulate interest rates and inflation might disagree with you.
How so?
They have two mandates: keep inflation low, and keep employment high. The first of these is addressed by regulating the money supply. If you want to see what happens to the value of a medium of exchange absent such regulation, check out this chart.
I should have mentioned that the second mandate is also addressed by regulating the money supply. It’s hard to hit two targets with only one arrow in your quiver.
It seems like the fed has a mandate to prevent asset deflation.
Another interesting difference between a DCU versus a bitcoin:
• a bitcoin is a discrete logical object.
• DCUs as implemented today are sums.
• The individual DCU (dollar or cent) is not tracked.
• The unique object is the account, for which the DCU sum (which represents dollars and cents) is an attribute.
Think of a player in an online game. That’s the account - the discrete object. The player’s “vitality” is a variable sum. That’s the money in the account. Individual vitality points aren’t tracked as unique objects.
Accurately tracking the change in sums is the trick in today’s banking and payment processing systems. The individual cent or dollar does not have a serial number and is not manipulated individually.
“China Set For Record Defaults”
https://www.thestar.com.my/business/business-news/2018/07/04/china-set-for-record-defaults/
For the past 2+ years I’ve been waiting for the subprime auto loan crash and the tsunami of inventory to have its way with new and used car prices, to no avail. This article admittedly rankles me. It seems there is limit to prices anymore, they just keep going up.
I just saw an article about a $100k Ford truck. Driving around today, it’s all $60k+ diesel trucks and $100k+ boats and RVs. I guess I’m one of the poor people and I’ll never buy another vehicle. The prices are stupid. Thanks, Bernanke, Yellen, Paulson and company…
https://www.freep.com/story/money/cars/2018/07/04/average-price-used-car-rise-along-tariffs/752850002/
Chevy, Ford and Dodge started slashing 3/4 and 1’s in March. Chevy crew with duramax is now under $45k.
Chevy is slashing prices on cars too, not just trucks. They know the crater is coming and are trying to unload their inventory before it’s too late. As for other brands, we’ll have to wait and see.
Yes, prices are stupid. I spent 4 hours today trying to figure out why the AC in my 18 year old ford ranger quits blowing cold after about 15 minutes. My wife drove the trunk when we first bought it. My daughter drove it all during high school. I’ve been driving it for 3 years or so.
I hate the effing thing. It’s a gutless 4 banger that gets crappy gas mileage and will bake you out of the cab if god forbid you get stuck in traffic and the AC goes on strike. I can afford to buy something else but I’d rather suffer through the 3 months of 100+ degree heat than buy a different car, new or used, at these nose bleed prices.
Recently bought a new Toyota Corolla for my wife for $16K or so. Runs like a charm, good gas mileage, backup camera and other newfangled features, affordable, reliable local transportation…
Swan - Daniel Ruiz is incredibly insightful. I think the tax cuts gave most things another year or two of life (RE, autos, etc).
https://www.blindersoffresearch.com/blog/this-is-not-how-it-ends
Bottom Line - Autos will crash. Just like everything else QE touches, it makes autos deflationary too.
After a while every person who wanted a newish vehicle will have one and a recession will tighten purse strings to reduce sales volume which will tank used car prices.
There are so many used vehicles, 5 to 7-yrs old with mileage above 100,000-miles, for sale right now, but their asking prices are very high likely due to the outstanding lien. It looks like an easy short, but the auto industry really is too big to fail.
BlackSwanDive,
I think you were throwing cold water on my cheerleading of oil higher and higher, which will accelerate the shift to EVs as consumers become more MPG conscious. But I ask you, what do you think will happen when the EV shift begins in earnest? Like, right now they are maybe 1% of all new auto sales in the US, but if they reach 10%, then the old tech is going to be less valued. I’m just giving my opinion that aside from the credit cycle, which is given, the acceleration of EVs will also force the cratering of used auto prices.
Q: Why did the Realtor cross the road?
A: To lie to the used house buyer across the road.
“However, if you are looking to move into New York City and want to try to get a good deal and have the cash to pay with the equity from your sale; wait until this winter (when demand is at its lowest) and you could score an amazing deal in the luxury market (for those individuals and developers, who may have to sell), as prices probably will be reduced from the excessive inventory and the decreased deductions in real estate taxes and interest on mortgages.”
My experience in the NY market from the first housing bubble (1970s) is that sellers hold out and take pain for a long, long, long time before they concede they aren’t going to get the price they “deserve.”
We bought a house in 1994, seven years after that bubble peaked in 1987. That’s how long we had to wait. And that’s with higher inflation pushing the “real” value relative to wages down faster, and falling interest rates rather than rising rates.
The total inflation-adjusted price decrease — 50 percent for the identical rowhouses on our block. Fell by half.
And not, that doesn’t mean we’re “fooked.” The current excess prices mean we’re “fooked.” I get the feeling that the young people who were so desperate to live here are running for the exists the way they’ve been squeezed.
Cheerful item this morning
The newest decluttering craze is ‘Swedish death cleaning,’ which hinges on the fact that friends and family won’t want your junk when you’re dead
http://www.businessinsider.com/swedish-death-cleaning-2017-10