Sowing The Seeds Of A Housing Bust
It’s Friday desk clearing time for this blogger. “Central Iowa is one of the fastest growing populations in the Midwest, especially noticeable in suburbs bursting with new comers. ‘The market, right now is crazy,’ says Realtor Jason Stuyvesant, whose last two houses for sale were only on the market for eight and two days. ‘If you see something you like, you have to be ready to buy,’ says Stuyvesant.”
“It’s a side effect from a lot of home buyers trying to take advantage of low mortgage interest rates. ‘They say that term; it’s almost free money with interest rates as low as they are,’ says Stuyvesant. ‘Wow, we are really busy right now, is that going to keep up? All signs point to yes.’”
“In a market with a limited number of properties and plenty of eager buyers, home builders are happy to be in Casper. Naked tracts of land are sprouting subdivisions and high-end homes in the Casper metro area. Small towns like Bar Nunn and emerging areas in the east and west of Casper are seeing a new spree of growth that contractors and real estate agents don’t expect to subside anytime soon.”
“Broker One has more than 100 properties that the company is developing or will build on in the near future, said associate broker Michele Trost-Hall. It is developing a new subdivision on the west side of Casper that has 26 lots under way and a potential for 200 lots, Trost-Hall said. ‘We’re banking on the fact that things won’t slow down,’ she said.”
“When Trent and Clara Ping decided to start shopping for a house in La Crosse last month, the couple lined up a Realtor and sent him a list of about a dozen homes they’d found listed online. But by the end of the week, as they were preparing to drive down from Minneapolis, word came back that almost everything on the list was sold – or had an offer pending. Ping sent him several more only to find that those had offers, too.”
“There is a new sense of urgency for buyers. ‘You’ve got to change your sense of thinking,’ said Dave Snyder of Gerrard-Hoeschler. ‘It used to be, ‘Let’s go out and look.’ Now it’s, ‘Can you see it tonight?’ If it’s priced right, it’s getting sold in days.’”
“Home prices in Southern California popped to their highest level in 58 months during April while sales hit their highest level for that month in seven years, market tracker DataQuick said. ‘This is definitely good news,’ said Robert Kleinhenz, chief economist at the Kyser Center for Economic Research at the Los Angeles County Economic Development Corp. ‘The people who are getting loans now are very high-value borrowers. We are not sowing the seeds of a future housing market bust like the one that led up to the great recession.’”
“In some of the hottest markets, appraisals are coming in well above the selling price. Agent Eric Tan said one appraiser did a ‘drive-by’ of a West Covina, Calif., home he was selling in April. ‘He didn’t ask for any comps, to see the inside of the house, or even schedule a time to meet with me. He wrote up the appraisal right at the purchase price,’ he said. ‘I was able to sell the client’s home for about $40,000 more than I thought the appraiser would value it.’”
“Over the 12 months ended March 2013, Texas had 53,359 completed foreclosures, according to CoreLogic. Three states completed more foreclosures than Texas over the past 12 months — Florida with 102,847 foreclosures; California with 83,310 foreclosures; and Michigan with 70,315 foreclosures. On the national front, a total of 55,000 foreclosures were completed during the month of March. The market still has a ways to go. Between the years 2000 to 2006, the country was averaging 21,000 completed foreclosures a month.”
“Benton County ranked first in Arkansas foreclosure filings for April with 48 homes slated for auction and another 70 going back to lenders to put the homes up for sale in the coming days. The county processed 118 new filings, up 22.92% from the same month last year. Residents in the Raleigh Hills neighborhood of Bella Vista are anxious to see what happens to a home they have been watching since in July 2010, when the homeowners walked away. It has languished in the foreclosure pipeline since that time. In February the home went from lender Chase Bank back to investor Freddie Mac and has recently been assigned to Coldwell Banker agent Connie Turner.”
“‘There is a home in my Bentonville neighborhood that has been vacant for nearly two years and a ‘For Sale’ just went up,’ said Jim Long, an agent with Crye-Leike Realty in Bentonville. ‘We took turns mowing the yard to keep the place presentable while it languished in limbo.’”
“Just when the local housing market is looking stronger, red flags are emerging in Maryland, with foreclosure activity up triple-digits last month. Some families, like the Hoovers, are finding it tough to get by. Randy Hoover and wife Ann have enjoyed owning their home in Frederick since 2001. They received their first foreclosure notification in January, as Ann’s unemployment benefits ran out. Randy and Ann have equity in the home but they haven’t been able to pursade their lender to lower their 7.5 percent mortgage rate. ‘Every time I call the mortgage company they say they can’t work with me,’ says Randy, adding ‘I’m not asking for them to forgive my principal balance. I just want a cheaper rate so I can have a cheaper balance to keep my home.’”
“The Hoovers were able to get current on the mortgage by taking money out of Randy’s 401k. Come August, that money will run out. RealtyTrak’s Daren Blomquist tells WUSA*9 ‘the other shoe is dropping in Maryland when it comes to foreclosure activity as foreclosures slowed down by the state’s foreclosure mediation law and faulty foreclosure paperwork are finally working their way through the foreclosure pipeline.’”
“A new study finds that new construction and foreclosure activity are running neck-and-neck, with building permits and foreclosure both up in the first quarter from a year ago. Combine foreclosures and new home construction and the result in many communities could be a large stock of available properties. If it turns out that housing supply is greater than generally believed that the rise in home prices could slow, especially in overbuilt areas.”
“‘We are currently experiencing a feeding frenzy in the Reno area for inventory. While the increase of foreclosures and building permits will bring some much-needed relief in the future it will unfortunately be far from a feast,’ said Craig King, COO of Chase International brokerage covering the Lake Tahoe and Reno, Nevada markets. ‘We are particularly feeling the heat for properties under $350,000. Those properties are receiving multiple offers within days of hitting the market so the builder and foreclosure inventory will be a blessing but far from an answer to the inventory shortage here.’”
“The real estate market in Washington continues to improve according to a University of Washington report. One thing preventing more sales is that there aren’t enough homes for sale, says said Glenn Crellin, the associate director for research at the university’s Runstad Center for Real Estate Studies. ‘Construction activity is improving, but builders cannot improve availability overnight. Lenders need to release properties which have been foreclosed, but are still owned by the lender to allow the market to stabilize and prevent renewed bubble conditions.’”
“Welcome to the 2006 economy, where stocks are booming, the art market is setting records, and home prices are soaring all over the country. In fact— not to rush things along too much— it’s already time for you to start worrying about the collapse of the next housing bubble. ‘Aw gee, we just had a collapse of a housing bubble!’ you exclaim, kicking the dirt in frustration. ‘I still have three partially constructed condos in Bed-Stuy to flip and IT’S NOT FAIR.’ We know, we know. But what can you do? These things happen. It’s been, like, five years since the last housing collapse— plenty of time for Americans to put it out of their minds entirely.”
“I wouldn’t worry, though: if there’s anyone smart enough to get in and out before the whole thing collapses, it’s you. You’re smarter than the others.”
“… it’s almost free money with interest rates as low as they are.”
And prices reflect this.
It would be logical to buy when money is expensive and hard to get because prices then would be beaten down. But when money is cheap and easy prices get all puffed up.
When money gets a bit more expensive then prices will then respond accordingly in that they will go down. What won’t go down will be the debt level incured when prices were at their highest. Those who bought at the peak will then find themselves a bit stranded.
This shouldn’t come as surprising news for these people but for some reason it will be.
The world still doesn’t have central bankers willing to acknowledge publicly that artificially-low interest rates cause asset bubbles, which to me seems as obvious as gravity.
Unbeknowst to central bankers, the inverse relationship between interest rates and asset prices is pretty much one of the “economic laws of gravity.” Open up any book on financial economics or asset pricing to page 3 and the information is right there, both in plain English and mathematical formulas.
To save underwater banks you must save the prices of the collateral that backs the loans made by the banks. Boost the prices of the collateral and you boost the value of the loans. Boost the value of the loans and - presto - you’ve saved the banks.
And Central Bankers have an interest in doing this because this is what they do.
For how many years to come are they going to keep trying to save the collateral? I guess the logical answer is “until all the bad collateral is saved,” but it seems like the efforts so far are falling short.
it’s very beknowst to central bankers…it’s unbeknowst to the sheeple and some here on this blog.
What gets cheaper when interest rates go up?
I seem to remember gold reaching $800/oz and interest rates 18% back in 1980…
Basically, if the bank is willing to lend you money, then it’s probably a bad deal for you.
The Fed just indicated that their low rate policy may last more than 10 years from now.
It would be logical to buy when money is expensive and hard to get because prices then would be beaten down.
Only people with money can buy when money is expensive. It is logical for people with no money to buy when money is free. I have found that most people don’t think very far ahead.
Buy,buy,buy! Buy anything you can. Buy old cars, buy art, buy gold, buy stocks, buy houses but just don’t keep cash; is that it? So fear prevails over clear thinking. After all this buying and a few quick commissions what disposable income other then servicing debt will be left to move the economy forward? No problem, we’ll face that problem when we get to it in the future.
We? No. You will though considering you recently got fleeced on a depreciating house.
There is totally a pinball machine bubble. It’s odd.
I bought stocks in 2009 at a 9000 Dow. Everyone said I was crazy. Up 67% in 4 years.
I bought 8 houses from ‘08 to ‘10. Everyone said I was crazy.
Now selling one house. Paid $296,000 ($307,000 w closing costs) and put $84,000 into it. Received $1500/year cash flow (2%), $1400/year on my tax refund (2%), and $2660 in principal reduction/year (3%).
Now selling for $435,000. Netting about $400,000 after selling costs. I will receive $188,000, so I get my money back, plus $104,000. 123% return on investment capital (before taxes and not counting the cash flow). Compounded annual return of 31%.
Hey RAL, my capital gains are quite calculable! The housing market is in a nice recovery mode. Get over it.
‘Now selling one house’
Might want to sell them all:
‘Fundamental REO LLC, a firm headed by former Goldman Sachs managing director Donald R. Mullen Jr., this year bought Scottsdale-based Empire Group, which had acquired about $100 million worth of single-family rentals. A portfolio of 522 rental townhomes in the Baltimore area, 85 percent of which are leased through rent assistance programs, was put on the market this month by Dominion Properties and East Baltimore Investments.’
‘While large-scale buyers are counting on profiting long- term by selling after prices appreciate, they also need to make current income on rents, which is easier to do with low-cost properties, according to Aaron Edelheit, chief executive officer of The American Home, an Atlanta-based single-family rental operator with 2,500 homes in Atlanta, Nashville, Tennessee, Charlotte, North Carolina and Tampa and Orlando, Florida.’
‘Those are the homes that came off the most from the peak,” DeFrancesco, who owns properties in Florida, Georgia and Texas, said in a telephone interview. “It was our opinion if we could buy these homes right, they would have the largest upside and we could collect the best yield or rent along the way while we waited for the price appreciation to go back up.’
‘If I had to guess, over the next six to 12 months, it will be difficult for us to continue in our current setup in terms of deploying capital,” Blackstone’s Gray, said in an interview last week.’
http://www.businessweek.com/news/2013-04-25/blackstone-sidesteps-auctions-in-largest-rental-trade-mortgages#p1
Like I said, it looks like flippers buying from flippers to me. They are just pretending to be interested in renting them out.
Hi Ben, you and I have fundamental differences on the housing market recovery, but I like that aspect of our discussions. It keeps me challenged in my perspective about the market and keeps me more self-honest in my actions and goals.
I do not plan to sell any more houses right now because I am getting excellent cash flow from all of them, particularly after refinancing them. If I refinanced the property discussed above, I could bump up the cash flow from $1500/year to $3,600/year. However, the tenant is a high maintenance P in the A and I don’t mind hedging my bets by taking a little of my money off the housing market table. You and RAL both contributed to the thought process behind this move, though in very different ways.
I also want to say that this blog has been instrumental in my housing investment success. The HBB was the basis for my understanding the market bubble in 2005-2006 and kept me on the sidelines thru 2007. So when the escrow referenced above closes, there will be a nice donation to the HBB. Keep up the good work. I really appreciate your continued efforts to foster discussions about the market.
“Might want to sell them all:”
I gave similar advice to my boss circa 2006. He nodded his head in pretend agreement, but secretly told others I was off base behind my back.
He’s not underwater, but I’m guessing he lost out the opportunity to cash out an extra million bucks by ignoring me.
I expect lots of others who fail to understand the inverse relationship between interest rates and asset prices or the transient nature of QE3 will similarly miss out on a last chance to cash out on their echo bubble gains.
Hmmm….
I gave Whac-A-Bubble similar advice to buy in 2010. Looks like he missed out on a chance to make $100,000 in 3 years…..
I’m surprised you were willing to accept such a low rental return. I’m getting ALLOT more than that through Ben’s fund, and that’s after he takes his commish.
Even though he denied it, he was speculating on price appreciation all along, which is why he is now selling. He’s a speculator, not an investor. There is a distinction. He could just as easily have gotten burned. He gambled and won on this one (assuming he is truthful which I have serious doubts). I don’t like his odds long term.
US of MH,
….”assuming he is truthful which I have serious doubts…”
Polly figured out the exact property I was discussing about 6 months ago and confirmed on this board that particular property was performing as represented. That should provide some credibility!
He’s a speculator, not an investor. There is a distinction.
What is the distinction?
Momentum versus value investing? The momentum player doesn’t care why it’s going up. Only that it is and that they think they can get out before it goes back down.
Momentum versus value investing?
The fact you have to qualify ‘investing’ with ‘value’ shows that there isn’t really a difference, perhaps? Same with adding ‘long-term’ or whatever.
Is there some time range that separates speculation from investing?
It sounds like “Uncle Fed” DOES love YOU! Change your name or be held accountable for false advertising! I suggest:
“Uncle Fed, WHY to you love ME so much”…..
Have a great weekend UFWWYLM! It is going to be beautiful in sunny Northern California. I think you are in San Diego, which is even better! But don’t forget to pay your sun tax.
Why are you patting yourself on the back? Asset markets over that time frame have been grossly manipulated to your coincidental benefit.
Because he is a narcissist? His ego craves…
A “housing recovery” is dramatically lower prices by definition. Get over it.
PS- As far as we all know, your losses are growing by the day. Losses are far more likely the truth. You just seem to have difficulty admitting the truth.
“The Hoovers were able to get current on their mortgage by taking money out of Randy’s 401k. Come August that money will run out.”
Translation: No FB dollar shall be allowed to escape.
“Randy and Ann have equity in the home but they haven’t been able to pursuade their lender to lower their 7.5 mortgage rate.”
And the lender has an interest in reducing the rate because …?
This is dumb in so many ways….
Normally IRA and 401k money cannot be seized in bankruptcy. It’s much better to go through foreclosure and keep your IRA/401k funds than to spend all those and still go through foreclosure.
““Randy and Ann have equity in the home but they haven’t been able to pursuade their lender to lower their 7.5 mortgage rate.”
And the lender has an interest in reducing the rate because …?”
And that’s why you go get a new loan from a new lender.
Yep. Pit ‘em against each other.
Hard to do if you owe more than the appraisal.
Maybe they can refi with DIGNITY> From Morningstar
Dignity mortgage loans are designed for people who a) have jobs (show proof of employment), b) have saved enough for a 10% down payment, c) are willing to pay a higher interest rate, and d) struggle to qualify for a loan after the bottom fell out of the lending market. These individuals will pay a higher interest rate premium for the opportunity.
For example, these subprime loans might require a borrower to pay 1.25% more than a typical loan. So if a creditworthy borrower would pay 3.25%, dignity borrowers would pay 4.5%. After five years of timely payments, the mortgage lowers to ordinary lending standards.
This is a project designed to help people reestablish credit. Given that the banks aren’t loaning to them now (and weren’t held accountable for their blatant disregard from 2004-2008), it’s only logical to improve the health of the middle class homeowners who lost everything and ultimately found themselves with credit scores in the low 500s.
As you may know, the difference between building and maintaining good credit in the high 600s, and being stuck in the low 500s is life altering. It reduces interest burden and puts more money in their pockets after five years of hard work and diligence. It gets them on the right track.
‘we are really busy right now, is that going to keep up? All signs point to yes’
‘We’re banking on the fact that things won’t slow down’
The ‘trees grow to the sky’ notion is alive and well. A reader sent me this:
‘The $510,000 median for the nine-county Bay Area represents a jump of 30.8 percent from a year ago and a record 17 percent above March’s median price, said DataQuick. ‘The Bay Area is getting back to normal fast,” said Andrew LePage, a DataQuick analyst.’
Ah yes, this is normal. Nothing unusual. And we can see the unaware public being asked, no scolded, to understand they have to get with the new paradigm:
‘There is a new sense of urgency for buyers. ‘You’ve got to change your sense of thinking,’ said Dave Snyder of Gerrard-Hoeschler. ‘It used to be, ‘Let’s go out and look.’ Now it’s, ‘Can you see it tonight?’
“…Bay Area represents a jump of 30.8 percent from a year ago and a record 17 percent above March’s median price…”
I’d say it’s not so much of a jump as it is an unusually-large price improvement.
And on a serious note, it was when prices were moving up like this in the early 2000s across inner-city Richmond that we knew the Bay Area was in an epic housing bubble.
‘when prices were moving up like this’
This is an interesting time. Notice how we went from ‘institutional investors buying to rent’ to Joe Schmoe flipping houses. And how casually the REIC and media embraced flipping as perfectly normal, even necessary market behavior. If you consider that I can point to instances of flippers selling to Blackstone, we may already be at the flipping to other flippers stage.
Does anyone remember the story about the people in Las Vegas who would see a sign for a new development in a truck and would follow the truck so as to get first shot at buying the yet to be built house?
Do you remember the story about the financial journalist turned condo flipper who chased deals in the tail-winds of Florida hurricanes during the terrible 2005 hurricane season? (I do!)
HOUSE TALK
September 2, 2005
Timing the Market For a Condo Purchase
By JUNE FLETCHER
Question: I bought a condominium several years ago, and the value has gone up quite a bit. The condo doesn’t have all I want, so I am thinking of selling and renting a less costly place for a year or so, waiting for my ideal condo to go down in price. Since timing is everything, do you know of any predictors that would give me clues as to the direction of condo values? This is my first real-estate purchase, so could you tell me how quickly market prices turn around?
— Pat Sigel, Hartford, Conn.
Pat: This may be your first real-estate purchase, but you’re savvier than other more-experienced investors. For instance, you know that location, location, location aren’t the only things that matter in real estate. Timing, timing, timing, though equally redundant, is equally critical.
The problem is that no one can predict the precise peaks and valleys of real-estate cycles any more than meteorologists can predict the exact path or intensity of a hurricane. And while most experts agree with Federal Reserve Chairman Alan Greenspan that the housing market will inevitably “simmer down,” and that “home-price increases will slow, and prices could even decrease,” nobody really knows when or where this will happen.
So everyone is watching the skies, waiting for signs of a storm. Economists scan the horizon from a distance, looking for changes in a city’s housing supply and demand. On the supply side, they look at such factors as housing permits (the number of new homes builders say they will create), starts (homes they are beginning to build), closed sales, pending sales (signed contracts), pre-sales (homes sold before a building gets a certificate of occupancy) and inventory (how many homes are available for sale). To gauge demand, they look at job growth, unemployment rates, household formation, in-migration and out-migration (how many people are moving in or out of the area), the number of investors, mortgage applications and the length of time homes are on the market.
…
Clearly this increase in house prices is just predicting the huge wage increases that are just around the corner. Never happened before but this is the Age of Obama so this time is different.
“We are not sowing the seeds of a future housing market bust like the one that led up to the great recession.”
It’s not a new housing bubble — it’s the housing market version of The Hunger Games. May the odds be ever in your favor.
‘The people who are getting loans now are very high-value borrowers’
‘Michele and Russell Poland’s credit was shot, but they managed to buy their suburban dream home anyway. After a business bankruptcy and a home foreclosure, they turned to a rare option in this era of tightfisted banking — a subprime loan. The Polands paid nearly $10,000 in upfront fees for the privilege of securing a mortgage at 10.9% interest. And they had to raid their retirement account for a 35% down payment.’
‘Most borrowers would balk at such stiff terms. But with prices rising, the Polands wanted to snag a four-bedroom home in Temecula near top-rated schools for their 5-year-old son. By later this year, they figure, they’ll be able to refinance into a standard loan.’
‘The mortgage is a bridge loan,’ said Russ Poland, now working as an insurance investigator. ‘It was expensive, but we think it’s worth it.’
Many people in 2004-2008 took out loans thinking they’d be able to refinance in a few years.
How’d that work out?
Best of luck to the Polands and their 10.9% loan. Insanity.
I too was shocked at that “high value” comment. A guy I know’s wife works for a mortgage broker…she said that 90% of the mortgages are going to people that had a “credit event” in the crash…high value my *ss.
Their value is that they will take these depreciating assets off the hands of the banks.
‘take these depreciating assets off the hands of the banks’
Here’s another possible item on the slippery slope of credit easing, courteous of the Federal government:
http://www.signalscv.com/section/36/article/95846/
‘Congressman Howard “Buck” McKeon, R-Santa Clarita, announced new legislation Friday intended to help investors secure loans to fix up derelict homes and put them on the market. The bill is intended to help revitalize communities, particularly those hardest hit in the foreclosure crisis, McKeon and the bill supporters said.’
‘If passed, McKeon’s Communities Achieving Sustainability Act will allow people to buy homes using 203k Housing and Urban Development loans, repair them, and sell them to buyers who will occupy them.’
‘Under the plan, borrowers may buy up to four dwellings per year, and must plan to live in the homes they are repairing.’
From the comments:
‘Under the plan, borrowers may buy up to four dwellings per year, and must plan to live in the homes they are repairing????????? ‘
‘Welcome to “Flip this House”
‘A tax payer gift to speculators’
How long from now until we start reading more tales of woe like this one?
HOME FRONT
March 28, 2008
Ground Zero for Home Distress
Bargain-Hunters Descend On Cape Coral-Fort Myers, Fla.; ‘We’re Just Dumping It’
By JUNE FLETCHER
LEE COUNTY, Florida — Here in the distressed-home capital of America, worried sellers keep slashing prices. Growing numbers of bargain-hungry buyers are circling. Both groups have the same question: How much more will prices fall?
In February, the Cape Coral-Fort Myers metro area in southwest Florida had the highest foreclosure rate in the nation, according to RealtyTrac of Irvine, Calif., which tracks notices of mortgage default, house-auction notices and bank repossessions. The area had a record 3,739 properties in some stage of foreclosure, or one per 84 households — almost seven times the national average.
As foreclosures rose, asking prices tumbled. That has resulted in discounts of 40% or more on properties ranging from mansions to modest tract houses. In February, median sale prices for single-family houses in Lee County, which encompasses Fort Myers and Cape Coral, fell 17%, to $211,900, from a year earlier, the Florida Association of Realtors says. (Nationwide, median prices were down a record 8.2% in February from a year earlier, to $195,900, the National Association of Realtors says.)
43% drop; Original price: $4.2 million; Current price: $2.4 million; Cape Coral, Fla.
The price cuts are particularly steep in Cape Coral, which had lots of cheap vacant land when the area’s building boom began six years ago. Rapidly rising home prices attracted big national builders and prompted small local ones to ramp up production. Now, many of these sandy subdivisions are full of unoccupied houses — some just half-finished.
James Matey, a Cape Coral builder, leans on the granite counter of an empty riverfront house he built for New York real-estate marketer Ted Kurz. Mr. Matey says the 5,139-square-foot house, with five bedrooms, wood-coffered ceilings and river views, was advertised at $4.2 million three years ago. The asking price is now $2.4 million — which covers only the cost of land and construction. “At this point, we’re just dumping it,” Mr. Matey says. Mr. Kurz says he’d like to hold on to the house for a few years until the market turns, but that would cost him more than $200,000 in interest, taxes and other expenses — money he doesn’t have now that the market has collapsed. “I’ll entertain any offer,” he says.
…
Shoe-shine boy moment #1887 for the echo bubble:
My wife’s hairdresser, who happens to also be a real estate investor, is busily snapping up properties again; she and her retired military husband just returned from Florida, where they snapped up some rental property investments.
And she keeps telling my wife that now is the time to buy, as interest rates are never again going to be as low as they are currently. Blah, blah, blah…
The reason given for buying - “interest rates are never again going to be as low as they are currently” - sounds to me like a good reason to sell.
If you are going to sell then you need somebody with money to buy. If interest rates are never again going to be as low as they are currently then buyers will never again be as able to easily buy as they are currently.
The funny thing is (and I noticed this yesterday when looking at Shiller’s data again), the “long rate”, however Shiller defines it, was under 5% pretty much the entire time from 1890-1967 (with the exception of 1921 at 5.09%), was over 5% from then until about 2001/2002, and now back under 5%. It was noted as 3.39% as of 2011.
Was 1967-2002 “Normal” in the context of inflation oil embargoes, etc.?
Or
Was 1890-1967 “Normal”?
Good point.
But even a “long rate” of only 5% on the 30-year Treasury (and higher on 30-year mortgages) would crush the housing market into a pulp.
“If you are going to sell…”
Sounds like the hairdresser won’t want to sell for a long time, she’s renting them out. In that case, the primary concern is whether or not she can pencil out a monthly profit, and the low rates help her do that.
WAB, I know how you responded, but how did your wife respond when her hairdresser told her that now is the time to buy? She didn’t say Suzanne researched it, did she?
‘Shoe-shine boy moment’
‘Sensing a possible opportunity to sell northwest Ohio real estate to investors from China, local commercial real estate firm the Reichle Klein Group has launched a Chinese-language version of its Web site and property database. While Toledo is not a proven market yet for significant investment by the Chinese, there does seem to be interest in the area from Chinese investors because of Mayor Bell’s trade missions, said Harlan Reichle, chief executive officer of the Toledo firm. He added, “We’ve had Chinese investors acquire property here. Those may be the only Chinese investors in the world that want to acquire Toledo property.”
http://www.toledoblade.com/Real-Estate/2013/05/01/Real-estate-firm-offers-its-Web-site-in-Chinese.html
Next thing you know, all-cash Chinese investors will be snapping up investment homes in central Iowa.
““The real estate market in Washington continues to improve according to a University of Washington report. One thing preventing more sales is that there aren’t enough homes for sale, says said Glenn Crellin, the associate director for research at the university’s Runstad Center for Real Estate Studies”
This is exactly what I see happening on the ground.
My wife told me this last night….this couple we know through my daughter’s pre-school put their house up for sale last week. They got 2 offers in 48 hours and went pending with one of the two. Full asking price.
What is interesting is the reason they’re selling. It’s too much house for them. It’s only the couple and their daughter and they have a 3000+ sq ft house with 5 bedrooms. They decided to downgrade to something a little smaller and closer to his work. The wife is a stay at home mom, he’s an engineer.
I should add “closer to work” is relative. This isn’t LA or Seattle where people have 2 hour commutes. Closer to work in this case is a 15 minute drive vs a 30 minute drive. But people here still think a 30 minute commute is crazy long.
‘there aren’t enough homes for sale’
‘Home buyers who are searching for a house or condo in Seattle often lament “There’s nothing for sale.” It’s a statement repeated by many agents as well. Frankly, most of the reports we write about the scarcity of inventory exacerbate the notion that no new listings are coming on the market.’
‘In reality, there are plenty of homes for sale every week. There are just as many new homes coming on the market today as there were two years ago. There are actually more than last year.’
What they really mean is “there are no homes for sale I’d actually want to live in”. Go to any of the cities where the is “no inventory” and there will be plenty of crackhouse adjacent inventory or houses in ghost towns for sale or other listings that for whatever reason makes them unsellable. These might as well not exist because they will never be sold.
“Go to any of the cities where the is “no inventory”
You tell us bud. Youre the one making the assertion. Back it up. And spare us your bull$hit marketing links too.
I’ll do that as soon as you tell me how to make money building for $60/sq ft including land.
http://m.longtidehomes.net/listing/11836372-3741-sundown-road-greenville-tx-75402/
Good example Steve J. That house will never sell. It might as well not exist as a listing since it’s treated as non-existent by the buying public.
“I’ll do that as soon as you tell me how to make money building for $60/sq ft including land.”
You’re revealing yourself Slithers.;)
We’re profitable at $55, not $60 and it’s been shown here over and over again.
But this isn’t about my statement here. It’s about yours…. Let me remind you;
Go to any of the cities where the is “no inventory”
What cities are they Slithers?
Oh now it’s $55.
Next week it will be $50.
Answer coward answer. Cities…. which ones?
“One thing preventing more sales is that there aren’t enough homes for sale …”
Banks benifit when prices go up because the value of their loan-backing collateral goes up. Realtors also benifit when prices go up but the benifit for them is limited because volume is limited.
Lots of volume = lots of commissions.
But lots of volume just may bring down prices. And if prices are brought down then the value of loan-backing collateral also is brought down.
So there are two choices given:
1. Save the banks or
2. Save the realtors.
The choice selected will, of course, be number 1. So number 2 will end up working their butts off so as to save number 1.
Karma.
you see it ‘happening on the ground’ huh Slithers?
Kind of link that sleazy marketing link you provided to support your “growing demand in Idaho” that in fact never really did exist.
So go ahead and humor us Slithers…… what “ground” are u pimping today?
Get a map of the the USA.
Locate Spokane, WA on the map.
Then notice how close it is to Idaho.
Then get a clue.
“I haven’t been this impressed since a young bootlick named Waylon Smithers.” Boot-lick. Nice.
With 1100+ defaulted properties in the city of Spokane alone, not including MLS inventory, there doesn’t seem to be much “happening on the ground” other than a stagnant, excessively priced product and lots of inventory.
http://picpaste.com/pics/dc70ab03fa2a3cde4444060219a42748.1368813043.png
Would you care to suggest another one of these “no inventory” cities?
Spokane WA, up 2% YoY.
http://www.zillow.com/local-info/WA-Spokane-home-value/r_20604/
Here in Tucson, the home ownership worship is being questioned. Story:
Rethinking the virtues of owning your home
Experts question idea that it’s the key to American dream
The comments are a real treasure. They include gems like this one:
It’s true, home ownership isn’t for everyone, however - one thing that occurred to both my sister and I (as we bought our own homes about the same time) was the realtors we worked with kept trying to “upsell” us homes, even after we very clearly laid out our budgest of what we wanted to spend.
It was a constant struggle. My realtor kept showing me properties and when I asked about asking price - I had to keep saying, that’s more than I want to spend.
If someone is a first time home buyer or novice in general - I can see how that type of behavior could be very detrimental to the buyer if they aren’t comfortable pushing back. Heck, they even tried to use “but you’re qualified to spend xyz/approved for xyz value of a loan” - yeah, I’m not that dumb. Just because I’m “qualified” doesn’t mean that’s a logical spend for me based on what I know my budget will allow for…
Thus, I have to admit, I wasn’t very impressed with my “experience” of buying my first home…
Wow…
It seems like everyone noticed how realtors are out to fleece anyone dumb enough to be fleeced.
Progress.
This article clearly pertains not only to equities, but also to housing.
ft dot com
On Wall Street
May 17, 2013 5:36 pm
Those partying with easy money of QE will suffer the hangover
By Michael Mackenzie in New York
The equity market rally is putting a disciplined investment approach to the test.
The adage “don’t chase a rally” is a core principle of investing, but such advice counts for little at the moment. As equities advance further into record territory, the S&P 500 this year has already risen more than 16 per cent.
After spending much of April unable to break through 1,600, the S&P has mainly been a one-way bet in May, rising above 1,660 this week.
This is an equity market that rallies most trading days and shrugs aside disappointing economic news with limited price corrections. A case in point was the modest pullback on Thursday after a series of weak data, led by monthly inflation easing the most in four years. That pullback was subsequently erased at the open on Friday.
The performance of equities is truly eye opening, and it’s a rally being fuelled by the Federal Reserve’s easy money policy of quantitative easing, all the while downplaying the fundamental and technical basics that ultimately must underpin financial markets.
An uneven recovery in the economy and modest sales growth at the corporate level are being brushed aside for now by the power of central bank liquidity. The equity rally has also occurred without significant fund flows into the market that would confirm investors are back in a big way, let alone justify the big rise in prices since January.
All of which places both private and professional investors in a quandary, particularly for those that have missed the rally so far and have spare cash earning next to nothing.
At this juncture do you chase the rally and place your faith in not fighting the central bank? For history buffs, the S&P is currently tracking very closely its performance from 1995, a year when the benchmark ultimately rose 34 per cent.
Or as an investor do you hold fast and refuse to jump into a market that has risen more than 20 per cent from its low of last November without a significant correction?
“Investors, whose portfolios are lagging behind the S&P and possibly face the loss of clients, may throw in the towel and help drive equity prices higher in the coming weeks.”
A common refrain of late among investors has been to rue not stepping into a market that back in February briefly dropped 2.8 per cent below 1,500 and then eased 3.3 per cent over several days in mid-April below 1,550, before moving onwards and upwards.
The gnawing fear now is that waiting for a sizeable equity correction against the backdrop of QE3 is a forlorn hope. Investors, whose portfolios are lagging behind the S&P and possibly face the loss of clients, may throw in the towel and help drive equity prices higher in the coming weeks.
…
Whac
Electronic money for nothing will eventually be nothing because a pig is always a pig, irregardless of the design of his skirt.
World economy will eventually correct itself by dealing with unworthy countries, imbalances, and pigs (Fed) wearing skirts.
Listing #13006586
$429,000 (LP)
Price/SqFt: 375.99
4550 N Ashtree St, Moorpark, CA 93021 Back-Up/Contingent
Beds: 3* Baths: 2 (2 0 0 0) (FTHQ) Sq Ft: 1141* Lot Sz: 4792sqft*
Area: SMP Yr: 1983
Remarks
Lovely Moorpark home close to schools, shopping and parks with lovely backyard. Sold before listing
Remarks
You edited the text.
Why did you do that.
It is better to be smarter than the others than it is to be happy.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
Marijuana enables us to visit the land of the stupid and happy any time we care to.
It also makes you thinner, less likely to get diabetes, and raises your good cholesterol too.
Welcome back Bill:
‘Everywhere PIMCO founder and co-chief investment officer Bill Gross looks, he sees bubbles. ‘These bubbles, of course, are being inflated by the billows of Federal Reserve bond buying. Now bogged down in its fourth discrete round of quantitative easing, the Fed has pumped so much liquidity into the economy that what once felt like a flood is now the new normal…There will be repercussions’ when purchases stop, Gross suggested in his interview with Bloomberg. ‘It doesn’t mean something like 2008, but the potential end of the bull markets everywhere. Not just in the bond market but in the stock market as well, and a developing one in the house market as well.’
http://wallstcheatsheet.com/stocks/bill-gross-is-the-end-of-the-bull-market-within-sight.html/?a=viewall
I cannot believe 10 year bonds at 0.23 of one percent !
Wipeout at only 7%.
What lunatic really thinks this can last ?
A rising rate market triggers the sale of pigs and the volume available is capable of flooding (drowning) the buyers. Only the Fed will be available to buy their own discounted pork.
What creative accounting will they conjure to cover their losses ?
Why do they want that much control about us?
Why do they weaken us, just for control?
How can some people (majority) be so stupid, and think that every thing
is getting better? If you are smart, you just step out on time.
Although, i live in Europe, here i can see similar things.
Don’t be fooled. This is not an organic market today, besides of that it is
a huge massacre coming to us within the next couple years.