July 21, 2018

A Collective ‘Who Could Have Known?’ Amnesty

A weekend topic starting with the WJCT in Florida. “A Tallahassee real estate expert is predicting some big changes on the way to the local home buying market. That assessment comes as the community sees an explosion in high-end rental construction. The local expert is Joe Manausa. He has more than a quarter-century of experience in the business so many people love to hate. He says Tallahassee is far removed from the real estate collapse of 2008 when no one was buying homes. ‘We’re in an opposite market right now. For many areas and a lot of price ranges, there’s not enough supply of homes. There are literally more buyers than sellers out there.’”

“The exception, he remarked, are high-end houses $300,000 and up, of which there are a bunch for sale right now. Certainly new home construction will eventually meet the demand for more down-market properties. However, Manausa saw another potential source of inventory for home buyers. ‘We absolutely pay attention to the rental market because it will have an impact on the for-sale market. When a landlord can’t rent his place out because they built 4,800 new units down Tennessee and Gaines streets, then they absolutely put those units on the market for sale. That becomes new supply that wasn’t in the for-sale market, but it was in the for-rent market.’”

“Put all of these factors together, and Joe Manausa had one bit of advice for those wondering whether or not this is a good time to buy a house anywhere near Tallahassee. ‘If you’ve been thinking about moving up, do it now. If you’ve been thinking about selling your house, buying a Winnebago and traveling the country, wait!’”

“Because he believed a major windfall is on the way for Capital City homeowners. ‘The supply is so limited, the demand is so high, barring something like the new governor saying we’re moving the state capital to Orlando, anything major like that, we’re going to see anywhere from 6 to 10 percent appreciation rates each year.’”

From Orlando Weekly in Florida. “A week after it was announced that Florida’s Gross Domestic Product is worth $1 trillion, which would make it the 17th largest economy in the world if it were a country, a new study from the United Way shows that the majority of us wouldn’t be able to tell. A study by United Way, titled the ALICE Project, showed that while Florida’s employment rate has improved from 2012 t0 2015, 47 percent of Florida’s households still cannot afford basic needs.”

“Nearly half of Florida is considered “working poor” and they make up most of the labor force (bartenders, construction workers, office clerks, and the like). ALICE workers are considered by United Way as our state’s most ‘valuable and vulnerable economic driver.’ From 2007 t0 2015, the basic cost of living in Florida rose 19 percent – with wages staying nearly stagnant.”

“As Orlando knows, families who also work in the service sector are stressed with other factors besides low wages, like irregular income, inconsistent scheduling and lack of benefits. Not to mention that these jobs are often located in areas with high housing costs, meaning you either have to spend long commutes to get to your job, or pay out of your budget to put a roof over your head.”

“None of this is anything new. Thursday report falls in line with just about every other major study released in the last five years. Last March, a study from the National Low Income Housing Coalition found that the Orlando area ties for second worst in the nation for available affordable housing, while a recent Census survey also stated that the City Beautiful had the third lowest average lowest median household incomes in the country, at $52,385.”

From Community Impact in Texas. “Industry experts say the real estate market remains healthy in the New Braunfels area, and that goes for buyers and sellers. According to Lynda Escalante, a Realtor at the Real Estate Haus in New Braunfels, the current state of the New Braunfels market is often driven by the price point. ‘I sell a lot in [the River Chase subdivision]and in the Hill Country, so the price point I sell is in $400,000-500,000. There’s more inventory in that price point than I’ve seen in the past,’ Escalante said, noting that she has seen people reducing their home price more this year than in 2017.”

“‘I think we’re going to shift to more of a buyer’s market,’ Escalante said. Laurie Jarrett, a local Realtor, shared similar sentiments. ‘I believe we’ll continue to appreciate because we have so many people moving into the two counties, but I will say that it’s going to shift to more of a balanced market, and there’s going to be more inventory and longer days on the market,’ Jarrett said.”

From The Wilton Bulletin in Connecticut. “Of 93 of the homes sold in Wilton in the first six months of this year, most were sold for more than originally bought. As might be expected, those purchased during the real estate bubble years from 2004 to 2010 did not fare as well. Twelve of the properties were condos, the rest were single-family homes. Eight of the homes were affected by foreclosure proceedings.”

“A home purchased in 1999 for $413,000 sold for $750,000 this year, an increase of 182%. On the flip side, a home purchased for $646,000 in 2000 was foreclosed on for $449,375. The other home sold at a loss was purchased for $450,000 in 1998 and sold for $395,000 this year, 88% of its purchase price. The next group of properties was purchased eight to 13 years ago and is a mixed bag, but with most on the losing side of the financial equation. This time period reflects the housing bubble of the early 2000s when real estate prices shot up rapidly and the ensuing recession when that bubble burst.”

“So far this year, 20 homes have reached the $1-million sales plateau and the year could finish with about 50 homes reaching that mark, according to John DiCenzo, executive director of sales for Westport and Wilton at Halstead Properties. The home that performed the best in this bracket was a condo purchased in 2010 for $450,000 and sold this year for $524,000. Three of the other 23 properties in this bracket also sold for more than they were purchased for.”

“At the other end of the spectrum, a home that was purchased in 2006 for $2,720,000, just before the recession hit, was sold this year for $1,447,500, just 53% of its purchase price. Next was a house at the other end of the price spectrum, purchased in 2007 for $612,500 and sold for $368,000 this year, 60% of its purchase price.”

“The greatest number of homes sold this year — 26 — were also those owned for the least amount of time, one to seven years. This was also a mixed bag, with 15 selling for more than their purchase price, two selling for the same price, and nine selling for less than they were purchased for.”

“The house that performed the best was purchased in 2012 for $215,000 and sold this year for $488,000, an increase of 227%. Also with a high return was a home purchased in 2012 for $385,000 and sold this year for $740,000, an increase of 192%.

The home with the lowest return was a foreclosure, which a bank purchased for $14 million and then sold for $7,600,000. Next was another high-priced home, purchased in 2014 for $1,965,000 and sold this year for $1,499,000, 76% of what the seller paid for it. When asked if there was any rule of thumb for how long it should take a homeowner to profit from their investment, DiCenzo said that is all based on market dynamics.”

“‘Anyone who bought prior to 2002 is holding equity,’ he said. The market has been correcting back to 2003-04, he added, and for people who bought high, waiting for prices to catch up can be frustrating. ‘If value is present and it’s been updated, a house will move,’ he said. A factor to keep in mind, he said, is that since 1997 buyers in Connecticut have been represented by agents who coach their clients on home values, run analyses, and offer price opinions. With a plentiful supply of homes on the market — about 250 — buyers can take their time and be choosy.”

“In the early 2000s, DiCenzo said, sellers behaved accordingly, turning down bids when a better offer came along the next day. What lies around the corner? No one knows. ‘The biggest factor is jobs,’ DiCenzo said.”

From Dean Baker. “Carlos Lozada, the nonfiction book critic for the Washington Post, promised ‘an honest investigation’ of whether truth can survive the Trump administration in the lead article in the paper’s Sunday Outlook section. He delivered considerably less. Most importantly and incredibly, Lozada never considers the possibility that respect for traditional purveyors of ‘truth’ has been badly weakened by the fact that they have failed to do so in many important ways in recent years. Furthermore, they have used their elite status (prized university positions and access to major media outlets) to deride those who challenged them as being unthinking illiterates.”

“This dynamic is most clear in the trade policy pursued by the United States over the last four decades. This policy had the predicted and actual effect of eliminating the jobs of millions of manufacturing workers and reducing the pay of tens of millions of workers with less than a college education. The people who suffered the negative effects of these policies were treated as stupid know-nothings, and wrongly told that their suffering was due to automation or was an inevitable product of globalization.”

“These claims are what those of us still living in the world of truth know as ‘lies,’ but you will never see anyone allowed to make these points in the Washington Post. After all, its readers can’t be allowed to see such thoughts.”

“This was far from the only major failure of the purveyors of truth. The economic crisis caused by the collapse of the housing bubble cost millions of workers their jobs and/or houses. While this collapse was 100 percent predictable for anyone with a basic knowledge of economics, with almost no exceptions, our elite economists failed to see it coming, and ridiculed those who warned of the catastrophe.”

“Incredibly, there were no career consequences for this momentous failure. No one lost their job and probably few even missed a scheduled promotion. Everyone was given a collective ‘who could have known?’ amnesty. This leaves us with the absurd situation where a dishwasher who breaks the dishes get fired, a custodian that doesn’t clean the toilet gets fired, but an elite economist who completely misses the worst economic disaster in 70 years gets promoted to yet another six-figure salary position.”

“When we have a world in which the so-called experts are not held accountable for their failures, even when they are massive, and they consistently look down on the people who question their expertise, it undermines belief in truth. It would have been nice if Lozada had explored this aspect of the issue, but, hey, it’s the Washington Post.”




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89 Comments »

Comment by Ben Jones
2018-07-21 08:06:56

‘while Florida’s employment rate has improved from 2012 t0 2015, 47 percent of Florida’s households still cannot afford basic needs…Nearly half of Florida is considered ‘working poor’

As everywhere else, the PTB can gin up bubbles but they can’t create wealth. This is why I disregard people who want to sit around and argue how Glenn Beck did alright with his shack gamble. Who F- cares? Take a look at the graphs in the Texas link. Look at how many half million and way up shacks there are. I used to live there and I can guarantee you there aren’t wages to support that and there never will be.

‘‘I sell a lot in [the River Chase subdivision]and in the Hill Country, so the price point I sell is in $400,000-500,000. There’s more inventory in that price point than I’ve seen in the past,’ Escalante said, noting that she has seen people reducing their home price more this year than in 2017. ‘I think we’re going to shift to more of a buyer’s market’

Or maybe they’ll get their financial a$$ kicked Lynda.

Comment by b
2018-07-21 09:10:52

The economy is just crazy. i was just at a corporate conference in Vegas.

a whole bunch of upper middle class, and rich folks (either work or personal) in the nice hotels/casinos eating at very expensive restaurants, drinking expensive drinks and gambling.

They are being served by tons on lower wage folks, who must pretend to smile and give good service. But knowing that they cannot make progress unless things changed. Basically all the Lyft drivers i had were doing Lyft as a second job.

It sucks for a lot of people who want to contribute

Comment by Ben Jones
2018-07-21 09:25:53

‘The house that performed the best was purchased in 2012 for $215,000 and sold this year for $488,000, an increase of 227%. Also with a high return was a home purchased in 2012 for $385,000 and sold this year for $740,000, an increase of 192%.’

‘The home with the lowest return was a foreclosure, which a bank purchased for $14 million and then sold for $7,600,000. Next was another high-priced home, purchased in 2014 for $1,965,000 and sold this year for $1,499,000, 76% of what the seller paid for it. When asked if there was any rule of thumb for how long it should take a homeowner to profit from their investment, DiCenzo said that is all based on market dynamics’

Since when were wild price swings like this market dynamics? Maybe for bio-tech stocks or beenie babies but not houses. You know why shack loans always had low rates? Because for decades, prices had been relatively stable. That and the government got involved. Interestingly, that’s about when prices got detached from incomes. Hmmm…

July 16, 2018

“A recent survey of Utah business leaders reveals a healthy level of confidence in the current economy, but less bullishness when it comes to the near future. Wages are not keeping up with the cost of living, particularly when it comes to housing. Since 1991, housing prices have risen faster than household income by a factor of 10.”

http://thehousingbubbleblog.com/?p=10494

 
Comment by GuillotineRenovator
2018-07-21 09:39:22

It’s all a lie based upon debt, the same as last time. Go check things out once the recession rolls in. It’ll be a ghost town.

 
 
Comment by Mike
2018-07-21 09:16:31

Causing housing prices to balloon while wages are stagnant reveals the reverse Robin hood logic at the Fed.

Bankrupt the working class and poor while showering $100 bills on the rich. Only well off, insulated, ivory tower bankers could conjure such a scheme

It’s a sight to behold

Comment by Mr. Banker
2018-07-21 09:23:56

“Bankrupt the working class and poor while showering $100 bills on the rich. Only well off, insulated, ivory tower bankers could conjure such a scheme.”

Nuthin’ to it. Full credit should be bestowed on our educational system; Without the complete dumbing-down of the population none of these easy victories were likely to be won.

Long live No Child Left Behind.

Comment by Mr. Banker
2018-07-21 09:36:21

A blast from the past …

“It was my equity that I cashed out. I don’t see why I have to give it back.”

Bahahahahahahahahahahahahahahahaha.

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Comment by whirlyite
2018-07-21 09:47:19

From what I’ve observed, in the past New Braunfels/Hill Country was more vacation/second homes and retirees from Houston, etc. I would imagine it is now more of a bedroom community for San Antonio and possibly even Austin given the tollway that runs from Santone to Waco. Of course, in the Hill Country, you are just one flash flood away from losing everything.

 
Comment by Fl_Skeptic
2018-07-21 13:06:41

I work for the State of Fl and I have a stack on my desk 2 feet high with a killer backlog that is month’s out. Scott cut the workforce back so far essential services are not getting done. State workers are like the second lowest paid in the nation. I make a living wage with an engineering degree but many of my co-workers do not. At tax time they issue statements of benefits including what the state pays for healthcare. They paid $16,000 for my family plan. Yea, there are people getting rich, not the workers.

They are still developing like there is no tomorrow and the looting continues even though there are definite signs that the top is in.

Comment by Professor 🐻
2018-07-21 14:28:39

You aren’t allowed to question the Republican party’s overpaid gubmint worker meme.

 
 
Comment by Mafia Blocks
2018-07-21 14:40:39

“This is why I disregard people who want to sit around and argue how Glenn Beck did alright with his shack gamble.”

Naples FL Housing Prices Crater 5% YOY As Public Dismisses Real Estate Industry As Untrustworthy

https://www.movoto.com/naples-fl/market-trends/

 
 
Comment by Ben Jones
2018-07-21 08:11:44

‘He has more than a quarter-century of experience in the business so many people love to hate’

Well there you go…

‘The exception, he remarked, are high-end houses $300,000 and up, of which there are a bunch for sale right now. Certainly new home construction will eventually meet the demand for more down-market properties.’

Wa? You mean humans are capable of building shacks?

‘However, Manausa saw another potential source of inventory for home buyers. ‘We absolutely pay attention to the rental market because it will have an impact on the for-sale market. When a landlord can’t rent his place out because they built 4,800 new units down Tennessee and Gaines streets, then they absolutely put those units on the market for sale. That becomes new supply that wasn’t in the for-sale market, but it was in the for-rent market.”

You don’t say Joe.

 
Comment by Mortgage Watch
2018-07-21 08:19:19

Redmond, OR Housing Prices Crater 10% YOY

https://www.movoto.com/redmond-or/market-trends/

Comment by Marco
2018-07-22 07:45:48

Got a high school buddy who lives there and it feels just like 2006-2007 right now there. Tons on new cars and silly jacked up trucks use to commute to some crappy retail job. It can’t end well for those maxed out on credit and trying to fake a lifestyle they can’t afford. At some point here is no more houses that need to be bought (or loans to be given) and it really slows down fast.

 
Comment by Mafia Blocks
2018-07-22 07:57:31

Sounds just like everywhere else in the world….. Falling real estate prices.

 
 
Comment by Ben Jones
2018-07-21 08:47:57

‘Thor Equities loses control of $50 million property’

‘Thor Equities has given up ownership of a Third Avenue building to its lender, the latest blow to the firm, which has struggled with several investments that have soured amid the downturn’

https://forextv.com/equities/thor-equities-loses-control-of-50-million-property/

 
Comment by Ben Jones
2018-07-21 08:52:53

‘The biggest factor is jobs’

‘Most importantly and incredibly, Lozada never considers the possibility that respect for traditional purveyors of ‘truth’ has been badly weakened by the fact that they have failed to do so in many important ways in recent years. Furthermore, they have used their elite status (prized university positions and access to major media outlets) to deride those who challenged them as being unthinking illiterates.’

‘This dynamic is most clear in the trade policy pursued by the United States over the last four decades. This policy had the predicted and actual effect of eliminating the jobs of millions of manufacturing workers and reducing the pay of tens of millions of workers with less than a college education. The people who suffered the negative effects of these policies were treated as stupid know-nothings, and wrongly told that their suffering was due to automation or was an inevitable product of globalization.’

Comment by Boo Randy
2018-07-21 08:59:49

Thankfully, our media border collies at the WaPo have assured the proles that “honorable and patriotic” Deep State operatives have our backs against any populist malefactors that would resist our forced march into economic serfdom on the globalists’ neoliberal plantation.

https://www.breitbart.com/big-journalism/2018/07/20/wapos-eugene-robinson-loyal-and-honorable-deep-state-has-a-higher-duty-god-bless-them/

Comment by tresho
2018-07-21 09:13:22

So-called real Americans are screwing up America. Maybe they should leave, so that we can replace them with new and better ones: newcomers who are more appreciative of what the United States has to offer, more ambitious for themselves and their children, and more willing to sacrifice for the future. In other words, just the kind of people we used to be — when “we” had just come off the boat.

O.K., so I’m jesting about deporting “real Americans” en masse. (Who would take them in, anyway?)

Bret Stephens, NY Times

Comment by Apartment 401
2018-07-21 09:46:00

Globalists gonna globe.

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Comment by Mike
2018-07-21 09:18:31

+1

 
 
 
Comment by Apartment 401
2018-07-21 09:10:40

Realtors are liars.

Comment by Josh
2018-07-21 09:29:43

This is so repetitive and ridiculous that it sometimes keeps me away from this blog. Contribute something of substance for once.

Comment by Apartment 401
2018-07-21 09:44:31

This post sponsored by the National Association of Realtors.

 
Comment by GuillotineRenovator
2018-07-21 09:51:52

Mmmkaayyyy, snowflake.

 
Comment by Anonymous
2018-07-21 11:04:21

Yeah, it was funny the first few dozen times…

 
Comment by jeff
2018-07-21 13:25:58

“Contribute something of substance for once.”

I wholeheartedly disagree.

Apartment 401 (not always under that name) has contributed greatly to this blog over the years, you must have been where you go when you are away from this blog and quite honestly I don’t think I want to know where that is.

Now if you will excuse me.

“I was curious if I could care about [money] on some fundamental level, and I couldn’t.”

Chelsea Clinton

Comment by BlueSkye
2018-07-22 03:18:13

where you go when you are away from this blog…

The Washington Post?

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Comment by CorporateShill
2018-07-21 18:32:27

This blog wouldn’t be the same without that quote repeated on each topic.

Comment by Professor 🐻
2018-07-21 20:20:42

It does seem consistently apropos. And you wouldn’t want to deprive any newcomers of the reminder.

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Comment by Josh
2018-07-22 02:00:46

It’s a stupid statement. It implies that all realtors are liars, which clearly isn’t possible. It also implies that realtors are a responsible party for this inflated bubble of a real estate market. They are not.

I don’t post here a lot because it’s not the easiest format to follow, but it’s a great blog with a wealth of information. Ben does an incredible amount of research and posters like Apartment 401 and Housing Analyst/Mortgage Watch give this thread a black eye.

 
Comment by Avg Joe
2018-07-22 07:48:35

All you have to do is install the Joshua Tree extension for Chrome or Firefox and you won’t need to read any of it.

 
Comment by drumminj
2018-07-22 08:35:54

All you have to do is install the Joshua Tree extension for Chrome or Firefox

+1…plus it makes it easier to follow.

(I am biased, of course, as the author of the extension :)

 
Comment by Avg Joe
2018-07-22 14:43:55

I work on the Firefox API, and I think you’ve done a good job. :-)

 
 
 
 
Comment by Mafia Blocks
2018-07-22 07:46:39

“Realtors are liars.”

Yup.

 
 
Comment by GuillotineRenovator
2018-07-21 09:42:54

“Tightening now hurts all that we have done. The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates - Really?”

-Donald Trump

This was a very disappointing thing to hear. I voted for a guy who saw the “big, fat, ugly bubble.” Now he wants to keep inflating it?

Comment by Mr. Banker
2018-07-21 10:03:32

“Debt coming due & we are raising rates - Really?”

I like it. It’s a real “Gotcha” situation - my favorite kind.

Once again, dumb ‘em down, and profit. Dumb the pukes down to the point where they will sign ANYTHING without question and when the opportunity to jack them up presents itself then jack them to the max.

Repeat as often as possible.

 
Comment by Mafia Blocks
2018-07-21 10:42:21

He’s posturing so he can say, I told you so and the blame the emerging collapse the Fed.

Smart man President Trump is. Very smart.

 
Comment by Professor 🐻
2018-07-21 11:26:18

Maybe he is employing interest rate jujitsu, as rates spiked higher after he spoke out against the Fed.

Comment by OneAgainstMany
2018-07-21 13:31:54

I have found Trump’s statements against rising rates a bit disconcerting too. What’s the point of appointing someone like Powell at the Fed only to lambaste the raising of rates when it actually occurs? If Trump wanted to keep rates lower, he should have kept Yellen in at the post. I very do hope this is an instance of “sell the rumor, buy the fact.” The normalization of interest rates under Trump is one of the notches that I have in the “pro” column of what I think of the man. If he were to somehow prevent quantitative tightening and monetary policy normalization because he’s worried about the economic consequences, I would sour very quickly.

Comment by Albuquerquedan
2018-07-21 18:04:00

I think he is just observing the rising dollar and the curve getting close to inverting. Yes, we need to normalize rates but there is no reason to get way a head of inflation. The longer rates will move higher when they sense inflation as will the wage rates, there is no reason the Fed should be trying to force a recession except the globalists would like to hurt Trump.

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Comment by cactus
2018-07-21 18:44:11

I think I’ll be retired when wage rates start to go up and they will only go up because of a shortage of trained labor.

Maybe they will even have to train new workers !!!!

 
Comment by cactus
2018-07-21 18:45:54

My company is always trying to get me to train engineers on the other side of the planet… I just don’t seem to find the time though…

 
Comment by OneAgainstMany
2018-07-21 21:59:36

Cactus, aren’t you going to become a lifeguard upon retirement? WaPo says it’s what all the retirees are doing these days.

—————————————————————————
Why your pool’s lifeguard is more likely to be a senior citizen

Washington Post
Abha Bhattarai

July 3, 2018

“Across the country, older adults and retirees are stepping up to the lifeguard chair — a job that historically has been a rite of passage for high-schoolers and college students. But the teen summer job is drying up as extracurricular commitments and internships eat into summer breaks. Fewer teens are seeking jobs — 35 percent of 16- to 19-year-olds are currently working, down from 52 percent in 1998, according to the Bureau of Labor Statistics.”

““There’s been an ‘age twist,’ ” said Paul Harrington, a professor of labor markets at Drexel University in Philadelphia. “There’s this idea out there among teens that work isn’t such a cool thing anymore — and so who’s replacing them in the workforce? Older Americans, 55 and up.””

 
Comment by OneAgainstMany
2018-07-21 22:03:17

Dan, I think the last reading of the CPI was 2.9%, and that uses owner equivalent rents instead of housing inflation by Case Shiller. So inflation is running high despite what is happening on the 10-year or 30-year. My reading is that higher rates needs to continue until we see what is happening in Toronto and Vancouver hit our frothiest cities, which is already happening but maybe not to the degree of Canada’s correction just yet.

 
Comment by Albuquerquedan
2018-07-22 05:03:28

Great so why isn’t Canada aggressively raising rates? Shouldn’t any intelligent policy at least take into account other countries policies and the strength of their currency. Additionally the 2.9 percent rate was not the core rate. The bond market is saying that the higher inflation rate is due to temporary factors. As an advocate for solar you should not be so hot for higher rates, as they go up the leases are disappearing and solar installations falling. Was much easier to lease when short term rates were close to 0.

 
Comment by Albuquerquedan
2018-07-22 06:15:34

https://www.fool.com/investing/2018/03/21/this-1-factor-is-a-bigger-deal-to-solar-energy-tha.aspx

Trump is doing what he was elected to do. Wall Street types love an ever stronger dollar as it attracts overseas money to the US. However, it hurts the rust belt, many countries will manipulate their currency lower just to get the advantage. Now many anti-Trump people are willing to risk nuclear war to get him out, but we should not. Similarly, many people are actually rooting for the Fed to cause a recession. However, interest rate rises should be data dependent. Thus, if there is no sign of wage inflation, and the dollar is getting too strong, the Fed should consider slowing the rate of increase. That is all Trump is saying and he is 100% correct, like usual. Obama and his minions created quite a mess, it is difficult to get interest rates up and the Fed balance sheet down to reasonable levels. Like a diver rising from deep water it should be done with caution and patience since too fast a rise can be deadly.

 
Comment by OneAgainstMany
2018-07-22 09:45:39

Great so why isn’t Canada aggressively raising rates? Shouldn’t any intelligent policy at least take into account other countries policies and the strength of their currency.

Well, the Bank of Canada has hiked their rate, just not as fast as the Fed. The Canadian provinces are tackling their housing bubble with stricter regulations surrounding foreign money and surtaxes on 2nd homes.

I agree with your contention that monetary policy should take into account other countries’ policies because there is a spillover effect that cheap money can have. This is why I would favor Canada type regulations that impose taxes on foreign investment into the housing market.

 
Comment by OneAgainstMany
2018-07-22 09:51:22

With regards to the impact on solar from higher interest rates, I say bring it on. There has already been a huge consolidation in the solar industry as a result of tariffs (many of my family is in the solar industry). Those companies who cannot abide higher rates will fold. Thinning of the herd.

Also, those I talk to in the industry say there is already a shift to outright purchase of solar panels by end consumer as opposed to PPA (power purchase agreements) and creative financing. I would support the shift of both of these anyway. I’ve always thought that things should be purchased outright (cars, houses, solar panels, etc.) and without debt.

 
Comment by Professor 🐻
2018-07-22 10:43:24

“Like a diver rising from deep water it should be done with caution and patience since too fast a rise can be deadly.”

That’s a good analogy.

However, it’s probably not a good idea for a driver to stay submerged in deep water indefinitely, which seemed to be Yellen’s plan.

 
 
 
 
 
Comment by Boo Randy
2018-07-21 09:43:19

Meanwhile, the Ponzis are starting to implode under the weight of their own fraud in China.

It would take a heart of stone to read these greedy “investors” tales of woe, and not laugh.

https://www.scmp.com/business/companies/article/2155357/investors-left-rue-losses-fraudulent-chinese-p2p-lenders-collapse

 
Comment by Mortgage Watch
2018-07-21 10:48:27

Big Pine Key, FL Housing Prices Crater 16% YOY As Vacation/Retirement Property Market Tanks

https://www.movoto.com/big-pine-key-fl/market-trends/

 
Comment by Anonymous
2018-07-21 11:06:26

Yesterday I was chatting to a neighbor here in Las Vegas. At one point I mentioned that I expected housing costs to come down in the next couple years or so. He assured me that it would just keep going up, in fact even faster because the Raiders are moving here, LOL.

Comment by BubblevilleCA
2018-07-21 13:14:56

Clearly coming from a man of noble intelligence

 
 
Comment by Professor 🐻
2018-07-21 11:10:20

“This leaves us with the absurd situation where a dishwasher who breaks the dishes get fired, a custodian that doesn’t clean the toilet gets fired, but an elite economist who completely misses the worst economic disaster in 70 years gets promoted to yet another six-figure salary position.”

The elite economists were paid to feign ignorance. Acknowledging from a bully pulpit that a panic is underway can exacerbate the panic and limit the time window for the elite to load onto lifeboats before the Titanic sinks. Only unpaid bloggers and a few rogue economists spoke truth to power.

It is hard to get a man to understand something when his paycheck requires him to not understand it.

– Upton Sinclair

 
Comment by Professor 🐻
Comment by Boo Randy
2018-07-21 15:57:45

That the real, productive economy - as opposed to Wall Street’s speculative casino - is cratering.

 
Comment by Albuquerquedan
2018-07-22 05:05:49

The dollar is much higher is what it is telling us. Show me any statistic of lower demand.

Comment by Professor 🐻
2018-07-22 10:46:29

The plunging price of copper is a statistic which is consistent with collapsing demand.

 
 
Comment by Mafia Blocks
2018-07-22 07:13:58

Copper?

Falling global demand, record high inventories and falling prices…. And rising. Just like oil.

 
 
Comment by Mafia Blocks
2018-07-21 14:28:32

“Elon Musk Is A Total Fraud”

https://nypost.com/2018/07/21/elon-musk-is-a-total-fraud/

We already knew fElon Musk is a fraud along with solar and electric cars and housing sales but the fact it’s going public is surprising.

Comment by GuillotineRenovator
2018-07-21 23:04:44

I used to think the guy was interesting but he’s a total douche. He’s like a petulant child when questioned about his failing car company.

Comment by Albuquerquedan
2018-07-22 05:07:48

Running out of OPM including government money

 
 
 
Comment by SW
2018-07-21 16:06:48

Ben,

How would I access posts from July 2005? I’m going to start reading the 2005 posts everyday as I think that’s about where we are in 2018.

Cheers!
Sam

 
Comment by Ben Jones
2018-07-21 17:40:26

I don’t think you can. Around May 2005 the original blogspot HBB maxed out. I started another one, the one you are looking for, and it maxed out near the end of 2005. So I had this one built and when I went to import those posts, the software mashed all the characters together. Like one long word, punctuation and all. So we left it as a means to forward visitors to this blog.

Comment by SW
2018-07-21 19:16:31

Thanks guys. I found the farthest I could go back was January 2006. It looks like June 2005 to January 2006 is missing.

Check this out. Sounds a lot like Australia for interest only mortgages. The defaults rising sound a lot like California, Texas, Florida.

It looks like by 2006 at least the San Diego Union Tribune was calling California a bubble by 2006.

JANUARY 29, 2006
‘Nobody Knows’ If There Will Be Panic Selling: CA
Reports from California show the precarious nature of that states’ housing bubble. “It’s unclear what lies ahead for housing, which is a state of flux. Residential permits statewide were down 2.7 percent last year. In San Diego County, permit activity dropped 12.2 percent. Among the bigger cities in the county, San Diego and Oceanside were off more than 6 percent. Chula Vista was down 51.1 percent.”

“University of San Diego economist Alan Gin predicted that fewer homes permitted in the state means that the 6.8 percent increase in California construction jobs last year will not be equaled. ‘That’s a worry,’ he said. ‘Construction has been a big job producer. We added 7,200 (San Diego construction) jobs in 2004 and probably over 5,000 in 2005.’ A bigger jobs hit is probably among real estate agents, mortgage brokers and other workers in housing services, he said: ‘I think there will be a shakeout in that industry.’”

“UCSD economist Ross Starr said the wild card in the local housing market is the financial health of recent home buyers who took out adjustable-rate mortgages with monthly payments set to rise substantially. ‘The question is will there be some panic selling by buyers who bought during 2002-2003 and can’t afford to hold on,’ Starr said. ‘The answer is nobody really knows the answer to that question.’”

“The December median home sales price in the Coachella Valley was $390,000, down slightly from the record $400,000 posted in November. Experts say the valley is in no immediate danger of dealing with a foreclosure crisis, as local prices continue to appreciate even as unsold resale inventory rises.”

“Buyers have relied increasingly on nontraditional loans to be able to buy into the local market amid plunging affordability. The loans have helped many, including investors like Danielle Galland of Desert Hot Springs. She bought a home in that city recently with an interest-only loan with payments scheduled to jump in two years. ‘The payments are scheduled to go up in two years, but I plan to sell before then,’ she said.”

“One red flag is that the valley’s notices of default, sent by lending institutions when payments are overdue, totaled 816 in 2005. That was up 29 percent from the 632 notices seen in 2004, and reversed a three-year trend of declines.”

“Longtime valley banker William Powers said while his bank does not offer them, many valley buyers have been able to save on their monthly payments initially by opting for non-traditional loan packages. The upside is that it allowed many more people to purchase homes than would otherwise have been possible. The downside is that when their introductory rates convert to adjustable, some will find that they really weren’t able to afford their properties long term.”

“The reason: They’ve already spent their monthly-payment savings on other items, like cars, big-screen TVs and upscale furnishings. If those owners find themselves with default or foreclosure notices, and home values aren’t rising as they are today, some may unload their homes at a loss or below-market value to pay off their loans. That could put a drag on the selling prices of non-distressed homes in the same neighborhoods.”

“‘As a homeowner, that wouldn’t make me very happy,’ Powers said.”

“As an indicator of what could be at stake nationally, there is currently between $1.5 trillion and $2 trillion tied up in what are known as interest-only loans. Currently, interest-only loans are more popular in the inland Riverside-San Bernardino metro area, which includes the valley, than in California and the nation. 39.3 percent of all inland home loans were interest-only in 2005, up from just 3.7 percent in 2000.”

“The California percentage was 34.3 (up from 1.4 percent). The national percentage was 24 percent (up from 1.1 percent). According to recent figures from the California Association of Realtors, only 10 percent of valley households can afford to purchase the median-priced valley home based on working income.”

“‘Our house is almost paid off, and we’re on a fixed-rate loan. We want to sell the house eventually and retire, but where? Not in California,’ said Colleen Bliss, (a) Calimesa resident visiting Palm Springs.”

 
Comment by SW
2018-07-21 19:22:50

Thanks for the info about where to find the old posts. I lived thru the last bubble but wasn’t on this blog. I plan to go back thru the old posts.

 
 
 
Comment by Mafia Blocks
2018-07-21 16:35:48
Comment by BubblevilleCA
2018-07-21 18:12:07

So basically take 4 left turns

 
 
Comment by SW
2018-07-21 19:19:28

2005 = 2018

Fed not done raising rates.

WEDNESDAY, MAY 25, 2005

Buyers, Builders, Lenders May Get “Burned”
Atlanta Federal Reserve Bank President Jack Guynn added to the housing bubble debate with these comments. “‘There are some local markets, especially in coastal Florida, where I’ve heard stories for more than a year about behavior that’s got to be characterized as nothing other than speculation,’ Guynn said it response to questions after his speech.”

“‘It makes me very uncomfortable. Some buyers, some builders, some lenders are going to get burned, could very likely get burned, in some of those local markets,’ he said.”

“The U.S. Federal Reserve is not yet done raising interest rates, but the central bank will watch economic data closely in an uncertain time for monetary policy. ‘Given the current outlook for the economy, my personal view is that we’ve not yet reached a neutral policy stance,’ Guynn noted.”

Comment by azdude
2018-07-22 05:22:43

the only reason they are raising them is so they can lower them and act as if they are in control.

debt=money

Wouldn’t you like the power to create money and loan it out to folks and collect interest? Pretty easy way to make a living huh?

There is a lot of profit in home loans. The interest is front loaded.
The more loans and higher the loan amounts are = more cash coming into the coffers.

 
 
Comment by Mortgage Watch
2018-07-21 19:39:12

Arcadia, CA Housing Prices Crater 20% YOY As California Housing Demand Plummets To 21 Year Low

https://www.movoto.com/arcadia-ca/market-trends/

 
Comment by Get Stucco
2018-07-22 03:21:29

Can’t sell your NYC penthouse for what you paid eight years ago? It’s the building’s fault. A glut of luxury apartments in a cratering market has nothing to do with it.

PS I just don’t get this new Realtor™ math:

“The singer has just knocked $245,000 off of the price of the downtown New York City penthouse that he owns with his wife, actress Jessica Biel. The three-bed, 3.5-bath condo was originally listed for sale for $7.995 million in March 2018. But after it had sat on the market for nearly five months, they decided to drop the price to $6.75 million, just slightly more than the $6.57 million Timberlake paid for the place back in 2010.”

$7.995 million - $6.75 million = $245,000
$1.245 million = $1,245,000.

Also, (6.75/7.995-1)*100% = -15.6% .
Nice haircut!

Celebrity Real Estate
Poor Justin Timberlake Can’t Sell His NYC Penthouse—and These Pics Explain Why
By Natalie Way | Jul 19, 2018
Alberto E. Rodriguez/Getty Images

Justin Timberlake has gone “(Sexy)Back” to the drawing board in an attempt to sell his home.

The singer has just knocked $245,000 off of the price of the downtown New York City penthouse that he owns with his wife, actress Jessica Biel. The three-bed, 3.5-bath condo was originally listed for sale for $7.995 million in March 2018. But after it had sat on the market for nearly five months, they decided to drop the price to $6.75 million, just slightly more than the $6.57 million Timberlake paid for the place back in 2010.

Luxury properties like Timberlake and Biel’s penthouse are notorious for taking longer to find the right buyer than your standard single-family home. But when a property does go stale, there are a number of factors to blame: The home may be in poor condition, the price might be too high, or the photographs might be off-putting. In the case of Timberlake and Biel’s penthouse, though, the interiors, price, and photographs clearly aren’t the problem.

The 2,600-square-foot penthouse is a property fit for an A-list celebrity, located on the border of SoHo and TriBeCa, two of the city’s most glamorous neighborhoods. It features floor-to-ceiling windows, an 853-square-foot wraparound terrace, a modern chef’s kitchen, custom wood paneling, and sweeping views of Manhattan. It’s clean, modern, and beautiful—exactly the type of aesthetic you’d want if you’re looking to buy in one of the world’s hippest locales. It’s even priced right in line with comparable properties in SoHo.

So we have to wonder: Why have they had so much trouble finding a buyer?

The onus likely falls on the building itself. The Soho Mews, built in 2007, stands nine stories tall and is made up of 68 apartments. In a neighborhood famously characterized by revitalized cast-iron buildings (an aesthetic that gives SoHo its desirable edge), the building’s façade is notably bland.

“Soho Mews is a totally uninspired development, just a basic building,” says Dolly Lenz, a luxury real estate agent and founder of Dolly Lenz Real Estate in New York. “It takes a lot of heavy lifting to move units there. When we’ve had listings in this building, we’ve had to really pump people up to even look at the place, because it’s just so ordinary.”

Lenz says the building’s amenities leave much to be desired, especially given what you’d expect to get in that area.

“You want to be wowed and walk into a lobby with really high ceilings, a luxurious gym, long hallways. … This place has none of those,” Lenz says.

Granted, it does have a 24-hour doorman and concierge, and an attached parking garage. But we have to agree with Lenz that some of the other amenities—for instance, the lobby—are lacking that extra pizazz one expects in high-profile buildings where people are paying top dollar. The fluorescent lights and choice of wall art are … interesting.

Comment by aNYCdj
2018-07-22 09:02:24

Here is why…do you really want to open your blinds in this bedroom…..

https://na.rdcpix.com/1778028571/d4e80aa02a424e9001bc4de36063bd10w-c0xd-w685_h860_q80.jpg

Comment by rms
2018-07-22 10:31:30

Why do people have so many pillows on the bed when you have to toss ‘em on the floor to stretch-out and sleep in it?

Comment by tresho
2018-07-22 12:19:23

Why do people have so many pillows on the bed when you have to toss ‘em on the floor to stretch-out and sleep in it?
Those bedrooms are just to impress the impressionable. The real sleeping is done in a plain old bedroom the public never gets a look at.

(Comments wont nest below this level)
 
 
 
 
Comment by Professor 🐻
2018-07-22 03:27:00

If NYC luxury apartments have already retraced to 2010 prices during the tail end of an economic boom, a full retracement to pre-Bubble Era prices can’t be far behind.

 
Comment by Professor 🐻
2018-07-22 03:35:36

Could Japan’s discussion of changing its deflationary quantitative easing program be roiling Treasury yields?

BOJ to debate policy change in July to make its stimulus sustainable — sources
Reuters
July 20, 2018 22:45 pm

TOKYO (July 20): The Bank of Japan, facing stubbornly low inflation, is in unusually active discussions before this month’s policy decision, with changes to its interest-rate targets and stock-buying techniques on the table, people familiar with the central bank’s thinking told Reuters.

Discussion is preliminary and will depend on fresh inflation forecasts from policy board members, the sources say. However, policymakers are already debating tweaks to Governor Haruhiko Kuroda’s massive easing, which is aimed at lifting the world’s third-biggest economy decisively out of decades of deflation.

The first BOJ tweak to policy since 2016 would come as the central bank’s main measure of inflation slowed for a third straight month to just 0.2 percent. This underlined expectations that the BOJ will this month trim its inflation forecasts out to the fiscal year ending March 2021.

Such cuts in its forecasts set up debate about the BOJ’s policy, under which it buys massive amounts of Japanese government bonds and exchange-traded funds (ETF) to flood the economy with cash, while pushing short-term rates negative and capping the 10-year bond yield at zero.

While a policy change this month could theoretically include additional easing, debate for now focuses on ways to make the massive stimulus programme more sustainable — given it may take far longer than expected to reach its 2 percent inflation target, said the sources.

 
Comment by Professor 🐻
2018-07-22 03:38:37

America’s 1% hasn’t controlled this much wealth since before the Great Depression
By Kari Paul
Published: July 21, 2018 5:01 p.m. ET
The top 1% took home 22.03% of all income in 2015

Comment by Boo Randy
2018-07-22 14:31:31

Heckova job, Ben & Janet.

 
 
Comment by Professor 🐻
2018-07-22 03:44:14

Sum Ting Wong

How wealthy and middle-class families are sliding inexorably into the red
By Kari Paul
Published: July 10, 2017 11:59 a.m. ET
It’s possible to still be broke in some U.S. cities with $500,000 per year in income

Comment by BubblevilleCA
2018-07-22 07:14:43

“They are unhappy, getting divorces, and always comparing themselves to wealthier and wealthier people,” he said. “Heck, even a friend who is worth over $200 million after founding and taking public a company feels like he needs to continue working because he has to ‘keep up with the Zuckerbergs.’”

Chasing the dragon…

Comment by tresho
2018-07-22 12:20:44

I guess that is what the combination of competitiveness, greed, and stupidity looks like.

 
 
 
Comment by Boo Randy
2018-07-22 06:21:23

Inflation pressures could force central bankers’ hand on interest rate rises, further squeezing FBs with variable-rate mortgages.

https://www.reuters.com/article/canada-economy/wrapup-1-canada-inflation-hits-six-year-high-stirs-talk-of-rate-hike-idUSL1N1UF1LQ

 
Comment by BubblevilleCA
2018-07-22 06:40:29

https://www.google.com/amp/amp.modbee.com/news/business/article214789045.html

Recent article about the rising values in the Modesto housing market. Speculation backed by realtors and oddly a picture of a home with a “priced reduced” sign. 🤔. It’s going up, buy now!

Comment by rms
2018-07-22 08:11:13

“Home prices also have rebounded in Turlock, Oakdale and Ripon in the past four years. The median price for an existing single family home in January through May of this year was $310,100 in Turlock, $349,500 in Oakdale and $461,500 in Ripon.”

If California needed an enema the nozzle would be inserted in Modesto.

 
 
Comment by Boo Randy
2018-07-22 07:14:34

Red flags proliferating, and still the fools rush in to meet their financial Waterloo.

https://www.scmp.com/business/article/2156298/buyers-snap-sun-hung-kais-st-martin-flats-tai-po-victoria-harbour-units

 
Comment by Mortgage Watch
2018-07-22 07:19:22

Los Angeles, CA 90024 Rental Rates Crater 12% YOY As SoCal Real Estate Interests Fail To Conceal Housing Correction

https://www.zillow.com/los-angeles-ca-90024/home-values/

*Select price from dropdown menu on rental chart

 
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