It Doesn’t Have To Be, ‘Oh, My God, This Is 2007 Again’
A report from the Abilene Reporter News in Texas. “Last school year, Bobby Easterling’s Jim Ned Consolidated Independent School District experienced 6.5 percent growth. This year, he’s projecting something close to that. And while the areas south of Abilene may be seeing new homes built and new subdivisions developed, a lot of the new homes, Easterling said, are actually sitting vacant because they’re spec houses, not homes being built for a known customer. He said there are probably 40 to 50 homes built in Jim Ned every year, but many of them go without people.”
“Tammy Kister, president of the Abilene Association of Realtors, said these houses may be finding owners much quicker in recent years than even in 2015. Kister said the school district’s boundaries saw 55 sales in 2015 rise to 100 in 2017. And in the first quarter of 2018, Jim Ned experienced 37 sales. Why? Kister said there are a number of different factors, but it could be a decreasing land price over that same time period, with the median home dropping from $270,000 in 2015 to $224,000 in the first quarter of 2018.”
“‘It would appear, as sold prices have decreased in the last few years homes have become more affordable,’ she said in an emailed statement. ‘The increased affordability factor could be attributed to additional subdivisions being opened with those homes selling in the popular price point of less than $300,000.’”
The Bend Bulletin in Oregon. “The Central Oregon Business Index posted its 28th consecutive quarter of growth in the three months that ended June 30, rising from 145 to 145.8. Although the gain was a fraction of a percent, Tim Duy, University of Oregon economics professor and index author, said it’s significant. Duy said Central Oregon still could see home-price increases slow, similar to what’s happening in the Portland area.”
“‘When does this end? It ends when people can’t afford to pay these prices anymore,’ Duy said. ‘It doesn’t have to be a dramatic, ‘Oh, my God, this is 2007 again.’”
The Tampa By Newspapers in Florida. “After a meeting that lasted four hours before a full house, IRB commissioners unanimously passed first reading of an ordinance to control short-term rentals in the community. Numerous residents spoke on the issue. They came from both sides of the debate. Residents have been complaining that organizations such as Airbnb have turned residential neighborhoods into pockets of small businesses with renters coming in and out at all hours and having late night parties when they are trying to sleep.”
“Local politicians say they are powerless to stop it because of Florida law. However, they are able to pass ordinances that make it more difficult for short-term rentals in residential neighborhoods to operate.”
“Several residents spoke of the disruption short-term rentals cause to their way of life. Among those who spoke to that was Robert Klemmer. ‘I live next door to two Airbnb houses and it is like a revolving door,’ he said. ‘Renters don’t care about trash. The recycle bins are out there all day with the plastic bottles blowing all over the neighborhood. The residential neighborhood has turned into a business district. Maybe this is something you can’t control.’”
“Jo Hammond said living next to a short-term rental property was tough for her. ‘It is an absolute nightmare, nonstop with two or three families there at once,’ she said.”
“Former Commissioner Jim Labadie, who lives in a residential neighborhood and operates a short-term rental motel on the Gulf, said the problem could be solved with a little effort by the neighbors. Labadie did admit that he doesn’t like the short-term rentals in the neighborhoods. ‘I feel like it is devaluing my property,’ he said. ‘It is hurting the people who worked so hard to get their homes.’”
The Orange County Register in California. “A 13,000-square-foot Shady Canyon home is on the market as a short sale for just under $7 million. Short sales, in which a home is for sale at less than what is owed on the mortgage, are a rarity on the Multiple Listing Service these days, especially in a neighborhood full of multi-million dollar homes. Short sales were more prevalent about a decade ago, during the housing downturn, as a way to avoid a foreclosure. In a short sale, the lender must approve the transaction.”
“Built in 2007, the estate at 89 Canyon Creek has nine bedrooms and 11 bathrooms. The listing also cites ‘multiple kitchens, raised pool and multiple game rooms.’ The home, on two-thirds of an acre, has been on and off the market over the past decade. The residence first was listed in April 2008 at $11.8 million. By February 2016 it was for sale at $7.495 million, eventually increasing to $9.495 million. The price dropped to $7.995 million in June and to $6.995 million on August 21, according to the MLS.”
“Tarek El Moussa of HGTV’s ‘Flip or Flop’ is co-listing the Canyon Creek home with Eric Crisp.”
‘Built in 2007…The residence first was listed in April 2008 at $11.8 million. By February 2016 it was for sale at $7.495 million, eventually increasing to $9.495 million. The price dropped to $7.995 million in June and to $6.995 million on August 21′
Oh dear…
Ya think listing with Tarek El Moussa is gonna help sell your shack? Bet he gets a spotlight fee regardless and likely has no involvement in the transaction other than his name and collecting a piece of that sweet commission check.
Dutch auctions certainly are gaining in popularity as of late.
‘Built in 2007…first was listed in April 2008 at $11.8 million’
Oh yeah, normal people buy a new shack and list it immediately all the time. Jeebus it’s already a flop of a flip.
Who spends 10 YEARS trying to sell a house?
$uzanne $ummer$
El Dorado, CA Housing Prices Crater 23% YOY As Sacramento Area Homeowners Take A Financial Beating
https://www.movoto.com/el-dorado-ca/market-trends/
Ha, ha, HA. Yes, cratering, because 17 houses with a 1,400 SF floor plan should certainly be worth the same median price as 15 houses with a median 2,300 SF area. Do you even read what you post? I thought you advertised yourself as a Housing Analyst….HA!
Days on Market: Down 13% from a year ago!
Price in $/SF: Up 2% from a year ago!
Heaven forbid a seller put a house on the market in El Dorado Hills. They would get a higher price in a shorter amount of time.
Where do you come up with “…Homeowners Take A Financial Beating.”???
Oh that’s right, you pull it out of your analytical hole!
Housing JonJingle….. housing.
West Miami FL Housing Prices Crater 7% YOY As Deflation Accelerates The Economy
https://www.movoto.com/west-miami-fl/market-trends/
Ignore him, I think he might be part of Movoto.com’s marketing wing.
My good friend Jon hasn’t the fortitude to ignore anyone.
Chino Hills CA Housing Prices Crater 7% YOY
https://www.movoto.com/chino-hills-ca/market-trends/
‘while the areas south of Abilene may be seeing new homes built and new subdivisions developed, a lot of the new homes, Easterling said, are actually sitting vacant because they’re spec houses, not homes being built for a known customer. He said there are probably 40 to 50 homes built in Jim Ned every year, but many of them go without people’
That’s nothing Bobby. Austin has 3,000 brand new, empty shacks for sale.
What’s the advantage to the seller of HODLing vacant homes during a period of falling prices? It seems like you would stans to lose a lot of money by waiting to sell, but perhaps they believe that selling sooner would accelerate price declines and screw up the comps?
Clackamas OR Housing Prices Crater 9% YOY As Global Deflationary Trend Accelerates
https://www.movoto.com/clackamas-or/market-trends/
https://www.zillow.com/homes/for_sale/Sun-City-Summerlin-Las-Vegas-NV/6939811_zpid/275613_rid/globalrelevanceex_sort/36.222464,-115.283533,36.187628,-115.338464_rect/13_zm/
I was perusing this Sun City Summerlin (Las Vegas) listing.
Scrolling down to the price history, I see that this property was sold in June 2015 for a mere $20,200. I clicked through to the document to verify the price. A sweet deal. And now they want $175K.
I think the pic with the toilet lid up showing the dark brown liquid inside is a nice touch. In this case, it really is worth 1000 words. I couldn’t have described this transaction in words any better.
Guess they can’t polish this turd 😂
HOA dues $311 monthly.
More than I pay for a year
A nation of dummys …
“When does this end? It ends when people can’t afford to pay these prices anymore.’”
It’s not about affording to pay prices, you stupid puke, it’s about affording PAYMENTS on the prices.
The prices are where they are, which is deep - DEEP - into unaffordable land because these prices do not have go be paid by the buyer, they only have to be contracted to be paid by the buyer, which means they only have go be PROMISED to be paid by the buyer.
Promises of paying out money are cheap go make, much cheaper than paying out actual money, THUS astoundingly stupid high prices of houses can be realized because these stupid prices are paid by promises.
‘When does this end? It ends when people can’t afford to pay these prices anymore,’ Duy said. ‘It doesn’t have to be a dramatic, ‘Oh, my God, this is 2007 again.’
You know Tim, I’ve been telling some bubble deniers that post here the same thing. Oh no they say, “the calendar doesn’t say 2007.” I don’t see what that has to do with anything. The bubble is in the prices.
‘Duy said Central Oregon still could see home-price increases slow, similar to what’s happening in the Portland area’
The housing ebola is already in Portland Tim. Seattle too.
Did he really think prices were affordable before we began to level out? If so, why is anyone asking him for real estate advice?
“‘When does this end? It ends when people can’t afford to pay these prices anymore,’ Duy said. ‘It doesn’t have to be a dramatic, ‘Oh, my God, this is 2007 again.’”
Bend shack prices have been unaffordable for years, but FBs who drank the “RE only goes up” Kool-Aid financially overextended themselves to buy anyway - just like they did in 2007. Housing Bubble 2.0 is going to end exactly like Housing Bubble 1.0, only this time around the Fed has blown all its ammo so true price discovery will no longer be deferred.
That is going to be calamity for speculators, FBs, and lenders.
https://www.cnbc.com/amp/2018/07/20/flip-or-flop-star-tarek-el-moussa-made-this-big-real-estate-mistake.html
‘Flip or Flop’ star Tarek El Moussa reveals the major mistake he made when buying his first home
Hearing that a lot! Guess getting into a career where you make money by selling these mistakes to others helps justify your mistake?
http://www.ocregister.com/2018/05/03/christina-el-moussa-sells-yorba-linda-house-for-2-925-million/amp/
Christina El Moussa of ‘Flip or Flop’ sells her Yorba Linda ‘dream house’ at a loss
Ok I don’t think I would work any RE transactions with these two…
“Raghuram G. Rajan, who warned of a credit crisis in 2005 before it hit, is now cautioning that trade wars when combined with a build-up in leverage and high asset prices could result in a toxic mix that dragged global growth.
“We are all very well aware that two things have built up, which had built up before the previous crisis, leverage and asset prices,” Rajan, a former governor of the Reserve Bank of India, said in a Bloomberg Television interview Thursday. “Trade is an issue for the world to be concerned about. It is extremely important that we have good outcomes there. By all means negotiate, but don’t pull the nuclear trigger there.”
https://www.bloomberg.com/news/articles/2018-08-24/foreseer-of-financial-crisis-rajan-warns-of-toxic-mix-on-trade
‘Renters don’t care about trash. The recycle bins are out there all day with the plastic bottles blowing all over the neighborhood. The residential neighborhood has turned into a business district. Maybe this is something you can’t control.’
It seems like the owners could be held responsible for not allowing their renters to trash the neighborhood, with fines used to provide the property incentives and cover enforcement costs. Same case for AirBnB partiers disturbing the peace. I don’t see why these problems are not easily fixed.
“I don’t see why these problems are not easily fixed.”
It might help if you had Luca Brasi on speed dial, other than that what could you do?
If these renter pukes are only there for three days or so then by the time you “got their attention” the three days would be up and it would be time for another batch of renters go arrive on the scene.
Therefore the renters are probably not the correct place to apply the pressure.
“Commissioner Phil Hanna said he understood why people want to rent their homes or bedrooms.
“I talked to one woman who knew that a neighbor got $1,500 for three days’ rental,” he said. “I can understand with that much money at stake why people do it.”
I can understand it, too. And I can also understand the residents who don’t like it.
Not so easy to do in some of the HOA communities, however. Many have restrictions on renting during the first year, even to long term renters.
I’m a renter. Even though my landlord could easily get $1800 for the house I’m in, my rent has been fixed at $1500 since 2014. Know why? Because I pay the rent on the 1st of every month, and take care of the place like it’s my own. “Renters don’t care about trash”? So not true. Responsible renters will be conscientious neighbors.
Our landlords eagerly renew our lease annually for similar reasons.
‘Kister said there are a number of different factors, but it could be a decreasing land price over that same time period, with the median home dropping from $270,000 in 2015 to $224,000 in the first quarter of 2018.’
‘It would appear, as sold prices have decreased in the last few years homes have become more affordable…The increased affordability factor could be attributed to additional subdivisions being opened with those homes selling in the popular price point of less than $300,000.’
Tammy, 300k in Abilene should get you a new shack with acreage, not some crappy lot right next to the Shmoes.
Portland, OR Housing Prices Crater 14% YOY As Homeowners Realize They Overpaid Based On Defective Appraisals
https://www.zillow.com/rose-city-park-portland-or/home-values/
*Select price from dropdown menu on first chart
From your own link:
” Rose City Park home values have gone up 1.5% over the past year and Zillow predicts they will rise 2.1% within the next year. ”
I don’t even have to say anything, your own links are making you look dumb.
Housing my friend.
Summerland Key, FL Housing Prices Crater 18% YOY As Deflation Drives Affordability Higher
https://www.movoto.com/summerland-key-fl/market-trends/
Define “home values.”
OT… Norway has started working on a new Coastal Highway. At the current exchange rate, the estimated cost is $41 billion.
Norway has a population of around 5.3 million people. The estimated cost of this project seems like a lot for a country this size. And projects like this have a way of costing a lot more than then original price tag.
Will the economic benefits really provide enough ROI?
At any rate, it’s an audacious project:
https://youtu.be/HCT-FurFVLQ
https://www.vegvesen.no/en/roads/Roads+and+bridges/Road+projects/e39coastalhighwayroute
I was at a conference and sat next to the CEO of an apartment ownership group. They owned 6,000 units in multiple locations and occupancy is solid and rents are firm.
What I found fascinating is that he owned over 600 units in SF, in small and medium buildings. When I asked him his vacancy, he said about 20%. I was stunned. It turns out they are not re-renting units that go vacant. Rent control creates a scenario where the units are much more valuable vacant the rented.
Once a building has enough vacancy, it becomes twice as valuable to buyers looking to to create for sale housing. How ironic!
So what’s your take on the big spike in foreclosures? It’s mostly 2014 loans and later and in formerly red hot markets. Didn’t you say this would be unpossible?
I am not sure what foreclosures you are referencing. However, I understand foreclosures and the markets are always changing. It is likely we will see more foreclosures when the next recession comes. We always do.
Today, I am seeing data that suggests foreclosures are very low.
“…Black Knight, Jacksonville, Fla., reported 44,900 foreclosure starts in May, the second-lowest such measure in more than 17 years.”
Here is the link: https://www.mba.org/mba-newslinks/2018/june/mba-newslink-friday-6-22-18/residential/black-knight-may-foreclosure-starts-lowest-in-17-years
Note the last paragraph:
“Looking ahead, Blitzer said there could be some concern about how long the moderate default rates can continue. Savings as a percentage of disposable income is declining,” he noted. “At the current level of 3 percent, it is near the low point seen in the boom before the financial crisis. While inflation remains low, wage growth is not very high and home prices are rising two to three times faster. Any rapid rise in defaults will wait for the next recession, whenever it comes.”
However, we are missing the points I was trying to make in this post:
Rent control leads to fewer rental units available.
The value of a vacant unit exceeds the value of a unit occupied.
The law of unintended consequences.
Interesting example of government intervention being counter productive
jingle that’s almost like NYC if you take a rent stabilized unit off the market for 4 years and it generates no income then you can apply to get it destabilized and free market rent.
But they want proof. utilities mail sent to that location, you can live there your family can live there you can use it as an office BUT you can’t deduct it as expenses on your income taxes. That is classified as generating “income”
What is an FB?
Great blog by the way, Ben. Wish I would have known about it back in the day.
“What is an FB?”
One (of many) customers of mind who oh-so-suddenly discovers the meaning of the oh-so-very-interesting term “adjustable rate mortgage”.
😁
Ebola
“F****** Borrower”
One who’s home becomes worth less than the mortgage value.
Former “Believer”
Haha I thought it meant FOMO buyer but I appreciate the other meanings, especially F***** borrower which is definitely what they are, if buying after 2016. I’m in NJ and recently sold my place in Jersey City - which has been in a full blown mania past few years. It is not NYC and never will be, and it may be nice and all downtown, but still absurd what people are paying there now. Renting now nearby and happy.
“F**ked borrower” is the definitive term. Here, I’ll use it in a sentence:
Josh borrowed $400K to buy a shack in Seattle, cuz Suzanne’s research indicated this listing was special, “you guys can do this!” and “It’s different this time!” Josh knew paying 8X his annual income was a stretch, but his Fear of Missing Out (FOMO) drove him to get up on that property ladder. Now Josh would be lucky to get $300K for his rapidly-depreciating “investment.”
Congratulations, Josh - you’ve just been inducted into the swelling ranks of the FB Army.
See also: sad panda.
This. Succinctly and in an accurately descriptive narrative.
“You gotta roll with it” — Caitlyn Vestal, Millennial, Portland, OR
Fawked borrower.
Lol favorite one so far
Santa Rosa Beach FL Housing Prices Crater 5% YOY As Subprime Mortgage Meltdown Accelerates
https://www.movoto.com/santa-rosa-beach-fl/market-trends/
Santa Rose is fortunate. The SW coast of Florida is fooked because of red tide and toxic algae. Could last up to another year.
I think it’ll last longer. The Gulf is a bit of a toilet now.
Where did all that million$&million$.of.gallon$ of BP.Halliburton lard go? … like magic … just disappeared!
Corexit. As a result, this part of the Gulf has never been the same. I wouldn’t put a toe in it, nor would I eat anything that came out of it. No Gulf shrimp for me.
Wouldn’t have anything to do with the$e activitie$? …
https://www.google.com/search?q=oil+rigs+in+gulf+of+mexico&oq=oil+rigs+in+g&aqs=chrome.1.69i57j0l3.12416j1j4&client=tablet-android-verizon&sourceid=chrome-mobile&ie=UTF-8#imgrc=LJu8LJyJH_oSxM:w
Absolutely, but I thought you were asking where all the oil from the spill went to.
Repost from the last thread, this is a map of all the countries where Senator John McCain has called for U.S. military intervention:
http://magaimg.net/img/60er.jpg
x1 Senator can’t $tart a x2 + Trillion$ dollar$ U$A war$ … but, a vice pre$ident looking for “yellow cake” & Pre$ident who’s all ear$ … are able to.
I find the media fawning over him absolutely nauseating.
Remember, that “bipartisan” in this context means serving the interests of unelected globalists first, and serving the interests of United States citizens last.
Off-topic from housing, but economic nationalism is the only hope this country has left.
“I find the media fawning over him absolutely nauseating.”
Testify. Even worse, though, is the bleating of the sheep repeating what the media gives ‘em. Horrible. I can’t even.
Testify!!!
Remember, that “bipartisan” in this context means serving the interests of unelected globalists first, and serving the interests of United States citizens last.
+1000
“Remember, that “bipartisan” in this context means serving the interests of unelected globalists first, and serving the interests of United States citizens last.”
+1000
I love how smart and awake many of the people on this blog are. God bless DJT.
One of the best comments I read was
“I’m going to go on a week fast so I don’t throw up every time someone call him a war hero……..”
That wouldn’t been Donald Davidson, aka, Cap’t “Bone $purs”?
I find the media fawning over him absolutely nauseating.
The same oligarchy that owns the media owns our Republicrat duopoly, including the late Sen. McCain.
#muhbomiran
da bear
“Aisle bee hear all weak!”
New York Times — The Student Debt Problem Is Worse Than We Imagined:
https://www.nytimes.com/interactive/2018/08/25/opinion/sunday/student-debt-loan-default-college.html
No “pent-up demand” for $500,000 starter homes happening here.
New York Times — High Profits and Misery Meet at Door of Smugglers’ Stash Houses:
“You can be in a neighborhood where kids are playing in the streets, and there could be a stash house next door,” said Jason D. Owens, the acting chief of Border Patrol’s Laredo sector, whose office mapped stash houses that the federal and local authorities have raided. “It’s literally the warehousing of human beings — like they were packages to be shipped off.”
https://www.nytimes.com/2018/08/26/us/politics/smugglers-border-immigrants-money.html
“Here Comes the 2nd Wave of Big Money in the “Buy-to-Rent” Scheme”
“A different set of private-equity firms, at the peak of the market, as brokers constantly blame low inventories of single-family houses for sky-high prices.”
(snip)
“This second wave is different. PE firms are paying prices at the peak of the market, amid ceaseless complaints that there isn’t enough inventory of homes for sale, for folks who actually want to live in the homes they buy.”
(snip)
“This Bernanke-triggered first wave of PE firms ended up buying about 350,000 homes, concentrated in a relatively small number of markets. After that wave, activity subsided somewhat. But now the second wave is washing over the housing market, but under entirely different conditions: peak home prices and rising interest rates.”
Stay tuned.
https://wolfstreet.com/2018/08/23/second-wave-buy-to-rent-single-family-homes-scheme/
And the search for yield continues at the expense of society as a whole. But we don’t need to raise rates, right Dan?
When the ten year rate is less than .20 higher than the two year rate, yes it is a bad idea to raise the short term rates .25.
Wouldn’t the ten year adjust higher than the two year?
when short term yields r about the same as long term that signals pain ahead. people fear sh@t is gonna hit the fan and dont want to tie their money up long.If they did tie up there money long term and then a recession hit they would be left holding the bag.
Probably but by an even narrower amount. Unnecessary risk. it is increasingly the risk of inversion.
Look$ like a game of “Chute$ & Latter$” … Where’s the box lid with the rule$, eye think $omeones cheatin’!
https://www.google.com/search?q=federal+funds+2007+2010&client=tablet-android-verizon&prmd=niv&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjGyfW03IvdAhVDF6wKHXWHCHcQ_AUIEigC&biw=962&bih=601#imgrc=TL48sAns62iTiM:
Thanks for the read mr banker and of course Ben for all his great posts. Opening up these eyes of mine as to what has been pushing up RE for so long. Guess I can’t solely blame Chinese investors anymore 😂
Local politicians say they are powerless to stop it because of Florida law. However, they are able to pass ordinances that make it more difficult for short-term rentals in residential neighborhoods to operate.
That’s right u can’t stop it
I can think of ways the neighbors could “disincentivize” the owners of these short-term rentals from ruining their ‘hoods. Lots of ways.
One would be to leave a massive pile of dog sh!t, like weeks worth, in an open trash can just on the other side of the fence of the AirBnB so that the guests couldn’t help but smell the stench every time they showed up.
Make it so bad that every review complained of it, but if the owner showed up you could simply put the lid on the can and hide it. I would pull out all the stops on that nonsense.
Burke, VA Housing Prices Crater 7%YOY As Housing Correction Trounces Fairfax County
https://www.movoto.com/burke-va/market-trends/
you know I think people learned from the last downturn that its better to walk away and then come back when the coast is clear with a govt loan. I think a lot more folks will do this if prices crater again.
It looks like a lot of institutional money is about to hit the housing market over the next few years. What do you guys think about this - how much will this dampen a correction/crash?
https://www.businessinsider.com/a-massive-buy-to-rent-scheme-is-hitting-the-housing-market-2018-8
Gotit all figure$ out do they? … Including plugging in the 10 year “perennial cycle$” financial in$urance policy … $1,000,000.00 + home$ for renter$ (-monkey wrench$ to$$ed in for ju$t.fer.the.heck.of.it)
$mart $uits, $tuffed with $mart monies$
“This term of over 10 years could also be an indication that the next housing downturn is being figured into the plan, and the duration of the fund is designed to extend past it in order to avoid having to exit at a bad moment.”