Buying Into A High-Stakes Poker Game
The Sun Sentinel reports from Florida. “When GL Homes opened its eighth Valencia community last weekend, the Sunrise-based builder ended up with 72 contracts at Valencia Cove. The 823 homes are selling from the high $300,000s to low $600,000s. GL held a lottery so buyers could select their lots in the 55-and-over community. Earlier this month, the builder had another lottery for 11 model homes at Valencia Reserve, the 1,043-home Boynton development that now is sold out. And buyers camped out overnight for 18 lots at The Bridges near Boca Raton. ‘The market is really exploding,’ said Marcie DePlaza, division president for GL. ‘Between the lotteries and the camp-out, it’s been crazy.’”
“South Florida’s housing recovery is sneaking up on some sellers. Their homes are flying off the market in days or weeks, and the severe shortage of inventory is keeping them from quickly finding a new place. It took only a few weeks to find a buyer for Tracy Sachs’ five-bedroom Parkland home, but she immediately grew disillusioned when she started looking for homes to buy. ”We started panicking that we had nowhere to go,’ said Sachs.”
“Just as she and her husband, Mark, were seriously considering offering money to the buyer to let them out of the contract, they got a call from Jon Klein, their real estate agent. He told them the buyer’s financing had fallen through, and the deal was off. The couple immediately took the home off the market. They’re redoing the floors, painting inside and out and making other improvements. They want to wait at least a couple years for the housing market to settle down. ‘I was truly relieved,’ Sachs said.”
“Klein said he tells sellers they have to start looking the minute they sign a contract on their existing residence. ‘I had one client say to me that she had to go to the gym first,’ Klein said. ‘I had to tell her, ‘What’s more important? The gym or buying a house? You’re going to be homeless.’”
From WFTV. “Florida realtor figures show 51 percent of single-family home sales are all cash. WFTV learned cash buyers are moving quickly to grab deals and out-negotiate buyers who need a mortgage. When an Apopka house sold last December, the seller had few fears the financing would fall through, because buyer Rob Arnold offered $62,500 in cash. ‘Somebody like me, I buy ‘em and resell ‘em. At some point, I buy ‘em. Once they’re sold, I can buy some more,’ Arnold said.”
The Tampa Tribune. “Rising prices and bidding wars are back in the Tampa Bay area. Dale Hunter, who owns a Tampa real estate firm called Vanguard Real Estate, said he sometimes gets offers on homes within hours of listing them for sale. The sales go through quickly, he said, because the investment firms pay with cash and don’t have to wait for financing to come through. One problem emerging from the hot real estate market is a tie-up in some home appraisals. Appraisals may not be able to keep up with the change in home prices.”
“For example, a home that sold for $100,000 in January might fetch a price of $110,000 today. But an appraiser might value the home at only $105,000 based on the best available statistics, said David Donaldson, a senior loan originator at VanDyk Mortgage. That mismatch between appraisal and sale price can hold up a sale, he said. Nevertheless, Donaldson was bullish on real estate. ‘It’s a fantastic time, and anybody that does not own a home, should be trying to buy one,’ he said.”
The Tampa Bay Times. “After shrinking 10 percent during the bust, the typical new American home built last year grew to an unprecedented 2,300 square feet, U.S. census data show. Homes in the South ballooned even bigger, to nearly 2,400 square feet. Buyers are ‘able to purchase a little more home for their dollar,’ Tampa Bay Builders Association executive VP Jennifer Doerfel said, ‘and they’re trying to get into those homes quickly before the prices increase.’”
“When looking for a new home, Jolyn and Mike Schweitzer were open to townhouses or condos of any size. Instead, they upgraded, buying a 3,500-square-foot home off Clearwater’s Lake Chautauqua, with lofty ceilings, an office and an exercise room. ‘We felt this was a good investment, so we went to the top of our budget,’ said Jolyn Schweitzer, 58. Except for when their four adult children stay over, ‘I will never have to go upstairs.’”
The Herald Tribune. “If the housing market continues at its current rate of appreciation — a combination of strong demand from buyers and dwindling supply of homes for sale — prices could be back to their boom-time peak within seven years, according to a new analysis of data by the Herald-Tribune. ‘Prices are definitely going up everywhere right now,’ said Shannon Moore, broker and owner of Green Lion Realty in North Port, who represents foreclosure investors. ‘I see that continuing for at least the next three years.’”
“Several speed bumps stand in the way. The first is an estimated shadow inventory of 11,102 foreclosures expected to hit Southwest Florida’s housing market during the next few years, according to RealtyTrac. ‘We still have a lot of distressed inventory, and furthermore, at some point the national economy has to begin wresting with the debt service,’ said Dennis Black, a real estate consultant in Port Charlotte. ‘The price increase we have been seeing, particularly from the Wall Street funds, is speculation at its highest level.’”
“By far the biggest driver of Southwest Florida’s recent real estate appreciation has been institutional investors which have been buying foreclosures by the score for use as rentals. Because those companies are paying as much as 45 percent more for their purchases than the homes are worth — as determined by appraisers through comparable properties in those neighborhoods — these recent foreclosure-buying sprees are forcing some smaller investors and other homeowners to overpay for their purchases.”
“Those inflated purchases will now become the new standard for real estate ‘comparables’ used by appraisers — leaving values that are much higher than market conditions would otherwise merit, said Jack McCabe, a real estate consultant in Deerfield Beach. ‘We’re going to go through the whole thing we did last decade all over again,’ McCabe said. ‘Except, while last time it was the flippers and speculators pushing the market up, now it’s these hedge funds.’”
The Orlando Sentinel. “A while back, a Brevard County builder of luxury homes told me he had no choice but to go the cash-only route because appraisals were coming in so low, lenders wouldn’t give his potential buyers mortgages. University of Central Florida economist Sean Snaith calls the rate of cash transactions ‘unsustainably high’ and worries that average buyers are still having trouble getting mortgages. ‘We’re not going to get a healthy housing market with 50 percent of the transactions being cash,’ Snaith said recently. ‘The financing system has to allow the average buyer to get a mortgage.’”
“A rational housing market provides a sense of economic stability. It encourages owners to spend on home-improvement projects – which, in turn, creates jobs and pumps oxygen into the larger economy. But it thrives only if there’s enough credit available to keep the gears turning for average buyers. It’s unreasonable to expect middle-class Floridians to come to the closing table with enough cash to purchase a house. After all, they’re buying into homeownership, not a high-stakes poker game.”
The Jacksonville Business Journal. “There’s limited inventory, and real estate agents say any decent home put on the market draws multiple offers. So it might be a good time to sell — unless you’re one of the 54,000 folks who bought a home in Northeast Florida at the height of the real estate market. If you bought at the peak — mid-2006, with a median price of $210,000 — you’re likely underwater on your mortgage. That’s part of what’s creating the inventory crunch — so many folks can’t sell.”
“‘Unfortunately, it’s a long, hard slog for those folks,’ said John Tuccillo, chief economist for Florida Realtors. ‘It’s a matter of timing. If you bought your house in 2000 and sold it in 2009, the bottom, you still made money. If you bought in 2006, you may never make the money back. So it’s a matter of timing, but I think the market is moving in a positive direction. The folks in the market now will be benefitting over the next couple years.’”
The News Press. “The battle over a pricey Cape Coral home bought on the cheap at a foreclosure auction by two south Fort Myers men may not be over. After a Friday morning court hearing held shortly after Bob Mosher and Stan Garczynski took possession of the home, the lawyer for the former owners said the banks might fight to claim the waterfront property that was in the process of being foreclosed.”
“Nickie and Jim Haggart were evicted from the home Friday. They bought the property for $599,000 in 2004 and put more than $250,000 into it, but Nickie Haggart said they stopped making mortgage payments five years ago after being hit hard by the economic downturn.”
“The banks filed to foreclose on the home and, while that was pending, Chase Bank, the lender, continued paying the property taxes and home insurance but ignored a water assessment impact fee, Cohen said. As a result, the city placed a lien on the property that totaled $619.58 plus unspecified interest, penalties and attorney fees. It then foreclosed on the lien and the home went to auction in January, where Mosher and Garczynski snapped it up for $4,350.”
“Before the real estate market crashed, the 2,991-square-foot house was listed for $1.2 million. It is now assessed at $387,906.”
Housing Bubble V2.0 in Florida.
Hope and Change.
Forward.
Yes we did.
Is it Obama or the independent Federal Reserve that is reflating the housing bubble?
So far, aside from your endless propaganda barrage, I have seen no evidence that Obama has anything to do with it.
San Diego Housing News
Can the Fed reflate the housing bubble without negative side effects?
Carlsbad East, News
Apr 22, 2013
Economists say there is no free lunch. Apparently, those economists don’t work at the federal reserve. Interest rates are near record lows, and the federal reserve has been printing money to buy $40 billion a month in mortgage-backed securities to reduce mortgage rates further and provide direct stimulus to the housing market. The reason they’re doing this is simple, Banks are still exposed to $1 trillion in unsecured mortgage debt, and if the federal reserve doesn’t make house prices go up to restore collateral backing to underwater borrowers, the too-big-to-fail banks will fail. Whatever misgivings many critics may have of federal reserve policy, the policy makers at the federal reserve don’t feel they have other options. They must make house prices go up — at any cost.
In the real world, there is no free lunch. The federal reserve’s zero interest rate policy does have real financial consequences. First, printing money ultimately leads to inflation, the erosion of buying power of the currency. Each dollar printed without a commensurate increase in productivity or value is essentially stolen from every other dollar in circulation. Anyone with savings or wealth in currency (cash, savings accounts, CDs, and so on), experiences a decline in the stored value of their labor.
…
In the real world, there is no free lunch.
Just because there’s no free lunch doesn’t mean one can’t influence who has to pay for it.
This is the problem with politics. Instead of viewing these politicians as employees, it becomes a “team” concept. They’ll defend this person because they voted for him. That doesn’t make any sense. Rather, if you hire someone and they screw up, you don’t cover up for them.
‘The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.’
http://articles.washingtonpost.com/2013-04-02/business/38220144_1_housing-recovery-housing-market-housing-officials
Oh, and who has been running the “foam the runway for banks” thing?
Here’s a suggestion; forget about politics and get ready for an economic crash.
“…forget about politics and get ready for an economic crash.”
I agree with you. And I’m not the one whose compulsive posting behavior brought politics into the discussion
‘One in four Floridians live near poverty line’
‘Most Floridians living in poverty have families, and the situation has been made worse by an 11 percent decline in incomes during the downturn. The findings by a research group at Florida International University conclude that poverty in the Sunshine State disproportionately affects African-American and Latino residents. About 23 percent of Florida’s 18 million residents live in what the federal government considers poverty or “near poverty,” defined as earning $14,000 or less.’
http://www.miamiherald.com/2013/04/25/3363546/one-in-four-floridians-live-near.html#storylink=cpy
” And I’m not the one whose compulsive posting behavior brought politics into the discussion”
2B is blatantly bi-partisan but even a stopped clock is right 2 times a day.
has been made worse by an 11 percent decline in incomes during the downturn ??
Discussed, but not nearly high enough on the problem list…Unemployment yes but underemployment may be a far bigger problem…Many people may be living on the edge…
“living on the edge…”
It’s not just low wage earners. Most people making $100K are on the “edge”, because of their debt burden. A slight reduction in income and the house of cards begins to waffle. Debt means you can’t just pull back, you get crushed in a contraction.
“Most people making $100K are on the “edge”, because of their debt burden.”
Doubly so in places like DC and San Diego, where living costs (especially housing) are high, meaning that $100K doesn’t go very far, and the sequester furloughs plus federal pay and hiring freezes add up to a decline in real income at the individual and community levels.
Eventually it will show up in the health status indicators for the 70% consumer-driven economy.
“This is the problem with politics. Instead of viewing these politicians as employees, it becomes a “team” concept.”
reminds me of when the fans boo the refs when they call a blatant personal foul against the home team.
Dude, I HATE it when people boo the ref!
“Here’s a suggestion; forget about politics and get ready for an economic crash.”
Uh huh. And there’s going to be alot of very long faces. Especially those who made the tragic error in thinking that a house somehow “funds retirement”.
Heres a bulletin for the readers. A house doesn’t “fund retirement”. It never has…. nor will it ever.
“independent Federal Reserve”
lol
Is it Obama or the independent Federal Reserve that is reflating the housing bubble?
BAHAHAHAHAHAHAHAHA
obama has appointed 6 out of the 7 Board of Governors of the Federal Reserve to include Ben Bernanke (Chairman).
But keep drinking that kool-aid and defending obama at every turn…
http://en.wikipedia.org/wiki/Federal_Reserve_System
Since this news came out about the white house pushing for subprime loans, I’ve found articles critical of it from ‘conservative’ publications, think tanks and pundits. But what has been the reaction in congress? I haven’t seen one single politician come out against it. (Frankly, where does the administration get this kind of power in the first place? That should be challenged.)
This looks more to me like proof that the two parties are hairy cheeks of the same ass.
“This looks more to me like proof that the two parties are hairy cheeks of the same ass.”
You forgot the word “smelly”.
Two hairy cheeks of the same SMELLY ass.
I thought this was a family blog.
Ben, are these fully amortized fixed PITI mortgage that Obama is pushing? No I/O Neg-am ARM teaser rate stuff, right? Is it no-doc? It was those no-doc, teaser rates, and grace periods that got us into trouble last time. But ISTM that if the buyer has the stable proven income to pay full PITI starting on Day 1, then “subpirme” FICO doesn’t really matter.
Hey Oxide:
I dunno. If a person has the income to pay their debts, but a history of not paying their debts, then aren’t they a credit risk?
@Ben,
As I’ve noted a few times I had a drink with a former exec at one of the GSEs; as soon as a politician (on either side) who was opposed to the GSEs got a photo-op with a new home “owner” at the new lending office (that the GSE opened in the offending politician’s district), the opposition went away.
In addition to your political problem being with defending your “team”, I think you should add that another problem with politics is that the #1 person on the staff of each politician is the guy (or gal) who is advising on how to get re-elected, NOT advising on how to make happen what the people want.
We need term limits for Senators and Representatives (with longer terms for the House…4 years?), so there can be the possibility of more people who don’t care about their next election.
Like we’ve known all along, you’re a corrupt housing crime syndicate liar.
“But what has been the reaction in congress? I haven’t seen one single politician come out against it.”
It amazes me that within a decade of when subprime collapsed and nearly took down the entire global economy with it, our politicians are optimistically assuming that maybe it will work if the government does it instead of the private sector.
Obama touched him in a naughty place. He’s just working through his Obama trauma.
‘The market is really exploding,’
Yep. There’s gonna be blood and feces all over the place by the time this next round is done. Talk about a pump and dump.
‘buying a 3,500-square-foot home off Clearwater’s Lake Chautauqua, with lofty ceilings, an office and an exercise room. ‘We felt this was a good investment, so we went to the top of our budget,’ said Jolyn Schweitzer, 58. Except for when their four adult children stay over, ‘I will never have to go upstairs’
Buying a house bigger than needed because it will increase profits; housing bubble indicator - CHECK!
Go ahead and google the dingbat….. then do some digging. Look at the associations. Same corrupt characters, same corrupt lies.
Do you really think the media’s coverage of people like these is random?
Guess again.
IMO real estate has always been a market full of crooks. Look back at history. And it’s no different today. The REIC bullies the press. But sometimes I can detect a news organization trying to insert a bit of skepticism:
‘The first is an estimated shadow inventory of 11,102 foreclosures expected to hit Southwest Florida’s housing market during the next few years, according to RealtyTrac. ‘We still have a lot of distressed inventory, and furthermore, at some point the national economy has to begin wresting with the debt service,’ said Dennis Black, a real estate consultant in Port Charlotte. ‘The price increase we have been seeing, particularly from the Wall Street funds, is speculation at its highest level.’
‘By far the biggest driver of Southwest Florida’s recent real estate appreciation has been institutional investors which have been buying foreclosures by the score for use as rentals. Because those companies are paying as much as 45 percent more for their purchases than the homes are worth — as determined by appraisers through comparable properties in those neighborhoods’
Hey Ben:
I read in a history book that your current home town was started by a bunch of Real Estate fraudsters. I think they were from Massachusetts something like that. Your town was sold as a good real estate investment to a bunch of greater fools, who proceeded to head out on covered wagons. As soon as they arrived and saw what they had bought into, they either turned around or continued West to California. Kinda funny.
“The REIC bullies the press”
On a national level, but especially on the local level. Builders and Realtors, and their advertising revenue, have grabbed the so called “local media” by the short hairs.
Exhibit “A”…….the “special” sections in the Sunday papers for Autos and Real Estate.
‘especially on the local level’
When I first moved to Flagstaff, the local paper had a reporter interview me for a housing story. He told me how developers would walk into the paper’s office shouting about some negative article. (They hardly wrote anything negative, but anyway). They didn’t include what I had to say in the article when it came out.
Back in the day, pessimistic soothsayers (who might predict 7-8 bad years, followed by a natural catastrophe) were typically replaced by those who hired them with those offering more optimistic sooths.
Now, soothsayers have changed their names to “Economist” and “Market Consultant”. Otherwise, not much has changed.
“they either turned around or continued West…”
How does this equal starting a town?
‘How does this equal starting a town’
It’s not much of a town.
If this “froth” continues surely the fed will raise rates…right? Right?
Where?
Will they raise them in CA and AZ (where prices are raging upwards)? Leave them the same in NY and IL where prices are still falling?
One major concern I have the Fed could get it perfect (ie. NOT create a bubble through ZIRP) with respect to one state that was slow to foreclose, while at the same time, allowing a bubble to completely re-form in a state where they foreclosed much more quickly (AZ/CA come to mind).
What would force them to increase rates?
‘What would force them to increase rates’
A couple of things here. For most of my adult life it was considered a truism that the Fed doesn’t control long term interest rates. Either that is true or it isn’t. So is what we are experiencing a temporary phenomenon? Are they really holding rates lower, or would they be here no matter what the Fed did?
Then there’s the unexpected. Just one issue I’ve mentioned is junk bonds. A default by a big junk bond issuer has in the past and could today change the landscape. Or a China debt problem. That said, I don’t think rates matter anymore. (Same with shadow inventory). We’ve got a refreshed housing mania that carries with it the seeds of its own destruction. Lower them to zero for house loans; it’ll be just that much more of a wipe out.
“Lower them to zero for house loans; it’ll be just that much more of a wipe out.”
Also just that much faster of a parabolic price blowout before the big crash that awaits.
For most of my adult life it was considered a truism that the Fed doesn’t control long term interest rates. Either that is true or it isn’t. So is what we are experiencing a temporary phenomenon?
Is this the first time they’ve actually purchased things in order to support prices? Maybe it was true then but isn’t any more? Not that I think it can go on forever…
Things already seem to be going on longer than I could have ever imagined. I do not know when or how this ends, but one thing I do know is we are looking at at least two decades of economic destruction due entirely to selfish greed.
It’s amazing what’s going on here in this part of Florida (Tampa Bay). The pump phase is in full swing. Some of the developments that went inactive during the first bubble’s crash are active again, and people are buying and building. We are getting an influx of folks from the Northeast, which is interesting, because they historically turn their noses up at the Tampa area. They’re fleeing taxes and regulation and weather. It all looks like a bargain to them here, lol.
But, anecdotally, there’s some interesting differences from the last time. Some developments that stunk out the joint during the last downturn, are not coming back and people are passing them over with a shudder. Some buyers are doing their homework this time, at least in terms of the history of certain developments. Those who can get out of these hellholes are doing so if they can and those coming in are mainly renters. The low end looks like it is languishing. The days when a ghetto shack was “snapped up” are over. This time, the rising tide isn’t lifting all the boats.
If you never have to go upstairs, then why did you buy a house with an upstairs you dolt? If the kids come, put them up in the Ritz; it will be cheaper.
LOL, how may ft2 per person at your house?
We have the same kinds of crazy decisions with the same lame rationales to back them up that we saw back in 2005-2007…
“Nickie and Jim Haggart were evicted from the home Friday. They bought the property for $599,000 in 2004 and put more than $250,000
Stunning.
Pay $600k, double the $600k to account for interest. We’re up to 1.2 million. Then you dump another $250k into it?
1.5million for a $150k item that depreciates? Wow. Just wow.. The cluelessness is stunning.
There is no spectacular crash without a spectacular mania.
I looked up some historic manias online. The current one’s denouement is taking far longer than the typical 2-5 years, thanks to the “hair of the dog” hangover cure underway. I’m thinking we may be on the way to a repeat of Japan’s quarter-of-a-century long economic malaise.
But think about the end game for just a moment: Imagine treating an alcoholic by waking him up from his drinking binges each time with a shot of whiskey. He may feel better over time than if he had to deal with the DTs, but will eventually die of alcohol-related diseases nonetheless, and perhaps even sooner than if he simply quit drinking.
I’m sure it is completely different than this when the punchbowl is spiked with QE3 liquidity than with BACARDI® 151°.
Some alkies live into their 90s, though. Hard to tell how long they can keep this one juiced.
I can confirm that the dinosaurs have returned to Tampa. The size of new houses being put up in my neighborhood is bigger than at any time since 2006. They are, without exception, hideously ugly. There are plenty of historic examples of beautiful and graceful large structures to be found both here and throughout the southern United States, but we are not good enough to do that anymore.
Looking at the federal government’s role in resurrecting this (including the role of the Federal Reserve), it’s obvious that this country has thrown in the towel on having an economy based on anything real.
I recently watched “The Queen of Versailles,” a documentary about a timeshare mogul and his wife who attempted to build a 90,000 square-foot house in the Orlando area at the bubble peak, to replace their inadequate 27,000 square-foot dwelling. At the beginning of the film, the guy is filmed sitting on a throne, with various paintings of himself on the walls where he looks like medieval nobility, along with photographs where he poses with national political figures. He’s asked why he’s constructing such a palace, and he answers “because I can.” By 2009 he’s reduced to a bitter and isolated old man yelling at his family for leaving lights on and a door open. This is who, and what, our leaders want to restore.
I’m of the mind that the LESS house I have, the better off I am. Why? Because I have to clean the thing!
Not to mention the higher aesthetic value of a smaller house. It’s like these designers don’t know how to handle the square footage.
In the film, the family is forced to lay off most of their 16 domestic servants. The house quickly becomes unkept. Particular disturbing was the fact that no one cleans up the dog crap.
They never trained the dogs because there was never a need to.
You and my MIL need to have a talk, Slim…
I used to rent a house 1 lake over, but on the same chain as Siegel’s monstrosity. I have boated past its rusting carcass several times and pee’d in front of it at least twice (that I can remember). It looks like two Wal-Marts stacked on top of one another. It has all the subtlety of an icepick in the forehead and roughly the same aesthetic effect. It it an example exhibitionism and ego masturbation at its most blatant and grotesque. Those who do this kind of thing are ‘reality TV’ refugees. Empty caricatures of people, devoid of any substance or real worth, acting out in outlandish ways to telegraph, ‘Look at me!!’.
The visual of BaCG boating by, popping a cool one, flicking ashes off his stoogie and casually relieving himself along the frontage of the rusty carcass is just too wonderful to pass by without comment.
“I can confirm that the dinosaurs have returned to Tampa. The size of new houses being put up in my neighborhood is bigger than at any time since 2006. They are, without exception, hideously ugly.”
Same here in San Diego along my daily commute route: ‘From $1 million’ the latest signs say. It’s as though the housing mania building boom along Ted Williams Highway was put in cryogenic suspension from 2007-2013, and is just now thawing out to resume where it left off.
The builders are doing the nonsense all over again, with raising prices and crazy lot premium’s at will.
They will never learn that the public has access to public records nobody is begrudging them a profit but when it gets insane and they start the lottery and releasing lots by bits and pieces they will suffer the consequences as they should and so will the real estate market and the general public.
We’re lowering prices my friend.
Exactly. The price for a new home build package is lower than it was before.
And strangely enough, nobody thinks about how much room there is to move lower. There’s alot. A whole lot.
Why even bother thinking about that when a Fed-funded mania is driving prices higher again (at least in my ‘hood…)?
They will never learn that the public has access to public records
Yeah, but how many actually bother to check them? My coworkers sure as heck don’t.
Come on rebubble, baby needs a new pair of shoes
Can’t have a bubble with demand floundering at 17 year lows…. and falling.
But Iwog:
How do you explain the inventory falling off the cliff? How do you explain the prices going up 30% y-o-y in certain cities? If it’s not a rebubble, then what is it?
How do you explain housing sales falling off a cliff? How do you explain “prices going up”(they’re not) with sales collapsing?
If it’s not a contrived media driven lie, what is it?
Sales are down because there is not enough inventory for sales to be any higher.
Let’s imagine that 100 houses are hitting the market every month, but none of them are getting bought. Then, one day, someone comes along and decides to start buying them all. This person buys 1,200 houses on Jan 1. Now the inventory is 0. Feb 1 comes along and 100 houses hit the market. Mr. Buyer purchases them. Sales for Feb were only 100, whereas sales for Jan were 1,200. However, the inventory is still ZERO.
It’s the inventory that tells you something.
With 20 million excess empty houses, I don’t think anyone has to worry about inventory.
Yes, Pimp Watch, that should be correct. However, with government collusion and a few major banks all backed by two or three government agencies, the shadow supply can be trickled into the rebubble quite easily. I guess it’s a pump and dump thing.
Like I said…. plenty of inventory…..
And you’re right about pump and dump.Thus;
If you buy housing now, you’ll lose ALOT of money.
“It’s the inventory that tells you something….”
Is this the new Realtor on the HBB?
What you call “inventory” is a scam. There are tens of millions of houses in inventory, not just the ones you are advertising. The number of “buyers” in inventory declines by the day.
”We started panicking that we had nowhere to go,’ said Sachs.”
You can’t put your stuff in storage and rent for six months while you look for a new house?
It’s more likely they thought they could get more money later.
‘They’re redoing the floors, painting inside and out and making other improvements. They want to wait at least a couple years for the housing market to settle down.’
Remodeling so as to make even more money: CHECK!
“Remodeling so as to make even more money: CHECK!”
I have a couple of great personal anecdotes on how badly that can work out. One friend’s wife had a remodeling compulsion; his income was way into the six figure range, but she spent every dime of it on making their home bigger and bigger. They are divorced now; she got the home, and he got freedom from her insanity.
In another case it was the husband (real estate developer) who had the remodel fever. Eventually he lost his job, and they sold the home at $500K less than he thought it was worth after all his remodeling work.
I was holding off on buying a house until 2015 and/or sanity was restored, but it’s becoming obvious that it ain’t gonna happen in my remaining lifetime.
The plan was to buy a small place with enough acreage to build a detached workshop, so I can work on my currently-in-storage projects eventually. But these projects don’t make sense, if I have to rent/buy dedicated shop space, especially if said space is located away from my primary residence. So I’m beginning to think I need to sell this stuff, or turn them over to the kids, if they want them.
Guess my new hobby will be yelling at the idiots on the TV set when “Teen Mom” is on.
Quit whining. You’re going to get your typically priced house($30/sq ft)…. and more.
The question is will you want it?
BINGO
Sometimes I wonder. Too many people (banks, government, home owners, realtors, builders, suppliers, etc.) are going to be totally fooked/Members of the Lucky Duck crowd, if it does.
I think I know how the “Earth is round, and revolves around the Sun” crowd must have felt.
My middle daughter has caught the “Gotta-have-a-house” fever from her future in-laws. Hopefully, the inevitable will happen before they save enough for the down payment.
Very little new construction around here. Lots of “For Sale” signs on existing houses. In a week or two the “SOLD” or “Pending” sign will go up. A week or two after that, the “SOLD” or “Pending” sign disappears.
Out here in BFE, there are a lot of paid-for houses that “aren’t going to be given away” and a lot of houses sold in the 90s-early 2000s whose payments are low enough for people to carry for a while.
In the meantime, 90% of the 20-40 somethings are Lucky Ducks, with a family gross of around $45-50K, 9% are the “elite/Techno-creative” class, making a household income of around $120K. Maybe a couple of hundred 1%ers (city/metro area of around 200K. Percentages are estimated against National income).
Using the old-fashioned “3 times income” guesstimate, wish-for prices should be around $120K. Prices are easily 50% higher than that.
And I’m not sure that even the “3X” estimate is valid anymore. Not when state/local sales taxes have jumped from 3% to 8-10% in the past 10-15 years.
But it’s not a problem. Our Gov. Brown-nose back has lowered taxes on the 1%, so soon we’ll be overrun with rich people moving out here to “Trickle-down” on all of us members of the wretched refuse.
Don’t try to BS me. I’ve seen the 1% around here up close. They want the “teachers union goons” put in their place to reduce property taxes. They don’t give a crap about public education, because all of their kids go to private schools anyway. The only people they “trickle down” on are the line service guys at the airport, when they fuel their airplanes on their way out of town, when they head out to Colorado, Vegas, Cali, NYC, etc.
We’re centrally located…….a long way from everything. Unless you are flying your own jet. Colorado is less than 90 minutes away. Either coast is two-three hours, give or take. Weekends in areas with nicer climates are real do-able with travel times like that.
We’ll just get the fertilizer plants built next to schools and hospitals.
there are a lot of paid-for houses that “aren’t going to be given away”
Then they’ll never sell. And the longer they wait, the less they’ll fetch.
It’s really a matter of getting out while the gettin’s good. And right now is the best it gets.
“Then they’ll never sell. And the longer they wait, the less they’ll fetch.”
Sounds like a cargo cultist’s worst nightmare…
If commercial would crash, maybe it would be possible to get a commercial space?
If America had a free-market economy, I would have high hopes for you.
JOURNAL REPORTS
April 29, 2013
THE MONEY GAME
Warning: Property Foreclosures Ahead
Small companies face balloon payments on their mortgages—and no way to raise the money.
By EMILY MALTBY
Many small firms that own commercial property are facing big trouble.
The problem is simple: Banks typically re-evaluate commercial mortgages every five to 10 years. At that point, they can renew the loans, or ask business owners to pay them off.
These days, lenders are a lot less willing to extend loans that don’t seem like good bets—and it’s tough for businesses to look creditworthy after years of slumped sales and exhausted savings. “So many small businesses have lost their reserves during the recession,” says Brent Case, president of Coldwell Banker Commercial Atlantic International Inc., in Charleston, S.C. “They don’t have that chunk of cash that banks want as a buffer.”
That leaves many small-business owners scrambling to find a lender that will cover their loan—or facing the loss of their property through foreclosure.
Trouble in Store
For an idea of the scope the problem, consider this: Some $276.2 billion of nonresidential commercial-property loans are expected to come due in 2013. That’s higher than any prior year, according to Trepp LLC, a commercial-mortgage research firm in New York.
Many of these loans were made leading up to the financial collapse in 2008, when property values were high and business owners could depend on steady income to repay the loan. In other cases, the loans came due in the depths of the financial crisis, but banks were willing to give businesses extensions—essentially pushing the question of refinancing to a later date. Some analysts estimate as many as 60% of commercial real-estate loans that came due were extended during this period.
Now the extension periods have been coming to an end. Borrowers are again confronting big balloon payments they can’t make—and banks are more willing to foreclose. They’re better capitalized than they’ve been in years and “are in a position to take a hit” on a loan, says Dan Fasulo, managing director of Real Capital Analytics Inc., a commercial real-estate research firm in New York.
…
You should have doubts….. real doubts about what’s going on. About housing in particular.
By the way, you guys are misspelling the word “alot”. It’s supposed to have two l’s. It’s “allot”.
your wrong about that, looser
(sarcasm)
This is one of my pet peaves.
I played through one of those amps one time and didn’t like it.
A Marshell man?
Just going for the cheap joke. When I was a hair band guy I liked Marshall’s. Now I like what nobody likes…Fender Cybertwin. But I don’t use really high gain distortion any more, which the Fender isn’t very good at.
Carlyle……
How do I get to the most authentic 80’s metal tone in the least costly way possible?
I used to think it was all in the amp, but now I think the guitar is more important than I gave it credit for, even at high gains. Different people have different definitions of “metal”. I was more of a pop metal kind of guy so for me it’s the intro to Ratt, “Lay it Down”. I think the key is almost any Marshall on 11 and a real Jackson Soloist. But lots of combinations are “good enough”. I even used a semi-hollow Gibson on tour one time in the army band because that’s all they had in the supply room and as a bass MOS (O2U) I didn’t have a personal one. It sounded nice through the Marshalls but the whole body would feedback a bit too much if you got right in front of the amps.
But cheap guitars suck, even at gains so high you wouldn’t think it would matter.
But I just realized you were asking about cheap. I’d pay the $500 for a real Jackson off Ebay. I don’t have a better cheaper solution.
I’m trying to get my brain around the details of this story without having my head explode:
“Nickie and Jim Haggart were evicted from the home Friday. They bought the property for $599,000 in 2004 and put more than $250,000 into it, but Nickie Haggart said they stopped making mortgage payments five years ago after being hit hard by the economic downturn.”
“…the city … foreclosed on the lien and the home went to auction in January, where Mosher and Garczynski snapped it up for $4,350.”
“Before the real estate market crashed, the 2,991-square-foot house was listed for $1.2 million. It is now assessed at $387,906.”
How could the same home have sold for $599,000 in 2004, gone on the market for $1.2 million after 2004 but before the real estate market crashed, sold again at auction for $4,530, and currently be assessed at $387,906?
There must be more to this story than meets the eye…
I’m pretty sure the guys just bought the lien, not the house.
‘I’m pretty sure the guys just bought the lien…’
“…the home went to auction in January, where Mosher and Garczynski snapped it up for $4,350.”
That’s not what I read. And besides, though investors snap up houses all the time, I’ve never before heard of a lien getting snapped up.
Last year we took the kids to an average hotel in Orlando for a staycation. The room was $129/night. This year, no joke, rates are $359.
What gives?
Opinion & Analysis
Fed will need impeccable timing to avoid a crash or a bubble
by Nouriel Roubini, April 30 2013, 05:39
THE ongoing weakness of America’s economy — where deleveraging in the private and public sectors continues apace — has led to stubbornly high unemployment and subpar growth. The effects of fiscal austerity — a sharp rise in taxes and a sharp fall in government spending since the beginning of the year — are undermining economic performance even more.
Indeed, recent data have effectively silenced hints by some Federal Reserve officials that the Fed should begin exiting from its current third (and indefinite) round of quantitative easing (QE3). Given slow growth, high unemployment (which has fallen only because discouraged workers are leaving the labour force) and inflation well below the Fed’s target, this is no time to start constraining liquidity.
The problem is that the Fed’s liquidity injections are not creating credit for the real economy, but rather boosting leverage and risk-taking in financial markets. The issuance of risky junk bonds under loose covenants and with excessively low interest rates is increasing; the stock market is reaching new highs, despite the growth slowdown; and money is flowing to high-yielding emerging markets.
Even the periphery of the eurozone is benefiting from the wall of liquidity unleashed by the Fed, the Bank of Japan and other major central banks. With interest rates on government bonds in the US, Japan, the UK, Germany, and Switzerland at ridiculously low levels, investors are on a global quest for yield.
It may be too soon to say that many risky assets have reached bubble levels, and that leverage and risk-taking in financial markets is becoming excessive. But the reality is that credit and asset or equity bubbles are likely to form in the next two years, owing to loose US monetary policy.
The Fed has signalled that QE3 will continue until the labour market has improved sufficiently (likely in early 2014), with the interest rate at 0% until unemployment has fallen at least to 6.5% (most likely no earlier than the beginning of 2015).
Even when the Fed starts to raise interest rates (some time in 2015), it will proceed slowly. In the previous tightening cycle, which began in 2004, it took the Fed two years to normalise the policy rate. This time, the unemployment rate and household and government debt are much higher. Rapid normalisation — like that undertaken in the space of a year in 1994 — would crash asset markets and risk leading to a hard economic landing.
But if financial markets are already frothy now, consider how frothy they will be in 2015, when the Fed starts tightening, and in 2017 (if not later), when the Fed finishes tightening? Last time, interest rates were too low for too long (2001-04), and the subsequent rate normalisation was too slow, inflating huge bubbles in credit, housing and equity markets.
We know how that movie ended and we may be poised for a sequel. The weak real economy and job market, together with high debt ratios, suggest the need to exit monetary stimulus slowly. But a slow exit risks creating a credit and asset bubble as large as the previous one, if not larger. Pursuing real economic stability, it seems, may lead again to financial instability.
Some at the Fed — chairman Ben Bernanke and vice-chairwoman Janet Yellen — argue policy makers can pursue both goals: the Fed will raise interest rates slowly to provide economic stability (strong income and employment growth and low inflation) while preventing financial instability (credit and asset bubbles stemming from high liquidity and low interest rates) by using macro-prudential supervision and regulation of the financial system. In other words, the Fed will use regulatory instruments to control credit growth, risk-taking and leverage.
But another Fed faction — led by governors Jeremy Stein and Daniel Tarullo — argues that macro-prudential tools are untested, and that limiting leverage in one part of the financial market simply drives liquidity elsewhere. Indeed, the Fed regulates only banks, so liquidity and leverage will migrate to the shadow banking system if banks are regulated more tightly. As a result, only the Fed’s interest rate instrument, Stein and Tarullo argue, can get into all of the financial system’s cracks.
But if the Fed has only one effective instrument — interest rates — its two goals of economic and financial stability cannot be pursued simultaneously. Either the Fed pursues the first goal by keeping rates low for longer and normalising them very slowly, in which case a huge credit and asset bubble would emerge in due course; or the Fed focuses on preventing financial instability and increases the policy rate much faster than weak growth and high unemployment would otherwise warrant, thereby halting an already-sluggish recovery.
The exit from the Fed’s QE and zero-interest-rate policies will be treacherous: exiting too fast will crash the real economy, while exiting too slowly will first create a huge bubble and then crash the financial system. If the exit cannot be navigated successfully, a dovish Fed is more likely to blow bubbles.