Returning To The Bad Habits Of The Boom Era
The Denver Post reports from Colorado. “The price of previously occupied homes sold in the metro area shot up in April as buyers battled over a limited number of homes available for sale. An analysis done by Jim Smith, owner of Golden Real Estate, found that homes listed for sale since April 1 spent a median four days on the market before going under contract. ‘Sellers, be prepared for multiple offers and informed enough to capitalize on creative offers,’ said Gary Bauer, an independent real estate research analyst who prepared the report.”
“Metrostudy, in a quarterly survey, found that builders started 1,596 homes in the first quarter in metro Denver, a 52 percent increase from the 1,050 in the same period a year earlier. They closed on 1,425 homes, a 39 percent jump from the first quarter of 2012.”
The Aspen Times in Colorado. “Many property owners in the mid-Roaring Fork Valley likely are to find another significant decrease in the value of their homes or commercial real estate when Eagle County’s new notices of valuation arrive by the end of this week. This reappraisal is based on real estate sales from Jan. 1, 2011, through June 30, 2012. The midvalley real estate market was slumping throughout that 18-month period. The dive comes on the heels of a bigger decrease in property values in May 2011.”
“‘There were quite a few foreclosures,’ said Eagle County Assessor Mark Chapin. ‘The market got really soft.’”
The Salt Lake Tribune in Utah. “The inventory shortage is hindering sales of new homes almost as much as existing homes. Rene Oehlerking, marketing director for Garbett Homes in Salt Lake City, said all builders have started ramping up efforts in the market. Competition for undeveloped land is fierce, and inventories are low because it usually takes a year before homes can be built and prepared for sale, he said. ‘We are just very low on inventory,’ he said. ‘We have sold out of every single unit that we have. If you are a buyer, you are going to have to wait until the third quarter until you have a [house] that you can move into.’”
“‘Sales are going to be flat, if not down, because there is nothing to buy,’ said Dave Frederickson, president of the Salt Lake Board of Realtors. Multiple buyer offers on homes for sale are fast becoming the norm in almost all prices ranges, he added.”
From KSL.com in Utah. “Brad Wilson, president of Destination Homes, plans to develop about 80 acres of farmland into a new neighborhood on the west side of Kaysville. The homes in Hill Farms will be priced between $200,000 and $600,000, comparable to Daybreak in South Jordan. Destination Homes said they already have hundreds of people on the waiting list for the Hill Farms development. ‘The housing market has been terrific for the last year or so, and continues to get stronger,’ Wilson said. ‘We’re very excited. The housing market does go in cycles. We’re just sort of catching the wave of this next cycle right now.’”
“Doris Giede-Stevenson, chair of Weber State University’s economics department, points out that housing prices are still 30 percent below the peak nationwide, and the current demand and rising prices may be reminiscent of the housing bubble that led into the recession. She believes the increased building, buying and selling are positive signs. ‘I think that you want to differentiate who’s buying the homes,’ Giede-Stevenson said. ‘And it seems that mortgage applications are up, and so traditional homebuyers are back in the market.’”
AZ Family in Arizona. “It is no surprise housing prices are going up, up, up here in the Valley, which is news we’ve all been waiting to hear. But are we preparing ourselves for another housing bubble? The short answer is: No. Real estate analysts say our recovery is steady, in large part, because right now there are far more buyers than houses available. ‘I’ve been doing this for 28 years, I would say this is the busiest I have ever been,’ said real estate agent Robert Joffe. ‘Some sellers getting multiple offers on properties; it definitely has changed very quickly. I think if someone is on the fence they should get off of it because next year they are going to be saying, ‘Why didn’t I buy this year.’”
“Vermaland is one of the largest landowners in the Phoenix area and Kuldip Verma said that housing shortage has home builders on the hunt for land. ‘And we anticipate the sales this year in raw land should exceed all the sales during 2008, 2009, 2010, 2011 and 2012,’ he said. ‘During the distressed time from 2008 to 2012, the land prices tumbled down to as low as 5 cents to 10 cents to the dollar. Now in the last three months, we are seeing land prices jump to 10 to 15 cents to the dollar.’”
The Arizona Republic. “Some housing market watchers are concerned that home-sales prices are climbing too fast. The Valley’s rising housing prices have deterred some investors, who can now find better bargains in other parts of the country. About 27 percent of all houses purchased in March went to investors, the lowest level in several years, according to Mike Orr’s report. ‘Higher prices would normally encourage more ordinary home sellers into the market, but many are either locked into their homes because of negative equity, or they’re simply waiting for prices to go up more,’ he said.”
“New-home sales have climbed 37 percent in the past year, but Orr said that’s not enough to meet the demand for housing. ‘Builders are scratching their heads, trying to figure out what to do. They don’t want to overbuild like they did during the peak, and they don’t want to build a bunch of new homes for people who can’t secure the mortgages needed to buy them.’”
From Vegas Inc. in Nevada. “Las Vegans are buying more cars, clothes and other consumer goods. That sounds like a good thing. But Nevadans also have some of the worst personal finances in the country. And the local mini-spending boom is raising fears that people once again are taking on too much debt and returning to the bad habits of the boom era — buying stuff they can’t afford.”
“Many people, because of bankruptcies and foreclosure processing delays, have stopped paying their mortgages and now are spending that money on vacations, clothing and furniture instead. Processing delays, caused in part by Nevada’s October 2011 ‘robosigning’ law, inadvertently let some people live for free – sometimes for months or years – while banks gather the paperwork they need to foreclose on the homes.”
“That doesn’t stop some residents from shopping. Too many local families are spending housing money on consumer goods, said Las Vegas’ Financial Guidance Center CEO Michele Johnson. She has noticed a troubling trend: clients have more credit card debt than in recent years and are creating dangerous spending habits. She had hoped the recession would teach people to be more careful. ‘I’m not sure that’s going to hold true,’ she said.”
The Associated Press on Nevada. “Struggling Nevada homeowners facing foreclosure would be given added protections and advised of ways to keep their homes under a bill known as the Homeowner’s Bill of Rights. ‘This bill will allow our residents to take the necessary steps to do everything they can to stay in their homes,’ said Assemblyman James Healey, D-Las Vegas, a co-sponsor of the bill who told the Assembly Judiciary Committee of his own frustrations trying to dig out from an under a home that lost considerable value during the recession.”
“While trying to refinance, ‘I got the run-around,’ he said. ‘Every time I tried to call, I had to explain it to a different person … again,’ he said. ‘This went on for more than year … before they finally said, ‘Sorry, you don’t qualify to refinance.’”
“Healey said on the advice of his lender, he stopped paying his mortgage, then opted for a short sale, a process that took nine months. ‘These are the types of stories we as legislators should not stand for,’ he said.”
“George Ross, representing Bank of America, cautioned that the bill, if enacted, would likely help only a fraction of distressed homeowners. He said around half of borrowers who are able to renegotiate their loans still default. ‘This is not going to keep everybody in their homes,’ he said. ‘An awful lot of folks know they cannot make their payments.’ It’s a point conceded by bill sponsors.”
From Fox 5 Vegas in Nevada. “There are fears shadow inventory could flood the market and burst the latest price bubble, but that’s unlikely to happen, according to Dave Tina, president of the Greater Las Vegas Association of Realtors. ‘They are going to release those strategically to keep prices as high as they can,’ he said.”
The Las Vegas Sun in Nevada. “My husband and I have been offered career opportunities in Nevada. We spent weeks looking for housing. We found nothing. Look on any real estate site and you’ll see thousands of homes for sale in Nevada. When you try to see the homes, it seems like 99 percent are unavailable because of the lenders. Most are vacant, and they cause a blight in every neighborhood.”
“Thousands of homes have sat in foreclosure for years and will continue to sit unless your Legislature acts to force lenders to release homes. The lenders now let a fraction on the market. The Legislature can establish reasonable guidelines for the foreclosure process and force lenders to release homes so that they can generate tax revenue.”
“I realize this may cause prices to drop at first, but it would generate income for the state in unpaid taxes and also bring people like us to Nevada. In the long run, it would raise prices and help neighborhoods — the vacant homes would be purchased and cleaned up, and the value of the entire area would increase. State officials should open Nevada for business again. ‘Home means Nevada’ to us, as well.”
‘Las Vegas‘ empty office space hit an all-time high last quarter as rental rates continued to slide. The valley’s office market had a record 26.2 percent vacancy rate in the three months ending March 31, up from 25.1 percent a year earlier, according to a new report from Applied Analysis, a Las Vegas research firm.’
‘The average asking rent for office buildings was $1.87 per square foot last quarter, down from $1.94 a year ago. Rental rates have dropped for 15 consecutive months and are down 21.4 percent from their peak, in the second quarter of 2008.’
‘Construction is expected to start next week on what will be one of the largest residential communities built along the Wasatch Front since the housing market collapsed five years ago. Homes will be priced from the “high $200,000s” to as much as $700,000, Wilson said. Lot sizes will range from less than a quarter-acre to a half-acre.’
‘We are [already] building in 12 to 14 communities [along the Wasatch Front], and there is a real lack of inventory,” Wilson said.’
“There are fears shadow inventory could flood the market and burst the latest price bubble, but that’s unlikely to happen, according to Dave Tina, president of the Greater Las Vegas Association of Realtors. ‘They are going to release those strategically to keep prices as high as they can,’ he said.”
The shadow inventory release bogey man is growing as long in the teeth as the cram downbogey man and the QE3 exit bogey man.
Fears which are discussed for years on end with nothing but conjecture to back them up eventually morph into phobias with no basis in fact.
P.S. Any thoughts on the identity of the ubiquitous “they” who represents the shadow-inventory-release bogey man?
The housing market has been effectively nationalized. The spice must flow!
Yeah. The “they” is really Dick Cheney in an undiscolsed location. Illegals secretly built 12500000 homes in Battery Park NY and 12500000 homes in Bethesda MD for $50 sq ft especially for Dick. Lying Realtors® know they’re there but no one else can see them. They are empty and depreciating rapidly. Dick is now releasing them one at a time to keep prices high to afford his next heart, preferably from a young strong UPS driver named Joe who drinks a six pack each weekend.
Cooking up straw men won’t save your home equity value from the eventual reality of a future exit of all cash investors from the purchase demand queue.
Oh come on PB, don’t be so tense. Oxide made a funny, and a good one too.
Don’t misconstrue my candor as “tenseness.”
…. or my graveness with anger.
yeah pb, lighten up…. and you learned term “straw man” from your buddy “evil doc”…a lesson well learned.
Hay Man!
Peeps, peeps, I call for peace. Well, not really, the fighting is hilarious. Let’s just watch this next bubble pay out, and make sure we all play the right cards at the right time.
Would I be a tard to steal a quote?
May the odds be ever in your favor!!!
“…evildoc…”
Where is MacDufus these days, anyways?
“Fears which are discussed for years on end with nothing but conjecture to back them up eventually morph into phobias with no basis in fact.”
I agree. This is the shadow inventory who cried wolf, except the wolf never comes. The banks couldn’t have anticipated this recent big bounce, so are we actually to believe that they were conspiring to hold and pay for these homes for the next 20 years while the values slowly increased? No, they were just too overloaded with homes to process them quickly and correctly. The pace of their release for sale will continue to be slow due to incompetence and workload, not evil genius.
‘are we actually to believe’
Believe whatever you want. I work in the foreclosure business and I believe what I see with my own eyes.
‘around half of borrowers who are able to renegotiate their loans still default’
And what you see with your own eyes is the perpetual slow release of inventory, right? My point is that the slow release will continue because banks don’t have the ability to suddenly flood the market with millions of homes. Their workload and byzantine processes prevent them from doing so.
If I’m wrong, and they do have the ability to release all these homes but haven’t done so in hopes of price appreciation, then surely they won’t change that plan now. It’s working perfectly for them.
Either way, by plan or lack of ability, shadow inventory is still the bogey-man.
Either way, by plan or lack of ability, the shadow inventory still has the potential to crush future U.S. housing price appreciation, especially when you factor in all the Greatest Generation members and Baby Boomers who will vacate their single-family homes over the next three decades and the smaller, poorer, debt-strapped cohort of twenty-somethings who represent the potential buyer pool.
Nevada passed a law that dropped foreclosures from 4,000 per month to 80. Not even the UHS deny it’s in the tens of thousands. And now:
‘Nevada, with 3,227 properties subject to April foreclosure filings, retained the nation’s top spot despite a 17 percent decline in filings from the same month in 2012. But the filings included 1,878 default notices, a 39.8 percent increase from April 2012. April filings in Nevada also included 948 notices of trustee sales and 401 repossessions.’
‘RealtyTrac vice president Daren Blomquist said “foreclosure starts are bouncing higher in a handful of non-judicial states where servicers are adjusting to legislation designed to prevent improper foreclosures.”
“This includes Nevada, Washington and Arkansas, where foreclosure starts have been increasing on an annual basis since late 2012, along with Oregon and California, where foreclosure starts are still down from a year ago but have been moving steadily higher in recent months,” he said.’
Tee hee…
Nevada foreclosure rate led nation in April
By MICHELLE RINDELS, Associated Press
Updated 10:20 am, Thursday, May 9, 2013
LAS VEGAS (AP) — After briefly falling from its long-held place as the nation’s foreclosure king, Nevada chalked up the highest foreclosure rate in the country for the second straight month in April, a tracking firm said Thursday.
The rate could remain high as lawmakers consider a measure to loosen restrictions on lenders.
Statistics released by RealtyTrac show nearly 1,900 homes received an initial notice of default last month — a 40 percent increase from a year ago.
Meanwhile, a total of 3,227 homes received some sort of foreclosure-related filing in April, down 15 percent from March and down 17 percent from the year-ago period.
A state Senate committee reviewed a bill on Thursday to ease requirements on lenders seeking to foreclose. The bill, AB300, unanimously passed the Assembly last month.
Current law says lenders must personally know the history of a home loan before they can foreclose on a property. Critics say that’s an impossibly high standard because mortgages were bought and sold at such a rapid pace during the housing boom and the subsequent meltdown.
Realtors are eager to see the bill enacted. They have been battling with persistently low housing inventory that has helped push up prices by 31 percent year-over-year in the Las Vegas area while spurring fierce bidding wars between investors.
…
The number of bank-owned vacant houses in Nevada is mind-blowing.
I have seen foreclosures being held back, then released in waves. I have not seen a slow and steady trickle. Now that prices are rising, the asset managers are opting for the slow and steady release. That was not the pattern from 2008-2012.
…they were just too overloaded with homes to process them quickly and correctly. The pace of their release for sale will continue to be slow due to incompetence and workload, not evil genius.
I think that incompetence had a major role in the housing bubble runup (nobody saw it coming!) and in its aftermath (what do we do with all these empty houses?).
Incompetence: It’s the gift that keeps on giving.
We’ve been hearing about the shadow inventory for years. Properties are being bought up so quickly and rising rising just as fast will it ever come to fruition?
Serious? “Bought up so quickly”?
Does this chart phase you at all?
http://www.zillow.com/local-info/CA-Orange-County-home-value/r_1286/#metric=mt%3D30%26dt%3D1%26tp%3D6%26rt%3D6%26r%3D1286%26el%3D0
My God you realtors know no bounds.
Builders are scratching their heads, trying to figure out what to do
No they aren’t and they aren’t being thoughtful either. They are building at full speed everywhere I look hoping to get in while the getting is good. The construction vehicles are everywhere in PHX now.
Like I say, more excess empty houses simply means the correction will be far deeper and broader.
I’m still not seeing construction out here in my little burg, not at the levels during 2005, though it has picked up since say 2009.
In Florida too. And sadly, I must report that earlier this week an ambitious realtor was going door-to-door in my neighborhood, which is seeing an onslaught of activity as 3/2 homes are being torn down for McMansions.
This is surreal, pathological, or both.
Welcome to Planet of the Morons.
“…as 3/2 homes are being torn down for McMansions.”
Talk about not knowing your market. Tear down houses that are relatively affordable and put up ones that are less so. But then again, what else are builders going to do but build?
But then again, what else are builders going to do but build?
It’s what they do. And don’t tell them about moved cheese and shadow inventory, etc.
YES, I see them building everywhere too. There are ABANDONED houses just sitting around rotting, yet builders are making new ones JUST AROUND THE CORNER. I cannot all-cap enough to express the words.
It’s interesting that journalists continue to quote known corrupt scumbags like Mike Orr.
My Story.
I have been reading this blog since 2007 or so.
In 2009 It kept me from buying a house, here in Bakersfield CA.
In 2010, however the planets aligned, and I was able to buy.
It is a “Toe-Tag” house,1900 Sq Ft. purchased for under 140K.
It supposedly appraised for over 250K in 2007.
Since my mortgage payments are under $1000.00 a month, I am OK with the deal. This actually cheaper than the rent I was paying for an older, smaller house, with fewer bedrooms.
(Rental was 3bd, new house is 4bd.)
New house has dual pane windows and A/C Vs Swamp Cooler, so heating / cooling costs are down from the old place too.
Loan is VA, and since I am a disabled Veteran, the closing costs were covered by the VA. I don’t think it was a “perfect” deal, but it is close enough. Since, I would be paying money to live someplace anyway, for me, right now, this is a good deal.
I know various folks on here would have advised me to keep renting, but cheaper Utilities, and a mortgage payment smaller than my rent makes economic sense to me.
All any of us can do, is the best we can, at the time.
Did I overpay? Probably so.
Do I regret it? No.
I have a very nice house, with room for my Grand Children to play and have their own room. That is important to me. It is cool in the summer, and warm in the Winter. It works for me.
Again, Thanks to Ben Jones and the others who post here. You helped me weather this whole thing, cheerfully.
Good luck. You’re going to need it. ALOT of it.
So in summary, it’s bigger than your rental, cheaper (monthly) than your rental, you’re glad you bought it, and you plan to die there. Sounds like you made the right choice.
Crusty the realtor…. rental rates are falling.
Yes, it could take the rest of this man’s life before renting would pencil out for him.
Good for you, eagle, and enjoy your grandchildren. That is far more valuable than getting petty about housing costs.
Right, because overpaying six figures for a house is trivial. Wow.
So in summary, it’s bigger than your rental, cheaper (monthly) than your rental, you’re glad you bought it, and you plan to die there. Sounds like you made the right choice.
Shhh…you’re not allowed to be happy with your housing situation here.
Quality of life means nothing, it’s all about $$$.
If you love where you live, can easily afford the monthly, and pay less than renting, you are doomed. Doomed, I tell you.
Speaking of underwater debt junkies…..
It’s all about finding a place that suits your long-term needs and desires at a price that you are able and willing to pay.
Sounds like you found something that works.
Another failed ruse by you corrupt pimps.
(And if you’re the reading public, note that this thread is a ruse… a charade.)
(And if you’re the reading public, note that this thread is a ruse… a charade.)
Regular people needing a place to live at a price they can afford aren’t the ones creating ruses and charades.
Reading public: beware Housing Analyst, RAL, and Pimp Watch, Whas a Bubble: they make their living in the building and RE industry (details of which are intentionally veiled) and their repeated postings and vehemence regarding their position makes their intentions all the more sketchy.
Perhaps they are all the same person. Maybe they are all Ben in disguise? Who knows? But they are ruining what was once an informative and interesting blog with their mindless, repetitive, and frequently insulting posts.
And it’s another one who said “you’ve got to use the joshua tree extension and ignore him!”…… LOLZ
And like I said then…. you’d don’t have the mental fortitude to ignore me. You can’t even be honest about that. Is there anything you’ve been truthful about? ANYTHING?
And a message to our readers here….
We have paid hacks, realtors, mortgage brokers and a few suckers sympathetic to their cause who post here, “Sfhomowner” one of them, who would love you to make the tragic error of paying in excess of $60/sq foot for house because a) they made the same error or b) they’re profiting from it.
Do NOT trust these liars and thieves. Stick around, learn who is who, who is truthful and who the liars are.
thieves
That’s nonsensical.
Regular people buying a place to live at a price they can afford are not thieves.
The thieves are the bankers, the investors, the flippers, RE agents, and everyone else in the RE complex, including builders and all the rest who turn a tidy profit from building and selling shelter, which is a basic human need.
We all know that “Housing Analyst”, “Pimp Watch”, and whatever other names they go by are in this category, whereas the rest of the posters that they continually harass are just regular people with regular jobs who are not involved in the housing industry.
Yeah, I have a new computer and didn’t load the JTT extension. And I haven’t had enough coffee so I’m irritated.
Yeah, I have a new computer and didn’t load the JTT extension. And I haven’t had enough coffee so I’m irritated.
It’s amusing to see all the collapsed oranges fields with his multiple personality disorder aliases on them. He (I’m guessing it’s a he) is an attention whore. Blocking him with the Joshua Tree extension is well worth it.
They are not Ben in disguise. Whac a Bubble/Professor Bear/Get Stucco is not the same person as RAL/Housing Analyst/Pimp Watch/Exeter/Bigsby/etc. You can tell by the content of the comments.
“Regular people buying a place to live at a price they can afford”
You couldn’t afford it. That why you sold 30 years of labor just to end up with nothing at the end when you could have rented it for half the monthly costs.
Now what did you pay for your debt dump? Be honest.
” Whac a Bubble/Professor Bear/Get Stucco is not the same person as RAL/Housing Analyst/Pimp Watch/Exeter/Bigsby/etc. You can tell by the content of the comments.”
Yes they have different styles but it seems like PB might have owned up to being RAL or at least hinted.
Notice that PB always lives in the SD suburbs. RAL says he is in CT, Westchester county NY, or one time Providence. It’s easy to move if you are the figment of an imagination.
You yap and still say nothing.
You are right, nobody pays me to trawl the web for arcane RE data. That’s why i visit this blog.
I feel the coastal contingent here might use some perspective from a flyover real estate market. If it bothers you that people can buy existing houses for less than the manufactured homes that you talk about building but don’t - just block me.
If it bothers you that we supply new product to the market for a fraction of the massively inflated price you paid for your debt-dumps, just block us.
I was looking forward to more stories like this. It seemed like there were a lot of people who found the HBB in its early days because prices were nuts and they couldn’t figure out why. As prices dropped into some posters’ comfort zones they took the plunge and discussed it here, and have gotten plenty of grief for it. Regrettable. With prices going back up again, I’m guessing there won’t be too many HBB buyers for the forseeable future.
Thanks for sharing Ex-Eaglekeeper.
Regrettable. With prices going back up again, I’m guessing there won’t be too many HBB buyers for the forseeable future.”
Just bitter renters ;-(
I’m guessing there won’t be any sales either. But that’s the beauty of markets. When housing prices are grossly inflated like they are, sales collapse.
US Housing Demand Collapsing
http://picpaste.com/pics/3ca612d5960e95a22c95af80f88cb3dc.1368031304.png
In light of that, you better be slashing the price on your underwater house.
Thanks for the comment, AL.
I’m 50, so I had to have someplace to live.
I figure that I’ll have it paid for when I’m 77.
(Oh Joy!)
I am not involved in Real Estate in any way, so much of what I read here was baffling to me at first. But, I read this site daily for 3-4 years and learned quite a lot.
The “Implode-O-meter” site were a huge help too.
While I appreciate folks like Housing Analyst and Whac-a-Bubble, most of what they say now, has little relevance to me.
Oddly, my total monthly expenses have gone down somewhat since I moved.
I thought reducing monthly “outgo” was kind of the point to all this wrangling.
I will admit though to having had some real qualms about buying a house less than 3 miles away from where I grew up. But, I got over them.
And I have to say the rental did teach me one very important thing. I do not want to ever live in a 2-storey house again.
In Bakersfield CA, That is a prescription for misery, especially if the house you rent was built in 1951, before R-values had any real meaning. My new house (built 1986) is much, much cooler.
So much so, that we cab go a couple months in both spring & fall with out ever turning on either A/C or Heater.
Now THAT is nice!
“It is a “Toe-Tag” house,1900 Sq Ft. purchased for under 140K.”
+1 You have your disability income to cover the mortgage, and you got in under $80/sq-ft, so you’ll survive better than most of the peeps.
This is what gets discussed at lunchtime. One guy in our group didn’t even put his house on the market until he had an offer accepted on his trade up. Once he did he put his house on the market and it sold within a few days.
But don’t tell them that it’s a bubble. They think that the 2008 crash was an anomaly and all you’ll get for your troubles is that they’ll think you’re a crank.
we work on the east side but we don’t live here. and surrounded by co-workers who do live near here and are banking their retirements on the appreciation of their aurora debt dumps.
The Great Housing “Trade” Part 2. Featuring the “Vegas” Debacle
Mark Hanson on May 6, 2013
http://mhanson.com/archives/1249
May 7, 2013, 8:35 a.m. EDT
Flip houses to get rich, retire before next crash
Commentary: There’s a window of opportunity if you act now
By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — Yes, flipping houses, your big new window of opportunity. Flipping commercials are increasing on drive-time radio.
Yes, there’s a window of opportunity for house flipping. But ask yourself: When will the window slam shut? Timing, that’s the trick. Could be just a few months, like the fall 2008 crash? Or a few years, like the bull of 2004-2007.
Not sure? Timing crucial tracking cycles, picking tops, bottoms and turning points is less of a science than gambler’s coin toss. Over the years we reported on a couple dozen warnings of a bubble blowing before the 2008 crash. And yet, four months before the fall 2008 that tanked global markets and economies, we hesitated. The Lehman bankruptcy was the turning point.
…
Here’s the one other story that you can’t afford to miss today
The Wall Street Journal reports “housing market accelerates … prices jump 9.3% in quickest rise since 2006, gains seen across country.”
Over on 24/7WallSt.com you can see its coast-to-coast “10 Best Cities to Flip a House:” The New York/New Jersey/North East sector had average $118,376 profits on holdings of 118 days. On the West Coast, California’s metro San Jose saw profits averaging $61,758 on 105 days holding.
I suppose we shouldn’t be surprised by the rapid return of the flippers. There were a pile of them before the crash, and it’s doubtful that many of them found employment in the tough economy since then. They’ll believe the recovery is real because they want it to be real and dive back in counting their blessings that things have returned to ‘normal’. As long as they can scrape together funding, they’ll be full at it.
“and dive back in counting their blessings that things have returned ”
Just one more bubble thats all I ask for
hell of a way to run an economy
Until the greater fool disappears, and then they’ll be wanting another bailout.
“Real estate analysts say our recovery is steady, in large part, because right now there are far more buyers than houses available.”
Deja Vu all over again.
I recall going up to a speaker at a housing conference in perhaps 2004 or 2005 (at which time we had already stopped making residential investments), and asking why she wasn’t concerned that home prices/interest rates/incomes were way out of whack…her response?
There was nothing to be concerned about because there was just such an amazing depth of demand.
Housing demand in the US is at 17 year lows.
Children being born is at a low as well.
That’s right.
And with population growth at the lowest point in US history and the excess, empty housing inventory in the 25 MILLION range, housing prices have a very long way to fall.
However, this bubble will push the prices up some more before they fall again.
Birth Rate is not the same as number of children.
http://abcnews.go.com/Health/us-birth-rate-hits-historic-low/story?id=18465281#.UYwwNbXql8E
http://www.cdc.gov/nchs/data/nvsr/nvsr61/nvsr61_01.pdf
See page 3 of the CDC PDF (black line…shows number of births).
Population growth is the lowest in US history. As the death rate among 70 million boomers continues to escalate, they will leave 35 MILLION empty houses. This is in addition to the 25 million excess empty houses already in inventory.
I recall attending a seminar that Gary Watts had in Southern California in Jan of 2005. He said that prices would never drop because people want to live here.
Here in Tucson, I’m noticing a trend I haven’t seen for a few years: Call it the for sale and/or for rent houses. What happens is that these places go on the resale market first.
A few weeks or months go by, and they don’t sell. So, up goes the “for rent” sign right next to the “for sale” sign.
I call this the “We’ll take the money any way we can get it!” strategy. And, to me, it doesn’t indicate a healthy housing market.
Slim, you seeing any significant development in Tucson? My understanding is that you had pretty high vacancy…I’m just interested if there is someone pouring gasoline on the fire.
There is quite a bit of student rental housing going up. Right now, there are, oh, half a dozen luxury towers under construction.
However, reality is going to bite pretty hard. Luxury complexes already exist, and they compete fiercely for a limited pool of University of Arizona students.
This isn’t going to end well.
Slim how is housing in NE Tucson ?
I don’t know. I’m in central Tucson. Haven’t been out to the NE side in almost six months.
I live on the SW side of Tucson in an area called “Drexel Heights”. There is practically no housing activity in my nabe. The house next door has been for sale for 8 months. I saw one house around the corner go up for rent a week ago. That is it. It is like a different world than what is being talked about in this blog. It is dead here and I am happy about that. If someone were to suddenly offer me twice what I paid for my house I would have a hard time saying no. But I like my house and I don’t want to move. So I would rather not have any temptation.
I’m in central Tucson. Just took a little walky-walk and noticed that a boarded-up house is now rocking a NOTS. Place has been abandoned for almost a year.
I don’t understand all that I hear about housing activity in Phoenix. Tucson is way better than Phoenix. It is cooler here, naturally prettier, less dirt. There is a lot of dirt, though… and weeds.
Hey, Weed Wacker, want to have a Tucson HBB meetup? Next Tuesday eve at Epic Cafe?
That’s not unique to Tucson. My sister (in the Midwest) and hubby did the same with one of the three houses they own (tried to sell, but ended up renting instead, “until prices come back”…).
There really are two housing markets. Hot markets and everyone else. But you won’t see the media reporting on the boring one.
Back to the gold rush analogy I raised here a couple of days ago:
Judging from recent MSM reports, it seems like the housing market is in some kind of a investing panic mode right now, similar to how pioneers rushed across the plains in the early 1850s to get in on the California Gold Rush.
Unless this time is different, this will work out quite well for those who got in early, while come-late-lies will lose the shirts off their backs.
Of course, it is also possible that the MSM has greatly exaggerated the story in order to sell more subscriptions.
The MSM is not exaggerating the story. Houses are selling very quickly, and for increasing prices.
Speaking of returning to the bad habits of the boom era, yesterday evening I was driving home from the gym and heard on the radio an ad about how you can make big bucks flipping houses. When I got home, I checked my mail and found three offers for credit cards.
Was the radio ad by that TV ‘flip this house’ guy?
You mean Than Merrill? I almost puked all over myself when I heard the radio ad here in Greenville, SC. Apparently it’s been going around the country for a while, the article below was written August 2012.
http://www.cleveland.com/consumeraffairs/index.ssf/2012/08/a_flurry_of_alerts_about_trave.html
I love this quote:
“It’s not get-rich-quick,” Esajian said. “Is it get rich? Yeah. But it may be two or three years.”
Get rich in two or three years. Ha ha ha.
I have been hearing those ads in Phoenix big time. Even heard one for flipping houses in Flag and Prescott. I know that you can not buy a house with NO money. You have to have at least enough for closing and if you are going to flip it - at least enough money to put in cheep paint and tile. I would never buy a flip house because I know the work and materials are going to be the very cheepiest they can find.
Hey, Golfer! Long time, no post! Welcome back!
Slim
I will be in Tucson next Tues night. Maybe we can met up again.
Slim
I will be in Tucson next Tues night. Maybe we can met up again.
Let’s give it a try!
I’m waiting for the giant ” buy AZ houses” sign to go back up again in CA
Its a “Spearmint Rhino gentlemans club” now but I remember it was BUY AZ back in the day
off the 101 Montavlo near Oxnard CA
When that happens its “go time” for me as in go back to AZ
And rent
Hello, AZGolfer.
Log into experian.com/freeze and put a lock on your credit report. Suddenly, no more useless credit card offers. It cuts down on the spam mail immensely and also makes you less prone to identity theft. Costs $5 and they call it a “Security Freeze”. It costs another $5 if you need to temporarily remove it when you apply for new credit. I recently bought a new car and did this. You can give it the exact dates to have it removed before it goes back into effect. An added benefit was that when I removed it they sent me a mail telling me what my FICO score is. They normally charge like $20 just to tell you what your FICO score is.
You will want to do the same thing at freeze.equifax.com to cut out more of the spam/theft. Another $5. $10 total is very worth it. Do it unless you are often applying for new credit.
There is another credit company called transunion. But it doesn’t seem to matter. Transunion is a scammy company that I have reported to FTC a couple of times. Just ignore them, maybe they will go away.
US Housing Demand Falling
http://picpaste.com/pics/3ca612d5960e95a22c95af80f88cb3dc.1368031304.png
Cratering housing demand is what happens when housing prices are grossly inflated.
Sometimes the sales numbers don’t reflect demand, but the inventory does. Yes, I know there’s shadow inventory up the ying-yang. However, the collusion among big banks and gubbmint flackies has managed to get a handle on that.
The entire economy is fake, not just housing. I used to let it bother me and I hid under a rock for a while. Now I accept I cannot do anything about it so I play their game to my advantage. You can recognize it and try to do something about it (as Ben does). You can recognize it and endlessly gripe about it (as Housing Pimp does). You can fail to recognize it (as it seems 90% of the population does). Or you can recognize it and try to make your way through it (as it seems the majority of us here do).
I just sit and watch and stay mostly out of the market…I don’t trust that I can get out in time when the big one hits.
“The entire economy is fake, not just housing.”
+1 And it will be a sad day when the fed’s printing press throws a connecting rod through the oil pan.
So here is it almost 7 years after the collapse and I’ll be damned but the PTB are right on time in trying to re-inflate RE.
My prediction was this disaster would follow more or less the course of the Savings & Loan disaster,which lasted approx ~7 years.
Don’t get me wrong, we know it’s not really over, but that doesn’t mean the powers that be aren’t going to try like hell to make it over. Which is exactly what they are doing.
Seven years is the normal biological cycle for population dynamics in certain tunneling rodents and flying insects. Lemmings and locusts come to mind.
Yep. Exactly.
The 17-year cicadas are my favorite!
I gotta laugh at these suckers paying $100+/sq foot for a run down 30 year old house considering we’re profitable building at $60/sq ft.
we’re profitable building at $60/sq ft.
Remind me if this price includes the price of the land and all the misc. governmental fees.
Realtard Michael Viking,
You’ve been schooled on this how many times now?
“It’s the land” doesn’t get you any closer to your Liar Prices than “interior finishes”.
We know why you sell used houses for a living. And deep down…. you do too.
LOL. You’re so way off on what I do for a living and whether or not I’ve been schooled that I imagine your head is so far up your ** that you need a plexiglass solar plexus to see where you’re going.
Anyway, I just wanted to plumb the depths of your lunacy for a while to see where you would become rational. It appears your lunacy is limitless, so I’ve got my answer.
C-ya!
Of course you’re going to lie, deny and run away. You’re running from your own posts.
You’re pathetic Mr. McAnus.
we’re profitable building at $60/sq ft.
What’s YOUR ruse?
What happened to the “ignore” feature my dear debt-junkie?
How much did you pay for your debt-dump?
You say you are profitable, but it isn’t as profitable as your industrial jobs so you aren’t interested. All talk, no action.
Another fool comparing building dams with building houses.
The Stockholm Syndrome and Printing Money
By Terry Burnham
[Patty Hearst holds an M1 carbine during the April 1974 Hibernia bank robbery. Photo by Federal Bureau of Investigation.]
A note from Paul Solman: Former Goldman Sachs trader, biotech entrepreneur, money manager and economics professor at Harvard’s Business School and Kennedy School of Government (where he taught me microeconomics), Terry Burnham, now teaching at Chapman College, is best known for his books “Mean Genes” and “Mean Markets and Lizard Brains.” But he may be better known to NewsHour viewers from his appearances in stories on the dot.com crash, evolution and economics and the neuroscience of economics.
Burnham says we are headed for another stock market crash and Great Depression, due to the wanton printing of money by central banks like the Federal Reserve.
“How can we believe,” he asks, “that printing money will make us rich?” Here’s his answer. My skeptical response follows.
Terry Burnham: We are hostages to the destructive actions of central banks. Printing money destroys value. The puzzle is not economic, but rather psychological. Why do we allow Central Bankers to make us poorer and endanger us physically?
The answer lies in our non-rational brains. One aspect of our psychology, labeled the Stockholm Syndrome, is the human propensity to develop positive feelings towards captors in a form of traumatic bonding.
Nils Bejerot coined the phrase after a 1973 Stockholm bank robbery where four hostages were held for close to a week. Even after being released, the hostages showed sympathy for the robber, and blamed the police. The most famous U.S. incident is that of Patty Hearst, who joined the organization that kidnapped her and took part in a bank robbery with her abductors.
The phrase “economy supported by central banks” generates more than half a billion Google hits. Can it really be true that printing money is going to make us rich? No.
…
I want to buy a new Toyota. The best deal available is to finance it at 0% interest for five years. If you try to bring a down payment, or reduce the financing period, the fees go up.
Gee, I wonder why people are spending money they don’t have?
Are there prepayment penalties?
I’m not sure, but I doubt it. I will ask. They would not benefit from a prepayment penalty on 0% interest.
The monthly payment on this brand-new vehicle will be lower than my payment on the exact-same brand-new vehicle 11 years ago. I paid that one off early, but I definitely will not pay this one off early. There is no interest. Therefore, there is no benefit for me to pay it off early.
Yes there is. You have to pay full coverage insurance until you pay it off.
The way I look at it, the insurance premium is the bet the company takes to make a profit on my not screwing up. So I keep the money, and am careful not to screw up.
Liability only insurance has saved me about $6000 since I bought my last car… that I can use for repairs or another car if I total this one.
That’s all well and good until a drunken illegal alien with no insurance totals your $40k vehicle.
I just bought a new car. They gave me an extra $1000 off if I did not pay with cash. I financed and then paid the whole thing off when they requested the first payment. If I had followed their payment schedule to pay for it over 7 years it would have cost me an extra $8000+. I made sure there were no early payment penalties before I signed.
I think this relates to the ability to create money that our departed darell talked about. When the bank loans money it is created out of thin air.
I bought my truck at carmax. They present an image of being an above-board company, but boy dids they pressure me into taking out a loan with them. Even though I had a check in hand from my credit union. Sorry, no go.
“They present an image of being an above-board company, but boy dids they pressure me into taking out a loan with them.”
The real money in selling automobiles is “the spread” between their discount rate and whatever higher rate they can foist on the borrower.
Japan has declared a currency war. Shouldn’t you expect to get a 20 percent discount since you are paying in US dollars? What was the price of that Toyota in early November 2012? Since the yen started it’s decline 6 months ago (almost exactly when Obama started his 2nd. reign, umm, I mean term) it’s lost over 20% in value. Japan has publicly committed to devalue the yen by 50% within 2 years so maybe you should wait until the yen/dollar is closer to 130 to 1?
http://www.exchange-rates.org/history/JPY/USD/G/180
I’m not a troll, but I play one on the internet.
There’s this subdivision in my neck of the woods I drive by occasionally. It’s 15 miles or so away so only when I need to be in that part of town do I see it There are I’d estimate 15-20 home sites. About 3 years ago when the place went up there were 2 finished houses, I’m assuming model homes. They sat there empty for a long time. Then one day, about a year ago I noticed a fence had been put around the yard of one of the two houses. Someone moved in. Then someone moved into the second one as well. This weekend I drove by the same subdivision and was really surprised to see several, 7 or 8, houses were under construction in that same subdivision. Half were in the framing stage, 1/2 looked to be just about complete. And just down the road in what had been an empty lot for as long as I can remember a new apartment complex is under construction as well.
If you don’t mind saying, what area is this in?
Coeur D’Alene, ID which if anyone reading asks WTF is that…small resort city on the lake which has over the years also grown into a Spokane suburb. It’s an odd place real estate wise. There are decent $150K 3 bedroom houses to be had and then there are $10M lake mansions a couple of miles away.
And also…
There was a retail/condo thing built in 2009/2010. Movie theater, some restaurants, high end clothes, Starbucks, the typical stuff. The condos didn’t sell very well. I remember going to the restaurants/thater and thinking nobody lives in these condos since there were no blind on the windows, nothing on the balconies. Just looked empty. There were even signs up saying NEW CONDOS 60% OFF or something along those lines.
Well, now the signs are gone and the condos looked lived in. Blinds on windows, BBQs on the balconies, things like that. And the Phase 2 part of the development has started with the addition of a few more restaurants. I don’t think there’s a plan to build more condos, but I don’t know fore sure what the long term plans are.
That’s precisely what is happening everywhere. All of the stalled developments are back under construction. The overbuilding during the boom was so prolific that there is no way this can end well.
I know this sounds like a “this place is different” kind of thing, but people are still moving to the area. Lots of them (mainly from CA sadly). So the 2-3 year building freeze at some point had to end to keep up with population growth. I never thought those condos would ever be sold. And here we are, all 150 of them gone. I don’t know if that means a new bubble is on the way. Maybe, maybe not. But what I can tell is the real estate atmosphere in 2013 is nothing like it was 2009/2010, night and day.
More suckers paying massively inflated prices merely makes the correction much more severe. This one is going to be breathtaking.
You think $150K for a decent 3 bedroom house is massively inflated? If that’s the case you’ll never be happy with real estate prices.
What is this “happy” crap? What does “happy” have to do with grossly inflated housing prices?
$150k IS inflated in certain markets. When household income is in the $30k range, there’s no way to afford that house.
The reason I mention incomes is because you are talking about northern ID. The job market up there is almost non-existent.
“$150k IS inflated in certain markets. When household income is in the $30k range, there’s no way to afford that house.”
The corridor between Coeur D’Alene, ID and Spokane, WA is largely built-out now, and with two incomes the average high-school grad family can earn nearly $50k/yr, which is doable unlike California. A college degree breadwinner means a stay at home mom is possible up there. FWIW, I wouldn’t buy a $150k home with a $50k/yr income, but a lot of people do.
” Comment by PeakHubris
2013-05-09 20:25:54
$150k IS inflated in certain markets. When household income is in the $30k range, there’s no way to afford that house.
”
Median income for Kootenai county is $48,075 (Census Data).
Eddietard,
In that case, $150k is still unaffordable by traditional metrics.