The Question For Buyers; Will The Investment Pay Off?
A report from the Santa Fe New Mexican. “Santa Fe’s housing market has lost its fear. With buyers finally stepping up, the number of residential sales in the first quarter was the highest in five years. ‘I think the buyers are tired of waiting,’ said Stephanie Duran, an agent with Barker Real Estate. ‘My gut is they’re tired of being afraid. The threat of higher interest rates is greater than the fear of maybe declining prices.’”
“As home prices collapsed — down perhaps 30 percent from the top of the market in Santa Fe — many homes were pulled from the ‘For Sale’ listings, and refinanced or converted to rentals. Other owners simply cannot sell because their house is worth less than what is owed to the lender. These owners would have to write a check at closing to cover the difference between what they would net with a sale and what is owed on the mortgage. These factors have resulted in less inventory, which is down 30 percent from 2010.”
“‘The decrease in inventory has created more urgency,’ said Warren Sacks, VP of Barker Real Estate. ‘Buyers recognize if they don’t buy this property, it might not be there.’”
“Janice Diamond, a self-employed massage therapist, was one of those on the hunt for a house Wednesday. She’s been in Santa Fe for 25 years and is renting a place off Rodeo Road. She’s looking for more open space, fresh air and a home where her aging mother can live independently. Now she’s back with a mission of owning a home by the end of summer and has been looking with Barker agent Francine Miles. Her quest for a home with a ‘mother-in-law’ suite for about $300,000 would have been impossible a few years ago, Miles said.”
“The short sale Diamond looked at has been priced at $319,000, or $152 a square foot, for 260 days. ‘You get to the point where the banks don’t want to lower it anymore,’ Miles said. Diamond also looked at a bank-owned, 2,000-square-foot home on 1-plus acres. It was described by Miles as ‘a smokin’ deal,’ for $304,000. But many of the wood floor planks were missing, the vigas were aging, the home would need a new back deck and front portal, and there was no cooling.”
“The question for Diamond, as with all buyers, is whether the investment would pay off. ‘If it [the market] goes up, what would this be worth?’ she asked.”
From KVUE in Texas. “Cynthia Mattiza of Realty Austin says it’s a seller’s market right now. ‘I tell buyers, ‘If you like it, act on it now,’ said Mattiza. ‘A house goes on the market and literally within seven days, you probably have multiple offers.’”
“Ryan Rodenbeck of Spyglass Realty and Investments says homes within four miles of downtown and Central Austin are in high demand. He says homes move fast when the presentation and price are right. ‘The last seven houses we listed this year have gone full price or above,’ said Rodenbeck.”
The San Antonio Express in Texas. “Home building is on the way back. San Antonio-area home builders in the first quarter started 1,636 homes, a 10.4 percent increase over the same quarter last year. Lot supply continues to be an issue for the building industry. The San Antonio market has 18,636 vacant lots, a 31.8-month supply. But the 90 most-active neighborhoods have just a 17.6-month supply, a shortage.”
“And it’s harder to qualify for a mortgage now than in recent memory. Jack Shull, San Antonio branch manager of Guild Mortgage Co., said it’s possible — but it can be time-consuming — for first-time buyers to get mortgage loans. A few years ago, no-documentation loans, known by the industry as “liar’s loans” were prevalent and helped contribute to the housing crash. ‘We’re still able to get people qualified. It’s just much more tedious. We put them through so many more hoops and bells and whistles,’ Shull said. ‘It’s more time-consuming. But frankly, it should be. Today I think people understand that buying a home is a serious thing.’”
From KTEN in Texas. “In Grayson County, the real estate market is gleaming with possibilities. Tour a few neighbors in Grayson County and you will find the occasional for sale sign. ‘Our months of inventory have come down from about 13 to 11,’ says Mark Tooley, Virginia Cook Realtor.”
“With interest rates near 4 percent, folks are excited to purchase. ‘A lot of people think I can’t get a loan, but that’s not necessarily true. You have to be able to pay your mortgage and have good credit, but there’s a lot of money out there to be loaned,’ says Tooley.”
“And on the flip side, sellers, you can now make your investment back. ‘Today if you bought your home in the last four, five years, you can probably sell it for what you paid for it. If you bought it 20 years ago, you’re going to make a little extra on the side,’ says Ron Schildknecht, association executive, Greater Texoma Association of Realtors.”
Pegasus News in Texas. “The Huse family finally got tired of all the driving. Two years ago, they packed up and moved to the Mosaic Building in downtown Dallas. With any family living downtown, safety is also often an issue. Safety issues used to keep Heather Huse up at night, but now an automatic alarm system and a host of other safety perks let her sleep in peace. ‘There’s one door in and one door out, so if I lock it, that’s it,’ she said. ‘The building emergency system takes care of that for me, and worrying about break-ins is no more because I’m 18 floors up with a locked door.’”
“The Montgomery’s have resided on the 17th floor of the Gables Republic Tower for nearly three years. Shannon Montgomery and husband Ken Montgomery knew what an exciting experience living downtown would be for their two daughters, ages 7 and 10. ‘I started becoming more relaxed in situations where other parents would be very nervous,’ said Ken Montgomery. ‘With cars and trains flying by, I know what to expect with my kids because they spent time living around it.’”
“‘It’s important to be alert, stay together and aware of what’s going on around you,’ said Shannon Montgomery. ‘Our girls have learned that, and it makes them grow.’”
My San Antonio in Texas. “The posh but troubled Boot Ranch golf resort near Fredericksburg is on the market. Boot Ranch, a 2,051-acre master-planned golf community in Gillespie County, started selling luxury lots in 2005. But the upscale neighborhood has been slow to materialize. ‘It was a terrible time to try to get off the ground,’ said John Flournoy, managing broker of the Phyllis Browning Co. ‘They were about 18 months slower than they should have been. If they had opened earlier, they would have had a year or two of appreciation on the front end. They opened when the market started sliding.’”
“About 39 estate lots out of 110 have been sold, eight homes have been built and two homes are under construction, according to Land Advisors. Flournoy said the project is too far from Austin and San Antonio to attract buyers who are still working and has suffered from competing with the better-located Horseshoe Bay and Cordillera Ranch. But he thinks it will eventually succeed. ‘Boot Ranch will survive this,’ he said. ‘In 20 years, it will be successful.’”
From Tulsa World in Oklahoma. “In one Tulsa County neighborhood, landlord Harry Heuszel owns several rental properties. He paints over bare plywood nailed to windows and doors of abandoned homes owned by others. He even tries to match the paint so that it blends in with the existing trim color as part of an effort to keep up neighborhood appearances. ‘It’s hard to rent these houses when you got a ghost town over here,’ Heuszel said.”
“In Lake View Heights, most homes saw no change in value in the past year. But among those that did, the change was drastic. One home sold for $60,000 in 2006. After remaining unoccupied for five years, it sold again for $6,000. Another home in the same neighborhood, a 975-square-foot, 57-year-old frame structure, also sold for $56,000 in 2006. A local real estate investor purchased the home in 2010 for $7,000, records show.”
“Heuszel has been watching all of those home sales and others in the neighborhoods since the mid-1990s, many of which he says were overvalued. ‘These homes were never worth that,’ Heuszel said, ‘as far as I’m concerned.’ Heuszel, who owns about 10 rental homes in the neighborhoods, blames the banks. ‘The banks were greedy to loan money,’ Heuszel said. ‘The banks would loan $45,000, $52,000 and $57,000 on these things.’”
“Out-of-state investors purchased some homes, installing new windows, central heat and air conditioning, even granite counter tops. ‘And guess what? They couldn’t sell them for $45,000,’ Heuszel said. ‘So they went belly up.’”
“County Assessor Ken Yazel said his office takes into account abnormal sale prices. ‘If I have a neighborhood of, say, 200 homes and there’s been 25 sales - and a person came from California and paid too much - we don’t want that to raise the values of everybody else,’ Yazel said.”
“Peter Lewis, 69, is one of those who admits he didn’t research the area well enough when he purchased a couple of homes in the area with cash in 2008. Coming from his native England, Lewis said the $18,000 and $24,000 sale prices seemed like bargains when he bought the homes. He has renovated both homes, but now said he just hopes to recoup his investment. ‘If I get more money back, I’ll be lucky,’ Lewis said.”
“Will The Investment Pay Off?”
The aftermath of the Great Housing Bubble brought on one of the slowest 30% corrections in the history of Western economies, and the entire event occurred against a backdrop of stealth and overt interventions to prevent it.
Given how slow the crash played out, wouldn’t one expect the following dead cat bounce to proceed in similarly glacial fashion? And is it reasonable to guess those who buy into the dead cat bounce will meet a similar, though more gradual, fate to those who buy the DCB one day after a stock market crash?
Interesting question, the trajectory of the correction. On average, we’re back to what, 2002? Are we going to correct 10 years of a 40 year credit expansion and call it good?
Some have been buying the whole time we’ve been watching this train wreck, saying it is the bottom. It’s bottoms all the way down.
It’s spring again for homebuilders around San Diego, as the bulldozers are cranked up and running along my morning commute route for the first time in maybe five years. The large billboards indicate pricing “From the $600s” or “From the $700s”, so apparently there is a new generation of qualified new home buyers around North County San Diego chomping at the bit for a chance to buy a new McMansion tract home in the $500K+ range.
“From the $600s” or “From the $700s”
I say good luck with that…to all the suckers that end up “buying” in that development. Think about that debt, it’s mind boggling to me.
Think about that debt, it’s mind boggling to me.
No chit…I couldn’t get a good night’s sleep.
More Job creators fleeing.
Wealthy Americans Queue to Give Up Their Passports
Rich Americans renouncing U.S. citizenship rose sevenfold since UBS AG (UBSN) whistle-blower Bradley Birkenfeld triggered a crackdown on tax evasion four years ago.
About 1,780 expatriates gave up their nationality at U.S. embassies last year, up from 235 in 2008.
“Every dollar you save, you lose to the U.S. tax man,” said tax lawyer Ledvina. “That’s one reason why people give up citizenship.”
Americans, who disclose their non-U.S. bank accounts to the IRS, must file the more expansive 8938 form beginning this year that asks for all foreign financial assets, including insurance contracts, loans and shareholdings in non-UNN.S. companies.
Imperial Overreach
The 2010 Fatca law requires banks to withhold 30 percent from “certain U.S.-connected payments” to some accounts of American clients who don’t disclose enough information to the IRS.
“There is incredible frustration at the audacity and imperial overreach of this law,” said David Kuenzi, a tax adviser at Thun Financial Advisors in Madison, Wisconsin, referring to Fatca.
Failure to file the 8938 form can result in a fine of as much as $50,000. Clients can also be penalized half the amount in an undeclared foreign bank account under the Banks Secrecy Act of 1970.
“It’s a big brother concept,” said Brent Lipschultz, a partner at New York-based accounting firm EisnerAmper.
http://finance.yahoo.com/news/wealthy-americans-queue-passports-220100649.html;_ylt=AqGCkaSm_22j2ah6JJ2WxM2iuYdG;_ylu=X3oDMTNyMDNyczE2BG1pdANGUCBUb3AgU3RvcnkgTGVmdARwa2cDMTE3MmZiNDgtMjY1NC0zZGE3LTg2MTAtOTVhM2RlMGE4MTdmBHBvcwMxBHNlYwN0b3Bfc3RvcnkEdmVyAzRhMTgyNTYwLTk0NGItMTFlMS04ZWVkLTIzZTcwOTYzZDFlMA–;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3
If you have more than one citizenship, I don’t see why you would even have to disclose your US citizenship to a foreign bank. Just show them your other passport and be done with it.
The trick is getting you millions out of the US into that Foriegn bank.
Let’s see! I don’t want to pay taxes here so I’m going to give up my passport. Screw you America! I’ll just head for Europe and put my money in US T-bills to keep it safe. Besides, property always goes up everywhere in the world. And who needs family and friends around anyway.
Ron:
I would expect tens of thousands up to their necks in students loans to be next up… live free and clear in another country.
But i guess ohboozo & batmitty will find away to strip their passport if they owe student loans
But again if you have a small family you could afford to send them plane tickets to visit you.
I’m still interested in Polly’s opinion of cancelling your degree or license in exchange for cancelling the student debt.
Would lawyers turn in their JD and be debt free? Could always become a paralegal.
Never happen. Those loans are guaranteed. Why would the government want to pay $100K to pay off your loans for you and then have you work at a lower paid position for the rest of your career? It might be advantageous to a few people, but it is a terrible policy (encourage people to just go to expensive schools for years, live and pay tuition off student loans, cancel the loans and the degree and then start on another).
Never happen. Not in a million years.
But if it was for only current graduates, not future ones..
Agreed maybe those with medieval history degrees would turn them in since they are presently working at Starbucks… but would it be so bad?
They might save money for a new house and family?
Moral hazard. If they do it for the current crop, people will believe they will do it for the next group in a few year. NEVER going to happen.
Where do you get the idea that the PTB care if people have money for a house and family outside of speeches? A few of the pundits care, but even they care because it increases demand and therefore helps the economy. I get the general impression that Paul Krugman (and maybe a few other liberal pundits) care about the human misery caused by a recession/depression of this length, but he is unelectable and unappointable to any position of significance.
Here’s a hint, dj. Stop thinking of politicians/economists/etc. as if they care about you or anyone else the way your/their mother does. It leads to bad assumptions.
I understand the moral hazard, but guaranteeing payment of non functional college degrees is also a moral hazard…so which is worse?
I predicted that 1/3 of colleges would be gone by the end of the decade. What really is needed is 6mos-1 yr intensive full time training courses tied to collecting unemployment or public assistance.
And Polly I would like to see EEOC expanded to include “intern” jobs..why should i be denied keeping up my skills in a working environment simply because i am too old or not a student in college for credit?
I know another moral hazard but what if I want to volunteer at a For profit company because nothing is available at the non profits?
It wasn’t long ago when I said the entire education system needed to be overhauled and got a lot of grief from the libs here.
The bottom line is higher education is great for specialized fields but even that has become overly expensive and blurry when it comes to actual in-field learning. In my business I’d like a return to business schools that gave 2 years of intense instruction related to, well, business!
The establishment is leading these young people right off a cliff into a lifetime of debt and servitude for a piece of paper.
It wasn’t long ago when I said the entire education system needed to be overhauled and got a lot of grief from the libs here.
Bad Andy, I’m as liberal as they come, but I agree with everything you just said. And you’ll be glad to know that we have a kindred spirit over at the EduBubble blog.
Well at least there’s some common ground there.
Another problem I have is in part due to the system I think. These kids I interview fresh out of a 4 year school feel like they’re owed something. Part of that is the dream they’re sold and part of it is the generation. I try to weed them out at the job fairs and on the phone before they get here. If we’re talking about customer service jobs, the pay sucks and the benefits suck. If we’re talking sales, you’re going to go hungry for a year or 2 and set for the next 15 or more. The problem is they don’t want to take that initiative to work to get to that point. Where’s my benefits, my 3 weeks of paid vacation, and my 6 figure base pay?
I’m going to have to take this a bit at a time.
“I understand the moral hazard, but guaranteeing payment of non functional college degrees is also a moral hazard…so which is worse?”
Guaranteeing costs for college degrees when they can’t be discharged in bankruptcy isn’t taht much of a moral hazard. It is an undercertain business proposition if you care at all about timing, but that is not at all the same thing. The person who did the borrowing is on the hook for LIFE. That is a long time to get your money back.
“I predicted that 1/3 of colleges would be gone by the end of the decade. What really is needed is 6mos-1 yr intensive full time training courses tied to collecting unemployment or public assistance.”
No, that is what YOU want. Most people on unemployment are perfectly employable. If they hadn’t been employed, they wouldn’t qualify for unemployment. As for your fantasy that people on public assistance can’t speak English, that is your fantasy. And training classes for people on assistance/unemployment is outrageously expensive. You either have to expand the government work force or you have to pay contractors who cost even more. I agree that it would be very lucrative for someone, so I’m not sure why there isn’t any big lobbying money behind it. I expect the people who would try are busy making even more profit as defense contractors so they don’t bother.
What training programs wouldn’t be is effective. Because government programs take a long time to set up and figuring out what skills businesses are going to need in two or three years is beyond their ken. If business wants particular skills they are going to have to provide the training. Like they used to do not so very long ago. Also pay more taxes so the community and public colleges can function again.
“And Polly I would like to see EEOC expanded to include “intern” jobs..why should i be denied keeping up my skills in a working environment simply because i am too old or not a student in college for credit?”
Because working at a job without being paid and without an educational goal is called slavery. OK that is an exageration. For it to be slavery, you have to be unable to quit. But it is a serious violation of labor laws. Do you really want to set up a system where any adult can “volunteer” for a job for months or years without being hired? What makes you think that at the end of your “internship” they won’t dump you for the next person in line willing to work for free to get experience? The fairly tight exceptions for students are tight so that companies can’t string people along for years and then just dump them for the next round of free labor. No cost center manager ever likes you enough to pay you a living wage when someone else is willing to do it for free.
“I know another moral hazard but what if I want to volunteer at a For profit company because nothing is available at the non profits?”
See previous response.
Oh, and dj, all those “overqualified” letters you say you keep getting. Don’t take them so literally. They are written or at least sent out by the same presentable young HR people you scorn so much. They have a couple of letters they send out. One for people who have no or little relevant experience and one for people who have a lot of relevant experience. They send everyone who has a lot of relevant experience and they don’t want to interview the overqualified letter. It doesn’t actually mean that you are overqualified. It just means they don’t want to hire you and that they read your resume enough to determine that have relevant experience.
The other people are getting similarly generic missives talking about how competative the environment is and how many resumes they received and that their background doesn’t meet the company’s present needs and that their information will be kept on file for future reference. None of that is necessarily true either.
You read way too much into the letter. It doesn’t mean what you think it does. It just means, “Thanks, but no thanks.” A resume reviewer could give you more useful feedback. See if you can find a free event at a community center or something.
Another problem I have is in part due to the system I think. These kids I interview fresh out of a 4 year school feel like they’re owed something. Part of that is the dream they’re sold and part of it is the generation.
I was discussing this very topic with a neighbor last night. My neighbor is right around 30 years old, and this mentality just drives her bonkers. Especially their idea of being entitled to be managers right out of college.
What got us on this topic? We saw some college kid driving by in a fancy-dancy car and my neighbor started asking about what would happen when this kid’s parents finally cut her off.
Thanks Polly for the great answers….I understand the legal principles, but on the ground here its seems like we can do a lot better then this, to put people back to work and really give people hope. And I think for a lot less then we are wasting today.
I should have added maybe 200 hours without pay 15 hrs a wk 13 weeks a semesters worth.
The benefit is a recent job in your field at the top of the resume….or else get serious about suing/fining companies that discriminate against the long term unemployed or those that got survival jobs in the meantime.
http://www.cbsnews.com/8301-504803_162-57380914-10391709/discrimination-against-the-unemployed/
—-adult can “volunteer” for a job for months or years without being hired
“.or else get serious about suing/fining companies that discriminate against the long term unemployed or those that got survival jobs in the meantime”
Sue them for what? Discrimination against people who don’t have recent related job experience isn’t illegal.
I took umbrage at not even being one of 12 interviewed for a part-time English Writing position at my local community college.
At the time I had an MBA in Management and several years
of teaching ESL.
As one of 173 unsuccessful yet basically qualified applicants, I now understand the huge pool of qualified applicants who prefer to live in SoCal, and don’t mind stupidly generous benefits including pensions.
Easy to find better qualified and experienced teachers in most subjects in SoCal than other locales.
Future writers may well be better off with a teacher who specializes in writing.
Was I discriminated against? Yes, but for the greater good.
Hate to admit I was not the best man for the job (per the resume).
well i guess ohboozo an Batmitty don’t care much for the American workers or else they would have gotten mad at this crap, and maybe proposed some quick legislation to stop it??
Polly it really is offensive to know you have all the skills qualifications even proof you done freelance work in the mean time, but to be rejected solely because you are not on someone payroll full time in the last year or 2. And then to put it in the ad…. what next no blacks no jews will be acceptable, and Damn those protected classes.
Oh wait we can put in the ad must speak proper English, and we work late Fridays and all day Saturday and you must be available those times or don’t bother to apply…..is that acceptable? Thanks!
To the passport giver-uppers, I have this to say:
Don’t let the door hit ya where the Good Lord split ya. And don’t come crying back home when your new country decides that it doesn’t like arrogant Americans.
Slim gotta nasty streak…….
I guess maybe I am a little more sympathetic to the kids who are getting raked over the coals, its like buying a car you have to beg to special order a car with just the basics.
And then you are forced to have a 4 year degree in just about anything to even apply at companies today. Because they can.
Here is a tip for your radio show, you as the resident librarian are so far ahead of today’s kids who really need to be retrained in doing Internet research..AKA Homework surprisingly very few are good at it…they may have the latest ipad app but doing your homework which is a big part of being a good talk/radio show host is scary for them.
Here is a tip for your radio show, you as the resident librarian are so far ahead of today’s kids who really need to be retrained in doing Internet research..AKA Homework surprisingly very few are good at it…they may have the latest ipad app but doing your homework which is a big part of being a good talk/radio show host is scary for them
Oh, no. I’m busted. I need to do more research on the playlist for my Mother’s Day show. A homework-doing I shall go!
You know ya gotta play this one:
http://www.youtube.com/watch?v=do9Jo-uFGa0
If Rosie Ledet does this song, I can play it. (The show I’m creating a playlist for features music by female artists.)
How very strange: Prices of houses are down thus underwater sellers cannot sell without bringing cash to the table so they hold off on selling. Because they hold off on selling fewer houses are put on the market. Because fewer houses are put on the market a shortage of houses arises which fuels a buying frenzy.
The buying frenzy will lift prices but only up to the point whereby those who are now underwater are no longer underwater and thus do not have to bring cash to the table, and this is the point that they will put their house on the market.
So even though prices of houses may rise the prices will only rise up to a certain point because the price rises will trigger more dumping of houses onto the market, and this dumping will act to put a lid on furthur price rises.
It is only after all the dumping is completed that RE will have a chance to experience a runaway market.
The difference between the market today and how it was six or seven years ago is people today cannot sell and people six or seven years ago didn’t want to sell.
Six or seven years ago a house was considered a money-making machine, and who wants to sell a money making machine?
And six years later, it’s a money losing machine.
The losses at current inflated asking prices is staggering.
Six years ago rising prices begat rising prices. Today rising prices begats dumped inventory.
‘who wants to sell a money making machine’
Especially when they can refi and sell it to the bank over and over.
Yeah, this ‘low inventory’ thing is completely conjured up and irrational:
‘if they don’t buy this property, it might not be there’
‘If you like it, act on it now. A house goes on the market and literally within seven days, you probably have multiple offers’
Are people really falling for the shortage line again?
And this:
”The threat of higher interest rates is greater than the fear of maybe declining prices.’
Ya know, when a salesperson uses the words threat and fear in the same sentence, something ain’t right.
“…threat and fear in the same sentence…”
Seems they forgot to play on greed.
”The threat of higher interest rates ??
Speaking for my area only, I think the primary driver for those that want to buy is the monthly payment…The price paid appears to be secondary…How much a month is the question…
We seen this before….Unless you buy into the idea that interest rates are going to remain this low for decades, then there is great risk that you could lose your a$$ if you need to sell in a environment of significantly higher rates…I would add to that, the likelihood that major tax reform will not be friendly to real estate in general, and high cost housing in particular…
I remember walking through a Bass Pro Shop with my son who is a avid fisherman…The sign on the side of this beautiful 21 foot bass boat said; “$299./Mo.” We stopped and looked at it and discussed how we could split it and its only $150. bucks a month each…Easily doable for either of us…Further investigation revealed the price…Right at $50,000…We walked away without engaging any salesperson and rambled that they must be financing this thing for 15 years…
Sorry for the long ramble but like the boat, real estate is being sold right now on the monthly nut, not the 30 year price you are paying…
“Speaking for my area only, I think the primary driver for those that want to buy is the monthly payment…The price paid appears to be secondary…How much a month is the question…”
I doubt that observation applies to your area alone; in fact, I would be quite surprised if the ‘how much a month’ mentality does not drive the vast majority of current home purchase decisions.
That said, I hope you realize the huge advantage those who think in terms of long-term costs and financial risks of home ownership have over How-much-a-month Harry or Sally.
Advantage ??
Well, if I am right, and we see both higher interest rates and adverse tax legislation effecting real estate the yes, the waiting game is a advantage in that you will buy it cheaper (price) later….
I would also suggest that all of these home buyers are not stupid given the knowledge that we have in this valley…I guess I am just sharing what my observation is given the huge amount of money (price) that people are paying for these shacks…We are in full blown mania “again” at least in some locals..
But, I would also share there is a disconnect with some product…Specifically, condo’s & townhomes…Even in good locations, they are still well below the peak of 2006… Unfortunately, I do not see the same for single family detached in those same locations…
And another story touting lack of inventory:
Some Housing Markets Rebound, But Bargains Scarce
by Ted Robbins, National Public Radio
http://minnesota.publicradio.org/features/npr.php?id=151709227
Tease:
Arizona is home to one of the nation’s extraordinary turnarounds. The Phoenix-area median home price rose 20 percent over the past year — 6 percent in March alone. And Tucson was recently named the nation’s best market for investors. But the easy money has already been made.
Ha! The easy money’s been made fleecing those Canadians. NPR probably followed up that story with an ad for the national association of sweaty used house salespeople.
‘‘TOP-20 ALL-TIME SWEATIEST CITIES IN AMERICA’
1. Phoenix, AZ
The Canadians, especially French Canadians are snapping stuff up in Palm Beach County at inflated prices. It happened all winter this year and last year.
Ya know… being french canadian, I can tell you we’re not the sharpest knives in the drawer and I see more evidence of this all the time. My new gypboard sub is a crew out of montreal. Oh my word what a bunch of goobers these guys are. Not a single one of them own a tape measure. They use string and a pencil. I’ve never seen anything like it in 20 years in the heavy construction business. Thus I’m not surprised than Canuckians are the latest pool of suckers getting skinned by the realtor crime syndicate.
Oh my word what a bunch of goobers these guys are. Not a single one of them own a tape measure. They use string and a pencil.
LOL! Probably couldn’t read a tape anyway.
“‘If you like it, act on it now. A house goes on the market and literally within seven days, you probably have multiple offers’”
This one might be true in certain markets. A college friend of 25 years has been selling real estate in the bay area for 20. She reports the exact same effect with the low-end (under 250K) homes. She says she has never been so busy. At the same time, mid and higher-end homes not moving.
“Prices of houses are down thus underwater sellers cannot sell without bringing cash to the table so they hold off on selling. Because they hold off on selling fewer houses are put on the market.”
This happens every time there is a housing bust. Supply shrinks when prices drop (as predicted by textbook economics theory), but this is in response to the drop in demand which accompanied the bust. At the end of this adjustment process, you have fewer home sales transactions at lower prices than at the bubble top.
Because fewer houses are put on the market a shortage of houses arises which fuels a buying frenzy.
Given efforts by the Fed to push the interest rate pedal to the metal and hold it there for years, plus infusions of federally-guaranteed loans from Fannie, Freddie and the FHA, it is not surprising to see bid wars this early in the aftermath of the Housing Bubble collapse. If you artificially jury rig housing demand with an infusion of easy money, bidding wars are a natural consequence.
“The buying frenzy will lift prices but only up to the point whereby those who are now underwater are no longer underwater and thus do not have to bring cash to the table, and this is the point that they will put their house on the market.”
As noted above, the artificially-stimulated demand is drawing in new builders offering prices ‘From the low $600s, $700s’ etc — just under the $729,750 conforming loan limit bar for San Diego.
If you are a bank and you have someone living in a house that you carry the mortgage on then it may benifit you not to evict but instead allow the person to stay-and-not-pay.
If you evict then you end up putting another house on the market, and this additional house on the market will act to keep house prices down. But if you allow the occupant to pay-and-not-stay then you don’t have to put the house on the market and prices will be stronger as a result.
Best of all, if you can convince the staying-but-not-paying FB that he has a chance of ending up owning the house then he will have an incentive to maintain it, so when the time is right for you to finally evict you will be getting a well taken care of house rather one that has been trashed.
Your argument does not work in the case of an individual homeowner in a competitive market.
However, with five or so banks, comprising 50%+ of the entire banking sector, plus F&F controlling the shadow inventory with oligopolistic market power, it could work quite well.
The oil in a stolen car should be changed regularly too.
The house has to go back to what is owed on the loan plus 6 percent RE selling fees. The home I bought was built in 1991. I bought from the original owner. After paying a 5 percent selling fee he netted $50K.
If you get a chance read all of Brian McGrory’s writings on corporate greed. There is a undeniability to his arguments not found in many others.
At some point in the future, maybe 50 years from now, maybe a century, historians will look back at this era as the time when America basically lost its collective mind.
This is not a screed against the rich. There are precious few people who don’t want to be part of that group. But there should be at least some rhyme or reason to who makes what. You’re an entrepreneur, an inventor, someone who founded a business by taking enormous risk, you deserve whatever the open market will bear. It’s why there’s admiration (and envy) rather than ill-will for that Holliston-bred techie who made $400 million from the sale of Instagram, or all that money made in San Jose and along Route 128.
Fifty million a year for an insurance executive? The corporate world thinks this is business as usual, the way things are supposed to be. It’s really nothing short of obscene, more evidence of an unparalleled age of greed.
http://rutlandherald.com/article/20120414/OPINION03/704149975/0/ARCHIVES
Key quote from the op-ed:
“These boards, of course, are the real problem. Kelly revealed this week that the Liberty Mutual directors are paid $200,000 a year, a figure never previously reported.”
To which I say:
After my father was no longer able to hold the position, I took his seat on the board of the company he co-founded. And I’m here to tell you how much I got paid for my year of board service:
Bupkis.
That’s right. Bupkis.
And none of the other directors got paid either.
May 1, 2012, 12:26 p.m. EDT
Why U.S. house prices won’t recover
Taking inflation into account, home prices are down to 1895 levels
By Jack Hough
When will U.S. house prices recover? Likely never. But that’s no reason not to buy.
The latest S&P/Case-Shiller numbers, reported last week, show that prices in 20 major markets declined 3.5% over the year through February. They’re now back to 2002 levels. If we subtract for inflation, they’re back to 1998 levels.
…
Glancing at the chart this dummy put alongside his article, it appears that buying at 1895 prices would have led to a 33% loss in value by the mid-1920s, with no recovery until after around 1950, for anyone who lived 55 years after buying.
That would appear through the lens of the rear view mirror to be a pretty stupid financial move. I hate when journalists fail to point out the obvious.
Wow, just wow! Heather didn’t feel safe before but she does now eighteen floors up in an apartment with only one door in and out. Hey Heather just how far up does that fire ladder reach and only one exit into a burning hallway. Glad you can now sleep at night; me, I’d be a little edgy.
She is very naive to think no one can break into her apartment. I’m sure the bums loitering outside her building are the kind and friendly ones you see on tv.
I wonder where she drives to do her shopping as there are no grocery stores/Target/Walmart/ect in downtown Dallas.
Yeah, I’m dying to live in obsolete office space:
‘According to Dallas’ Office of Economic Development, the city’s primary downtown initiatives are residential conversions of obsolete office space…In addition to the residential development and new parks, there are markets and gas stations popping up around the edge of downtown.’
The edge, huh? Why don’t they want to pop up in downtown?
On the bright side, it’s not too far to find a 40 ounce bottle of malt liquor.
I think they stopped selling the 40’s due to pressure from the city and only sell 24 oz.
They won’t go after Heather when she’s IN the apartment. They wait… and watch.
Dumb question of the day, yet one that may be hard to answer:
Is the level of government intervention in the aftermath of the Housing Bubble’s collapse historically unprecedented compared to the aftermath of similar real estate busts? Or does it just seem extreme when viewed (for the first time) through the fish bowl of the internet?
‘Four of the world’s largest central banks have gone absolutely berserk, running the money printing presses like never before in history’
http://www.moneyandmarkets.com/what-happens-if-central-banks-fail-in-their-giant-experiment-49448
BOE + BOJ + ECB + FED
Seems like the BOJ’s printing press velocity had little effect on Japanese asset prices since the late-1980s collapse. I guess it’s different here in the U.S., especially with so many central banks running their printing presses at berserk levels at the same time?
May 1, 2012, 4:02 a.m. EDT
The Fed will provide, it has no choice
By Mary Anne & Pamela Aden
The stock market is looking good.
A renewed rise is getting underway, and this will be reinforced if the Dow Industrials (DJIA -0.18%) can rise and stay above 13,250 points.
It’s currently close to that level, and if it’s surpassed, it would be a new high for the move, suggesting the bull market is strong and on its way to higher highs.
Addicted to the Fed
…
This news should be great for nominal stock prices: The worse the real global economic picture gets, the more incentive central banks have to paper it over with massive liquidity infusions.
May 2, 2012, 12:14 p.m. EDT
Europe stocks drop on downbeat jobs data
UBS bucks bank-sector weakness, up following well-received results
By Sara Sjolin, MarketWatch
LONDON (MarketWatch)—Most European stocks ended lower Wednesday, erasing gains after a report on private-sector U.S. jobs fell short of expectations and data showed unemployment in the euro zone hit a new euro-era high.
The Stoxx Europe 600 index XX:SXXP -0.38% closed 0.4% lower at 257.39, after trading as high as 260.88 earlier in the day. Banks traded broadly weaker, with Swiss investment bank UBS AG a notable exception.
…
Euro-zone data points to sharper contraction
The unemployment rate across the 17 countries that use the euro rose to match a record high, BSkyB defends its record and Euro 2012 becomes a political football for Ukraine.
European markets retreated in afternoon trading, with selling sentiment keying off the ADP employment report from the U.S. that showed private-sector payrolls increased 119,000 in April, below market expectations. The ADP data come two days ahead of the Labor Department’s closely-watched nonfarm payrolls report for April.
Separately, U.S. factory orders dropped 1.5% in March, the biggest decline in three years. U.S. stocks traded lower on Wall Street.
European markets had started the day in positive territory, catching up with the previous day’s gains in the U.S. Most European markets were closed for May Day on Tuesday, when Wall Street jumped after a surprise rise in a gauge of U.S. manufacturing activity.
“Worries about southern Europe and the debt crisis continue to be a burden,” said Mattias Gredmark, equity strategist at SEB Private Banking.
“Earnings have been positive in most cases, but the earnings season is approaching the end and investors start to focus more on macroeconomic news in Europe instead,” he added.
…
Henry Blodget
May 2, 2012, 11:27 AM
After a few months of decent data, most people suddenly think the U.S. economy is finally headed towards a recovery. Not Jim Rogers.
Rogers, who stopped by our offices the other day, thinks another economic slowdown is coming and that it will be much worse than what we’ve just experienced. Rogers says the good news we’re hearing about the economy is basically just propaganda from a government hoping to be re-elected this fall.
‘About 39 estate lots out of 110 have been sold, eight homes have been built and two homes are under construction…There are nearly 1,000 acres to develop in the second phase of the project.’
And you know what’s on the other side of that 1000 acres? Another 1000 acres.
It’s stuff like this that makes it hard for me to even drive through the Hill Country. Developers have ruined it, IMO.
And you know what’s on the other side of that 1000 acres? Another 1000 acres.
————
And that’s what brought me to this blog. I still remember back in 2005 when land near my grandmother’s hill country ranch was selling for $500k for 40 acres and a dumpy hunter’s cabin with 100 feet of river frontage [a 'river' in central TX is 20 feet wide and 6 feet deep] and the nearest city/hospital/shopping is nearly 70 miles away. The same land is now selling for more like $3000 an acre. It still is a head scratcher as to who was buying that land.
San Antonio has a population of 1.3 million. 1,600 housing starts in a quarter is not very many at all.
Especially since they have the S word:
‘the 90 most-active neighborhoods have just a 17.6-month supply, a shortage.’
Of course, everyone wants to live there:
‘Texas boasts seven of the Top 20 Sweatiest Cities.’
http://www.examiner.com/article/top-20-all-time-sweatiest-cities-america
‘TOP-20 ALL-TIME SWEATIEST CITIES IN AMERICA’
1. Phoenix, AZ
2. San Antonio, TX’
I’m sure San Antonio is going to metastasize toward Austin, the live music capital of the world. Then we can merge them into San Austin, and declare it the sweatiest musician capital of the world!
Wow, you’re on a cynical roll today Ben! Good job
I used to live between Austin and SA; I actually owned land there at one time. I used to love it, but now you couldn’t pay me to live there.
San Antone and Austin have already metastasized. There is very little ‘open country’ in the I-35 corridor between the two now. The areas south of Austin (Buda, Kyle) are growing explosively into big bedroom communities (with a hellish commute to the tech offices at the opposite end of the metro area).
You will sweat your a$$ off in a Texas summer, it’s brutal. To me, Phoenix is actually better but still pretty effing hot.
You will sweat your a$$ off in a Texas summer, it’s brutal. To me, Phoenix is actually better but still pretty effing hot.
A good portion of Texas gets the gulf moisture, which is much worse at 95-degrees than Phoenix at 110-degrees, IMHO. FWIW, I’m not a fan of the tropics; reminds me of immersion foot and constantly spitting bugs.
“Peter Lewis, 69, is one of those who admits he didn’t research the area well enough when he purchased a couple of homes in the area with cash in 2008. Coming from his native England, Lewis said the $18,000 and $24,000 sale prices seemed like bargains when he bought the homes. He has renovated both homes, but now said he just hopes to recoup his investment. ‘If I get more money back, I’ll be lucky,’ Lewis said.”
That’s going on around here, too. People have forgotten that housing prices are DIRECTLY linked to jobs. If there are no jobs, then the price of housing literally falls to ZERO. Even if you got the house for free, you can’t stay in it, since without income you can’t keep the utilities on and pay the property taxes and other aspects of upkeep.
True, there are a lot of forces at work that will bottom housing out. Lots of housing around here has been bulldozed while having some residual value. But they were still bulldozed. Hence their real value was ZERO.
Adding to this travesty of NEO-POTLATCH, we have a welfare system that encourages renting, not owning. Sadly, we’re going to watch a significant fraction of the housing in the rusted-out Midwest just get destroyed since our society is run by property developers and welfare promoters, not real capitalists. Real capitalists would take ANY asset and get it sold at cost-plus. But costs are not being allowed to fall.
What are the chances of your investment paying off if your neighbor paints polka dots on his house?
Will the investment pay off if a helicopter crashes into it? Word is that the owner is an out-of-state in-VEST-or.
‘I think the buyers are tired of waiting,’ said Stephanie Duran, an agent with Barker Real Estate. ‘My gut is they’re tired of being afraid. The threat of higher interest rates is greater than the fear of maybe declining prices.’”
Realtard spew.
Higher interest rates mean lower prices. Ain’t no maybe about that.