A Large Number Of Sellers-In-Waiting
It’s Friday desk clearing time for this blogger. “Herbert Crockett, a retired human resources director, said he bought a $904,000 hotel-condominium suite at the Trump International Hotel & Tower, Toronto, attracted by a presentation that showed he could make as much as 27% a year on his investment. Crockett is now suing Trump and the hotel’s developers for $2.6-million, and says he’s losing $7,000 a month because the unit he rents out is occupied on average about a quarter of the time. ‘It turns out that the hotel had nothing to do with him and that it isn’t a good investment after all,’ Crockett said.”
“The brewing legal trouble is the latest sign that the real estate boom in a city with more skyscrapers under construction than any other in the world may be cooling as sales drop and prices climb. ‘When people buy units purely as an investment and not to ever live in, it’s a sign that the Toronto market is on thin ice,’ said John Andrew, a real-estate professor at Queen’s University in Kingston, Ontario. ‘The luxury market always feels the cracks of a housing market first. Here we have the canary in the coal mine.’”
“The average price of a property in Spain fell by 15.2% in the third quarter of the year, compared to the same period of 2011, according to the National Statistics Institute. This is the 18th consecutive quarter in which prices have fallen. ‘There are currently approximately one million newly built homes for sale, in addition to over 200,000 repossessed properties; furthermore, there are an unknown number of exchanges of debt for property agreements in place, as used by financial institutions. It will take many years to absorb the stock of properties, even if sales volumes return to 2003/4 levels of 250,000/300,000 units a year,’ commented Juan David Garcia from global market analysts Fitch.”
“For Irish banks, whose losses forced the government to follow Greece in seeking a bailout, the true cost of the debacle is about to hit. Banks have largely held off on repossessions or debt forgiveness after taxpayers were forced into a €64 billion rescue of the financial industry. While they have set aside about €6.4 billion of provisions for expected bad loans, actual write-offs in the 30 months through June were €250 million, say Goodbody Stockbrokers.”
“‘Banks have been playing a waiting game, hoping things improve,’ Lars Frisell, chief economist at Ireland’s central bank, said in Dublin two weeks ago. ‘That’s not happened. It’s time to stop procrastinating, to find out where the losses are and crystallise them. Take the losses.’”
“More than 40 percent of foreclosures cleared from Florida’s courts in recent months were dismissals, cases that likely will boomerang back into the overloaded judicial system when lenders are better prepared to continue their pursuit. Some homeowner attorneys complain that lenders have gotten used to winning in Miami-Dade’s courts and are heading to trial whether their evidence is admissible or not. When a case goes to trial when the sides say they are not ready, the judgment may be appealed, rejoining the backlog of foreclosure cases to be heard.”
“‘By and large if people are saying they need more time to get ready, and it’s been sitting there for three or four years, three or four years is enough time to get ready,’ said Miami-Dade Circuit Judge Jennifer Bailey, who sat on the state’s foreclosure task force.”
“The Oregon Legislature and Supreme Court have at least one definite topic on their agendas in the new year: finding a solution to the state’s foreclosure standstill. Oregon’s new foreclosure mediation program was supposed to give homeowners one last chance at keeping their homes. Instead, it brought out-of-court foreclosures to a halt. Faced with new requirements and costs, lenders simply stopped filing new foreclosures, the Oregonian reported.”
“By November of this year, preliminary reports showed the number of court foreclosure filings had more than tripled, to 882 in a month. By comparison, more than 22,000 Oregon homes had a foreclosure notice in the out-of-court system in all of 2011, according to RealtyTrac. ‘We still think this is just a fraction of what will be pending out there,’ said Doug Bray, trial court administrator in Multnomah County Circuit Court.”
“Maine home sales increased more than 20 percent in November, the second month the state’s residential real estate market has experienced double-digit growth. The demographics in Washington County are such that 80 percent of Billy Milliken’s clients are people buying second homes, so it’s a market driven by discretionary income. ‘In the economy we have been in that did not exist,’ the owner of Jonesport Realty, told the Bangor Daily News. ‘So much of our real estate sales are contingent on what’s happening in the rest of the world. We’re not building factories, fisheries are closed to new participants … we’re not pulling a lot of working families into Washington County.’”
“‘I have clients that have been looking for houses for six months because there’s so much demand right now in Phoenix,’ said Bradley Manhoff, Autobahn Mortgage LLC. Meanwhile, the Federal Reserve keeping interest rates artificially low benefits perspective home buyers. ‘Rates are so low people can afford a lot more than they would have been able to afford before,’ said Manhoff. ‘When you can get interest rates in the low 3s on a 30 year fixed, people say that’s almost free money.’”
“Australian mortgage holders have escaped more than $21 billion in extra interest payments this year, according to new Treasury data obtained by Fairfax Media. Since the Reserve Bank started cutting the cash rate over the past 12 months to crisis lows of 3 per cent, new figures show that, in NSW, home owners avoided paying $6.4 billion over the year compared with the two previous years.”
“But the record low interest rates have not benefited all Australians. Self-funded retirees and pensioners who rely on interest payments from savings accounts were the worst hit, the latest rate cut of 0.25 percentage points eating into their incomes. A seniors lobby group, National Seniors, said that the more than 1 million people who rely on savings and term deposits as income could be losing an amount equivalent to 25 per cent of a person’s wages following the series of rate cuts since November last year.”
“The Treasurer, Wayne Swan, who was last week forced to abandon his vow to deliver a surplus next year, was unrepentant, saying his economic settings were helping ‘working families.’”
“At the recent Beijing International Property Expo, Wang Jing’s eyes widened. The island country of Cyprus, which had a booth at the expo, offered a list of properties at steep discounts. She didn’t know much about Cyprus, but that wasn’t important. Wang read about a beachfront apartment on the Mediterranean island. The price was 350,000 euros ($463,000), which is cheaper than many three-bedroom apartments in Haidian district. ‘I am considering purchasing one. If my son cannot enroll in the best primary school in Beijing, I can still send him to study at the top universities in Europe 10 years later,’ the 33-year-old graphic designer said.”
“According to a survey by SouFun International, a real estate platform in China, the United States, Canada and Australia are the priority targets for Chinese overseas property investments. Huang Shucheng, CEO of a real estate website based in Shanghai, said around 40 percent of Chinese investors in the British market are aiming for high returns on their investments. ‘Since last year, when many cities (in China) limited the number of homes one could purchase, many Chinese people went abroad to buy a house. My business in the British market has grown by about 30 percent since 2011, and purchases in Canada have increased even more,’ said.”
“With anti-corruption investigations on the horizon, so many panic-stricken regime officials in China are hurrying to get rid of secret investments that some analysts believe property values in Beijing and Shanghai will drop. The China Times and Oriental Morning Post both reported that officials were rushing to dump property in Jiangsu and Guangdong provinces at fire sale prices this week.”
“A manager of a financial consulting firm in Jiangsu said that about two months ago he began receiving phone calls from a series of heavyweight customers, according to the China Times. ‘All of them were public servants, and strangely enough, every single one of them urgently wanted to sell off some properties,’ he said.”
“‘These four houses must be sold as soon as possible. Don’t sell them any cheaper than two million yuan each,’ one Jiangsu official was overheard saying on the phone in public. According to South China Morning Post, ‘Property agents have reported receiving mass-produced text messages, for example: ‘Eight sets of hard-to-find flats, owner selling all at once.’”
“The rate at which lenders have been doling out foreclosures and other distressed properties has made sense and has had a lot to do — perhaps more than other single component — with rising home prices in many areas. The flow of foreclosures to the market coupled with the managing of the absorption rate is the residential real estate story of the year for 2012.”
“Why? Had the infamous ’shadow inventory’ of distressed homes been dumped on the market all at once, many neighborhoods would still be reeling — not only from a poorly maintained inventory of homes, but also from a larger number of sellers-in-waiting who are current on their loans yet wanting to sell for a figure higher than their purchase price.”
“Two major incidents have analysts scrutinizing the flow of foreclosures to the market more than ever: The detrimental effects of a possible ‘fiscal cliff’ and the upward revision of shadow inventory by a California research firm specializing in distressed properties. Some analysts believe that if lawmakers take a restrained approach — extending the residential mortgage interest deduction and most tax cuts — the impact on housing would be positive. However, other observers believe if lawmakers charge hard and push everything over the edge at the same time — including the once-untouchable mortgage interest deduction — the economy could falter and the housing market could suffer.”
“That would mean more foreclosures, additional shadow inventory and more would-be sellers waiting for things to calm down. Some might not want to wait — again. The last thing we need is another set of sellers tossing house keys to their lender.”
“At the recent Beijing International Property Expo, Wang Jing’s eyes widened. The island country of Cyprus, which had a booth at the expo, offered a list of properties at steep discounts. She didn’t know much about Cyprus, but that wasn’t important. Wang read about a beachfront apartment on the Mediterranean island. The price was 350,000 euros ($463,000), which is cheaper than many three-bedroom apartments in Haidian district. ‘I am considering purchasing one. If my son cannot enroll in the best primary school in Beijing, I can still send him to study at the top universities in Europe 10 years later,’ the 33-year-old graphic designer said.”
Wow. A graphic designer can afford an almost half million dollar house? And at 33?
Most GDs I know make nowhere near that kind of money and most never will. But then, most are Americans.
Perhaps ‘graphic designer’ is Chinese for ‘money launderer.’
Or the husband is the businessman. May be the parents will help her out.
I bet she couldn’t find Cyprus on a map until she saw that presentation. And yet she still may be more informed than retired Toronto human resources director Herbert Crockett, who fell head over heels for the Trump myth. How embarrassing is that? You’d think someone of that age would have the life experience to distinguish fact from a sales pitch. If someone promised me 27% annual returns on anything I think I’d laugh out loud.
Cyprus isn’t in the EU and probably never will be (has its own debt crisis brewing). I’m unclear why this idiot thinks he will be able to get his child into any of the decent/better EU universities? The Europeans seem far more likely to take care of their own… much moreso than the U.S.
Additionally, only a few universities in the EU countries are near the level of top US schools.
Maybe this will answer your question:
Cyprus introduced a new immigration policy at the end of 2011, allowing a person who buys a house in Cyprus of a certain value to apply immediately for a residence permit.
[Immigration lawyer] Kouzalis said the education system in Cyprus is among the best in Europe and that graduates from Cyprus’ high schools are not required to take further examinations to enroll in any university in Europe.
If I were the lady, I would go for it. If nothing else, her son will learn English.
Aren’t there several countries that are offering citizenship, or at least permanent residency, to high-net-worth “investors”? Why don’t they offer safe haven to Mexican drug lords and members of the Russian mob, why they’re at it? As long as they prop up the local real estate market, it’s all good!
Your children will never be able to afford a house, but drugs to cope with the despair will be much easier to get.
Don’t they speak Greek or Turkish in Cyprus?
They speak Greek (poorly) here in the southern half of the island. Cyprus is an EU country and has been since 2004. I live in Limassol and in the four years I’ve been here the amount of Russians and Chinese moving in has been mind boggling!
Hey, if all you have to do is spend 300,000 Euros and you get a Cyprus ID then why not? It entitles you to the same stuff as the Cypriots get and it gives them a back door entry to EU citizenship down the road.
Clearly, nothing has changed since 2008 based on these articles which merely confirm what we all know to be true.
Prices are a bit lower yet grossly inflated and falling, inventory is still massive, houses are toxic hot potato’s where nobody wants to make a decision.
What a growing stinking pile of a mess.
“inventory is still massive”
Then why are prices going up ?
Prices are falling.
Look, I like your message, but there is no denying that there has been a sharp upturn in prices in some markets. Of course, I believe it is all fake, and prices will be finding their natural bottom sometime in the future.
And guess what… they’re not selling.
I share your long-term outlook RAL (or at least I hope you’re right).
However, for now, where I live in So Cal, inventory has gone down to near-zilch this year.
The thing that puzzles me the most is that Toronto housing market still experiences increase in prices. This means that all the investors are not willing to lower prices on their offers and rather prefer wait for a longer time. They try to cheat statistics by taking off the offered units and also try to play with the price. But the fact is that there are no bidding wars on condominiums, no investors, many developers rather cancelled their plans and the whole construction in the city dropped significantly in comparison with the 2011.
And worse yet, the massive inventory problem grows by the day as the boomer demographic continues to age out permanently.
And being the depreciating asset housing has always been, combined with massive and growing inventory means falling prices for the next two decades or more.
Housing is still massively overpriced.
“the massive inventory problem”
Then why aren’t prices falling ?
Resale prices are falling.
‘Then why aren’t prices falling’
Let me put it back to you: how are house prices rising when unemployment is so high? Have you heard the jobs that are being formed pay less? How about the record poverty, the food stamps? And we’re told rents are rising too. Doesn’t this just mean people have less money left over? There’s a heck of a lot of stuff thrown around in the media that doesn’t make sense to me.
Preach it, Ben!
“‘Herbert Crockett, a retired human services director, said he bought a $904,000 hotel-condominium suite at the Trump International Hotel & Tower Toronto, attracted by a presentation that showed he could make as much as 27% a year on his investment.’”
Now there, my friends, is a great return on capital. I don’t mean the investment, I mean the presentation.
Throw out a few thou to attract the fish to the presentation (aka chumming) and throw out a few more bucks to set the presentation up and - viola! - hundreds of thousands of dollars - millions even - come streaming back.
I gotta agree. Maybe they used a lot of the flying animated bullet points and lots of pictures of the fat little Powerpoint guy with the light bulb over his head.
But even Trump can’t match this beauty:
http://www.norvig.com/Gettysburg/sld001.htm
“Faced with new requirements and costs, lenders simply stopped filing new foreclosures, the Oregonian reported.”
Finally, the right time for me to quit paying the mortgage. I sure am glad “it’s different here” in Oregon.
The Oregonian newspaper used to have some of the best housing bubble reporting. Then they turned on a dime and started crying for the victims, who previously were portrayed as kinda greedy. I suppose it’s a reflection of the population, as the Oregon legislature put a stop to foreclosures like Nevada did.
Yeah…I still don’t get it…Can’t the courts and the legislature see what is happening here…They borrowed money with the real estate as collateral…When you stop paying the collateral goes back to the lender…For every borrower that was in fact misrepresented there must be 10 others that are just moochers…
My goodness…I wonder how hard it is to get a loan in Oregon…With the courts protecting these slackers who would want to take the chance…Even a qualified buyer would know that they could just step back and take advantage of the court protection…It just seems so bizarre to me…
Instead, it brought out-of-court foreclosures to a halt. Faced with new requirements and costs, lenders simply stopped filing new foreclosures, the Oregonian reported.”
‘When the recession hit, Klock and his wife, who are in their 60’s and 70’s, found themselves with a second mortgage on a house that was worth less than the amount of the loan. He’s stopped making the payments. Now he just wants the servicer to foreclose, take the house and be done with it. But so far, that hasn’t happened.’
‘As Klock waits to see what happens with his property, so too are thousands of other Oregonians at risk of foreclosure…data show since this summer non-judicial foreclosures — that’s foreclosures processed outside the courts — are down about 90 percent though much of the state
http://thehousingbubbleblog.com/?p=7497
These people in the legislatures know exactly what they are doing:
‘Foreclosures in Nevada could spike next year if lawmakers and banks roll back a bill passed in 2011 that played a large role in stymieing banks’ attempts to retake homes from Nevadans, according to the state’s banking association president and housing analysts…after the law took effect in late 2011, foreclosures in Nevada — which previously led the nation in foreclosures — ground to a halt.’
‘This shadow inventory — of homes headed for almost certain foreclosure — has loomed over the seemingly positive news of slightly increasing home values and the rise of new housing construction. Sen. Tick Segerblom, D-Las Vegas, chairman of the Senate Judiciary Committee, said, ‘I’m extremely reluctant to change anything that everyone agrees has raised property values in the state of Nevada.’
http://thehousingbubbleblog.com/?p=7493
“These people in the legislatures know exactly what they are doing:”
Which is:
1. Saving the banks
2. While representing the interests of the voters.
(Note: One of the above is wrong, but that’s okay; It doesn’t have to be correct, it just has to work.)
‘One of the above is wrong’
Actually these clowns aren’t accomplishing either. Just look at the situation in Oregon, Nevada and Florida. They stopped foreclosures and now have to restart them. Not because they want to but because they have to. Meanwhile Arizona is further down the road to recovery. The only defaults being held back here are because of the lenders.
These slowdowns worked in favor of the lenders. They used robo-signing as an excuse to let the houses sit. If you read the Palm Beach post article, it’s clear nobody is moving very fast, so the courts are pushing the issue, I’m sure because the communities want something done. But politically, this was pandering.
‘The detrimental effects of a possible ‘fiscal cliff’ and the upward revision of shadow inventory by a California research firm specializing in distressed properties.’
Unless you open your eyes and look around, that shadow inventory is mighty hard to spot.
Yeah boy, the REIC is mighty worried about this cliff thing. With total US obligations way up there, it’s a real Wile E. Coyote situation:
‘Fannie Mae and Freddie Mac obligations excluded…Although not included in the debt figures reported to government, the U.S. government has moved to more explicitly support the soundness of obligations of Freddie Mac and Fannie Mae…The on- or off-balance sheet obligations of those two independent GSEs was just over $5 trillion at the time the conservatorship was put in place, consisting mainly of mortgage payment guarantees.’
‘U.S. federal government guarantees are not included in the public debt total, until such time as there is a call on the guarantees. For example, the U.S. federal government in late-2008 guaranteed large amounts of obligations of mutual funds, banks, and corporations under several programs designed to deal with the problems arising from the late-2000s financial crisis.’
‘The U.S. government is obligated under current law to mandatory payments for programs such as Medicare, Medicaid and Social Security. The Government Accountability Office (GAO) projects that payouts for these programs will significantly exceed tax revenues over the next 75 years…The present value of these deficits or unfunded obligations is an estimated $45.8 trillion. This is the amount that would have had to be set aside in 2009 in order to pay for the unfunded obligations which, under current law, will have to be raised by the government in the future…Adding this to the national debt and other federal obligations would bring total obligations to nearly $62 trillion.[33] However, these unfunded obligations are not counted in the national debt.’
http://en.wikipedia.org/wiki/United_States_public_debt
I always thought the little puff of dust when he hits was funny.
Wile E. Coyote falls off cliff
http://www.youtube.com/watch?v=Gq_bjaI0NTo
From the Palm Beach Post article:
‘In a four-month period beginning July 1, the state’s foreclosure courts disposed of 69,513 cases…But the achievement is dampened by the fact that nearly as many new foreclosures were filed during the same time period and by a new concern that 43 percent of the cases were dismissals.’
‘The voluntary dismissal is an off-ramp for a plaintiff that is being forced to trial, but doesn’t have his or her evidence ready,” said Royal Palm Beach-based defense attorney Tom Ice. “Again, this means the numbers (of closed cases) is deceptive because the cases will be coming back.’
‘As of Oct. 31, Florida’s 20 circuit courts had 377,272 pending foreclosure cases, according to the state courts administrator. That’s a net of just 432 fewer cases than July 1 because of the 69,078 new foreclosures filed in the four-month span.’
So basically the foreclosure backlog grew by over 29,000 cases. Wasn’t someone asking where the shadow inventory is?
‘if people are saying they need more time to get ready, and it’s been sitting there for three or four years, three or four years is enough time to get ready’
and it’s been sitting there for three or four years, three or four years is enough time to get ready’ ??
And what common sense Judge can’t see this…How do you argue that you are “Not Ready”…Hell, murder trials get underway in about a year…Just rewarding bad behavior on the backs of the banks that is ultimately on the backs of the tax payers…
“Get what you can get for your house today because it’s going to be less tomorrow for many many years to come.”
HBB buyer’s, a year in review 2012. We are buyers who found what we wanted after 8 years of renting. It’s the last house we will buy. It wasn’t a short sale, met every one of our wants, and was within our budget. So here is some fun with numbers.
We were renting for $1635/month; 1300 sq.ft. two story, postage stamp lot, three to five cars in front of each house (driveway & curb), and two families in some houses. Neighborhood got it’s share of graffiti from time to time.
What we bought. Single story, 2700 sq.ft., 1+ acre, gated, all custom one owner house, 20+ yrs old, $80K over original purchase price.
Down payment was from the sale of our house in 2004; $350K mortgage.
PII: $1670/month plus $50 HOA, plus $50 insurance over our rental insurance. We don’t have tv or home phone which more than off sets our $50 HOA.
Taxes are $500/month and equity on payment is $500/month; one can look at that as paying the same as renting and putting $500/month into savings. We were getting nothing on savings.
There was little lost opportunity on the down payment money as any pittance earned was paid back out in taxes. Cost of mortgage is just over 2 times income.
At the time of purchase the house, as all housing in CA, would have to cover a 6% selling commission in order to break even if one had to sell. If house values dropped below purchase price then the loss coverage would be greater.
Will this house cost us more than renting, yes. Yes, because as we make it into our home we are willing to put money into aesthetics within reason (doing the work ourselves).
Your HOA is dirt cheap for what I assume is a 20 year old development, why ?
HOA is run by businessmen (homeowners) who have good sense. Finances are projected out 20+ years and only covers gates, security and repaying of streets. Everyone visiting cannot believe house is 21 years old.
Our HOA was able to dump the streets back onto the county. The county has to maintain the streets.
DennisN, glad to see your name again!
I just got my HOA bill for 2013 today. It’s $310 for an entire YEAR. That’s $26 per month and it includes all the FREE WATER you care to use to water your yard.
Most of the dues go to pay the gardener to keep up the landscaping in the commons areas.
Thanks. Like I’ve written earlier, my personal and family situation is such that in a few months I’m going to have to capitulate. Our landlord is going to sell, we like our neighborhood, and we just do not have the stomach to repeat the ordeal that is trying to find a good renting situation here.
I have waited for more than eight years for this to end. At this point, all I can say is that it will never end voluntarily — our leaders are totally committed to this course regardless of facts or consequences.
our leaders are totally committed to this course regardless of facts or consequences.
Can’t disagree with you there. So the question is how long do we wait for the consequences?
This is the appropriate time to invoke Keynes’ maxim that the markets can remain irrational for a longer time than an individual can remain solvent — and housing markets only are irrational because, since 2008, governments and central banks continuously have intervened to keep them that way. I really don’t know when this act will come to an end. But I am absolutely certain that it will.
“Like I’ve written earlier, my personal and family situation is such that in a few months I’m going to have to capitulate.”
Yup, hear you load and clear. Hope it’s not a bubbly area.