July 24, 2018

It Will Sit Forever If A Seller Has An Inflated View

A report from News Channel 5 in Tennessee. “About 30 percent of millennial first time home buyers are pulling funds from their 401K, IRA, or borrowing against their retirement funds to afford a down payment, according to a new study. Locally, experts said that trend is not surprising, given how expensive and competitive the market is. Nashville realtor Paul Sek said he recommends people take the time to set themselves up for success and consider what you can realistically afford. Sek said he also often sees family members, particularly parents, helping millennials with down payments through personal loans.”

“‘People have completely neglected the starter home and they want the dream home right off the bat,’ Sek said. ‘They don’t understand they’re still in their 20’s or 30’s and they think they should buy the $500,000 or $1 million home.’”

From WKRN in Tennessee. “If you’re looking for a new home, you may have noticed some price reductions. So with an influx of people still moving to the area, could the price of homes be dropping? Sher Powers, President of the Greater Nashville Realtors, says there are definitely areas where buyers can get a really good deal right now. Powers said, ‘When people price they always need to look at what’s going on right now in the market, not yesterday, not tomorrow, they need to pull current comps, and not assume because prices rose every three months in their neighborhood that it’s continuing to do that. Everything sells if it’s priced correctly, and it will sit forever if a seller has an inflated view just because a neighbor’s house sold for $50,000 more.’”

From the Wall Street Journal. “Home sales fell for the third straight month in June, defying the strongest period for U.S. growth in years as rising mortgage rates and escalating prices at the lower end of the market drive away potential buyers. There were 1.95 million existing homes available for sale in June, up 4.3% from May and 0.5% from a year earlier. That is the first yearly inventory increase since the middle of 2015, according to Lawrence Yun, the trade group’s chief economist. ‘Maybe this is indicating that…the lows in inventory may be coming to an end,’ Mr. Yun said.”

“Jessie Culbert, a Redfin agent in Seattle said inventory there has increased, allowing buyers to move at a more leisurely pace. Previously, properties incited bidding wars and got 10 or 20 offers, she said. Now she counsels sellers that multiple similar listings are likely available. ‘We’ll have to sharpen the pencil on the list price,’ she said. Buyers she encounters have often toured 20 properties and seem to feel little urgency, she said, adding: ‘Many of the buyers got burned out. It’s just exhausting to be in the hunt for a long time and losing out.’”

From CBS Bay Area in California. “Allen Dugan’s home is still available after one open house which last year would have been unheard of for a property like this in Cupertino. ‘It’s unpredictable. We’re hoping for the best. Hoping to get a high price,’ says Dugan. It’s a refurbished farm house with a main house, a guest house and detached garage with a studio, all on a quarter acre. It just listed for $3.2 million.”

“But Dugan realizes the Silicon Valley real estate market is changing again. ‘We’ve been following the market for a number of years and it’s time to make a move,’ he says. ‘The market was crazy and now it’s gone from crazy to good.’”

“New numbers suggest the Bay Area real estate market cooled off a little in the May to June time frame. Sales of homes under a million fell by 50 percent since last year. Higher-end homes are holding their value, but are taking longer to sell. Real estate people are calling it ‘buyer fatigue.’ Realtor Dave Clark says some homes are still getting offers for over the asking price but others are selling for below asking price. ‘Now it’s what I call a perfect market. Prices are where they should be, activity is where it should be. We have multiple offers sometimes, sometimes we don’t,’ says Clark.”

“So far, no offers on Dugan’s place but since it’s walking or biking distance to the new Apple campus it shouldn’t take long.”

The American Statesman in Texas. “Amid strong demand for housing, Central Texas homebuilders ramped up production in the second quarter as they started work on more than 4,500 houses, new figures show. Starts totaled 4,537 from April through June, a 3.3 percent increase over the year-ago quarter, Metrostudy said. For the 12 months that ended in June, starts totaled 16,675 — up 1.9 percent from the prior 12-month period, the housing-market consulting firm said. ‘Thanks to continued strong job growth, demand is high,’ said Vaike O’Grady, Austin regional director for Metrostudy.”

“The supply of houses that are finished, but vacant — now numbering 2,872 homes — is up nearly 25 percent from a year ago. ‘While the level is relatively high, it’s indicative of builder confidence in future demand,’ O’Grady said. Half of the vacant inventory has base prices below $300,000, where there’s the most demand, O’Grady said.”

From Culture Map Austin in Texas. “In the Austin home market, it’s a tale of two trends. Homes for sale are spending longer on the market, but fewer homes are fetching prices above the list price, according to new data from real estate brokerage Redfin. One real estate agent says these two trends are a sign of much needed stability in the local market. Meanwhile, just 21.7 percent of homes in the Austin area were sold above list price in the first half of 2018, according to the Redfin data. That’s the lowest since the first six months of 2012, when 15.5 percent of home purchases were above list price.”

“‘After a very busy start to 2018, and several years of intense homebuyer competition and strong price growth, it finally feels like the local housing market is starting to stabilize,’ Andrew Vallejo, a Redfin agent in Austin, tells CultureMap. ‘In contrast with previous years, buyers are no longer pay[ing] whatever it takes to win a bidding war, and homes are staying on the market longer. Bidding wars are less common than they were earlier this year, and when there are multiple offers, we rarely see prices escalate as high as they did in previous years.’”

From The Real Deal on New York. “Even the cheap apartments aren’t selling. In Manhattan, units priced below $1 million are piling up, according to StreetEasy. Inventory climbed 27 percent in June from a year earlier — to the highest level for the month since 2013, the website found. It’s essentially a buyers’ market across the board, and the total number of available homes in Manhattan is at the highest for the month since 2011. In Brooklyn and Queens, total inventory for June was the most since 2008.”

“In the second quarter, Manhattan sales saw a third consecutive decline. As units pile up, condominium developers have been ramping up discounts and incentives. This month, Toll Brothers is holding a nationwide sales event in an attempt to boost sales. And Extell Development has offered price cuts and perks on sponsor units at One57. “




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136 Comments »

Comment by Ben Jones
2018-07-24 08:16:17

‘he also often sees family members, particularly parents, helping millennials with down payments through personal loans’

Remember when you couldn’t do this and get a loan?

‘it will sit forever if a seller has an inflated view just because a neighbor’s house sold for $50,000 more’

So you are saying prices are down $50k?

‘The supply of houses that are finished, but vacant — now numbering 2,872 homes — is up nearly 25 percent from a year ago…Half of the vacant inventory has base prices below $300,000, where there’s the most demand’

Annnnd Austin is fooked.

Comment by Ben Jones
2018-07-24 08:57:16

‘As units pile up, condominium developers have been ramping up discounts and incentives. This month, Toll Brothers is holding a nationwide sales event in an attempt to boost sales. And Extell Development has offered price cuts and perks on sponsor units at One57′

Yes Austin, this is your future as well. Developers will bury your price to sell out what they chose, leaving you high and dry.

The moral here: don’t buy into this shortage crap. If Austin can have 3,000 finished empty shacks sitting around in 2018, there is not nor ever has been a shortage.

BTW, there have been reports here and there of price declines in Austin for over a year now and the MSM/REIC is still not telling the sheep.

Comment by Professor 🐻
2018-07-24 09:15:25

“This month, Toll Brothers is holding a nationwide sales event in an attempt to boost sales.”

I predict that Toll Brothers staff members will soon be living in their parents’ basements.

Comment by Ben Jones
2018-07-24 09:58:32

‘just 21.7 percent of homes in the Austin area were sold above list price in the first half of 2018…the lowest since the first six months of 2012, when 15.5 percent of home purchases were above list price’

‘Bidding wars are less common than they were earlier this year, and when there are multiple offers, we rarely see prices escalate as high as they did in previous years’

Meaning prices have fallen.

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Comment by Taxpayers
2018-07-25 04:15:53

I thought Toll raised prices every Monday

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Comment by Ben Jones
2018-07-24 08:18:24

‘Allen Dugan’s home is still available after one open house which last year would have been unheard of for a property like this in Cupertino…But Dugan realizes the Silicon Valley real estate market is changing again. ‘We’ve been following the market for a number of years and it’s time to make a move’

Don’t screw up the comps Allen. What a classic example of a speculator.

Comment by Ben Jones
2018-07-24 10:00:29

‘People have completely neglected the starter home and they want the dream home right off the bat,’ Sek said. ‘They don’t understand they’re still in their 20’s or 30’s and they think they should buy the $500,000 or $1 million home.’

This is speculating too. Why would they unnecessarily want a more expensive shack? Because more shack means more profit on the flip.

Comment by Carl Morris
2018-07-24 11:54:26

Also as we’ve talked about here endlessly, the starter home market is completely screwed up and over inflated. Why would I want a POS starter home when I could have something twice as good for only 20% more? As soon as starter homes have starter prices, then that problem will take care of itself.

Comment by oxide
2018-07-24 13:54:48

The new “starter home” is a new two-bed condo, a 20 year old townhome with three tiny beds, or a 30+ year old shack. There are very few new cutie-patootie houses.

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Comment by Montana
2018-07-24 19:20:41

Or they’re rentals that you’ll never pry from the landlords’ cold, dead hands.

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Comment by Ben Jones
2018-07-24 19:42:53

July 23, 2018

‘Aaron Lewis — president of Realty One Group Gold and who is in his 15th year selling homes in the Modesto area — said institutional buyers and investors who bought homes as rental properties are taking their profits and getting out of the market.’

http://thehousingbubbleblog.com/?p=10501

 
Comment by oxide
2018-07-25 05:50:09

“Taking profits and getting out of the market” is code for raising the price out of starter range. And when those LLs bought those houses in 2008-2009, they were at least 20+ years old at the time, and now they’ve undergone another 10 years of aging, neglect, AND trashing from the renters. You could easily rack up $30K of repairs to a $180K house and say good bye to the starter price.

 
 
 
Comment by Mafia Blocks
2018-07-24 14:03:24

“This is speculating too.”

They can’t afford a $500k shanty any more than a $150k shack. Yet one who can won’t because they know better. DebtDonkeys don’t so they finance it for 30 years.

 
 
 
Comment by Ben Jones
2018-07-24 08:20:49

‘Jessie Culbert, a Redfin agent in Seattle said inventory there has increased, allowing buyers to move at a more leisurely pace. Previously, properties incited bidding wars and got 10 or 20 offers, she said. Now she counsels sellers that multiple similar listings are likely available.’

Ah yes, the UHS who previously told the puppy eyed suckers they had to write an offer over asking on the hood of their Benz are now sticking the knife in to their previous clients.

Comment by Boo Randy
2018-07-24 14:00:41

“Buy now or be priced out forever!” seems to have been overcome by events. The puppy eyed suckers will not be pleased when bidding wars give way to foreclosure auctions on the courthouse steps.

 
Comment by GuillotineRenovator
2018-07-24 21:53:09

Look how quickly the worm turned. It’s only been mere months since these leaches were talking about bidding wars, and now they’re “counseling sellers.” What a joke. They’re as sleazy as attorneys.

 
 
Comment by Ben Jones
2018-07-24 08:24:12

‘Maybe this is indicating that…the lows in inventory may be coming to an end,’ Mr. Yun said’

Using maybe twice in one sentence is wishy-washy Larry. I bet your voice cracked a little as you said that.

Comment by Professor 🐻
2018-07-24 08:43:15

Two ‘maybes’ merely call heightened attention to the obvious.

 
Comment by Mafia Blocks
2018-07-24 08:46:30

He has to walk it back easy…

Why?

https://i.imgur.com/ITxsoYk.jpg

 
 
Comment by Mortgage Watch
2018-07-24 08:35:47

Tahoe City CA Housing Prices Crater 7% YOY Mortgage Meltdown Accelerates/b>

https://www.movoto.com/tahoe-city-ca/market-trends/

 
Comment by Fisherman
2018-07-24 08:36:21

I haven’t been back to this blog since 2009ish. I was a frequent reader going back to 2007. Initially I was drawn here because I was frustrated by the FL housing market. I was making reasonably good money and looking for a place to buy. I grew up without much. Trailer park to small house in farm country. I always dreamed that a nice house was happiness. I really thought that it would be a panacea. But I couldn’t understand how people my age were buying 350-400,000 3br houses. It just didn’t compute. So I waited and waited and then the bust finally hit here. I bought a reasonable house for 270,000 (previously in the 400K fantasy price land).

Part II - I hated it! Owning a house, even a new home where everything worked perfectly, was not for me. And I’m a hard worker. I farmed and labored and did all manner of upkeep on the family home all my life (plumbing, carpentry, electrical, etc.). I knew about that stuff and I had done the math on the other expenses. None of that is why I hated it. It was the commitment - like being married to a building. The time it steals from your life. All of the fun activities in my life slowed down for house chores. Projects started to pop up. Eventually, I was so resentful that I pulled the trigger and unloaded the thing. Made a nice profit since I bought at the bottom and sold in 2016. But it’s note even remotely worth it.

Here’s the point if you’re still reading. Nobody in the world could have convinced me that buying a house was a bad idea. I’m a hyper rational person (scientist). I think things through dispassionately. But this one got the better of me. So, as we’re reading about millenials making terrible decisions, I try not to be snarky or judgmental. Some things can only be learned through experience.

Comment by Fisherman
2018-07-24 08:43:28

I should mention that I’ve been renting a quite and cozy 2BR apartment for 8% of my annual salary for the past two years. I am delightfully happy and spend way more time doing the things I enjoy doing. I literally never think about my own housing. I only started reading here again because I’m considering a job in CA and wanted to get a feel for the rental markets.

Comment by Mr. Banker
2018-07-24 09:14:53

“I should mention that I’ve been renting a quite and cozy 2BR apartment for 8% of my annual salary for the past two years.”

Wow! You did good!

“I only started reading here again because I’m considering a job in CA and wanted to get a feel for the rental markets.”

Poof … there goes your 8%.

Here’s a hint of what the rental market in Southern California looks like. I like to think of this as “Pent up demand”.

😁

http://www.worldstarhiphop.com/videos/video.php?v=wshhJNLCxd2nm942×8CR

Comment by Fisherman
2018-07-24 09:39:07

Indeed, 8% on rent is in my past. Although I will be moving in with my lady friend, so that helps. And a 60% pay raise helps too. Overall, I think I’ll be okay if I pull the trigger.

Thanks for the link. I solo hike quite a lot, so I’m used to sleeping in the outdoors. Perhaps I’ll just bring my tent and join the other “campers” in paradise!

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Comment by MGSpiffy
2018-07-24 16:15:41

Damn… Looks like the i-5 service road….

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Comment by TIC TOK
2018-07-24 16:23:41

Buy new and you will have no maintenance

Comment by Mafia Blocks
2018-07-24 16:54:36

$3/sqft/yr depreciation occurs new or used.

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Comment by SuzeB
2018-07-27 08:02:02

Nice to find another happy renter. As a single female of “a certain age” who never married or procreated the last thing I want to do is buy and maintain a house. Like you, I prefer spending my time on more enjoyable activities than yard work, gutter cleaning, lawsuits with neighbors, fighting the HOA over decorations, etc. If my peers and relatives enjoy home ownership, fine…but why can’t they leave me alone? I don’t give them a hard time about their choices but they do not return the favor.

A friend who was a renter for many years bought a home two years ago with her male partner in a leafy suburb, somewhat posh location. In two years she has been embroiled in two lawsuits with neighbors, and terse, unfriendly relations with neighbors on the other sides. When I went to her house, I remarked on the seeming privacy and tranquility she seemed to have as her yard was surrounded by trees and her house was at the end of a longish dirt driveway. She laughed and said she has developed a bit of a drinking problem due to the stress. She related similar stories to me about the incredible social pressure to “own”, and told me “Don’t do it”. She has a very nice home in a very nice area but is miserable and cannot afford to do anything except pay for the house. She told me that the pressure to be a home owner is a case of “misery loves company”.

The rents in my city are astronomical so I cannot move (will have to eventually as I won’t be able to do the walk-up in old age). I’m not sure where I’ll end up but I’m milking my cheap rent for at least another year or two.

 
 
Comment by Apartment 401
2018-07-24 08:55:26

Part II … The time it steals from your life

This. All of this.

 
Comment by SandalTanLines
2018-07-24 09:03:33

Part II makes me glad I don’t own, along with a host of other reasons.

 
Comment by lostinspace
2018-07-24 09:10:12

I haven’t posted in forever myself, but still lurk here. This everything bubble that the world’s CBs have cooked up is terribly screwy and Ben is one of the best info aggregators in the entire webosphere to get a good picture of this slow motion train wreck.

I’ve been continually fixing up this old house of mine but I admit I do resent how much time and money I have sunk into a bunch of sticks, tar and mud.

I don’t know why people clamor for fixer uppers unless they really love working on houses or are just flippers. I think to truly enjoy home ownership, you need to purchase a nice new house and then leave it as a fixer upper.

Comment by BlueSkye
2018-07-24 20:34:04

you need to purchase a nice new house…

Maybe not. Debt Donkey advice. The prices are astronomical, so most people doing this have sold off the three most productive decades of their working lives for that convenience.

Comment by lostinspace
2018-07-25 04:22:58

Twas a bit of humor is all. Geez.
Leave the house a fixer upper instead of buying one. Maybe even pull all the copper on the way out the door as well.

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Comment by BlueSkye
2018-07-24 10:02:12

I’m a hyper rational person…

Ironic that you tell yourself this while making all these huge life decisions on raw emotion.

Comment by Fisherman
2018-07-24 10:27:47

It is ironic, but also an atypical experience for me. It was my white whale. That’s kinda the gist of my entire post. I so rarely make irrational decisions, but when I do, I try to learn from the experience. And if I can be swayed to act irrationally, then I shouldn’t be surprised when other people do.

Comment by Sam (SW)
2018-07-24 11:25:39

Thanks for sharing Fisherman!

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Comment by OneAgainstMany
2018-07-25 07:38:55

I knew about that stuff and I had done the math on the other expenses. None of that is why I hated it. It was the commitment - like being married to a building. The time it steals from your life. All of the fun activities in my life slowed down for house chores. Projects started to pop up.

Fisherman, your post really struck a chord with me. It feels exactly how I felt when we bought our first place. The time aspect is the biggest thing that blew my mind. When I go home to visit my mom who is in her 60s and see how much time she still spends trying to maintain the house that 6 children lived in when I was younger, I feel really sad. I know that this is meaningful to her and she gets some intrinsic satisfaction out of it, but to me it just seems like some of her best years of life are being wasted trying to upkeep a space that is too big.

 
 
 
 
Comment by Hwy50ina49dodge
2018-07-24 10:15:44

“Some things can only be learned through experience.”

The key e$$entail contribution$ of Mr. Ben’s efforts is to enhance the ability of a reader to di$tinguish between these financial hou$ing pathway$:

An e$timated gue$$ … or … An informed deci$ion

(imhto)

 
Comment by ibbots
2018-07-24 11:14:38

‘So, as we’re reading about millenials making terrible decisions, I try not to be snarky or judgmental.’

Ya, there was an article recently about millenials regretting purchasing their 1st homes. I was thinking that likely isn’t unique to millenials. A certain % of every generation likely ends up regretting buying a 1st house for a variety of reasons.

‘ like being married to a building.’ That’s a funny way to express it, but not inaccurate..for better or worse!

I had a plumbing leak last weekend. Best place to have a leak though, out by the meter, under the grass. Took about 2 hours to fix so I am not complaining.

On a weekly basis I spend about 1.5 hours / wk on yard maintenance during March to Aug or so. Rest of the year is fairly minimal. Planted a peach tree 4 years ago and she’s really making now…I got peaches coming outta my ears. My plum tree produced a few plums for the first time also, none of them really made it, its only 4 years old so maybe next year.

Comment by BlueSkye
2018-07-24 20:43:34

I had a faucet leak here today at the galley sink; drip, drip. It’s serious when you only carry two weeks worth of potable water. Took 5 minutes to fix.

 
 
 
Comment by SandalTanLines
2018-07-24 08:40:35

“About 30 percent of millennial first time home buyers are pulling funds from their 401K, IRA, or borrowing against their retirement funds to afford a down payment”

If building wealth over the long term is your goal, then this “investment” strategy makes no sense to me.

Comment by Apartment 401
2018-07-24 08:58:12

And 40 years from now they’ll be eating cat food and cutting their pills in half.

Comment by oxide
2018-07-25 05:53:14

Unfortunately rents are so high that they might be eating cat food no matter what they do. Yes, I realize rents are dropping. But a rent drop from $2200 to $1800 isn’t much good when you should be paying $1200.

Comment by Mafia Blocks
2018-07-25 06:27:25

Only slightly more favorable than $4000/month principal, interest, taxes, insurance and depreciation that never goes down.

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Comment by snake charmer
2018-07-24 12:25:03

Yeah, borrowing against one volatile asset to purchase another. Some people at the company where I worked in the late 1990s borrowed against their 401Ks, which often were overweight company stock. And that stock went on to decline 95% in the tech bust, and the employees lost their jobs to boot.

 
 
Comment by Mortgage Watch
2018-07-24 08:52:18

Austin TX Housing Prices Crater 6% YOY As Industry Concedes Full Blown Housing Bust

https://www.movoto.com/austin-tx/market-trends/

 
Comment by Bay Area Native
2018-07-24 08:53:23

Mr. Duggan in Cupertino owes $1,100,000 on his Cupertino home. He purchased in 2001 for $639,000. At the time he obtained a mortgage for $511,150. He’s since been using his home as an ATM. This is classic Bay Area where people live beyond their means. I’m sure he’s not the only one around here doing the same.

Mr. Duggan also tried to sell in late 2016 and listed the home for $2,688,000 and later reduced the sale price to $2,550,000 to try and capture a sucker! The home NEVER SOLD!

Comment by Hwy50ina49dodge
2018-07-24 10:32:29

“I’m sure he’s not the only one around here doing the same”

Name an a$$et cla$$ where you can obtain borrowed fund$ in lot$ of $200,000, $300,000, $500,000, 1,000,000+ @ <4% & then extract ca$h ba$ed on more borrowed fund$?

Multiply x bye million$.of.borrower$ = make Mr. Banker$ day

” & the beat$ goe$ on … & the beat$ goes$ on … “

Comment by b
2018-07-24 13:18:51

An Austrian co-worker has been on the Seattle east side for almost 20 year. The house was almost paid for and the appraised value has gone up 3 times. In the past few years he has taken out at least 70% of the (equity) to build a very nice vacation house a mile from the water in Croatia.

I one asked what happened if the Seattle house looses a lot of value. He doesn’t care. He will move back to Europe and live in his other house (that is all paid for).

There are so many people that work the system somehow or other. I wish i had a dr.evil mind

Comment by MGSpiffy
2018-07-24 16:20:47

If he’s been here 20 years, he’s playing a long game - props to him for being pragmatic about it, and the arbitrage between Seattle and Croatia.

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Comment by Anonymous
2018-07-24 21:45:14

Hopefully for him Croatia remains a desirable place to live.

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Comment by Dave
2018-07-24 13:32:59

“owes 1.1M”
. . .and guess who gets to pick up the tab.

 
Comment by rms
2018-07-24 18:57:05

“The home NEVER SOLD!”

He sold his Cupertino home to the bank for $1,100,000.

Comment by hwy50ina49dodge
2018-07-25 07:49:35

& the bank will “gift it” to the Federal Re$erve, no que$tion a$ked.

 
 
 
Comment by Professor 🐻
2018-07-24 09:02:02

The next housing bust will be a doozy, as it is starting with near record low unemployment and interest rates, and marginally qualified (subprime) recent buyers who are underwater out of the starting gate.

The Wall Street Journal
Economy
Home Sales Extend Slump Despite Economic Strength
Existing-home sales slipped 0.6% in June from the previous month
By Laura Kusisto and Sharon Nunn
Updated July 23, 2018 10:29 p.m. ET

Home sales slumped in the second quarter despite what was likely the strongest period for U.S. growth in years, the latest sign that the economic expansion faces headwinds.

Existing-home sales slipped 0.6% in June from the previous month to a seasonally adjusted annual rate of 5.38 million, the National Association of Realtors said Monday. Compared with a year earlier, sales in June declined 2.2%.

Comment by azdude
2018-07-24 09:13:31

being a home loaner allows u to be in the casino and get free equity.

They have to maintain that or else people wouldn’t gamble in homes and they couldn’t make as many loans.

Comment by Professor 🐻
2018-07-24 10:06:10

It also qualifies you for bailouts when prices drop and your mortgage goes underwater.

Comment by azdude
2018-07-24 11:22:07

exactly the central bank doesnt want the banks to lose money.

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Comment by Boo Randy
2018-07-24 14:04:44

Only bankers get bailed out, not FBs.

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Comment by Mortgage Watch
2018-07-24 09:45:43

Atlantic Beach FL Housing Prices Crater 7% YOY

https://www.movoto.com/atlantic-beach-fl/market-trends/

 
Comment by Professor 🐻
2018-07-24 09:47:19

The bond market is ‘coiling’ for a violent yield surge, says BMO strategist
By Sunny Oh
Published: July 19, 2018 7:26 a.m. ET

The 10-year Treasury yield has traded in a tight range of eight basis points in the last 14 sessions

Comment by azdude
2018-07-24 11:24:55

if bond yields go up you can guarantee there will be either:

1.Another round of QE

2. a stock market crash to force investors in to the safe haven bond pits of the FED to help them unload bonds.

What is more likely?

Comment by Carl Morris
2018-07-24 12:00:12

What is more likely?

Why limit yourself to only one choice?

 
 
Comment by Professor 🐻
2018-07-25 02:28:01

The Wall Street Journal
Treasurys
U.S. Government Bonds Slide Amid Concerns of Falling Demand From Abroad
The yield on the benchmark 10-year Treasury note rose to 2.963%
By Daniel Kruger
Updated July 23, 2018 4:23 p.m. ET

U.S. government bonds fell Monday, amid mounting concerns that demand for the debt from overseas investors is poised to decline.

The yield on the benchmark 10-year Treasury note jumped by the most since June 1 to 2.963%, from 2.895% Friday. Yields rise as bond prices fall.

Yields rose following similar moves in Europe and Japan, with investors…

 
 
Comment by Larry Littlefield
2018-07-24 10:16:15

“Even the cheap apartments aren’t selling. In Manhattan, units priced below $1 million are piling up, according to StreetEasy.”

That’s cheap? The median existing homes sales price in the U.S. is $247,500 — and that’s according to the NAR.

 
Comment by Apartment 401
2018-07-24 11:14:04

When you can’t afford rent and student loans:

“I think of it as more of a gift from someone you’re dating rather than a sexual transaction, even though that is part of it.”

https://www.businessinsider.com/professional-sugar-babies-share-what-its-like-to-have-a-sugar-daddy-2018-7

Comment by Anonymous
Comment by Professor 🐻
2018-07-25 02:34:24

If you have to collect your own data, why not come up with a creative plan to make it enjoyable?

 
Comment by Professor 🐻
2018-07-25 02:40:47

Who knew that you could screw up the comps at a brothel by lowballing the customers. Seems like starting high with a reservation price is the way to go.

Comment by hwy50ina49dodge
2018-07-25 07:51:36

Beggar$ can’t bee re$erved choo$ers …

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Comment by oxide
2018-07-24 12:55:33

One of the girls has to cater to three different sugar daddies and she’s pulling $60K/year tax free, in San Diego. Not sure if that’s a good deal or not. IMO I’d rather teach at a podunk high school. At least it’s honest work.

(Hey yous guys, how does it make a man feel if he has to share his mistress with a couple other men?)

Comment by ChuckA
2018-07-24 15:58:12

Better than sharing your wife, and you having to pick up the entire Tab.

 
Comment by GuillotineRenovator
2018-07-24 16:42:20

“(Hey yous guys, how does it make a man feel if he has to share his mistress with a couple other men?)”

Definitely NOT for me. I refuse to share. Monogamy is the only way I roll.

Comment by Boo Randy
2018-07-24 17:17:47

All of my many mistresses pass me around to their hot friends.

That’s my story and I’m sticking to it.

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Comment by hwy50ina49dodge
2018-07-25 07:53:23

Begs the question, what else gets passed around?

 
 
 
Comment by rms
2018-07-24 19:02:24

“Hey yous guys, how does it make a man feel if he has to share his mistress with a couple other men?”

Depends who’s first.

 
 
Comment by MGSpiffy
2018-07-24 16:29:26

Funny, the topic came up in conversation around here not too long ago.

What’s interesting about the SA website apparently (I’ve never been on it, so I could be wrong) is that unlike most dating sites which are a total sausage-fest, the sugar babies outnumber the (legit) sugar daddies about 10 to 1, letting the men be picky and putting some dampers on price inflation.

The whole situation, while having existed in various forms since forever, seems to me to reflect on the growing trends of economic inequality and the bottom 90% losing ground in a world that shoves excess in your face 24/7.

Insert horrible pun about ‘putting their assets to work’…

Comment by oxide
2018-07-24 18:25:35

Total sausage-fest… So wait, dating sites are overweight in men? I wonder if I should give it a gander.

Comment by MGSpiffy
2018-07-24 20:40:59

If you have to ask the question, then you already know the answer… :P

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Comment by rms
2018-07-25 03:08:11

Her highest-paying Sugar Daddy “doesn’t sexually function,” but she does do things like go to his house and lounge by his pool naked. “He’s an older guy, he’s not married anymore. He was big on Wall Street, moved to California, got into real estate, and likes to enjoy his money.”

“…got into real estate…”

Ta-da!

 
 
Comment by Hwy50ina49dodge
2018-07-24 11:35:38

Eh, could bee … time to turn the page, LePage

Southern California home sales crash, a warning sign to the nation

Sales of both new and existing houses and condominiums dropped 11.8 percent year-over-year, as prices shot up to a record high, according to CoreLogic.

The median price paid for all Southern California homes sold in June was a record $536,250, according to CoreLogic, a 7.3 percent increase compared to June of 2017.

In the past, California, one of the largest housing markets in the nation, has been a predictor for the rest of the country.

“LePage points to the ri$e in mortgage rate$ over the past six months, increa$ing significantly a borrower’$ monthly payment. Rates haven’t moved much in the past month, but are suddenly moving higher again this week, pointing to even further weakness in affordability”

Diana Olick CNBC
Published 53 Mins ago

https://www.cnbc.com/2018/07/24/southern-california-home-sales-crash-a-warning-sign-to-the-nation.html

Comment by octal77
2018-07-24 12:03:13

Per article:

“…The supply of homes for sale increased annually in June for the first time in 3 years, according to the National Association of Realtors, but sales fell for the third straight month…”

Hey wait a minute!

Isn’t SoCal [one of] the hottest markets in the USA?

Isn’t June “prime” selling season?

Doesn’t everybody and anybody want to live here?

I would say our buddy Lawrence Yun of the NaR gots some ‘plaining to do.

What kind of B.S excuse this time? The annual coastal Great White Shark migration is scaring all the buyers back to Kansas?

Comment by Ben Jones
2018-07-24 12:15:45

This has been building for a while. OC is swirling the bowl and a few places in LA have seen double digit price declines.

July 1, 2018

From the Culver City Observer in California. “The median price of a single-family home in the state reached a record $600,860 in May, the California Association of Realtors said last week, while prices in Culver City and the rest of the Los Angeles Metro Area jumped 2.9 percent from the previous month and a whopping 9.3 percent from a year earlier. Separately, though, figures published by Zillow this week suggest that many of the houses and condos that are currently for sale in Culver City are already in the foreclosure or pre-foreclosure process.”

“There were 86 Culver homes for sale at the start of this week, Zillow reported, but dozens of them were either in foreclosure or in pre-foreclosure proceedings. Real estate economists blame the slow but steady rise of foreclosure and pre-foreclosure offerings across the nation on a variety of factors. Some buyers in the last one or two years have over-extended their borrowing power, experts say, to purchase a house before prices could move even higher. Others have seen their original monthly housing bills rise sharply because payments on their adjustable-rate mortgage, or ARM, have moved higher in lock-step with this year’s climbing interest rates.”

“Zillow reports that one of the most luxurious and expensive local homes for sale this week is a five-bedroom, three-bath English Tudor-style house at 10738 Molony Road in the exclusive Culver Crest community. It’s listed for nearly $3 million.”

http://thehousingbubbleblog.com/?p=10479

Comment by snake charmer
2018-07-24 14:07:57

I like Culver City very much, and have relatives who live there. But 1,300 square foot homes priced at $1.2 million is insane under any analysis. Looking at the Zillow valuation map for some of the streets there, you’d think it was Beverly Hills.

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Comment by Boo Randy
2018-07-24 14:19:48

Southern California home sales crash, a warning sign to the nation

That’s quite the attention-grabbing headline. I suspect the FBs who recently signed on Mr. Banker’s dotted line for an insanely overpriced SoCal shack might be reading that and experiencing a sudden involuntary bowel movement.

Comment by azdude
2018-07-24 16:43:38

so goes so cal so goes america? Or maybe just CA?

 
Comment by rms
2018-07-24 19:05:22

“That’s quite the attention-grabbing headline.”

The shot heard round the world?

 
 
Comment by jeff
2018-07-24 19:45:27

That Diana Olick “How to use your home as a source of cash” movie was great!

 
 
Comment by Norma
2018-07-24 11:43:50

Southern California home sales crash, a warning sign to the nation

https://www.cnbc.com/2018/07/24/southern-california-home-sales-crash-a-warning-sign-to-the-nation.html

Comment by lfc
2018-07-24 12:42:40

Huh? Where have we seen this scenario of increasing prices, but lower volume?

Wait, wait, was it at the start of the last bust?

Comment by Professor 🐻
2018-07-25 02:44:35

Seen at the onset of every asset price crash in history…

 
 
Comment by rms
2018-07-24 19:07:14

And it’s the Olick chick too, so it must be true.

 
Comment by rms
2018-07-24 19:12:39

And the helpful URL at the bottom… ‘Merica!

“WATCH: How to use your home as a source of cash”
https://www.cnbc.com/video/2018/04/30/how-to-use-your-home-as-a-source-of-cash.html

Comment by oxide
2018-07-25 06:39:44

Home equity is a source of credit, not cash.

 
 
 
Comment by Hwy50ina49dodge
2018-07-24 11:51:48

David Rosenberg I$$ues bubble warning in credit market: It will tear into $tocks
Stephanie Landsman | CNBC
Published 5 Hours Ago

Rosenberg’s has been known as a perma-bear for most of his career. However, he became one of the first Wall Street strategists to become bullish as the United States was digging itself out of the 2008 financial crisis.

“You always know that the bubble that was created by the previous mass of monetary accommodation comes out of the wash. This time around I’m not even saying it’s the equity market, per say. It’s probably more in the corporate bond market,” he said.

Comment by Hwy50ina49dodge
Comment by Professor 🐻
2018-07-25 02:46:07

No bull!

 
 
 
Comment by Mortgage Watch
2018-07-24 12:01:05

Costa Mesa, CA Rental Rates Plunge 10% YOY As San Diego County Housing Bust Accelerates

https://www.zillow.com/costa-mesa-ca-92626/home-values/

*Select price from dropdown menu on rental chart

Comment by MIke in Carlsbad
2018-07-24 17:49:58

Costa Mesa, CA is not in San Diego County.

Comment by Anonymous
2018-07-24 21:49:16

HA isn’t one to let facts get in the way of a headline!

Comment by Mafia Blocks
2018-07-25 00:27:20

Housing

Tuscon, AZ Housing Prices Crater 7% YOY As Housing Demand Plummets Nationally

https://www.zillow.com/tucson-az-85704/home-values/

*Select sale price from dropdown menu on first chart

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Comment by Professor 🐻
2018-07-25 02:47:48

It’s just a few miles to the north…

 
 
 
Comment by Professor Bear
2018-07-24 12:35:15

I sure do hope the stock market does well the next five days!

The fate of the stock market for 2018 could rest on the next 5 trading days
Published: July 24, 2018 1:25 p.m. ET
The S&P 500 ETF is on track to set a new milestone

Comment by azdude
2018-07-24 12:45:01

corporate buyback desks wait for all the short sellers to show up and then they kick them in the SAck with some buying. They have this down to a science.

They have totally used the hate and disbelief of this bull market to enrich themselves. Climbed a wall of worry.

When everyone turns bullish then sh@t will hit the fan. There are still a lot of doubters.

 
 
Comment by Boo Randy
2018-07-24 14:26:29

The warnings about a pending housing bubble implosion are starting to proliferate. Yet when it all goes down, our corporate media border collies will solemnly intone in unison that no one, but no one, saw it coming.

https://www.peakprosperity.com/blog/114196/trouble-ahead-housing-market

 
Comment by Mortgage Watch
2018-07-24 14:59:25

Bothell, WA Housing Prices Crater 7% YOY As Crumbling China Economy Slams Seattle Area

https://www.movoto.com/bothell-wa/market-trends/

 
Comment by Boo Randy
2018-07-24 15:07:22

China’s rating firms as as worthless and complicit as ours. “AAA” on toxic-waste crap, just like Standard & Poors, Moodys, etc. rating bundled MBSs before the 2007 housing bubble crash.

https://www.bloombergquint.com/business/2018/07/23/china-s-downgrade-free-defaults-put-spotlight-on-rating-firms#gs.VNQe7lE

 
Comment by GuillotineRenovator
2018-07-24 16:45:50

Looks like the HODLing is paying off:

$8,414.64 Bitcoin price
+$2,256.56 Since last month (USD)
+36.64% Since last month (%)

Wall St. is neck deep in this scam. Where else can you get unreal returns like this? 36% in a month? CD rates are 2.5% per year.

Comment by GuillotineRenovator
2018-07-24 16:49:22

“Last week, BlackRock confirmed it assembled a working group to look into cryptocurrencies and its underlying technology, blockchain. The working group has existed since 2015, a source familiar with the matter told CNBC, but the news still managed to help sentiment for the digital currency.

Billionaire hedge fund manager Steven Cohen’s venture arm, Cohen Private Ventures, invested in the cryptocurrency-focused fund Autonomous Partners, according to a Fortune report published last week.

Speculation that a bitcoin ETF will be approved by the SEC in August has also boosted sentiment in the past month.”

https://www.cnbc.com/2018/07/24/bitcoin-edges-past-8000-notching-a-two-month-high.html

Comment by Anonymous
2018-07-24 21:52:05

A working group that has lasted for ~ 4 years studying crypto and blockchain? My B.S. meter is pegged!

 
 
Comment by BlueSkye
2018-07-24 17:54:50

36% in a month?

More like a couple of days.

Comment by GuillotineRenovator
2018-07-24 17:56:42

No that’s for the past month.

Comment by BlueSkye
2018-07-24 20:50:15

$6K on Friday, $8K on Tuesday.

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Comment by GuillotineRenovator
2018-07-24 22:07:13

It was not at $6,000 on Friday. The low on Friday, July 20th was $7,242.

 
Comment by BlueSkye
2018-07-25 06:37:25

I thought the Prof posted something on Friday about it sinking to $6200. Guess all the sun, sand and water have me hallucinating.

 
Comment by CryptoNick
2018-07-25 06:43:50

If Wall Street money gets involved in pumping the value of Bitcoin up, then letting it drop again when the latest round of suckers have their asses handed to them, then Bitcoin may fail to ever revert to its fundamental Beanie Baby value of $0.

 
Comment by hwy50ina49dodge
2018-07-25 07:40:01

“when the latest round of suckers have their asses handed to them”

Who you calling $ucker$? … That’s just down right deplorable!

Steve Bannon says he owns bitcoin and is working on his own cryptocurrency

“I like bitcoin. I own bitcoin,” Bannon said during a wide-ranging interview at the Delivering Alpha conference in New York, presented by CNBC and Institutional Investor.

Bannon has said earlier that he believes in bitcoin and other digital currencies and that he is considering circulating what he called a “deplorables” coin.”

Jeff Cox | CNBC
Published Wed, 18 July 2018

 
 
 
 
 
Comment by Mr. Banker
2018-07-24 17:34:25

A nation of morons …

“Maxed Out: Keeping Up With the Joneses”

https://youtu.be/go6tXeFCnqw

Comment by Boo Randy
2018-07-24 19:44:11

Steve Martin SNL skit: Don’t buy stuff you can’t afford.

https://www.youtube.com/watch?v=QzE76nUSjL8

 
 
Comment by Josh
2018-07-24 23:37:13

“How Irresponsible Mortgage Lenders Created a Second Housing Bubble”

https://seekingalpha.com/article/4189254-irresponsible-mortgage-lenders-created-second-housing-bubble

Good read.

Comment by aNYCdj
2018-07-25 06:49:33

One of the things my father taught me ( he was a bricklayer) and verified by the blog many years ago is If you cant rent out your house for more then the monthly nut and still make a little profit then you overpaid for your home and it becomes a speculation on price.

 
Comment by rms
2018-07-25 07:50:16

In 2016, they declared their company a “FICO Free Zone” in a press release. Said a former business development associate, “The volume of applications coming in was crazy.”

So zero downside risk, huh? LMFAO

 
Comment by rms
2018-07-25 07:59:32

The wild sex culture at the San Francisco lender Social Finance (SoFi)
https://dealbreaker.com/2017/09/sofi-scandal-getting-crazier-fast/

“People would leave with a manager, go to the parking lot, have sex in the car, come back in and get promoted,” says our insider.

Good thing that the GSE hillbillies have their back.

 
 
Comment by Boo Randy
2018-07-25 04:03:49

Winston learned to love Big Brother, and you can, too, say the Real Journalists at the Wapo.

https://www.zerohedge.com/news/2018-07-24/wapo-god-bless-deep-state-standing-between-us-and-abyss

 
Comment by Boo Randy
2018-07-25 04:10:22

Oh dear…Chinese “investors” just become net sellers of (soon to be collapsing) commercial U.S. real estate.

“I was shocked,” said Jim Costello, senior vice president at Real Capital Analytics. “They really curtailed their buying and stepped up sales.”

That’s why they pay you the big bucks, Big Jim, because of your talent for spotting the blindingly obvious.

https://www.wsj.com/articles/chinese-real-estate-investors-retreat-from-u-s-as-political-pressure-mounts-1532437934

 
Comment by Boo Randy
2018-07-25 04:17:29

Why is it that “debt laden” and “real estate boom” always are intrinsically linked?

http://www.dailymail.co.uk/wires/reuters/article-5989597/In-Chinas-debt-laden-Xiamen-real-estate-boom-chokes-consumption.html

XIAMEN, China/BEIJING, July 25 (Reuters) - Yang Xiaodao, a 26-year-old civil servant in the Chinese city of Xiamen, says taking out a 30-year-mortgage on a two-bedroom apartment with her husband was the most regrettable decision of her life.

Although their parents covered the 1.5 million yuan ($226,778) down payment on the 2.9 million yuan flat, mortgage payments eat up more than 70 percent of the couple’s combined income of about 10,000 yuan a month - average for the city.

“Our spending power has plummeted,” Yang said. “We do not dare to have a kid. We do not dare to buy a car. We do not dare to travel.”

 
Comment by Professor 🐻
2018-07-25 06:47:00

Almost 70% of millennials regret buying their homes. Here’s why
Megan Leonhardt
8:00 AM ET Thu, 19 July 2018
Mint Images | Getty Images

Millennials aren’t exactly jumping for joy after purchasing their homes.

About four in 10 millennials are already homeowners, according to a new survey of over 600 millennials (age 21-34) by Bank of the West. Yet it turns out that 68 percent of them are feeling buyer’s remorse — almost double the amount of Baby Boomers who say they have regrets.

“Millennials are so eager to become homeowners that some may be inadvertently cutting off their nose to spite their face,” says Ryan Bailey, head of Bank of the West’s retail banking.

Here are the biggest areas of remorse.

Comment by dandroidz
2018-07-25 17:34:17

Because we are taught from early age about the American dream. then you have to experience the BS of bidding wars, accruing $300+k in debts on a depreciating asset, make repairs, assume itll appreciate 4-6% YoY…
Just a big game of disappointment.

I think too many millennials realize after its too late and the paper is signed and mortgage signed that they made a mistake. All for their pupper to have a back yard and they can buy crappily built furniture from IKEA to furnish rooms they dont really need.

I learned my lesson 5 yrs ago when I bought my brand new condo thinking “I’m on my own, I made it!”. Then I realized how shitty my condo was built, the HOA sucked of course, my loan sucked, and it hampered my mobility to leave my job I disliked.

 
 
Comment by Professor 🐻
2018-07-25 07:00:18

Seems like the new welfare proposal to assist farmers who fall victim to self-induced gunshot wounds in the trade war is going over like a lead balloon among Republican senators in farm states.

Comment by aNYCdj
2018-07-25 07:23:47

It’s almost to the point where if we allow illegals to stay then they must learn how to read, write and speak English to work. Or back to their home country.

 
Comment by hwy50ina49dodge
2018-07-25 07:32:08

Willie’s farm aid gig is just going to be a $mokin’ good time in legal Connecticut, … What’s a few music fe$t million$ compared to citizen taxpayer$ Billion$ …

“Defict$ don’t matter!”…

 
 
Comment by CryptoNick
2018-07-25 07:08:25

It turns out that cryptocurrency is a mere speck in the universe of bubbles propped up by central bankers’ $247 trillion in debt-funded printing press money.

https://www.marketwatch.com/story/bitcoins-rise-may-bring-back-bubble-calls—-but-this-chart-puts-it-all-in-perspective-2018-07-24

 
Comment by Mortgage Watch
2018-07-25 07:32:55

Centreville, VA Housing Prices Crater 8% YOY As Housing Correction Slaughters Fairfax County Housing Market

https://www.movoto.com/centreville-va/market-trends/

 
Comment by Professor 🐻
2018-07-25 07:37:36

There’s never been a better time to rent.

New-home sales slump in June as housing headwinds increase
By Andrea Riquier
Published: July 25, 2018 10:16 a.m. ET
Higher mortgage rates, increasing home prices, and slim pickings - are more Americans deciding just to rent?
Bloomberg News/Landov
Framers work on walls on a new home under construction in Lancaster, Ohio.

The numbers: New-home sales were at a 631,000 annual pace in June, the Commerce Department said Wednesday.

Economists surveyed by MarketWatch had forecast a pace of 660,000.

 
Comment by dandroidz
2018-07-25 17:29:39

I regrettably admit that when I was 23, I pulled my 3.5% downpayment for my FHA loan from my 401k to buy a condo, my first home.
It was many a lessons learned. I no longer own the property, and hindsight is 20/20
1) No FHA loans (PMI)
2) Dont buy until the next inevitable dip/price fall
3) Dont pull from a retirement account
4) Dont buy brand new crappy built condo crap shacks with HOAs

Many grand lessons and I am in a better place for learning from the experience of buying/selling. I prefer to keep my mobility, my money in my pocket, not associating with used house snakeoil salesman, or owning crappy condos.

 
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