Headed For A Less Than Soft Landing
A report from the Manteca Bulletin in California. “Housing affordability in Manteca along with Stockton and Lodi is sinking back to pre-Great Recession levels. Data for the three cities puts the median household income at $63,000 with the median resale home costing $365,000. Based on those statistics only 28 percent of the households can afford to buy the median-resale home. Housing sales for both new and existing homes reflect that reality with a solid majority of buyers coming from the Bay Area. Re/Max Executive broker pointed out as housing demand and prices have increased in San Joaquin and Stanislaus counties wages have been essentially stagnant.”
“Costa noted at the same time banks are returning to 100 percent loans — the same mortgages that fueled much of the housing collapse when many borrowers without ’skin in the game’ walked away from homes that dropped in value even though they could still afford the payments. Agents are also seeing sellers who are pushing for prices that are significantly above nearby comparable of similar properties used to determine appraised values. Costa indicated that in many cases bank appraisals are coming in that justify the higher selling prices.”
“Costa said the resale market reflects a growing trend that is being seen in new home sales of multiple families buying a home together and sharing living space.”
The Marin Independent Journal in California. “Marin’s median home price jumped to $1.165 million in June, up 8.4 percent over the $1.075 million median price in June 2017, CoreLogic said. Recent reports about people leaving the Bay Area because of the high cost of housing haven’t appeared to directly influence the June numbers — but they could gradually have an impact on the Marin market. ‘Lower priced homes are still selling briskly,’ said Kathy Schlegel, of Golden Gate Sotheby’s International Realty in San Rafael. ‘However, the upper end homes in various areas of Marin are presently sitting on the market longer.’”
“‘An example is the $1.5 million to $2.5 million home market in Novato,’ she said. ‘As of July 4, there were 27 homes listed as active in this category. As of July 24, three of these homes went into escrow, while five new listings came on the market.’”
The Herald Net in Washington. “A dusty school bus sits in front of a two-story house on the edge of a Bothell-area neighborhood. In the back yard, a rundown sedan is parked with another like it hidden behind piles of black, overflowing trash bags. Since 2013, the sheriff’s office has partnered with the county health district, code enforcement and human services to combat nuisance properties like the Bothell house. The team is dealing with 45 nuisance properties, with possibly 10 more on the way. The majority of these homes are in the north end of the county. Nine months ago, they were concentrated in the south.”
“The owners are usually banks or people who are out of state, elderly or deceased. Some are in prison or hospitals. This makes it easier for squatters to move in and the house to deteriorate. The bank is set to take the house in Bothell. A bank spokesman said state and federal laws prohibit the bank from cleaning the property until the home is foreclosed. Anders Olin, a county code enforcement officer, has his doubts. The bank originally set a June 29 auction date for the property, but canceled the sale in May, Olin said.”
“The rise and decline of nuisance properties is partially tied to the housing market, said Snohomish County sheriff’s deputy Dave Chitwood said. ‘If some houses go into foreclosure and they’re just sitting there, we might get a spike,’ the deputy said.”
“Ryan Weber moved into his Delta Neighborhood home in November with his wife and baby. He noticed a house next to his was foreclosed on, but not vacant. No one was living in the house full time, but people came and went at all hours of the day. Now, all there is to do is wait for the bank to list the house for sale. When that day comes, Weber said he’d be interested in putting down an offer and renting the house out. That way he can avoid any future nuisances, he said. Weber said he sees houses like this one throughout the city. ‘A lot of people don’t know what to do,’ he said.”
From WTOP on Maryland. “Distressed home sales, including foreclosures and short sales, hit an 11-year low nationwide in the second quarter, but two Maryland cities are among those left behind. In Baltimore, 20.7 percent of home sales in the second quarter were distressed sales, the highest percentage in the nation among cities with a metropolitan area population of 1 million or more. Philadelphia, New York, Cleveland and Providence, Rhode Island, all had distressed sales of between 19 percent and 20 percent.”
“Among all 148 metropolitan areas Attom Data Solutions analyzed for distressed sales, Hagerstown, Maryland, ranks in the top five, at 22.1 percent.”
The Miami Herald on Florida. “A web of former Venezuelan officials and businessmen was charged in Miami Wednesday with operating a massive $1.2 billion international money-laundering racket funded with stolen government money that was invested in South Florida real estate and other assets. The defendants are accused of embezzling funds from Venezuela’s vast oil income and exploiting its foreign-currency exchange system to amass illegal fortunes in the United States and other countries, according to a federal criminal complaint.”
“‘Venezuela’s state of social, political and economic crisis, in which multibillion-dollar corrupt and criminal ecosystems thrive, drives rivers of criminal proceeds through South Florida,’ says a Homeland Security Investigations affidavit filed with the complaint in Miami federal court. ‘[It] has become an international money-laundering hub and a desirable destination for well-to-do foreign criminals and kleptocrats.’”
“The federal probe, called Operation Money Flight, was launched with the initial focus on the defendants’ efforts to launder a portion of the $78 million. ‘Two years and over one hundred recordings later, Operation Money Flight revealed an international conspiracy to launder the PDVSA funds through Miami and several large-scale international money-laundering organizations,’ the complaint says. ‘More specifically, the investigation revealed the use of Miami real estate and sophisticated false-investment schemes to launder hundreds of millions of U.S. dollars.’”
“The Miami Herald and el Nuevo Herald reported in March that Alejandro Andrade, a former bodyguard to Chávez who rose to the rank of national treasurer between 2007 and 2010, is suspected of laundering millions of dollars stolen from the Venezuelan government to invest in real estate, show horses and other assets in South Florida and elsewhere, according to sources in Miami and former Venezuelan government officials familiar with the investigation.”
“Andrade’s acquisitions in South Florida and other parts of the United States don’t show up in public records because the purchases were made through shell companies that allow him to keep his ownership hidden, sources said.”
From 27 East on New York. “At first glance, the South Fork real estate market statistics for the second quarter of 2018 look grim: Key metrics by Miller Samuel Inc., a real estate appraisers and consultant firm for Douglas Elliman, indicate the median sales price declining by 5.3 percent, and the number of sales reduced by 12.8 percent when compared to last year’s second quarter. But the declines are nothing to lose sleep over, and there are other metrics to be happy about, including significant growth in the $5 million to $8 million range.”
“‘There is a downward correction in Hamptons market,’ said Carl Benincasa, a Douglas Elliman regional vice president of sales. ‘Buyers are always aware of it before sellers. But now the sellers are finally figuring out where buyers are and they are making the adjustments they need to meet them. That’s why you are seeing prices drop; that’s why you are seeing houses are being sold faster; that’s why you are seeing listing discounts go down: because sellers are pricing their homes more reasonably.’”
“‘One of the characteristics of the high-end housing markets around the region, whether we are talking about New York City or the outlying suburbs, is a sales decline,’ said Jonathan Miller, the president and CEO of Miller Samuel, ‘and the Hamptons is no different.’ Mr. Miller said one of the key observations was the decline in sales activity of homes in the $1 million to $5 million price range—or a ’soft middle’—which made up a bulk of the quarter’s loss.”
“After 37 years selling real estate on the South Fork, Judi Desiderio, the CEO of Town & Country, said she has never seen a time that has had the high-end market this strained, ‘except maybe after 9/11.’”
The Williston Herald in North Dakota. “Northstar Center was proposed as a large, mixed-use development on U.S. Highway 2, just across the road from another proposed large, mixed-use development called Williston Crossings. Neither of the projects made it off the ground before oil took a dive in prices, spooking investors, and putting a number of projects in Williston on hold. Stropiq, which had proposed Williston Crossing, shelved its project, citing the downturn in oil, as well as changes to the retail landscape nationwide. They have since shifted their attention to a subdivision called The Meadows.”
“North Star, meanwhile, appears headed for a less than soft landing. The development is to be sold at auction to the highest bidder Aug. 14. The sale follows a foreclosure initiated by YAM Capital LLC. YAM Capital, in court documents, said it is owed $9.031 million dollars from the development. The master plan for Northstar Center showed more than 2,000 dwelling units and more than 2.7 million square feet of commercial space. City officials at the time had promoted Northstar Center as a gateway to Williston, which was, at the time, one of America’s fastest-growing micropolitans.
‘Costa noted at the same time banks are returning to 100 percent loans — the same mortgages that fueled much of the housing collapse when many borrowers without ’skin in the game’ walked away from homes that dropped in value even though they could still afford the payments. Agents are also seeing sellers who are pushing for prices that are significantly above nearby comparable of similar properties used to determine appraised values. Costa indicated that in many cases bank appraisals are coming in that justify the higher selling prices.’
Ahem…
‘Costa said the resale market reflects a growing trend that is being seen in new home sales of multiple families buying a home together and sharing living space’
Like strawberry pickers? If it’s all these rich bay aryans, why the 100% loans and multiple families?
In two recent sales I am aware of in Arizona, both appraisals came in at exactly the agreed upon price. And both were 100% financed USDA loans. The UHS arraigned this by having the seller cover the closing costs.
Rampant appraisal fraud is how we got here.
Oxide just said this doesn’t happen. Where is oxide? Firing up the crow grill I guess.
Poor Donk. Poor poor Donk.
Burke VA Housing Prices Plunge 13% YOY As Skyrocketing Home Equity Loan Defaults Barbeque Fairfax County
.https://www.movoto.com/burke-va/market-trends/
hey if the bank believes it and the buyer is will to pay that price then we have a legitimate deal.
“You can barbecue it, boil it, broil it, bake it, saute it. Dey’s uh, crow-kabobs, crow creole, crow gumbo. Pan fried, deep fried, stir-fried. There’s pineapple crow, lemon crow, coconut crow, pepper crow, crow soup, crow stew, crow salad, crow and potatoes, crow burger, crow sandwich.” — Bubba Oxide
“hey if the bank believes it and the buyer is will to pay that price then we have a legitimate deal.”
The bank doesn’t have to believe, the buyer is the one who has to believe it.
The bank merely passes on to the buyer money that belongs to somebody else - but only after taking for himself a healthy cut.
😁
I don’t recall making any pronouncements about appraisals. FWIW, my appraisal came in at exactly the asking price, this was in 2012.
Dept of ag
Is that part of smelly Mel’s purview
New theorem: as re taxes go up faster than appreciation shack prices decline
,discuss
Brisbane CA Housing Prices Crater 21% YOY As Bay Area Tanks On Failing Subprime Mortgages
https://www.movoto.com/brisbane-ca/market-trends/
Brisbane tanks??….you are a tool. My sister in law lives there. I can assure you nothing in Brisbane is tanking. HA!
It’s easy to fit more families in one house if you can convert the bathrooms into bedrooms. Everyone just goes on the sidewalks out there.
“Costa said the resale market reflects a growing trend that is being seen in new home sales of multiple families buying a home together and sharing living space.”
I’m guessing these multiple-family households are comprised pretty much exclusively of south-of-the-border new arrivals.
Racis.
East Asians also. Multiple generations under one roof is traditional.
South Asians as well.
And did this new tradition just start recently, or has it been going on for thousands of years with no affect on US housing trends?
I meant “effect”.
A letter to the editor in the Virginia Gazette.
“I take exception to the economic data quoted by the James City County Housing Taskforce. It was self-serving and misleading. A recent Gazette article cited a county study that said 29 percent of county workers earn $7.81 an hour. That conflicts with the Census Bureau and DataUSA data that 6.5 percent of JCC residents live in poverty, and county median and per capita income are about $81,000 and $41,000 respectively. While 29 percent of workers might earn $7.81 an hour, that has nothing to do with household income or taking into account students, retirees and part-time workers who make extra money.”
“It would also indicate that a lot of people are living in tents or are homeless, which is not the case. The cited figure makes a case for section 8 housing, not affordable housing.”
“The proposed remedies cited are ineffective in light of overall construction costs, land value, financing, tax rate and the developer’s need for profit. Chipping away at minor expenses just does not get you there. Reducing these costs are a giveaway, as taxpayers have to make up the difference for not only the reductions, but also because these developments do not pay for themselves in county services.”
“Affordable housing is not very economically viable in this area and probably never will be unless there is a complete collapse of the housing market. Yes, we need affordable housing, but using scare figures is inappropriate.”
Welp, I guess it’s time for that complete collapse then.
Napa, CA Housing Prices Crater 7% YOY As California Economy Tanks
https://www.movoto.com/napa-ca/market-trends/
‘The master plan for Northstar Center showed more than 2,000 dwelling units and more than 2.7 million square feet of commercial space. City officials at the time had promoted Northstar Center as a gateway to Williston, which was, at the time, one of America’s fastest-growing micropolitans’
Remember when Williston rents were higher than silicon valley? The highest in the country at one time.
What a bag of potatoe$ head$ … “Why eye can see all the way to Russia standin’ @ the top of the Red River bridge, look ma, it’$ a B-52 takin’ to the skie$!”
‘A web of former Venezuelan officials and businessmen was charged in Miami Wednesday with operating a massive $1.2 billion international money-laundering racket funded with stolen government money that was invested in South Florida real estate and other assets’
Usually Miami Herald reports get picked up and re-published. I didn’t see that with this. Strange considering how much money was involved.
I think the antics of the Kardashian clan are much more relevant to ‘Muricans than stories like this, Ben. Gotta give the sheeple the bread and circuses they demand.
Everyone’s fighting to be the desired destination for dirty foreign money. As long as the right people get rich, who cares whether it violates laws or makes housing unaffordable?
Interestingly, I was in Bogota earlier this summer and heard several complaints from locals about the influx of Venezuelans, who in their desperation were working for a fraction of the pay of locals, or committing crimes. The immigration has been in three waves. The first wave was wealthy people with capital who feared expropriation of assets; and the second wave was highly educated professionals without significant wealth. The third wave — the subject of the complaints — has been everybody else.
‘In Baltimore, 20.7 percent of home sales in the second quarter were distressed sales, the highest percentage in the nation among cities with a metropolitan area population of 1 million or more. Philadelphia, New York, Cleveland and Providence, Rhode Island, all had distressed sales of between 19 percent and 20 percent’
Now how did the MSM miss this?
Now how did the MSM miss this?
Who pays the MSM salaries?
Coincidentally, I have noticed a few of those popping up around where I live too. At first I thought it must be overhang from the last bust, but maybe not…
“‘There is a downward correction in Hamptons market,’ said Carl Benincasa, a Douglas Elliman regional vice president of sales. ‘Buyers are always aware of it before sellers. But now the sellers are finally figuring out where buyers are and they are making the adjustments they need to meet them. That’s why you are seeing prices drop….”
Truly, I am awestruck by Carl’s uncanny grasp of market forces that has always eluded the mere mortals who post in here. This remarkable ability to explain clearly and lucidly why prices are dropping surely warrants his six-figure salary.
Winter Park FL Housing Prices Crater 9% YOY As Housing Meltdown Accelerates
https://www.movoto.com/winter-park-fl/market-trends/
Ran across this…
“Why are there so many suckers? A neuropsychologist explains”
“Unwanted messages and solicitations bombard us on a regular basis. Most of us hit ignore or delete or toss junk mail in the trash knowing that these messages and solicitations are most likely so-called mass-market scams. Others aren’t so lucky.”
I suppose saying “Others aren’t so lucky” sounds a wee bit better than saying “Others aren’t so stupid”.
Moving on …
(snip)
“But why do people fall prey to these scams? My colleagues and I set out to answer this question. Some of our findings are in line with other research, but others challenge common assumptions about fraud.”
If inquiring minds want to know the answer then here’s the place to go to find out …
https://theconversation.com/why-are-there-so-many-suckers-a-neuropsychologist-explains-99980
http://sites.psu.edu/siowfa15/wp-content/uploads/sites/29639/2015/12/gullibility_test.jpg
” …ignore or delete or toss junk mail in the trash …”
20% off @ Harbor.Freight.Tool$! … is a $cam?
Sir, that is bla$phemy
(also, you’ve confu$ed $ucker/client$ folk$ with wanting a “dotted$ line” with NEEDING a “dotted$ line” … they need$ you Mr. Banker, they really really need$ you, doe$n’t that just warm the cockle$.of.yer.heart?)
“… they need$ you Mr. Banker, they really really need$ you, doe$n’t that just warm the cockle$.of.yer.heart?”
Ah, yes, they NEEDS me. Not necessarily WANT me or even LIKE me, but NEEDS me.
The best position to be in.
😁
Oh dear….
http://www.dailymail.co.uk/money/markets/article-6002843/Estate-agents-chain-Countrywide-issues-125m-emergency-cash-call.html
Countrywide, Britain’s biggest chain of estate agents, will make an emergency cash call next week amid concerns that its chairman Peter Long is too stretched to oversee the troubled firm.
The firm is expected to say it needs to raise around £125million following four profit warnings in eight months. Its house sales are forecast to drop by a quarter this year.
Results for the first half of this year, to be unveiled the same day, will show a £20million drop in pre-tax earnings to £8million, analysts say.
As long as you have enough cash, doesn’t matter how many of you there are, politicians will listen.
“If money is speech, rich people have a lot more of it than you do.”
‘the upper end homes in various areas of Marin are presently sitting on the market longer.’
‘An example is the $1.5 million to $2.5 million home market in Novato,’ she said. ‘As of July 4, there were 27 homes listed as active in this category. As of July 24, three of these homes went into escrow, while five new listings came on the market.’
This sounds like the opposite of a shortage.
Ri$ing intere$t rate$ will clear the muddy water$ inn the Valley.of.$hortage$ … (just.you.wait$.&.$ees)
What does the California Association of Shortages say?
‘California Home Sales Stumble In June 2018 As Median Price Hits New High For Second Straight Month, C.A.R. Reports’
‘June’s sales figure was up 0.4 percent from the revised 409,270 level in May and down 7.3 percent compared with home sales in June 2017 of 443,120. The year-over-year sales decline was the largest in nearly four years.’
“California’s housing market underperformed again, despite an increase in active listings for the third straight month,” said C.A.R. President Steve White. “The lackluster spring homebuying season could be a sign of waning buyer interest as endlessly rising home prices and buyer fatigue adversely affected pent-up demand.”
‘For the second straight month, the statewide median home price hit another peak price at $602,760 in June. The June statewide median price was up 0.3 percent from $600,860 in May and up 8.5 percent from a revised $555,420 in June 2017.’
(Revised?)
“Although home prices increased year-over-year in virtually every region of the state in June, at the same time, nearly every county experienced a significant contraction in home sales from a year ago,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “With the year-to-date sales tally now in negative territory, the back-to-back sales declines could be an early sign that the market is transitioning, especially since further rate increases are expected to hamper homebuyers’ affordability and put a cap on how much they are willing to pay for their new home.”
‘On a regionwide, non-seasonally adjusted basis, all regions recorded year-over-year sales declines. Sales in the Bay Area dipped 0.8 percent monthly and fell 8.2 percent annually. Sales in the Inland Empire slipped 1.2 percent from May and was down 14.5 percent from a year ago. Sales in the Los Angeles metro region edged up 0.9 percent from May but was down 12.4 percent annually.’
‘The Bay Area Region, which previously led the state in home sales, registered significant year-to-year sales decreases in seven of nine Bay Area counties.’
‘The Central Valley Region experienced the smallest sales contraction with sales falling 6 percent on an annual basis. Only Merced County posted a year-over-year sales increase, rising 15.2 percent from a year ago. Five counties - including Glenn, Kings, Madera, San Benito, and San Joaquin - posted double-digit annual declines, while Fresno, Kern, Placer, Sacramento, Stanislaus, and Tulare recorded single-digit annual decreases.’
‘The Southern California Region suffered the largest home sales drop, falling 11.7 percent from May. Every county within the region posted declines with all but Orange and San Diego counties experiencing a year-over-year, double-digit pullback. Even the Inland Empire, which had been buoyed by San Bernardino County for the past several months, experienced significant declines.’
‘By price segments, sales in every price category under $1 million contracted but lower-priced homes registered the largest sales decline as homes priced below $300,000 fell 23.8 percent from a year ago.’
“With the year-to-date sale$ tally now in negative territory, the back-to-back sales decline$ could be an early $ign that the market is tran$itioning, especially since further rate increa$es are expected to hamper homebuyer$’ affordabilitie$ …”
Les.lie’$ Propaganda’$ $peak to her $heple flock$ of $eller.buyer$ agent$:
$ide with $eller$ on the way up, … $ide with the buyer$ on the way$ down.
“What does the California Association of Shortages say?”
Nothing truthful.
Tahoe City CA Housing Prices Crater 7% YOY As Mortgage Fraud Grips California
https://www.movoto.com/tahoe-city-ca/market-trends/
Nothing truthful.
Because Realtors are liars.
You know, I think you may be right. Realtors are liars!
This sounds like the opposite of a shortage.
There’s a word for that…it’s coming to me…
Glut.
While I’m not a regional Vice President for RE sales, I do believe, based on my non-VP understanding of market forces, that a glut of anything means prices are bound to fall, if not plummet.
Oh dear….
“…understanding of market force$, that a glut of anything mean$ price$ are bound to fall, ”
Google: U$ $ugar $ubsidie$
‘A bank spokesman said state and federal laws prohibit the bank from cleaning the property until the home is foreclosed. Anders Olin, a county code enforcement officer, has his doubts. The bank originally set a June 29 auction date for the property, but canceled the sale in May, Olin said’
I’d be willing to bet 5 bucks that if you looked at the June 29th sale, it was preceded by another cancellation, and another.
‘Weber said he sees houses like this one throughout the city’
You know Ryan, I find these zombie shacks everywhere I look.
This nonsense is going to continue until municipalities start slapping the owners of these zombie properties with fines and liens big enough to get their attention and galvanize them into dumping these shacks for their true market value: i.e. pennies on the dollar.
That doesn’t work. The local governments talk a big game, but they are not very diligent. And the lenders (mostly not banks BTW, but GSEs) just leave it in limbo just prior to foreclosure. They don’t own it, fine the FB! But Mr FB is long gone. And likely doesn’t have any money anyway. Sure pile on liens - which go away when the foreclosure is finalized. You can see why the local governments don’t bother. Once in a while the media will put the spotlight on one shack and bam - it gets cleaned up and sold pronto.
Why do they do this? I’ve probably posted dozens of admissions. To keep prices from nose-diving.
Another day, another high-flying tech bubble stock facing a liquidity crunch. This has a vaguely 2001/2008 bursting bubble feel to it. If Janet Yellen hadn’t assured us that there will be no new financial crisis “in our lifetime,” I’d be worried.
By the way, can someone go check on Old Yellen’s vital signs, just in case?
https://www.independent.co.uk/news/business/moviepass-outage-not-working-issues-out-of-money-loan-a8466971.html
Who goes to movies in a movie theatre? It’s current year.
We’ve got a small indie theater that serves wine & beer and screens the kind of movies I most enjoy. Nice audiences too (no punk kids with cell phones and incessant jabbering). Love going there.
A family of four with an annual income of $84,450 or less now qualifies as low income in Orange County. A single person living alone qualifies as low income if he or she earns $58,450 or less a year. … Record-high rents and home prices are driving up Southern California income limits.May 3, 2017
LOL, I would be well below that “low income” threshold if I lived in OC. Which is why I live in Las Vegas instead.
Housing Bubble 2.0 collapse accelerates! (No “gentle decline” here.)
https://www.zerohedge.com/news/2018-07-28/housing-market-collapse-20-accelerates-rapidly
How many fly-by-night flippers will be able to escape before the burning theater collapses on the rest of the bovine flippers?
“the appraisor showed up and his client said to hit the numbers or his business would drop like a rock.”
Exactly what happened in 2006-2007, when the last honest appraisers left the business.
And this is pretty much the end of the summer selling season. I’ve said this before, but I’m a firm believer that schools drive the ‘summer markets’ and most schools are within 30 days of starting, within the escrow window to get the kids in school and settled before the first day. These are June’s numbers too…..what do you think November is gonna look like? In a word……..pain.
I guess that would be pain by sellers’ standards, but not by mine.
I’m a firm believer that schools drive the ‘summer markets’ and most schools are within 30 days of starting, within the escrow window to get the kids in school and settled before the first day.
The window is already closed. I got my first taste this spring with what people go through with that. Wife insisted on “10″ rated elementary school for stepdaughter. Turns out even if you buy/rent within the school’s boundaries you are only guaranteed of a slot in that school if you got the paperwork done in the spring. Show up in the summer and you’ll get in if there’s room. And for the “10″ schools that goes away as soon as all the people from elsewhere in town get to request transfers to that school.
So anyway…here in Folsom, if you’re the picky type you need to already have your address and have your kid registered at the school you wanted. Otherwise you get to drive them across town all next year to the school nobody wants to go to.
“This is summertime — peak real-estate season — so if sales are tanking now, a housing collapse is as good as in the bag because sales certainly are not going to get better as the Fed continues to raise its interest targets and carry out its quantitative diseasing, even as the usual winter real-estate slump sets in. Those who can’t see that are simply not seeing what they don’t want to see.”
Thanks for the share Boo Randy. Spot on analysis of our current RE market
But how will Chief Meterologist Lawrence Yun spin this? Tomorrow the Pending Home Sales numbers come out. My guess is it won’t be good.
It’s definitely the red hot summer sales season here in California — so hot that many areas are literally on fire. Try not to get burned!
I’m not sure the Fed considered itself the guarantor of perpetually high asset prices back in 1937, the way it does today.
If Ray Dalio’s 1937 comparison continues tracking, the market is in big trouble
By Shawn Langlois
Published: July 26, 2018 3:37 p.m. ET
Bloomberg
Ray Dalio, chairman and co-chief investment officer of Bridgewater Associates
Back in 2015, Ray Dalio, the billionaire founder of hedge-fund giant Bridgewater Associates, compared the economic climate at the time to the one Americans grappled with some 80 years ago.
…
“The combination of these monetary and fiscal tightening pressures created a significant selloff in risk assets,” Dalio wrote. “Stocks fell the most, but home prices arrested their gains and dipped negative as well.”
…
the FED and corporate buybacks have been the market for 10 years.
It’s cool to see that Dalio properly classifies homes as risk assets, just like stocks. Today’s sheeple have been collectively brainwashed into the belief that their homes are as safe as a bank savings account and also guaranteed to provide double-digit returns in perpetuity.
leaving cash parked in a savings account has been a losing bet for years.
at least u can live in a house.
common stocks are the riskiest cause u could end up being a bagholder in bankruptcy.
in a low interest world corporations can borrow low and keep goosing their stock so they get paid.
Do u see this changing anytime soon? If interest rates rise the FED will come to the rescue.
The Fed is the primary architect and executor of rising interest rates.
i thought free markets were suppose to determine interest rates?
Policy Normalization
FOMC Communications related to Policy Normalization
The Federal Open Market Committee (FOMC) outlined its approach to monetary policy normalization in the Policy Normalization Principles and Plans that it issued after its September 2014 meeting. The FOMC indicated that there would be two main components to policy normalization: gradually raising its target range for the federal funds rate to more normal levels and gradually reducing the Federal Reserve’s securities holdings. The Committee augmented these Principles and Plans at its March 2015 FOMC meeting by announcing more details about the approach it would use to raise the federal funds rate and other short-term interest rates. At its December 2015 meeting, the FOMC decided that economic conditions and the economic outlook warranted taking the first step in normalizing the stance of monetary policy; accordingly, the Committee voted to raise the target range for the federal funds rate for the first time since December 2008. The postmeeting statement announced the change in policy; the accompanying implementation note provided operational details. The Committee has continued to gradually raise the target range for the federal funds rate as the economy has strengthened and the economic outlook has evolved. Following its June 2017 FOMC meeting, the FOMC announced additional details about its planned approach for gradually reducing the Federal Reserve’s securities holdings over time. At its September 2017 meeting, the FOMC agreed to start the program for gradually reducing the Federal Reserve’s securities holdings in October 2017.
…
Mental conditioning at its finest!
“…Dalio properly classifies homes as risk assets…”
The intrinsic value is realized by those living in it.
Which spells trouble for a market deeply penetrated by non-owner-occupants trying to get rich on a quick flip…
Bothell, WA Housing Prices Crater 9% YOY As Seattle Land Prices Plunge
https://www.movoto.com/bothell-wa/market-trends/
Interesting. This may explain why a Bothell-based employer suddenly starting ghosting me after recruiting me for a telecommute role. I live in AZ.
1937, … Balloon disasters, wacky.tabaccky marry.juanna taxe$, okie homele$$ness in Cali.forn.i.a., $eeds.of.Wars that end in Roman numeral$
May 6 – Hindenburg disaster: The German airship Hindenburg bursts into flame when mooring to a mast in Lakehurst, New Jersey.
October 1
The Marijuana Tax Act becomes law in the United States
John Steinbeck’s novella of the Great Depression Of Mice and Men is published.
Well, iffin’ Americans ain’t exhua$ted with war$ on other$ $hores, there’s always Indu$trial Military Complex expenditure$ & outlay$ oppoortunities.
September 7, 1937: In a speech underscoring a perceived need for Lebensraum (living space), Adolf Hitler claims that Nazi Germany “is too small to guarantee an undisturbed, assured, and permanent food supply.”
December 1937: Japanese troops pillage the Chinese Nationalist capital of Nanking, murdering tens of thousands of civilians, in what will become known as the “Rape of Nanking.”
That’s despiiicabbbble!
April 17 1937 – The animated short Porky’s Duck Hunt, directed by Tex Avery for the Looney Tunes series, featuring the debut of Daffy Duck, is released
I ran across this. It contains an interesting chart …
“Relative Price Changes, 1997-2017 — Confessions of a Supply-Side Liberal”
https://blog.supplysideliberal.com/post/2018/3/16/relative-price-changes-1997-2017
I drove by a shuttered Toys R Us today. I realized:
• The executives absolutely do not care about the jobs, only their profits.
• If they can reduce jobs and increase their profits, they will.
• It is up to the society to put in place rules that encourage jobs, and discourage corporate looting via bankruptcy
Paper was written in 1993. Abstract below.
See also Shiller et. al’s book “Phishing For Phools”
Looting: The Economic Underworld of Bankruptcy for Profit
by: George A. Akerlof and Paul M. Romer
1993
Abstract
DURING THE 1980s, a number of unusual financial crises occurred. In Chile, for example, the financial sector collapsed, leaving the government with responsibility for extensive foreign debts. In the United States, large numbers of government-insured savings and loans became insolvent-and the government picked up the tab. In Dallas, Texas, real estate prices and construction continued to boom even after vacancies had skyrocketed, and then suffered a dramatic collapse. Also in the United States, the junk bond market, which fueled the takeover wave, had a similar boom and bust. In this paper, we use simple theory and direct evidence to highlight a common thread that runs through these four episodes. The theory suggests that this common thread may be relevant to other cases in which countries took on excessive foreign debt, governments had to bail out insolvent financial institutions, real estate prices increased dramatically and then fell, or new financial markets experienced a boom and bust. We describe the evidence, however, only for the cases of financial crisis in Chile, the thrift crisis in the United States, Dallas real estate and thrifts, and junk bonds.
https://www.brookings.edu/bpea-articles/looting-the-economic-underworld-of-bankruptcy-for-profit/
I drove by a shuttered Toys R Us today. I realized:
• The executives absolutely do not care about the jobs, only their profits.
• If they can reduce jobs and increase their profits, they will.
• It is up to the society to put in place rules that encourage jobs, and discourage corporate looting via bankruptcy
I’m a little confused that you just realized this? It’s been a known fact for over 20 years. But then again my family got screwed over by such decision making in the early 80s so maybe I’m more sensitive to it than most. Several layoffs during my engineering career for the same reasons since 1996 just emphasized it.
Hallandale Beach, FL Housing Prices Crater 10% YOY As Wave Of Mortgage Defaults Loom
https://www.movoto.com/hallandale-beach-fl/market-trends/
The new Jesus Alexandria Ocasio Cortez profiled last week on the TeeVee:
https://www.youtube.com/watch?v=8Ha3dvgtKBc
It’s open season on mansplainers.
Ghost Cities and Zombie Blocks Invading Sydney and Melbourne Predicted to Drop by 26% and 29%
Economy Times
Published on Jul 29, 2018
Ghost cities from China 2.0?
Sydney’s falling apartment prices look set to continue into the next decade, with leading economists and real estate analysts predicting ongoing construction and the rise of so-called zombie blocks will pull prices lower.
https://www.youtube.com/watch?v=Avyili_LfTw
The media is starting to realize the economy is going to get hammered.
should I unload everything now?
You should probably hang on to at least one big cardboard box, as you might be needing it during your next, more downwardly mobile phase of life once your shack “investments” go south.
What exactly do you mean$: “everything$” ?
Leverage that shack to the rafters and then squat in place while heating it with the late notices. You can do this…
It was around a year ago they were bragging that there were more cranes in Australia’s 3 biggest cities than all of north America. Imagine how many jobs are going to be lost.
That’s just the crane operators. Everyone else should be okay.
/sarc
They just need to import more immigrants to rent the apartments (sarcarsm
so if all hell breaks lose and sh@t hits the fan again what will have been the purpose of all this FED intervention?
To have proven once and for all that it doesn’t work.
10 year$ of hayzues.of.Bethlehem bonu$e$ … merry.x-ma$
To prove that Quantitative Easing is deflationary. (Not to suggest that the BOJ hasn’t already provided convincing evidence…)
so if all hell breaks lose and sh@t hits the fan again what will have been the purpose of all this FED intervention?
Did the runway foam do its job? Did Mr. Banker keep his job and bonuses for the last 10 years? Anybody important go to jail? MISSION ACCOMPLISHED
Or did you think they were actually trying to keep it from happening again?
“The way it works is that a U.S. importer pays the taxes to the customs duties or customs tariffs to the U.S. Treasury,” Gold explained. “Of course, that’s going to effect the sale price [and] whatever price at which the exporter sells to the importer is going to lower, because the importer has to pay duties in addition to paying the purchase price.”
“You’re going to see higher prices passed on to consumers…almost immediately” Matt Gold, a former deputy assistant U.S. Trade Representative for North America under former President Barack Obama, told CNBC. “A lot of goods are already warehoused that were imported months ago, so it takes a bit of time to catch up, but prices catch up pretty fast,” he added.
Polaris Industries is another recreational-vehicle company raising prices on its vehicles including boats, motorcycles, snowmobiles to cover $15 million of the $40 million in tariff-related charges to pay for steel, aluminum, and components from China this year. The company is facing severe headwinds from retaliatory tariffs from other countries on products it exports from the U.S., including the Indian-brand motorcycles it ships to Europe.”
https://www.zerohedge.com/news/2018-07-29/why-americans-are-about-experience-sharply-higher-prices
I guess people could always stop buying too?
I guess someone has to pay for the corporate tax cuts.
‘pay for the corporate tax cuts’
There’s nothing wrong with letting people keep their money.
Knot paying corporate taxe$, it make$ them $mart!
If you were running a corporation, what would you do? Pay more tax than required? If you chose not, would that reflect on your intelligence? Or be a part of your fiduciary responsibility to the people who actually own the company?
It’s funny how this tax discussion goes. Like your money belongs to the government, and they allow you to keep some of it.
fi·du·ci·ar·y
fəˈd(y)o͞oSHēˌerē,fəˈd(y)o͞oSH(ə)rē/
adjectiveLaw
adjective: fiduciary
1. involving trust, especially with regard to the relationship between a trustee and a beneficiary.
“the company has a fiduciary duty to shareholders”
noun: fiduciary; plural noun: fiduciaries
1. a trustee.
“Like your money belongs to the government”
Well, it certainly Profit$ you & your Corporation$, to bee protected bye a Military Indu$trial Complex that $urvives on yearly depo$its from citizen/taxpayer$ charitable contribution$ to the IR$!!!
(Di$closure: my big brother is a Millionaire’$/Billionaire$ Tax avoidance extraordinaiare!, like Kevin O’Leary,known a$ “Mr. Wonderful”)
What was Wills quip?
You know everybody is ignorant, only on different subjects.
Be thankful we’re not getting all the government we’re paying for.
Ten men in our country could buy the whole world and ten million can’t buy enough to eat.
The income tax has made more liar$ out of the American people than golf has.
“Corporation’s are people & they don’t file tax lie$” … OK he didn’t say that!
‘it certainly Profit$ you & your Corporation$, to bee protected bye a Military Indu$trial Complex that $urvives on yearly depo$its from citizen/taxpayer$ charitable contribution$ to the IR$’
I’ve never owned a stock. And what does the Military Indu$trial Complex have to do with selling coffee, lawnmowers and laptops? We can’t make, buy and sell these things without the merchants of death?
A lot of people want the benefits of capitalism without the work, risk and compensation of said work and risk. But you can’t have it both ways.
“We can’t make, buy and sell these things without the merchants of death?”
Uncle Warren, like every.Corporation.one else, are the benefactor$ of $acrifice$ of Blood & Trea$ures, that knot only preceded them, but $tablized there path$ to riche$ in the current era.
To think it’$ “$mart” to game the tax $ystem of their taxe$ to as clo$e to zero as is po$$ible, is knot only a “funny” mind $et, it is in fact, a consciou$ effort to minimize there Patriotic duty to both Blood & Trea$ure, pa$t & pre$ent.
i guess I was saying that in order to pay for the corporate tax cuts they decided to make up the lost revenue by taxing the chinese imports so the little man pays more.
These tariffs are gonna only make prices go up.
We are simply not competitive on a lot of products.
I guess Polaris will have to hire more Americans, who would theoretically contribute to the US economy and help buy Polaris products.
Allen, TX Housing Prices Crater 11% YOY As Dallas Housing Market Implodes
https://www.movoto.com/allen-tx/market-trends/
It’s rainy season here in Tampa. I expect to see it rain falling knives.
Will anybody try to catch them?
“Will anybody try to catch them?”
Who’s With Me?!
https://www.youtube.com/watch?v=6eX3fiQLo84
Hopefully these poor California sales keep up. The Virginia letter to the editor is right. No one wins with high home prices. Not developers. Not citizens. Expensive housing just makes everyone poorer.
“Expensive housing just makes everyone poorer”
Mr. Banker in Vega$, might ôfferin’ a different a different POV @ any moment.
“Expensive housing just makes everyone poorer.”
That’s one way to look at it and it is true true for an earned-money economy.
But our economy is no longer an earned-money economy, instead it has morphed into a borrowed-money economy, and in a borrowed-money economy wealth is represented by high prices, high prices that produce equity that can be borrowed against and spent.
Take away the high prices in such an economy and the wealth vanishes, and when the wealth vanishes then so vanishes the spending that was associated with the wealth.
If seventy percent of our borrowed-money economy is supported by spending then the economy is screwed if the spending is curtailed, and the spending will be curtailed housing prices collapse.
An interesting link …
“The growth of finance in graphs”
http://cepr.net/blogs/cepr-blog/the-growth-of-finance-in-graphs
Pukes work, lenders reap.
debt = money
most people do not realize that most of the new money that enters our economy comes from making loans. One mans money is another mans loan.
The other way is by the FED creating more money as they did in QE.
If there is another way US dollars or credit is created please share.
and in a borrowed-money economy wealth is represented by high prices, high prices that produce equity that can be borrowed against and spent.
The problem is that eventually that has to be paid back, with interest. And when virtually everyone is doing that (”peak debt”), then the car drives onto sand.
Asset bubbles have been advocated as an economic model by Krugman and Summers. However it is becoming more and more apparent that asset bubbles are quite destructive.
You are correct. Work has been substituted for by asset price increases.
Usually these debt flows have cycles, aka credit cycle.
They load everybody up on debt to have an economic boom.As long as asset prices keep going up folks can service the debt. If asset prices reverse then the ponzi unwinds.
Where are we in the credit cycle? It has to be > than 7th inning?
The problem is that eventually that has to be paid back, with interest.
If only that actually happen$ …
1.41 Million Americans Filed for Personal Bankruptcie$ in 2009 a jump of 32 Percent from 2008. More and More Average Americans Resorting to Bankruptcy even with Tougher Rules to File
(Don’t have the total dollar$ vani$hed attached to just individual$)
+
More than 170,000 small businesses in the U.S. closed between 2008 and 2010, according to analysis by the Business Journals of U.S. Census Bureau data.
(Knot much monie$ left in $ole proprietor$ pocket$ after the light$ go out)
+
Big Bidne$$ lo$$e$ knot made whole post 2008 … Well, venture a gue$$
“Recently imposed tariffs are expected to impact material costs in the second half of the year by approximately $100 million to $200 million, and the company expects supply chain challenges to continue to pressure freight costs. However, the company intends to largely offset these impacts through announced mid-year price increases.
As a result of the strong earnings, CAT shares are up 3.6% in the premarket. And since the company makes up 3.8% of the Dow Jones, the CAT results have also pushed Dow futures off the unchanged line.”
https://www.zerohedge.com/news/2018-07-30/caterpillar-surges-after-reporting-record-earnings-boosting-guidance
price increases? their stuff is already grossly overpriced
And so it begins….
https://therealdeal.com/miami/2018/07/26/most-big-cities-across-us-show-signs-of-housing-market-cool-down-report/
Once prices dropped everyone began investing in real estate.chasing profits has kept the market alive for quite a long time. Those profits are getting smaller every year. Eventually there is more risk than reward.
Eventually you get to see who is swimming naked.
The lows always seem to be a little higher than the previous bust.
Ipswich, MA Housing Prices Crater 15% YOY As Mortgage Debt Ravages Boston Economy
https://www.zillow.com/ipswich-ma/home-values/
*Select price from dropdown menu on first chart