Investors Are Stressed And Blame Lousy Advice
It’s Friday desk clearing time for this blogger. “‘Home sellers throughout the Seattle region are experiencing a reality check and the days of multiple offers are days of the past,’ was how one director with Northwest Multiple Listing Service summarized the market. ‘People are taking notice of the evolving real estate landscape — even my mom tells me she’s noticing more for sale signs!’ remarked Robert Wasser, an officer of the Northwest MLS board of directors. George Moorhead, designated broker at Bentley Properties, is noticing an increase in the number of price reductions for actively listed homes as inventory increases, ‘even in the hotspots in Seattle and the Eastside.’”
“Moorhead detected new construction starts have ’slowed proportionately with sales,’ saying builders are now offering large incentives to attract buyers.”
“Higher interest rates play a role in determining how affordable homes are. Also, the increased borrowing costs has caused a decline in the home lending business. ‘All California is experiencing a slowdown,’ said Otto Kobler, branch manager in Santa Rosa of Summit Funding. The most dramatic impact of rising rates occurs in the lending business for those who want to refinance their homes. ‘It just vaporizes,’ Kobler said.”
“This summer, the housing market was expected to be extremely competitive, with lots of buyers vying for a limited number of homes. But it turns out, the housing market, including in our region, may finally be cooling down. Lawrence Yun, chief economist with the National Association of Realtors, says home prices have been rising too fast — much faster than people’s incomes. ‘Even in a strong local economy — in places like Denver, Salt Lake City or in Seattle — the home sales are coming down,’ he says.”
“Redfin CEO Glenn Kelman says the company lowered its Q3 forecast after ‘an unexpected drop in Redfin’s bookings growth in the past three weeks, slowing traffic growth in a weakening real-estate market.’ Kelman says the ’significant’ housing market slowdown could continue in the coming months. Kelman: ‘For the first time in years, we are getting reports from managers of some markets that home buyer demand is waning, especially in some of Redfin’s largest markets.’ He called out Seattle, Portland, and San Jose by name.”
“We are in the middle of a housing crisis in British Columbia. The intended goal of the speculation tax is to increase housing affordability by curbing foreign and domestic speculation and increasing the supply of housing throughout Metro Vancouver and in other designated regions. We are hearing from small- to medium-sized business owners across B.C. who are already feeling the ripple effect. Les Bellamy is the CEO of Bellamy Homes, a construction team of three and a support staff of three. Bellamy cites two project cancellations as a direct result of the speculation tax.”
“‘The first cancellation was from an Alberta family — it was a financial stretch for them to achieve their dream of retiring in Kelowna in the first place, but add in the speculation tax and they just couldn’t make it work,’ explained Bellamy. ‘The really unfortunate piece is that this family felt insulted and unwelcome in B.C. — these relationships are broken now.’”
“The woes of Foxtons and Countrywide could be symptomatic of a wider malaise in the property market undergoing structural change. The conclusion is drawn in an article in Investors Chronicle headlined ‘Estate agents exposed as the tide rolls out’. The article, by Mark Robinson says that its emergency cash call could horrify shareholders, given the hugely discounted shares placing. Robinson says that the problems besetting Foxtons and Countrywide could simply be the result of excessive leverage, constrained mortgage financing and a cyclical downturn in the London housing market.”
“Separately, bank Credit Suisse has cut its share target price for Countrywide to 17.2p – higher than the share finished yesterday – and said the group would take a £!4m hit when the fees ban comes in.”
“Based on data for the first half of 2018, the number of high-end real estate deals in Tel Aviv has sunk by as much as 80% in the past three years, according to Israeli real estate website Madlan. The slowdown in the high-end real estate segment is linked to the lower numbers of foreign investments reported in recent years. Between the years 2007 and 2016, real estate investors from France, the U.S., the U.K., and Russia made hundreds of real estate deals in Israel each year.”
“The impact of foreign investors on the local real estate market has gone down considerably, due to the appreciation of the Israeli shekel against the U.S. dollar, euro, and the British pound, and to tightening regulation on international money transfers.”
“Cheaper apartments could be on the way for Aucklanders as construction costs start to decline. According to the latest building consent figures from Statistics NZ, the average value of building consents issued for new Auckland apartments has been in an almost steady decline for the last 12 months.”
“In the second quarter of last year the average value of new building consents issued for new Auckland apartments was $451,050, and it then declined in three of the four following quarters. By the second quarter of this year, the average value per consent had dropped to $278,222, the lowest it has been since the third quarter of 2015. The decline in average value appears to have been driven by a fall in construction costs rather than a reduction in the average size of apartments being consented.”
“For the last two years, the average size of apartments consented in Auckland has been largely stable at around 100 square metres, and in the second quarter of this year it was 110 square metres. But over the last 12 months, the average value per square metre has declined form $5334 per square metre in the second quarter of last year to $2529 in the second quarter of this year, which was also the lowest it has been since the third quarter of 2015.”
“More than half of Millennial property investors are stressed by their finances and blame lousy advice for having to cut back spending, or work second jobs, to make ends meet, according to a national survey. They claim their savings and investments are being smashed by falling property prices and rising interest rates. It’s a generation of ‘rentvestors’ who rent the property they live in because of high property prices but buy investment properties in other areas they rent out. But many have bought in at the top of the market and are being hit by falling prices and rising costs.”
“Mandeep Sodhi, a former banker, said stressed Millennials are being forced to cut back on dining out, holidays and are working second jobs. ‘Most of these Millennials took out loans with the big four banks,” said Mr Sodhi about the survey. ‘They never bother looking around for property advice or shopped around for better rates with other lenders. They are paying a high price for their loyalty.’”
“Apartments have failed to realise the expected rise in values and their ‘cheap’ mortgage terms have expired and been replaced by more expensive principal and interest products. Lachlan MacPhee and Simon Gladysz, who live in the inner-Melbourne suburb of Richmond, are selling a one-bedroom off-the-plan investment apartment bought eight years ago that failed to increase in value. The couple found it easy to find a tenant but were paying higher interest rates after their interest-only term expired.”
“A huge increase in construction of inner-city apartments, falling prices, rising interest rates and growing investor nerves are making it more difficult to sell, analysts warn. Auzita Pourshash, a human resources consultant who rents in the north Sydney suburb of Neutral Bay, has recently bought a $500,000 investment property on the NSW Central Coast. Ms Pourshash made the investment because she wanted to own a property before her recent 30th birthday. ‘It is an investment property while I continue to live in Neutral Bay,’ she said.”
‘an increase in the number of price reductions for actively listed homes as inventory increases, ‘even in the hotspots in Seattle and the Eastside.’
‘builders are now offering large incentives to attract buyers’
The kiss of death for resales.
“Moorhead detected new construction starts have ’slowed proportionately with sales,’ saying builders are now offering large incentives to attract buyers.”
“Large incentives” means LARGE price declines.
What? No free Mercedes?
Sheepishly slips in:
sleepless_near_seattle
Where’s the bravado?
Er, que bravado?
Housing my good friend.
Keller, WA Housing Prices Collapse 33% YOY As Washington Housing Market Hits The Mat
https://www.movoto.com/keller-wa/market-trends/
Aren’t you always telling us prices are to the moon and etc? I don’t hear that from you any more. I wonder why?
Never. There’s a sleepless IN seattle that perhaps is making those claims. I’m the biggest RE cynic this side of Tacoma.
(Perhaps it’s also time for a new more Portland-reflective moniker…).
I’ve been posting as NEAR since, I believe, 2004.
OK, I get all you west coast rednecks mixed up. BTW, I’m thinking about flying out there next month. View the carnage.
Welp, give a holler when you do. Lots of cranes, carnage, and microbrews between Bellingham and San Diego.
Lots of fires between San Diego and Seattle.
And a whole bunch of backpedaling, gyrating and foot stamping.
“OK, I get all you west coast rednecks mixed up. BTW, I’m thinking about flying out there next month. View the carnage.”
The Land Of Falling Knives
“Lots of fires between San Diego and Seattle.”
Pretty much a constant low level haze underneath us on my flight from SJC to PDX yesterday.
Last bubble Phx, LV, Sacramento, Florida were ground zero…this time it will be Seattle, Portland, Denver, NY…
Places like Vegas and Phoenix will get absolutely slaughtered again. They are low wage areas.
I agree, but Seattle, et al have just exploded in prices based on wage growth. A lot of Seattle was driven by Chinese and they have vanished from the buying scene. I assume they have also vanished from the the Pasadena area where they were gobbling up everything in sight
“Places like Vegas and Phoenix will get absolutely slaughtered again. They are low wage areas.”
Copy that… no tall cotton unless you’re a crime family.
Denver = CRATER
“this time it will be Seattle, Portland, Denver, NY…”
Portland, OR Housing Prices Crater 14% YOY As Private Equity Initiates Multi-Year Housing Liquidation Strategy
https://www.zillow.com/portland-or-97209/home-values/
*Select price from dropdown menu on first chart
Wooo! Good start. Looking forward to that number reaching 30+.
Wow - seems like (long running sentiment) amongst the horny house buyers turned on a dime (well a few months).
I have been looking and saw some early indications and symptoms but had to really look for it. But WOW what a change for the lemmings
Yeah and this is where that troll had it completely wrong too. He said, “oooh the gobernment would never let shack prices fall, waaa!”
Jeebus, the governments/central banks are the ones doing it! Almost everybody is raising interest rates. Almost everyone is reducing stimulus or planning to do so in the near future. Almost everyone is cracking down on money laundering, tax dodges and shell buyers.
Jeebus, the governments/central banks are the ones doing it!
True. The question is how fast will they reverse when their friends are in danger? Or have the bankers been successfully insulated from danger this time?
“The question is how fast will they reverse when their friends are in danger?”
Are they good friends?
Are they good friends?
Seemed like it last time.
“Or have the bankers been successfully insulated from danger this time?”
Got QE4?
Having good friends is always…… good.
Ben,
I want to add a bit of nuance to that statement - not to disagree with what’s happening here in the area, but rather pointing out that the builders who greatly exasperated the problem during the run-up are now on the very front lines of the downturn due to their own behavior.
Given that the metro Seattle doesn’t have the outlying room to expand like Dallas or Phoenix, etc due to the geography, build-out and land restrictions, builders have been a thorn in the side of regular buyers (non foreign money stashing, working couples, etc) by severely outbidding everyone else on smaller/older/starter homes so they could just turn around, bulldoze the existing homes and then build the largest house they can get away with on the lot to sell for 2-5x the price of the home it replaced. It’s been such a thing that some sellers made a point NOT to sell to builders even if they offered more $.
So the new construction homes these builders are building+selling are almost all in the upper ends of the price range(s) - i.e. the first to be caught without swim trunks when the tide recedes. All price tiers are seeing the effect of what’s happening, but it’s these builders who had no problem going after the highest end they could with sheer size, luxury veneer everything, etc who are getting the biggest slowdowns in traffic/offers right now.
Just looking in my own little ‘neck-o-the-woods’ in the middle between Seattle and the Eastside, 15% of the current listings are new construction, but the cheapest one is at the 35th percentile price-wise, and that’s a ‘cheap outlier’ at just over $2M. Very quickly, new construction gets over $3M. That’s a damn small group of potential buyers. ( And that cheapest outlier has been on the market almost 5 months now ). All those houses are huge - only a couple under 4000 sq ft (all 3500+), despite mostly tiny lots.
Now, many of the ‘cheaper’ houses in the area are also showing price reductions (sellers had delusions which are getting corrected), and to my eyeballs its mostly the ones with issues or location disadvantage. Overall, everything is leveling off and going down, but as someone was saying yesterday, I believe the best condition and most desirable of the lower-priced houses will be sticker than the rest. Buyers were already fed up with having to take things ‘as-is’ / no-inspection, etc and are only going to get much picker going forward. (about bloody time).
I do not shed a single tear for the builders who have been transforming nice older neighborhoods into a caricature of California excess around here. They were making bank, and now they’re going to be downsizing soon.
‘recently bought a $500,000 investment property on the NSW Central Coast. Ms Pourshash made the investment because she wanted to own a property before her recent 30th birthday’
Dang, that’s a good reason!
‘In the second quarter of last year the average value of new building consents issued for new Auckland apartments was $451,050, and it then declined in three of the four following quarters. By the second quarter of this year, the average value per consent had dropped to $278,222, the lowest it has been since the third quarter of 2015. The decline in average value appears to have been driven by a fall in construction costs rather than a reduction in the average size of apartments being consented’
How would you like to be one of the fools who bought one last year?
From the comments:
‘It’s just what was sold to the masses in NZ (via stuff, NZ herald and the 10% at the top) essentially everyone was rorting the credit boom. It’s stopped now, hence the contruction firms going belly up.’
‘I was building in the UK up until 2016 at £130 per square foot in double block and brick with UK labour and we spec’d stuff properly. 100 square metre build (stand alone in my case not apartments) = 1076 square feet = £139,880 (fully fitted) or at current NZ exchange rate (after overnight devaluation to $1.94:£1) = $271,367.’
‘Yep - there has been a lot of wool pulled over the eyes of the masses.. If I’d ever employed immigrant labour I could probably have got my costs down to £100 per square foot… but I couldn’t deal with the hassle… NZ has been ridden like a seaside pony or cashcow…’
Another comment:
‘Construction costs have in essence more than halved in 12 months… Which would suggest to me that there is no labour shortage, no housing shortage, or a housing problem - just previous overleverage and stupidity. This would suggest to me that the steam has evaporated from Auckland and everything that was being hyped up before as justification for why everyone had to pay so much for a house in Auckland was not true it was just a way of selling more debt on the hype.. Where is Uncle John maybe he can help answer this? Oh he’s Chairman of the biggest mortgage lender….
Re-read the quote again and think on it.
“over the last 12 months, the average value per square metre has declined form $5334 per square metre in the second quarter of last year to $2529 in the second quarter of this year, which was also the lowest it has been since the third quarter of 2015.”
‘Pump and dump… John sold in November of 2017 and his son may have recently sold too if Double GZ cares to confirm that.. What a ride that was!’
‘the steam has evaporated from Auckland and everything that was being hyped up before as justification for why everyone had to pay so much for a house in Auckland was not true it was just a way of selling more debt on the hype’
Bingo!
“… everything that was being hyped up before as justification for why everyone had to pay so much for a house in Auckland was not true it was just a way of selling more debt on the hype.”
Nuthin to it! Dumb the pukes in the Southern hemisphere down to the same level as pukes have been dumbed down in the Northern hemisphere and the free ride for lenders is extended accordingly.
It is truly amazing just how universally stupid people are everywhere on the planet.
The most dramatic impact of rising rates occurs in the lending business for those who want to refinance their homes. ‘It just vaporizes,’ Kobler said.”
I would submit, Kobler, that the most dramatic impact will be on the Greater Fools who purchased an insanely overpriced shack using borrowed money, and will now see just ludicrous the bubble valuations were when the bottom drops out of the market but what they owe remains the same.
“… when the bottom drops out of the market but what they owe remains the same.”
😁
Santa Monica, CA Housing Prices Crater 17% YOY As The Bottom Falls Out Of CA Housing Market
https://www.movoto.com/santa-monica-ca/market-trends/
‘All California is experiencing a slowdown,’ said Otto Kobler, branch manager in Santa Rosa of Summit Funding.
Outlier!
The troll who said that had the worst timing in the history of the internet.
It seems azdude timed the peak perfectly.
Sure, he was bragging about buying something a couple of months ago.
BTW, for anyone who doesn’t know azdude is a caricature.
Yeah, he’s a troll.
Lol
Sometimes I find his witty one-liners provoking. I enjoy his input.
Moonbeam is predicting a recession …
“California Gov. Jerry Brown predicts recession within two years”
https://www.sfchronicle.com/bayarea/matier-ross/article/California-Gov-Jerry-Brown-predicts-recession-13130880.php
And last time I checked, the Cali state pension funds (CalPERS and CalSTRS) were $200B-plus underfunded. A recession will make that worse.
Speaking of public employees in Cali…
“When newly elected Mayor London Breed signed San Francisco’s record $11 billion budget last week, she also ushered in a 3 percent pay bump for all city workers — meaning nearly 800 city executives will be making more than California’s governor…”
“…Three sheriff’s deputies who each took home nearly $350,000 last year, with their overtime alone totaling more than the governor’s salary.”
https://www.sfchronicle.com/bayarea/matier-ross/article/It-pays-to-work-at-SF-City-Hall-some-13130966.php
Chinese property investors will pay for it right ?
All of California definitely is an outlier!
Atlantic Beach FL Housing Prices Crater 10% YOY
https://www.movoto.com/atlantic-beach-fl/market-trends/
’sellers throughout the Seattle region are experiencing a reality check and the days of multiple offers are days of the past’
This is a long press release full of tongue lashings like this for loanowners.
‘Yun…says home prices have been rising too fast — much faster than people’s incomes ‘
And how many years has that been going on with no warning from the UHS? To the contrary, they insisted market forces demanded that you landless people submit to your superiors and write love letters, pay way over asking and feed the termites when they leave to spend your borrowed money forever and ever!
“you landless people submit to your superiors and write love letters,”
Added humiliation to overpaying 3x for a house. Like dropping your pants at the closing and shuffling in. Sad.
Remember (just a few months ago) how they would “coach” on what to put in the letters? “Something personal, imagine yourself spending a day at ‘their’ home. Include photos of your kids (preferably on their knees, praying the outrageous overbid is accepted), and have your child draw your dog frolicking in the back yard! Multiple colors, and the more pathetic the better.”
Realtors are liars.
The National Association of Realtors is a fraud and a lie.
I would love to grade those kiddie drawings and send them back to the FB spawn with some constructive criticism.
http://www.thebestpageintheuniverse.net/c.cgi?u=irule
For me that was one of the biggest red flags that we were approaching a top… all the extracurricular “Pick Me!” nonsense.
When having the money isn’t enough and you have to humiliate yourself as well…
Americans who are seeing stagnant wages and the erosion of their purchasing power due to inflation will have a diminished ability to buy overpriced shacks, especially with rising mortgage rates.
https://www.zerohedge.com/news/2018-08-10/americans-real-wage-growth-slumps-most-6-years
And just a few hours ago as I talked to manufactures rep and told him he doesn’t get business because his company is too slow he starts whining about how they can’t find anyone to hire.
shucks
So I guess we can say 5/2018 was the top
“So I guess we can say 5/2018 was the top”
Thereabouts…
“In May, sales of previously-owned homes slumped, the second month in a row of declining sales. The National Association of Realtors, which tracks those sales, pointed to the same culprit it’s blamed for the past few years: not enough supply of homes to buy.”
“We’re probably at peak housing. Here’s what that means.”
https://www.marketwatch.com/story/were-probably-at-peak-housing-heres-what-that-means-2018-06-27
And that was the same month the 10 year T broke the 3.0 barrier. Coincidence?
Nope. 10 Year T. 30 Year M rates. CPI. Not a single number anywhere could have seen this coming. No-sir-ree. All my PDH economist friends tell me so.
Out of curiosity, I just emailed an agent who recently propositioned me to be my ‘buyers agent’ if I decide to move back into the buying arena.
She assured me that she would have only my best interest in mind while advising me and assisting me with a purchase so I explained my skepticism with the current market and concern about a substantial correction pending. Then I asked her if she thinks now is good time to buy or if she would recommend that I wait.
She replied, “I get that question all the time. Prices are nowhere near their peak in 2006 and I do not think we are anywhere close to a bubble.
New starts in construction are nothing like during the boom. Rent is rising and so are interest rates. I absolutely think it is a great time to buy. The market has softened over the last 6 months, allowing buyers to look at a fair number of well priced houses. I think when you figure that most mortgages are less than the rents on an equal home, BUYING IS A WIN/WIN. By not buying you loose over $20,000 a year in rent & tax benefits alone.”
This is coming from an industry expert so clearly there is no bubble. It is a buyers market.
“Then I asked her if she thinks now is good time to buy or if she would recommend that I wait.”
I had a similar experience on a used car lot recently. I asked the guy running the lot whether I should buy the car I selected and he assured me that I should.
He’s the pro and I am not; He knows a lot about cars because that’s what he deals in every day so it behooved me to follow his expert advice.
“You’d be crazy to buy now on the cusp of the implosion of yet another housing bubble,” said no realtor, anywhere, ever.
Usually the realtors say they “feel” there is no housing bubble, even though objective data says otherwise. Gosh, but that Suzanne is so intuitive, and she’s done her research and stuff, so I better act quickly before this fleeting opportunity goes away and shack prices start their inevitable upward march again.
Wow. I’d say your realtor is delusional - ” Prices are nowhere near their peak in 2006 and I do not think we are anywhere close to a bubble.”
Check Zillow for any home in Del Oro Estates in Safety Harbor and look at the trend as a general indicator for Tampa and SWFL.
SWFL didn’t spike like SE FL did during the first boom/crash so prices are actually higher in SWFL for many areas when compared to 2006/peak prices.
Not sure how SWFL compared to SEFL in the 2004-2006 run up but I can assure you that it spiked drastically in the Bonita Springs area where I was. As far as I know, from Naples North to Cape Coral had one of largest crashes from top to bottom of any place in the country.
I bought one house in 2004 for just shy of $200k and sold it in 2005 for almost exactly double what I paid for it. Then bought another in the fall of 2005 where I continued to live for the almost 10 years. That one lost over half of it’s value in the crash.
To her point, prices in this particular market aren’t quite back to where they were in 2006, especially if you account for inflation. But that isn’t a realistic barometer of impending danger in the RE market today. 2006 prices were extremely over-inflated and, even at 10% below those prices today, they are once again over-inflated.
That doesn’t mean they absolutely can’t go any higher, they can. If you look at pricing on the East coast of FL or in places like CA/WA/MA/CO, ect. SWFL home prices still look like a bargain.
What’s not clear is having had your rear handed to you after your last foolish purchase you are playing nookie nookie with a Realtor.
I’ve lost money on a house a time or two, but nothing so spectacular.
“…Rent is rising and so are interest rates. I absolutely think it is a great time to buy. …”
This was the *exact* same argument when interest rates were falling.
So, in the delusional world of REIC real estate, you *can* drive south at the same time you are driving north.
To Lawrence Yun of the NAR, a tip of the keyboard. You *have* succeeded in hypnotizing your membership. Well done. Well done.
Investors Are Stressed And Blame Lousy Advice
Just curious for anyone who knows…do hung over sorority girls blame their previous night’s bad decisions on their drunken frat guy partner’s “bad advice”? He told them exactly what they wanted to hear to get the deal done. If he hadn’t they’d have just gone to someone else. So was it really “bad advice”?
You use what works.
Is that you Skylar? Please call…
It felt so good at the moment of decision.
What is the RE equivalent of the next morning ‘walk of shame’?
First trip to home depot?
I’d say the fifth trip…on the same Saturday.
Home Depot…. Where poor people go to get a whole lot poorer.
Oh man you guys totally got me, just look at NY and LA, if you squint hard enough you can see a little squiggle there at the end of that long line thingy lol.
https://www.economist.com/graphic-detail/2018/08/09/global-cities-house-price-index
Are you one of those people who suffers an amputation then loudly declares “wow, I didn’t bleed out and die!” one second later?
It’s just a flesh wound!
Darn, I’ve reached my article limit with The Economist!
This sponsored content post provided by the National Association of Realtors.
OutLiar.
Nice!
Since rejoining the fray here a few weeks ago, I’ve been thinking over my 2009-2016 adventure in home ownership. Just tallying the cost a little,I came up with this:
Cost per month (I’m including the actual costs including “optional” expenses that are less optional when working 70-80 hrs/week in my job)
Ownership period:
Property tax $500
HOA $50
Insurance $75
Utilities $350 (gas, sewer, water, electric)
Internet $80
Lawn care $100
Pest control $85
A/C service contract $20
That’s $1260 a month BEFORE my mortgage payment is even included! It also does not include repair costs for a sinkhole, roof damage from a storm, fridge replacement, washer replacement, dishwasher replacement (jeez… those were some crap appliances in the spec house) and dozens of other paper cut expenses.
Current rental life:
Rent $870 (2br 2ba)
Utilities $150
Internet (included)
$1020 all expenses paid.
Good grief, what was I thinking?
Peace of mind of renting while Housing Bubble 2.0 begins imploding: priceless.
Just checked my nabe. Inventory is definitely up, but at least 60% of it is fix-and-flip. Buy for market price, $60K HGTV reno including basement, re-list for $150K more. We’re talking over a half mil for a 4-bed split shack from the 60s.
Ok, I’m jealous. They make my house look like a dump. But then again, give me $60K and I could make a house look nice too…
“Inventory is definitely up, but at least 60% of it is fix-and-flip.”
Rampant speculation is the #1 indicator of a bubble.
During the run up it looks like the price appreciation is the equivalent to being on a sailboat with the wind at your back.
Now the wind direction has spun to the side and clearly it’ll be into strong headwinds before long.
PS- I’d guess that more than half of all “flips” flop. When you factor in purchase price, carrying costs, improvements and then taxes on the flip, they’re not making any money.
May 25, 2018
“The City of Trees is getting noticed. The limited run Fixer Upper-style show on HGTV is helping put the spotlight on the booming Boise area in yet another way. The concept is simple: the pair buy a house, make improvements (usually drastic) and work to resell the homes for a profit. Two of the homes on the show with the highest price tags have sat on the market unsold, despite a tidy wrap-up at the end of each episode. A home along the rim at Kathryn Albertson Park was purchased for $350,000 - with another $350,000 into renovation costs.”
“Toward the end of the episode, Robertson tells the camera they have a deal in hand. But the home didn’t sell until well after the episode was produced and the show was aired. The home was removed from the market just Sunday after a price reduction from $989,700 down to $974,900. Another home in Boise’s North End was said to have sold ‘above asking’ during the show, but is still listed for sale - listed since March 10th at $897,700.”
http://thehousingbubbleblog.com/?p=10443
That house is still on the market. Reduced to $789,100
https://www.zillow.com/homes/for_sale/Boise-ID-83702/house_type/79662053_zpid/94275_rid/43.792658,-115.97992,43.579396,-116.348992_rect/11_zm/2_p/?
$400K. And that’s being very generous.
Wut??
I have seen first hand many, many flips that made massive amounts of money. A lot of them didn’t even involve renovation. I unintentionally flipped one myself that I bought in 2004 and sold in 2005 just to move to a different neighborhood and I made a killing on it.
A wise man once said, “Why buy it when you can rent it for half the monthly cost? Buy it later after prices crater for 75% less.”
He’s right.
North Bethesda, MD Housing Prices Crater 20% YOY As Federal Workforce Reductions Accelerate
https://www.movoto.com/north-bethesda-md/market-trends/
$85 every month for pest control?! If so, please elaborate.
Yeah, he downsized from a mini-mansion to a 2-bed apartment and thinks it’s an apples-to-apples comparison.
And just how do you do that kind of downsizing? Were you living in the mini-mansion by yourself? Or did you shed a wife and a couple kids along the way?
I shed a wife, but no kids. I’m not sure what qualifies as a mini mansion. Our house was a cookie cutter 1900sf 3br, 3ba suburban box.
And I’m not trying to make an apples to apples comparison, but I’m glad you raise the point. One of the things I realized during this experience is how little space I need. In the house, we wanted extra room for family to visit, and that happened a few times a year, but not enough to justify the added cost (relative to a hotel). We had a 2 car garage that was so full of junk that you couldn’t park in it. We had so much crap. And one of the best parts of downsizing was getting rid of it all.
And I guess my main point is this… when we had that extra space and all of those expenses, it was unnecessary. We could have lived the same lifestyle in this 2br apartment. Actually, life would have been better in my opinion. Owning a house just isn’t for me. I know it was a mistake. But I didn’t know it before I experienced it. That’s life.
I shed a wife, but no kids.
We had so much crap. And one of the best parts of downsizing was getting rid of it all.
Been there. I’m grudgingly back to accumulating again. But the best part of separating a few years back was driving away from all that crap with only a suitcase. I “generously” let her have it all.
“And I guess my main point is this… when we had that extra space and all of those expenses, it was unnecessary.”
What I observed during the McMansion fad of ten-fifteen years ago was the “need” for the owners, particularly the ladies, to fill up vast and empty walk-in closet space with stuff.
The clothing merchants REALLY liked that idea and so did we HELOC lenders.
😁
Been there as well.
When I had the 4500 sq ft house in TX, there were rooms I would literally go a month without setting foot into. I was young and on the “bigger is better” and “show off” trains of thought.
The divorce got me into downsizing, especially selling off stuff I used to collect but knew I wouldn’t have time for (as well as bigger things like the M5).
Now that I’ve remarried and we got this place - it’s a tad bigger than we were targeting, but there’s only one room we’re not in or getting used regularly - and that should change once the next round of downsizing is complete. My problem I guess is that there are people who will pay (enough) for a lot of the stuff I have, so I chisel away at selling things off instead of just dropping it off at goodwill.
That’s ironic too! Overpaying a quarter of a million on a house and yard sales to help make ends meet.
“…did you shed a wife and a couple kids along the way?”
Sometimes life events are a wakeup call.
Ironic that Oxy would call renting vs owning “apples and oranges” when someone puts them both in terms of dollars. Oxy went from a modest apartment to a mini mansion without adding kids or spouse for one simple reason; she was gonna be rich by going into debt cause rents were going to the moon forever and forever and houses never depreciate.
Oxy isn’t in a “mini mansion,” she’s indicated she’s in a very modest, older 3/2.
Worse yet considering the grossly inflated price.
…she’s in a very modest, older 3/2.
I’ve always thought a 3/2 wasn’t exactly modest for a single person with no cats.
My bad… that was a typo. Should be $25 a month. $300/yr.
I lost my ass in the crash and bought back in 6 years back. Sold that Austin house 18 months ago and bought a 425k new shack with pool in Tampa. I owe about 125 k after paying down the mortgage with proceeds from other property sales.
My monthly nut is not much more than yours.
Don’t be afraid to buy back in when this next crater sets in and ride the next wave of Fed funny money. Or buy a sailing cat and head of into the sunset. Ok I’m projecting…
this family felt insulted and unwelcome in B.C
Oh boo-hoo. The speculation tax applies ONLY if:
It’s not your primary residence and you live there less than 1/2 the year
You’re not renting it out.
The house is worth more than $400K
The house is in Metro Vancouver, the Capital Regional District, Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and Mission. (i.e. no taxes for cabins-in-the-woods)
Maybe the family in Alberta just wants to retire, but they are walking and swimming and quacking like a speculator. Let them stew in their own ego.
https://vancouversun.com/news/local-news/b-c-speculation-tax-heres-what-you-need-to-know
Allen, TX Housing Prices Crater 11% YOY As Dallas Area Housing Recovery Begins
https://www.movoto.com/allen-tx/market-trends/
Are you still looking for a Bitcoin recovery to enable you to get out from under the massive losses on your HODLings?
The Washington Post
Democracy Dies in Darkness
Wonkblog Perspective
Bitcoin is still a total disaster
How much prices would have changed on an annual basis if they were measured in terms of bitcoins instead of dollars
by Matt O’Brien
August 10 at 9:57 AM
There’s one thing a currency is supposed to do that bitcoin never has. That’s maintain a stable value.
Indeed, as investment analyst Eddy Elfenbein points out, bitcoin has gone through four bear markets in 2018 alone. Now, maybe you don’t care if your money periodically loses 20 percent of its value, but most people tend to. They want to be able to afford things whether or not cryptos are having a good day. Although when it comes to bitcoin, the price changes so quickly and so violently that it really matters what point you’re comparing it to. Over the last year, bitcoin is up 91 percent, but over the last nine months it’s down 67 percent. That, as you can see above, is why inflation would alternate between being nearly negative 100 percent and positive 100 or 200 or even 300 percent if we measured prices in terms of bitcoin rather than dollars.
Just what you want in a currency!
https://www.washingtonpost.com/business/2018/08/10/bitcoin-is-still-total-disaster/?utm_term=.7b5f7dd5e0d6
Can you say cr8er?
https://www.coinbase.com/charts
“This town…is kinda like a ghost town.” — The Stranglers, “Ghost Town”
https://www.wired.com/story/spain-ghost-towns-photo-gallery?mbid=nl_080918_daily_list3_p5&CNDID=38901740
ONE OF THE countries most affected by the 2008 global financial crisis was Spain, where a decades-long housing boom went bust almost overnight, bankrupting developers and leaving unfinished housing projects littered across the country, from the suburbs of Madrid to the Mediterranean coast.
Ten years later, the Spanish economy and housing market have recovered, but these ghost developments remain, too unprofitable to sell and too expensive to demolish. Across the country, an estimated 3.4 million houses remain unoccupied. Many are now owned by large banks, which seized them after their original developers defaulted on their loans.
Why doesn’t the EU move the “refugees” into these places? Just a thought.
They’re too valuable. [cough]
“Good grief, what was I thinking?”
Chuck Brown: “I’m $uch a blockhead, all I had to do, wa$ $ign on Mr. Banker$ $imple dotted line!”
Another day, another massive stock market loss on currency crisis fears…
https://www.marketwatch.com/story/us-stocks-pulled-into-global-selloff-as-turkeys-currency-crisis-raises-the-alarm-2018-08-10
Someday, Turkey can make lots of money selling F-35 technology (or maybe the planes themselves!) to the Russians and Chinese.
Does it seem like an inordinate number of ‘lowest since 2009′ comparisons have recently popped up?
“The iShares MSCI Turkey ETF (TUR, -14.53%) plummeted 14.5% on heavy volume, extending its year-to-date decline to 51% and marking its ugliest day since Oct. 15, 2008, pushing the country-specific fund to its lowest close since March of 2009.”
Auzita Pourshash, a human resources consultant who rents in the north Sydney suburb of Neutral Bay, has recently bought a $500,000 investment property on the NSW Central Coast. Ms Pourshash made the investment because she wanted to own a property before her recent 30th birthday.
Until the final mortgage payment clears, Ms. Pourshash doesn’t own squat.
Ms. Pourshash:
And don’t forget the reconveyance….
“More than half of Millennial property investors are stressed by their finances and blame lousy advice for having to cut back spending, or work second jobs, to make ends meet, according to a national survey. They claim their savings and investments are being smashed by falling property prices and rising interest rates. It’s a generation of ‘rentvestors’ who rent the property they live in because of high property prices but buy investment properties in other areas they rent out. But many have bought in at the top of the market and are being hit by falling prices and rising costs.”
HAHAHAHAHAHAHAHAHAHA!!!!!! They must be getting nervous thinking they might have to join their brethren and move into their parents’ basement! Oh well, I suppose they can hope Bernie will get elected in 2020 to redistribute wealth to them from Boomers and GenX-ers .
Upon a closer read, I see that this quote in the article was about Millennials in Oz. So Bernie isn’t directly applicable to them, but Australia has their own Socialist politicians they likely generally support.
“It’s a generation of ‘rentvestors’ who rent the property they live in because of high property prices but buy investment properties in other areas they rent out. But many have bought in at the top of the market and are being hit by falling prices and rising costs.”
Is this really a thing, or just a made-up used home seller story?
Unbelievable how fast this is unwinding. It’s time to start taking bets on when and how government intervention will kick in. I am dumbstruck at how quick the whole thing began to sour. Only two months ago it felt like it could go on forever.
Most people still seem oblivious that anything has changed. I think when the “for sale” signs and “reduced” listings start proliferating, that’ll mean it’s dawning on people that the market has turned.
“Unbelievable how fast this is unwinding.”
+1 Social media.
Seattle, WA Housing Prices Crater 8% YOY As Tech Economy Staggers
https://www.zillow.com/fairmount-park-seattle-wa/home-values/
*Select price from dropdown menu on first chart
other than REITs every stock in housing crashed
California is a smoky, schorched, parched, post-apocolyptic wasteland.
Why is it again that everyone wants to live there?
Unfortunately, the California fire season doesn’t traditionally even begin until September or October.
U.S.
Three of California’s Biggest Fires Ever Are Burning Right Now
By TIM WALLACE, ASH NGU, DENISE LU and MATTHEW BLOCH
AUG. 10, 2018
California is in the middle of yet another record-breaking fire season with 820,000 acres across the state already burned — more than twice the area that burned by this point last year.
In the northern part of the state, the Mendocino Complex Fire has grown to more than 300,000 acres, becoming the largest fire ever recorded in California. In fact, three of the largest California fires since 2000 are burning right now.
In addition to the Mendocino Fire, firefighters are battling two more massive blazes in other rural parts of the state. The Carr Fire, near Mount Shasta, has burned more than a thousand homes and caused eight deaths, according to CalFire. And the Ferguson Fire, near Yosemite National Park, is the largest fire in Sierra National Forest history.
…
they keep saying its climate change
“Why is it again that everyone wants to live there?”
Chicken of the Sea?
https://www.youtube.com/watch?v=RyoaMsmvcNI
Don’t catch yourself a falling knife.
$1bn for empty space: the saga of the world’s most valuable real estate
Skepticism abounds over 157-acre LA-area lot once linked to Brad Pitt and Iran’s shah, amid questions over sellers’ motivations
Andrew Gumbel in Los Angeles
Fri 10 Aug 2018 07.00 EDT
Last modified on Fri 10 Aug 2018 16.35 EDT
The property offers views of Los Angeles and Bel-Air.
A billion dollars is a steep price to pay for a whole lot of nothing – even if the nothing in question happens to be a prime piece of open land with commanding views over the mansion-studded hills of Bel-Air and Los Angeles.
Still, a billion dollars is what the owners of the 157 acres perched between Benedict and Franklin canyons say they want, and they are not in the mood for discounts. At least in theory, the listing – known variously as the Vineyard or the Mountain – is an invitation to the ultimate gazillionaire to build his or her palace of dreams above a city famously built on them.
If the tract – or rather, 17 adjacent tracts – fetched the full billion, it would be by far the most valuable piece of real estate in the United States, and maybe the world.
That, though, is a big if.
…
Im still waiting for this big depression you guys have been calling for the past 10 years.
Here’s why affordability in U.S. housing market is at record lows
15 Hours Ago
Diana Olick analyzes a report by the National Association of Home Builders that reveals the trend of decreasing affordability in the U.S. housing market.
Experts are falling all over each other to herald the onset of the next housing bust.
Has the housing market peaked?
By Leia Klingel
Published August 10, 2018
Real Estate
FOXBusiness
Home prices have been on a tear, but now experts are lining up with their calls that this could be the peak for the U.S. housing market.
David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates, in a tweet said that the housing market has entered a recession of its own and “nobody seems to notice.”
“The housing market has entered a recession of its own and nobody seems to notice. Mortgage apps sank 3% in the Aug 3rd week, down now for four weeks running, and the YoY trend has collapsed 17% from year-ago levels.”
…
Housing finance system roiled by maze of investigations: Here’s a guide
By KATY O’DONNELL
08/10/2018 04:26 PM EDT
The U.S. housing finance administration has been rocked by a series of investigations that have raised fresh doubts about the federal government’s management of the vast system that supports most of the nation’s mortgages.
The country’s top housing regulator is under investigation for alleged sexual harassment. The watchdog looking into his behavior is herself under a probe — partly over claims that her office is too cozy with his. And the outgoing CEO of the largest mortgage financier was faulted in a report for failing to disclose potential conflicts stemming from a romantic relationship.
…
Why financial criminals use real estate to launder money
Property is stable, functional, and less scrutinized than other landing spots for ill-gotten gains
By Jeff Andrews
Aug 10, 2018, 3:28pm EDT
…
Real estate is often the preferred destination for a financial criminal’s ill-gotten gains for the same reason real estate is attractive to any investor: Real estate prices are generally stable and will appreciate over time. Real estate is also functional; a money launderer could use the property as a second home or rent it out, earning income from the investment.
“You’re not gonna lose money on the transaction,” said Chris Quick, a former FBI agent who now runs a private investigation firm in South Carolina. “You buy a piece of real estate for a million, you’re gonna get rent on it or you’re hoping it’ll appreciate in value so when you sell 4 or 5 years down the road, you’re gonna make 25 percent on it. That’s one of the reasons why it’s attractive.”
…
I gave a beater to the local wrecking yard after we discovered a burnt valve caused significant damage. I stopped by the Insurance office with the registration, which they photocopied. Later I see an email indicating that they dropped the wrong vehicle from our coverage. WTF?
I also moved four cell phones to a new plan, yesterday. Ho Lee Schitt… talk about an exercise in accent and dialect. I’m guessing the Philippines vs some Caribbean Island, tech from one company vs the other. We just needed SIM cards, not new phones. Hence, the run around that consumed literally half the day to sort-out. Whew.
We are nowhere close to living like the Jetsons… not even close.