The Kind Of Insanity You Live For
The Republican reports from Massachusetts. “The word ‘bubble’ appeared last week in a story about the housing market in The New York Times. On the same day, Wednesday, the same word appeared in a housing story in The Wall Street Journal. The mere fact that someone thought to wonder, that the possibility was considered and then rejected – that ought to be cause to break out the bubbly, to strike up the band. Happy days aren’t exactly here again, but they might be warming up, readying their act. We’ll likely never again see a time like the one that ended in such disaster. Thank goodness. No one wants a repeat of that sad story.”
“The ideal, of course, the goal, is consistent, more-or-less predictable growth, steadily increasing house prices without the fervor, without the ridiculousness that was visited upon us routinely just a decade back. For years now, such a scenario has been merely a dream. Now, though, one can actually imagine it without completely straining credulity.”
The Patriot Ledger in Massachusetts. “Massachusetts home prices rose for the seventh consecutive month in April despite a slight downward tick in single-family home sales, according to the Warren Group. ‘The housing market continues to improve but could be hindered if rising prices cause an affordability issue,’ said Warren Group CEO Timothy M. Warren Jr. ‘Three consecutive months of double-digit price increases is slightly concerning.’”
The Providence Journal. “The Massachusetts Association of Realtors reported that the number of single-family house sales was down by 1.2 percent from the same time last year. The decline was blamed on ‘the lack of homes for sale over the past several months.’ However, the association said that new listings were up by nearly 13 percent (year-to-year) in April, ‘and up 44 percent from the 6,468 listings in March.’”
From WKBW in New York. “Partly due to low interest rates, homes all over the region are selling in a matter of days and sometimes, hours. Many sellers are even getting more than the asking price. While homes in suburban areas like Williamsville, Amherst, and East Aurora continue to be in high demand, realtors say there has been a resurgence in the housing market in South Buffalo. ‘Most of the time if the house is priced right we’ll get multiple offers, sometimes two, three, four offers at a time,’ said said Jim Roberts, of WNY Metro Roberts Realty.”
The New York Times. “The rules of engagement for buying an apartment in the city have changed. Negotiation, brokers say, is no longer part of the equation. Open houses are packed to capacity, bidding wars and all-cash offers have almost become the norm, and some listing prices actually rise, not drop, after a home is listed. ‘It’s the kind of insanity you live for in this business,’ said Mickey Conlon, a broker with CORE, recalling a two-bedroom two-bath condominium in the Flatiron neighborhood that he listed with his business partner, Tom Postilio, for $1.89 million in early January.”
“‘At the moment, that was considered aggressive pricing,’ Mr. Conlon said. Yet within 24 hours, the brokers had received a flurry of requests to see the place, which prompted them to be bold. The next day they raised the price by $100,000, to $1.99 million. Though some potential buyers grumbled about the change, about 100 people came to the first open house. Soon, there were multiple offers above the asking price. By the end of January, there was a signed contract for $2.16 million — all cash. The sale closed in April.”
“The foreigners streaming into New York to buy housing often pay in cash, but with interest rates low, more have been seeking to finance their purchases. HSBC, the multinational bank based in London, reports that its volume of home loans extended to foreign borrowers in the United States has tripled since 2010. ‘They are usually coming and looking for all-cash deals. Then they find out they can borrow, and so they take advantage of it,’ said Joe D’Alessio, an HSBC mortgage consultant who works with, who has worked with clients from Britain, Hong Kong, Turkey, Japan and Brazil.”
“Borrowing also gives foreigners more buying power. Some choose to ‘buy a larger property that might have a higher rate of return in the next few years,’ he said.”
The National Journal. “Home ownership is good for the American soul, but is it good for its wallet? One of the leading advocates for caution in light of the recent good news has been Robert Shiller, a Yale University economist and co-creator of the Case-Shiller home-price index, which identified the record gain. In op-eds and T.V. appearances, Shiller has repeatedly warned against viewing homes as an investment.”
“Strong gains from March of last year to March of this year—released in the Tuesday report—may be the result of fewer foreclosure sales, which generally go at discounted rates, he told CNN on Tuesday. Shiller, who predicted the 2006 housing bubble, argues that over time home values barely appreciate. According to his research, home prices rose just 0.2 percent a year on average from 1890 to 1990. In nominal terms, prices skyrocketed, but when adjusted for inflation they were pretty stagnant. And the Federal Reserve’s current policy of promoting inflation may exacerbate that effect. ‘[B]ecause people often forget to correct for inflation, they may have the illusion that the market is improving,’ Shiller warned in a New York Times article last month.”
“Though some disagree with his finding, others have confirmed similar results, albeit in slightly different markets. In a 2009 paper, a group of MIT economists found that commercial property values in Manhattan actually dropped 30 percent in real terms from 1899 to 1999. ‘[I]n the last century New York real estate has not outpaced inflation in terms of appreciation,’ they concluded.”
Crain’s New York Business. “Here we go again. Home prices across the country rose sharply in the first quarter, according to the latest Case-Shiller index, with a surprising 10.3% gain over the last year. In New York, The Wall Street Journal reported, suburban home sales are ’swelling’ as ‘prices increase in areas around New York City’ and that buyers feel ‘urgency’ to complete deals. That’s not really true.”
“The Case-Shiller Index shows that for the first quarter, the New York region reported the lowest increase of any major market: just 2.6%. Nationally, prices have returned to their levels of late 2003, but in New York, we are actually a little lower with prices the same as early 2003.”
“What’s going on here? The Journal story was based on first-quarter snapshots of individual suburban markets compared with a year ago. Case-Shiller tracks the entire market. The Journal then claims a second-quarter surge because real estate brokers say it is true. Brokers always say the market is getting better; that’s how they stoke it. There is no way to tell for sure if they are exaggerating this time, but they usually are.”
“Housing is an important economic indicator, and it needs to be watched closely, especially in comparison to what is happening in the rest of the country. But beware the people who want to convince people prices are rising.”
“No one wants a repeat of that sad story…the goal, is consistent, more-or-less predictable growth, steadily increasing house prices without the fervor…one can actually imagine it without completely straining credulity.”
IMO, the mania didn’t die, it was just wounded. A year ago I thought we ought to at least have a little bounce before the next major leg down. Now we do. Keep your seat belt on.
The mania will continue as long as:
The federal government borrows 46 cents of every dollar it spends
The federal government continues with QE3 at $85 billion/month
The federal government continues with $1 Trillion deficits per year
The federal government continues to bail out and will not allow them to fail
The federal government continues to guarantees nearly 100% of all mortgages
Hmmm - what do all these things have in common?
Things that cannot continue forever?
Things that can mask but not stop a credit contraction?
Things that are simply stupid?
You’re right, the mania never died. People never forgot how high prices once were, and they fully expect them to return to those lofty highs- and stick. We are right back in the soup.
How inflated are the prices and how long would it take us to get there from here at the rate we are going? Prices will eventually be there, there is no question.
What does it matter when we all know that it is price that chokes sales volume ever lower?
Housing demand at 17 year lows isn’t fantasy. It’s the truth. And it is massively inflated prices that drove it there.
US Banks lending money to foreigners to buy over prices housing in a bubble.
All to get a “better rate of return.”
Anyone want to guess how this ends?
—————————–
‘They are usually coming and looking for all-cash deals. Then they find out they can borrow, and so they take advantage of it,’ said Joe D’Alessio, an HSBC mortgage consultant who works with, who has worked with clients from Britain, Hong Kong, Turkey, Japan and Brazil.”
“Borrowing also gives foreigners more buying power. Some choose to ‘buy a larger property that might have a higher rate of return in the next few years,’ he said.”
“…The decline was blamed on ‘the lack of homes for sale over the past several months.’ However, the association said that new listings were up by nearly 13 percent (year-to-year) in April, ‘and up 44 percent from the 6,468 listings in March.’”
You just gotta’ love the assinine doublespeak being brayed at full volume by these real estate snake-oil salesmen. Does their target audience (greater fools) even hear the lie or suspect the trap?
Beautiful truth:
“What’s going on here? The Journal story was based on first-quarter snapshots of individual suburban markets compared with a year ago. Case-Shiller tracks the entire market. The Journal then claims a second-quarter surge because real estate brokers say it is true. Brokers always say the market is getting better; that’s how they stoke it. There is no way to tell for sure if they are exaggerating this time, but they usually are.”
“Housing is an important economic indicator, and it needs to be watched closely, especially in comparison to what is happening in the rest of the country. But beware the people who want to convince people prices are rising.”
I got wide-eyed at that one too, especially coming from a source like Crain’s. Someone reputable is being objective- Oh, the Horror!! Now watch the NAR’s village idiots come out discredit the source like they tried with Jack McCabe.
Now watch the NAR’s village idiots come out
They’re right here on this blog every weekday.
“Case-Shiller tracks the entire market.”
Really? Does it include short sales and REO? I doubt it. New houses? Didn’t think so.
For starters, it is a repeat sales index — i.e. it averages changes in the prices of homes which sold more than once — and hence excludes new homes by definition.
My guess is that it also systematically excludes “distress sales” (e.g. short sales and REO) on the presumption these are “unrepresentative.” I’m fairly unconvinced that if these represent a significant portion of current market transactions, that they can be excluded without introducing serious bias.
Foreclosures down thanks to new law, study says
http://www.bizjournals.com/boston/real_estate/2013/06/foreclosures-down-thanks-to-new-law.html
A letter to the editor:
‘There are two main factors that I’ll just touch upon that show why I think the housing market recovery is, like the stock market valuations, an illusion.
First, New York state in 2010 required lenders to issue pre-foreclosure notices to seriously delinquent homeowners. In the seven-county area of New York City, more than 500,000 of these notices have been sent. On Long Island, where more than 240,000 notices have been sent, the monthly average for foreclosure filings is less than 1,000. The borough of Queens, where more than 100,000 notices have been sent, saw 91 foreclosures listed on the market as of April 1.
Second, the reverse mortgages seniors are using to tap equity on their homes to survive in Federal Reserve Chairman Ben Bernanke’s zero-interest rate environment are, according to the Consumer Financial Protection Bureau, now 10 percent in default or foreclosure.
Looking at just these two factors, what, I ask, are the true underlying fundamentals of the nation’s housing recovery?
Some of the other factors I consider: Labor force participation is down to 63.3 percent, with median household income down by 7.3 percent since the recession began. Per capita income is about $26,000. Real inflation, not the core inflation the Fed touts, is high. Bernanke’s $45 monthly purchase of mortgage-backed securities really tells me of the asset quality of the unsecured mortgages the banks hold, along with the suspension of “mark to market” accounting rules for these “assets.”
As someone looking to purchase a home, perhaps now realtors whom I meet can see why I am so obnoxiously negative on local housing prices. I am trying to protect our assets and get what I believe is true value in a purchase.
David - Chambersburg’
http://www.publicopiniononline.com/ci_23347847/suspicious-housing-market-valuations-letter
Housing market collapse lesson for lawmakers:
If you don’t like the consequence of following the rules, just change ‘em.
Government = Housing
Housing = Government
Tells me all I need to know. Does it do the same for you?
You sure don’t seem to mind feeding at the trough. Most pigs don’t.
Huh?
Before you shoot your mouth off, you might want to learn more about who you are speaking to.
Perhaps I mistook you for another commenter. What are your other handles, may I ask?
My memory is MacBeth = EvilDoc = the fake doctor. If so, my comment stands.
“the fake doctor”
lmao
No, sorry. I don’t know of any Evil Doc.
I thought I was Joe. Whatever happened to that notion?
I don’t have another alias. I can’t be bothered. How many have you had? Why?
Resorting to various aliases is akin to wearing clown makeup.
It is very telling, however, that as soon as someone states something you dislike, you resort to personal attacks.
What do you do for a living, BTW, that enables you to post 50-100 times daily?
If anyone on this board is on the take, it’s most definitely you.
Living large off other people’s taxes are ya?
You got the wrong guy bud.
My memory does serve. You are the MD imposter. There is no way you could post so much if you had patients. FYI I only post an average of less than 5 per day. You are mistaking me for someone else.
Second, the reverse mortgages seniors are using to tap equity on their homes to survive in Federal Reserve Chairman Ben Bernanke’s zero-interest rate environment are, according to the Consumer Financial Protection Bureau, now 10 percent in default or foreclosure.
A dear friend reverse mortgaged her house in late 2006. By mid-2009, it had gone into foreclosure.
And THIS:
Timber! Falling Lumber Prices Shatter Housing Optimism
By Jeff Macke - Yahoo – 6/4/2013
Timber!!!!
The price of framing lumber on CME is barely over $300 per 1,000 board feet, down more than 20% since the beginning of April. The last time prices were this low was October of last year. Meanwhile, the price of copper is currently fighting back from its own 20% correction from February through April.
Copper and lumber have one thing in common: they’re both used to build. If the economy is supposed to be in recovery and housing is picking up, someone forgot to tell the commodity markets. The question for traders is whether the copper and lumber price declines have a great meaning or are just another piece of ambiguous data in a recovery defined by such things.
————————-
I liked this comment:
The commodity prices of copper and lumber tells the true story. Its not like we had a surge of supply from a recent discovery. Its because homebuilders have little faith going forward. Part of it is due to knowledge of the great number of homes currently in possession of banks. Banks don’t want to be property managers. They’re landlords by default. But withholding the financing needed to both build and buy homes limits the active supply of housing thereby pushing home prices higher to which banks can recover their capital from the market.
Banks sure don’t seem to mind holding empty homes for three years or more. There are too many to count. They don’t have to be landlords, they just happily hold onto them vacant.
As the houses quietly deteriorate, rot, mold and are infested by termites and other vermin. Some are taken over and used as temporary meth labs. Great plan by the banks, huh? Real solid citizens and supporters of the community, huh? How many of those houses would you want to buy? It would be much smarter have a local builder knock me together a new house. Then what will the banks do with their decaying, uninhabitable assets?
Those holding onto all these empty houses are throwing alot of money at maintaining them…. at least in the northeast. Our contact in CA reports the same there. The only difference is that the majority of the shadow inventory is in California.
“How many of those houses would you want to buy?”
It’s much better if the all-cash Chinese and Canadian investors buy these sight-unseen, and eventually get to eat the losses due to physical depreciation.
While accounting for them at peak value.
Peak value? I’m sure they’ve appreciated at least 300% since then!
Well yes…we do have to account for inflation.
The saw mill operators around here say most of their product goes directly to China.
Exactly. China is hoarding materials in an absolutely unheard of fashion. A lot of those ghost cities were built with US natural resources. A quick drive around the PNW, and the devastating clearcuts, shows the mammoth worldwide appetite for wood products.
wealth is not created by a printing press.
“Home ownership is good for the American soul, but is it good for its wallet? One of the leading advocates for caution in light of the recent good news has been Robert Shiller, a Yale University economist and co-creator of the Case-Shiller home-price index, which identified the record gain. In op-eds and T.V. appearances, Shiller has repeatedly warned against viewing homes as an investment.”
Shoeshine boy moment #5,973: Shiller is warning (again) on high-stakes speculation in housing…
“Irony is wasted on the stupid.” - Oscar Wilde
Even better:
“I have defined the hundred per cent American as ninety-nine per cent an idiot.” -George Bernard Shaw
Bulletin U.S. trade deficit climbs 8.5% in April
June 4, 2013, 7:21 a.m. EDT
Banks loosen standards on down payments
Average down payment dropped to 16.1% last month, one survey finds
By Jonnelle Marte
Aside from rising home prices and reports of bidding wars, here’s one sure sign the housing market is improving: banks seem to be loosening standards for down payments.
The average down payment in purchases with a 30-year fixed rate mortgage dropped to 16.1% nationwide in May from 17.6% two years ago, according to a report released Monday by LendingTree, an online mortgage marketplace. In some states, like Mississippi and West Virginia, the average down payments are as low as 12%, the survey found.
…
when there are no jobs the last resort is to rely on gambling on assets.
“The average down payment in purchases with a 30-year fixed rate mortgage dropped to 16.1% nationwide in May from 17.6%”
But the HBB keeps telling me most people don’t even have $50 in their bank accounts. Yet here they are putting down 16% to buy a house. Unless that house costs $100, they have a good chunk of cash on hand. And this stat doesn’t account for people who put down 100%, ie cash buyers.
And the reason there is a drop is due to price appreciation. A constant dollar amount from 2 years ago will buy less % of a house today. People don’t have less money, houses are just more expensive.
Cheer up Eddietard…… Massively inflated and unaffordable housing results in collapsing sales which we’re experiencing right now. Of course this will eventually result in dramatically lower price and affordable housing which is bullish for the economy.
Pick yourself up off the floor kiddo. Cheer up.
“People don’t have less money, houses are just more expensive.”
You do know, Smithers, that when you have to resort to parroting obvious falsehoods and attempt to deny the ubiquitous realties that anyone with a frontal lobe acknowledges, it is time to hang up your shtick. Like Fonzie, you have jumped the shark. If you continue, the needle on the gauge now moves from ‘desperation’ to ‘pathetic’.
Is there a state-by-state breakdown for that 17% average down payment, or a breakdown of what they’re buying (condos or SFH)?
This is all so confusing. I thought Obama was supposed to fix everything that evil Boooosh did. So he’s fixing the housing bubble/crash by creating another bubble. AWESOME!!
Obama was supposed to fix everything that evil Boooosh did ??
Well China is sure happy that Booooosh fixed Iraq…Only cost us 5000+ dead…Tens of thousands all screwed up and 1-Trillion +…
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CDAQqQIwAA&url=http%3A%2F%2Fwww.nytimes.com%2F2013%2F06%2F03%2Fworld%2Fmiddleeast%2Fchina-reaps-biggest-benefits-of-iraq-oil-boom.html%3Fpagewanted%3Dall&ei=NvytUdCTHqWZiALTioHoDw&usg=AFQjCNGnBl407_yW3qRZ4OPIxKtL93UwnA&sig2=Ht68zD4XTTwY-Metjdrnxw&bvm=bv.47380653,d.cGE
You get points for blaming Bush. But you lose points for not blaming Joos, Faux Noise and the evil Koch Brothers.
‘you lose points for not blaming Joos’
One more statement like that and you are banned.
“You get points for blaming Bush. But you lose points for not blaming Joos, Faux Noise and the evil Koch Brothers.”
Ah, there it is. So you hate a certain group of people for the religion that they choose to practice. And here I thought that you were kind of cerebral, but you are just another common, two-dimensional shithead. I’ve got a few friends in the IDF who would love to hear your Jewish slurs in person, internet tough-guy.
Here is a freebie: Subconsciously, many people feel like their hatred toward something/someone has some effect or somehow injures, damages or diminishes that perceived ‘enemy’. These weak-minded people feel like their irrational hatred has some power or purpose. It doesn’t. All of those innocent people that you hate are completely unaware of how you feel and it doesn’t effect them at all. They don’t know and they truly don’t care. Your irrational, sociopathic feelings don’t even matter. And if that is a big part of who you are, then you don’t matter.
I’m 99% sure it’s not just a “certain group of people for the religion that they choose to practice” either. I’ll bet that self-hatred projects onto many for a number of perceived wrongs. That’s the thing about hate. If you let it in, it can take over, like addiction. Pretty soon, you’re hating your own mother.
Sarcasm is lost on cigars
No, sarcasm is generally lost in written text. You might try another venue, like stand-up comedy or real estate.
LOL…
US home prices jumped in April by most in 7 years
http://abclocal.go.com/kabc/story?section=news/business&id=9126805
And your losses increased this month.
HA
We’re here until toe tag time. What losses?
With homeowners ins. EQ ins, utilities and taxes our nut is
under $700/mo.
The irrecoverable losses you took the day you paid a massively inflated price for your depreciating dump.
June 4, 2013, 8:18 a.m. EDT
Home price boom continues into April
Annual gain highest in over seven years
By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — Supported by growing demand and low inventory, home prices continued to run ahead in April, with year-over-year growth hit the fastest pace in more than seven years, according to data released Tuesday.
Including short sales and other distressed properties, home prices in April grew 3.2% during the month and were up 12.1% from the same period in the prior year, the highest rate since February 2006, according to CoreLogic (CLGX -2.08%), an Irvine, Calif.-based analysis firm.
“Increasing demand for new and existing homes, coupled with low inventory, has created a virtuous cycle for price gains, most clearly seen in the Western states with year-over-year gains of 20% or more,” said Mark Fleming, CoreLogic’s chief economist. “Increasing demand for new and existing homes, coupled with low inventory, has created a virtuous cycle for price gains, most clearly seen in the Western states with year-over-year gains of 20 percent or more.”
Excluding distressed sales, prices were up 11.9% from the same period in the prior year.
Annual price growth was widespread. Each state saw a year-over-year price gain, excluding distressed sales, for a second consecutive month. When including distressed sales, only two states saw a year-over-year decline: prices fell 1.6% in Alabama and 1.7% in Mississippi.
…
‘The Federal Reserve is poised to evaluate and potentially make changes to its massive monetary stimulus, a top Fed official who is critical of the Fed’s bond-buying program said on Tuesday.Fisher on Tuesday did not repeat his call, made most recently last month, for the central bank to cut back immediately on its $85 billion in monthly bond purchases, though he did reiterate his concerns. While chances are “extremely low” that monetary policies will help push inflation above the Fed’s 2 percent target this year, the bond-buying program is, “at best, pushing on a string and, at worst, building up kindling for speculation and, eventually, a massive shipboard fire of inflation,” he said.’
‘He told the Toronto audience there was a “practical limit” to the size of the Fed’s balance sheet and investors should not expect “QE infinity.”
‘Asked if he was concerned about the impact of rising bond yields on the economy, he said it should be monitored but that policymakers could not let markets dictate policy. “We cannot live in fear that gee whiz, the market is going to be unhappy that we are not giving them more monetary cocaine,” he said.’
http://finance.yahoo.com/news/fed-poised-evaluate-bond-buys-000120505.html
“We cannot live in fear that gee whiz, the market is going to be unhappy that we are not giving them more monetary cocaine,”
Gee whiz, I thought monetary cocaine was forever. Or at least until 2015 or so…
‘One big issue is looming in the background this week as hundreds of real-estate executives gather in Chicago for an industry convention: rising interest rates. Until recently, the REIT sector was enjoying good times, with property values, cash flows and share prices rising. But rates began to climb last month.’
‘Blackstone Group is trimming its office-building holdings in the Boston suburbs as it gears up for a larger selloff of its office-property empire. The building is the latest to hit the market from the huge office-building company that Blackstone acquired from Sam Zell for $39 billion in 2007. Blackstone quickly sold some of the company’s buildings after the Zell deal, but has largely held on to the remaining office properties.’
‘Blackstone last month agreed to sell a Burlington office park for $215 million, its second recent sale in the Boston area. The firm is expected soon to begin marketing another property, the Wellesley Office Park.’
‘The suburban-properties sales are likely a prelude to Blackstone putting 13 office buildings in downtown Boston and Cambridge on the block. That could happen by the end of the year, according to people familiar with its plans.’
http://online.wsj.com/article/SB10001424127887324423904578525690129930634.html?ru=yahoo&mod=yahoo_hs
“…rising interest rates. Until recently, the REIT sector was enjoying good times, with property values, cash flows and share prices rising. But rates began to climb last month.’
‘Blackstone Group is trimming its office-building holdings in the Boston suburbs as it gears up for a larger selloff of its office-property empire.
…”
Given that rates already spiked steeply last month, isn’t it already too late for income property investors to head for the exits without losing money?