August 17, 2018

People Have Been Asking For Silly Money

It’s Friday desk clearing time for this blogger. “It’s happening in larger, pricier housing markets: Buyers are starting to get fatigued, indicated by modest drops in existing home sales, mostly in competitive Western states like California and Washington. From Seattle to the Silicon Valley to Austin, Texas, headlines point to a cooling as housing inventory creeps up and prices continue to outpace wage growth, squeezing out fed-up buyers. Is this trend about to hit the Lehigh Valley housing market? It’s a necessary part of the cycle. Other short-term predictions are part of it, too: The region may see more new listings and a smaller jump in sales price, said Sean LaSalle, president of the Realtors group, but this is what usually happens in August and September. ‘We need this,’ LaSalle said. ‘If we see something alarming, everyone will know about it.’”

“The Washington-area housing market is showing signs of slowing down, and buyers may be starting to balk at rising prices. Mary Bazargan, a Redfin agent in Washington, says well-priced homes in sought-after locations continue to get interest, but buyers seem more hesitant to write offers. ‘I recently listed a gorgeous D.C. home at a price we thought would attract multiple offers the first week, but despite a lot of tours, it took three weeks to receive an offer,’ she said. ‘That kind of buyer reluctance is becoming more common.’”

“A separate report from Zillow showed another sign of an early shift in the nation’s sellers’ market. The share of sellers reducing their original list price rose from 11.7 percent a year ago to 14 percent in June. The percentage of sellers in the Washington area that reduced their original list price in June was higher than the national average, at 15.4 percent, and little changed from last June.”

“Los Angeles home prices may level off in coming months, new reports suggest. Zillow shows sellers slashed prices on 14.1 percent of homes in Los Angeles and Orange counties in June, up from 11.1 percent in January. The median value of those reductions was 2.6 percent of the original listing price. Eric Sussman, adjunct professor of accounting and real estate at UCLA, agrees. ‘I don’t think there’s any question that the housing market is slowing,’ he says, adding that he ‘wouldn’t be surprised’ if prices in LA start dropping ‘in the next few months.’”

“Sussman suggests that home prices could drop between 5 and 10 percent during a recession. That would be a silver lining for prospective buyers—but not much of one. ‘That’s really not going to move the needle for most people,’ he says.”

“A penthouse in Tribeca is finally off the market — but sold for half its original asking price. The unit at VE Equities’ 11 North Moore Street sold for $20 million, according to New York City Department of Finance records. The 7,000-square-foot pad hit the market in 2014, asking $40 million. The penthouse purchase comes as luxury units have been lingering on the market amid a glut of inventory. In the last week of July, luxury properties that went into contract were sitting on the market for an average of 536 days, according to Olshan’s market report. That’s prompted developers to cut prices.”

“Prince Albert’s housing construction scene may be in the doldrums, but the city is not alone as latest figures show the severe decline is widespread across the province and in other parts of the nation. Statistics released this week by the Canada Mortgage and Housing Corporation showed Saskatchewan had the nation’s second-largest decline in housing starts in July compared to last year. Only Prince Edward Island was worse. Saskatchewan saw a 46 per cent slump in the construction of single- and multi-family dwellings. Prince Albert best typifies the slump in the single detached market, with just one unit underway last month.”

“The conversion of a failed condominium complex into a hotel will create at least 80 jobs, the Senate heard yesterday. The comment came during debate on the Bermuda Housing Amendment Act 2018. Justin Mathias, an OBA senator, called the Grand Atlantic a ’stain on the last PLP administration.’ Ms Mathias said the condo units had failed to sell because of an ‘oversaturation’ in the housing market, as well as their price.”

“Fears are growing that Britain’s property bubble is about to burst. A string of indicators last night triggered concerns that the market is running out of steam – and could be heading for a correction or even a crash. Prices in London are falling at the fastest pace since the financial crisis – but the declines are not limited to the capital. The number of property sales has also tumbled, by as much as 65 per cent in some areas, as buyers worried about rising interest rates baulk at the ’silly money’ demanded by sellers.”

“Lee Pendleton, founder director of independent estate agents James Pendleton, said: ‘People have been asking for silly money. But the market has changed. Sellers need to be realistic about the market. If a house is not selling, it is usually down to price. In South West London, where we operate, house prices rose 180 per cent in ten years – it’s insane. Some areas are still over-inflated and some people are still asking for inflated prices. But these houses are not selling.’”

“Some buyers are so edgy about the Hong Kong property market that they are pulling out of deals, despite losing big deposits. A buyer who agreed to buy a unit at Sun Hung Kai Properties’ St Martin II two weeks ago cancelled the purchase on Thursday. The U-turn on the HK$7.25 million studio unit in Tai Po in the New Territories meant the buyer had to forfeit the 5 per cent deposit – about HK$362,700 (US$46,200).”

“That followed five instances on Wednesday at Sun Hung Kai’s Park Yoho Milano in the northern Yuen Long district. A total of nearly HK$2 million will be charged for the sales terminations. The project debuted last month and was seen as the cheapest residential project this year. Such soured interest has spread to lived-in home sales. Agents confirmed that last week the transaction of a 589 sq ft flat at Harbour Place in Kowloon’s Hung Hom was terminated and at least 3 per cent of the home price, or nearly HK$400,000, will be charged for the withdrawal.”

“House hunters are picking up properties for hundreds of thousands of dollars less than their neighbours paid just months earlier. In Kogarah in Sydney’s south, a three-bedroom red brick house on a 489sqm block on Annette Ave sold a week ago for $1.16 million — an eye-watering $210,000 below the $1.37 million paid just two months ago in June, for a three-bedroom red brick house on 462sqm on the same street just a ­couple of doors down. And the deals are dispersed across the city, even to the north where prices were still booming six months ago.”

“Buyer’s agent John Carew of Mayfield Property Buyers said house hunters were stunned by the turnaround. ‘There are bargains everywhere in this market if you are prepared to be decisive,’ Mr Carew said. ‘The problem with most buyers is … they don’t know what to do, so they’re not doing anything. This has opened the market up for those who are ready to buy.’ He said the heavy discounting did not mean the market was crashing, just stabilising after the long boom. ‘Even if you think a property is out of your budget, there is no harm in putting in an offer. We’re finding those low offers are actually getting accepted,’ Mr Carew said.”

“It is not a question of whether Auckland’s house prices will fall but by how much, a financial services company says. Australasian Trading Management warned investors home values had ‘already pulled back significantly’ in Australia’s hot Sydney and Melbourne markets and the ‘price correction’ was spreading to Auckland. It pointed to figures by Auckland agents Barfoot & Thompson, showing the city’s median home value hit $810,000 last month - a 10 per cent fall from the market peak price of $900,000 in March last year.”

“Australasian Trading Management said it was ‘clear that the Australian and NZ property markets are now in a period of price correction. But the key question is how deep the price drop will be?’ the analysts said.”

RSS feed


Comment by Ben Jones
2018-08-17 15:38:08

‘People have been asking for silly money. But the market has changed. Sellers need to be realistic about the market. If a house is not selling, it is usually down to price. In South West London, where we operate, house prices rose 180 per cent in ten years – it’s insane. Some areas are still over-inflated and some people are still asking for inflated prices. But these houses are not selling.’

This is interesting. As soon as it becomes known widely enough that prices aren’t going up, the prices seem absurd. That’s just what will happen to those old shacks in the bay area without a driveway, etc.

Comment by 2banana
2018-08-17 15:47:45

Rising interest rates + DJT new tax laws + QE unwind + Mel Watt retiring = the market has changed

… In America

Comment by azdude
2018-08-17 16:08:09

a lot of the buying is speculative cause prices are rising. When prices start to reverse a lot of demand goes away. It can take years for it all to play out. You dont want to be on the wrong side of it.

Comment by Ben Jones
2018-08-17 16:19:29

Inventory shooting up almost everywhere shows it was speculative. All these people didn’t decide to move at the same time.

(Comments wont nest below this level)
Comment by Tim
2018-08-17 16:28:51

In Denver I know several people that own many rental properties. They have told me they finally believe the bubble has peaked and they want to get out before the next recession hits. We are due. Until a few months ago, they all said there was no bubble. This may be behind some of the increased inventory. I don’t own property, but wonder if I should sell some of my stocks and go higher in cash.

Comment by Mr. Banker
2018-08-17 16:37:01

“… but wonder if I should sell some of my stocks and go higher in cash.”

Hope this helps ….

Comment by Tim
2018-08-17 16:58:28

Thanks. That is rather frightening, and I may be forced into early retirement for health reasons. CDs are paying more than they were but not enough.

Comment by Ben Jones
2018-08-17 17:19:10

‘they finally believe the bubble has peaked…Until a few months ago, they all said there was no bubble’

Yeah we had one of those slow flipping landlords here:

For years: “it’s not a bubble”

Then: “this is my third bubble!”

Landlords waiting for a peak to sell are just speculators. Watch these airbnb guys come out of the woodwork.

Comment by 2banana
2018-08-17 17:25:26

Everyone thinks they can sell at the top.

The doors are narrow and only a few will get through it.

The rest will die in the fire.

Comment by Boo Randy
2018-08-17 19:07:52

Lots of FBs are going to be needing emotional support animals.

Comment by Mr. Banker
2018-08-17 21:31:18
Comment by Professor 🐻
2018-08-18 06:13:42

A coworker owns many rental properties, amassed over a lifetime of living and working in San Diego. As a long-term investor with cash flow and paid off properties bought early during a long period of rising prices, he’ll come out fine no matter what happens next. But good luck during the next recession to those who leveraged up to buy at recent prices. HODLing is going to become difficult again.

Comment by CryptoNick
2018-08-18 05:58:08

MAHAA Make America’s Housing Affordable Again

Comment by 2banana
2018-08-17 15:41:12

$600,000 mortgage + $70k in other debts + $600 car payment on a $90k per year combined income????

Well played Mr. Banker. Well played.


Slain Colorado mom had painted happy picture of married life
Yahoo - 8/17/2018

The couple had a combined income of $90,000 in 2014. But they also had tens of thousands of dollars in credit card debt, along with some student loans and medical bills — for a total of $70,000 in unsecured claims on top of a sizable mortgage.

They said in the filing that their nearly $3,000 mortgage and $600 in monthly car payments formed the bulk of their $4,900 in monthly expenses.

Comment by Mr. Banker
2018-08-17 16:09:10

“Well played Mr. Banker. Well played.”

Yeah, well it’s not as if it’s the pukes aren’t the ones who caused this miracle to happen.

But I’ll take the credit (and the money) if it will help pacify everyone.

Comment by Mr. Banker
2018-08-17 16:28:30

In an environment infected by common sense the free ride bankers now get to enjoy would not exist. But in the totally dumbed-down environment we bankers are blessed with the free ride is a given.

Lay out some dotted lines with some clearly stated debt- slave inducing language written above the dotted lines and the miracle of life-long debt enslavement of totally dumbed-down ignorant pukes will immediately commence.

Life is indeed good if you are a banker, not so good if you are an ignorant puke.


Comment by Sean
2018-08-17 16:28:10

I feel bad for the kids. They didn’t deserve this. Seriously, just drop the kids off at a relatives or friends house.

Comment by 2banana
2018-08-17 16:38:46

None of them (mother, two daughters) “deserved this” - to include the unborn son.

There is no known motivation published yet - so I am speculating mucho.

But I have to assume the massive financial burden/debt was a big part of it.

You have to wonder if this couple had decided years ago that they would live within their means, drive clunkers, forego the tanning salon, live in an apartment, pay off credit card debt/not use credit cards - that things would have turned out differently.

Was all that stuff worth it???

Debt is evil.

Comment by hunkydory
2018-08-17 17:13:49

Perhaps a big part of the “attraction” was to the fake/unaffordable lifestyle. It blows my mind how much effort people put out to keep up with the Joneses.

(Comments wont nest below this level)
Comment by Mr. Banker
2018-08-17 18:04:49

“It blows my mind how much effort people put out to keep up with the Joneses.”

What it is that blows your mind is the same thing that allows me a free ride through life.

And I just LOVE the Joness you speak of; A banker’s best friends.

“It is not greed that drives the world, but envy.” — Warren Buffett

Comment by Albuquerquedan
2018-08-18 07:49:19

Mr. Banker, I am always amazed at the creativity in the real estate industry. Now, I know the way to get fit is to buy a dump and fix it up. I know that someone you are close to thinks it is by hiking in the mountains, but no the correct way to remove lead paint, mold and asbestos and breath lots of dust:

Comment by Anonymous
2018-08-18 15:10:26

Re: the NZ article… Gem worked in the construction industry, was he building houses? If so, then he was profiting from the housing run-up. Oh, the irony.

This is entertaining:

“Not having a permanent home creates an absolute and utter emotional toll. Not only on one person but across families, across relationships and communities. The stresses involved in not having that kind of security is just huge.”

Actually, Gem, there is no security in having a mortgage. And since apparently you’ve been living hand-to-mouth as a renter, I wouldn’t expect you to be more solvent in the face of the inevitable expenses of “owning” a home.

Comment by Boo Randy
2018-08-17 19:16:07

Cracker - Tune Out Turn On Drop Out

(Comments wont nest below this level)
Comment by Jessica
2018-08-17 20:21:26

Agreed - when I read how they were living way beyond their means… it never ends well.

(Comments wont nest below this level)
Comment by Mortgage Watch
2018-08-17 15:47:23

Santa Monica, CA Housing Prices Crater 23% YOY As California Recession Accelerates

Comment by Tim
2018-08-17 16:21:44

“The conversion of a failed condominium complex into a hotel will create at least 80 jobs, the Senate heard yesterday.”

I live in downtown Denver, and because of the glut of luxury apartments on the market, my complex has just started offering 3 day or more short-term rentals to get units occupied (apparently hotels have lower vacancy rates). Seems to be working somewhat. There are lots of screaming kids in the pool and confused tourists walking around.

Another solution offered by our fine mayor was to offer subsidies for school teachers and the like to move into the vacant units. Nothing like paying taxes to subsidize ppl living in over-priced units so the developers can get rich rather than letting prices fall to a fair market price.

Comment by oxide
2018-08-18 04:52:18

Schoolteachers today, Section 8s tomorrow — all with gov taking up the slack. That luxe rent WILL be paid.

Comment by Ben Jones
2018-08-18 05:59:14

You’ve been saying that. Now they’re going bust.

Comment by Mafia Blocks
2018-08-17 16:44:51

Checked over at the SeattleClownHouse. The Clown says shortage.

Silly 🤡

Comment by jeff
2018-08-17 18:01:34

Is anyone going to make a written offer this weekend?

Comment by Boo Randy
2018-08-17 18:47:21

‘We need this,’ LaSalle said. ‘If we see something alarming, everyone will know about it.’”

Sure you will, LaSalle. Cuz realtors are always the first to sound the alarm and try to frantically wave off Greater Fools eager to sign that dotted line for their own personal financial Waterloo.

Never in recorded history has Suzanne’s research indicated that now is not the time to buy.

Comment by Mortgage Watch
2018-08-17 19:13:52

Frisco, TX Housing Prices Crater 6% YOY As Dallas Area Homeowners Get Skinned Alive

Comment by 2banana
2018-08-17 20:29:40

Funny. I thought the liberal/progressive rich wanted to pay their fair share of higher taxes!

“What I don’t want my money going to is pension obligations” for government employees.”

BAHAHAHAHAHAHAHHAHA! But you keep electing democrats!


California tax shelter saves children big bucks on inherited property
San Francisco Chronicle ^ | August 17, 2018 | Kathleen Pender

A state law that protects children from steep tax increases on inherited property is likely contributing to the shrinking inventory of homes for sale in many parts of California.

As baby boomers — the oldest of whom are 72 — die and leave homes to offspring who convert them to other uses, the shortage could get worse.

The tax break, passed in 1986, lets parents transfer a primary residence of any value, plus a generous amount of other property, to their children without it being reassessed at market value for property tax purposes. In California, where long-held homes are typically assessed at a fraction of their current value, this can save children thousands or tens of thousands of dollars per year.

In between changes of ownership, the assessed value can go up by no more than 2 percent a year, plus the value of improvements. Property taxes, including local ones, average about 1.2 percent of assessed value. Normally when long-held properties change hands, taxes soar. But voters have excluded some transfers from reassessment.

The home is assessed at about $54,000, and the property tax last year was $948. Homes in his neighborhood are selling for around $2 million — and often being torn down to make way for larger ones. Had Zapata’s home been reassessed at $2 million, his taxes last year would have been close to $24,000.

“The top 1 percent doesn’t need another break,” he said. “We have all these people who need help, if a little higher property tax would help I’m willing to chip in. What I don’t want my money going to is pension obligations” for government employees.

Comment by jeff
2018-08-17 23:52:33

Watching 2 minutes of Hillary’s “basket of deplorables” speech should have her banned from Apple, Facebook, Youtube and Spotify while she was calling out the guy they just banned.

Clinton: Half of Trump supporters ‘basket of deplorables’
US Democratic presidential nominee Hillary Clinton has called half of Donald Trump’s supporters a “basket of deplorables”.

Speaking at a fundraiser, she said they were “racist, sexist, homophobic, xenophobic, Islamophobic - you name it”.

Why Infowars’ Alex Jones was banned from Apple, Facebook, Youtube and Spotify

By Manuela Tobias on Tuesday, August 7th, 2018 at 2:44 p.m.

“We define attack as violent or dehumanizing speech, statements of inferiority, or calls for exclusion or segregation.”

Comment by ibbots
2018-08-18 06:54:50

No Hilary fan, but Alex Jones is a kook spreading fear and lies. I never paid him much attention until he started with the sandy hook conspiracies.

Interesting though how some who object to his being banned by companies like you tube etc. Have no problem with the Baker guy in CO refusing to do a cake for some guy guys. It’s the same thing, private companies choosing who to do business with.

Comment by Albuquerquedan
2018-08-18 10:06:45

how about vice versa and the government feeling compelled to forcing someone to create something unique against his beliefs and people have no problem with it. Can’t they just find a gay baker and leave this man alone? They get to have their lifestyle and he gets his lifestyle. That is true freedom for everyone.

Comment by Jessica
2018-08-18 16:01:54

Uh ibbotts these some guy guys are targeting this baker for destruction. Not nice

Comment by jeff
2018-08-18 17:29:06

“Interesting though how some who object to his being banned by companies like you tube etc. Have no problem with the Baker guy in CO refusing to do a cake for some guy guys.”

Same thing by the same people, think like us or else.

From Wikipedia

the Southern Poverty Law Center describes him as “the most prolific conspiracy theorist in contemporary America”

Comment by jeff
2018-08-18 22:05:42

“but Alex Jones is a kook spreading fear and lies.”

Such as?

Comment by Mr. Banker
2018-08-18 04:00:54

Yeah, I know this is not real estate related but …

“Bitcoin mining now consuming the annual energy consumption of Ireland.”

Comment by CryptoNick
2018-08-18 06:23:57

The societal acceptance of pernicious behavior to satiate greed seems extremely similar to what goes on in real estate.

Comment by aNYCdj
2018-08-18 06:27:05

This Space Heater Mines Bitcoin While Keeping Your House Warm

Comment by CryptoNick
2018-08-18 06:31:08

China’s Crypto Millionaires Are Using Bitcoin to Buy Real Estate Abroad
Wolfie Zhao and Leigh Cuen
Jul 21, 2018 at 09:30 UTC | Updated Jul 23, 2018 at 18:04 UTC

The chives growing in one crypto tycoon’s California mansion carry a hidden message.

Guo Hongcai, a beef salesman turned early bitcoin adopter from China’s Shanxi province, is one of many freshly minted millionaires funneling parts of their wealth out of the country by purchasing real estate abroad.

In April, Hongcai sold 500 bitcoin in the U.S. then used that money to buy a 100,000-square-foot mansion in Los Gatos, a 90-minute drive from San Francisco, California. His Rolls-Royce, also purchased with the fruits of bitcoin arbitrage, sits in the driveway close to a small chives garden.

“It’s very normal to sell bitcoin in the U.S. After selling bitcoin, you can just buy anything you want,” he told CoinDesk.

Comment by Matt P
2018-08-18 11:23:02

It’s going to level off and probably drop. Nvidia announced in their latest earnings call that they are selling far fewer cards to miners but a lot more to gamers as though suddenly a ton of gamers appeared. No, gamers just couldn’t afford the inflated prices.

Comment by Albuquerquedan
2018-08-18 07:07:56

I saw data out of China recently that power consumption was up 7.8 percent this year. I wondered how much is true economic growth and how much is bitcoin.

Comment by Albuquerquedan
Comment by taxpayers
2018-08-18 07:37:47

a contra view
I’m starting to think re turn down will be like the 90’s

Comment by Albuquerquedan
2018-08-18 08:14:06

You are joining my camp. The bubble has a lot of room to run.

Comment by aNYCdj
2018-08-18 08:37:05

I think i agree, i saw the other day the local hi rise self storage announcing they were full and taking names for a waiting list, never saw that before they always had some type of a move in special free mo. rent truck rental, but not today its full price all the way.

Name (required)
E-mail (required - never shown publicly)
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post