Plenty Of Empty Houses
The Denver Post reports from Colorado. “A report issued Wednesday by the metro area’s Multiple Listing Service, characterized the market as ‘cooling,’ but economists were careful to note that the market is still experiencing strong demand. ‘When they say ‘cooling,’ what that means is that things just aren’t skyrocketing as fast as they were earlier in the spring,’ said Ryan McMaken, an economist with the Colorado Division of Housing. McMaken believes mortgage rates will have an effect if they continue to increase. ‘If they head up, we are set to see buying taper off a bit, but that is different from an actual decline,’ McMaken said.”
“Broomfield economist Gary Horvath said if the mortgage rates go up slightly, the effect may be small. But if prices of homes go up by $20,000 and interest rates go up substantially, ‘that can price someone out of a home,’ Horvath said. ‘The combination of increased rates and increased prices will cause a cooling.’”
KTAR in Arizona. “A new report by the W. P. Carey School of Business at Arizona State University says that the housing market has hit ‘normal and historical’ levels after a troublesome foreclosure crisis. The report says that median single-family home prices reached $185,000 in May, up 26 percent from last year. Not everything is good news, though. The report also reveals that investors are losing interest in the city of Phoenix, with total home and condo sales down almost 40 percent from July of last year to May of this year.”
The Phoenix Business Journal on Arizona. “The latest Metro Monitor Report from the Brookings Institute shows strong economic growth for Phoenix. Phoenix saw 0.6 percent job growth over the quarter, which is higher than the national average of 0.4 percent. However, the employment rate is still 7.2 percent below its pre-recession peak despite consecutive quarters of above-average growth. Kenan Fikri, Brookings policy analyst and co-author of the report, said Phoenix may never reach pre-recession peaks in the housing market because a significant percent of its pre-recession economy was based on the housing bubble.”
“Despite the positive recovery performance in Phoenix, the report also said the city has a long way to go to reach pre-recession levels of employment and output. ‘Phoenix has a strong recovery,’ Fikri said. ‘But it’s still lagging behind national progress in really achieving full recovery because it was hit so hard by the recession.’”
News 8 Now in Nevada. “The sound of construction can once again be heard in the Las Vegas valley after being silent for the past five years. Lennar homes is one of the largest builders in Las Vegas. It has been sitting on parcels of vacant land for years waiting for the housing market to come back to life. The company has already sold 300 homes this year. Lennar is seeing fewer investors buying homes and more families looking to make a commitment to a house. To attract families, builders are thinking outside the four-walled box and throwing in lots of extras.’
“‘Washers, dryers, blinds, refrigerators, appliances,’ said Jeremy Parness, the president of Lennar Las Vegas.”
“Kristopher Milicevic, who is shopping to buy his first home, has been looking since the beginning of the year. ‘I talked to the seller, they agreed to sell, I went and met with everybody, high fives, cheers and that type of stuff and all of a sudden he calls me and says nope she backed out. She doesn’t want to sell right now, she thinks she can get a better price,’ Milicevic said.”
“He hopes to land a house soon because he’s noticed it’s been harder and harder to buy homes over the past few months. ‘It’s a long-term investment for myself and also for my city. I grew up here, I’m a native. I want to see Las Vegas succeed and that’s one of the reasons I want to invest in this economy at this point.’”
The Wall Street Journal on Nevada. “In a city dotted with tens of thousands of vacant houses, Jericho Guarin figured it would be effortless to buy his 1st home. But nearly a year after beginning a search late last summer, he has come up dry. ‘It has-been a nightmare,’ says the - 37-year-old U.S. Air Force officer. ‘There are plenty of empty houses, yet they’re just not for sale.’”
“Many real-estate agents, home builders & consumer advocates argue that the law, intended to remedy foreclosure-processing abuses, has backfired. Some owners who are behind on payments aren’t maintaining their homes as banks refrain from eviction proceedings. The perverse outcome: Inventory shortages have spurred new developments despite a glut of properties stuck in foreclosure limbo.”
“‘The people injure most by this law are the middle class,’ says Steve Hawks, a real-estate agent in Henderson, Nev. He refers to the phenomenon wrought by the foreclosure measure, Assembly Bill 284, as the ‘A.B. 284 bubble.’”
“The inventory shortages, meanwhile, have been a boon for some—especially builders. ‘A.B. 284 has been great for us. It darn near eliminated the constant inflow of foreclosures on the resale market,’ says Robert Beville, president of Harmony Homes, a local home builder. Mr. Beville says Harmony has sold 57 homes this year to cash buyers, compared to 70 in all of 2012. Realtors say investors are planning to flip the homes to a new buyer on the bet that prices will have jumped even more by the time the homes are built.”
“The foreclosure delays have helped distressed homeowners like Scott Chatley, who went 54 months without making a mortgage payment. That gave him enough time to pay off debts, repair his credit, and begin saving for a down payment on his next home. Mr. Chatley, who bought a home here in 2005 for $495,000 with no money down, stopped making his $4,000 monthly mortgage payments in mid-2008 when he lost his job as a software engineer.”
“Mr. Chatley says he delayed foreclosure first by seeking loan modifications and then by filing for bankruptcy. His mortgage company last fall approved a short sale of his home for $169,000 to an investor. Though he moved out in September, Mr. Chatley says he probably could have stayed longer because the bank hadn’t been actively moving along the foreclosure. Recently, he was prequalified by a credit union for a new mortgage and hopes to buy a new place later this year or early next.”
“Nearly 45,000 loans are either 90 days or more past due or in foreclosure. Local electric-utility data showed nearly 64,000 vacant homes at the end of last September, according to a tally by analysts at the University of Nevada-Las Vegas. Fewer than 8,000 of those units were listed for sale.”
“Xenophon Peters, an lawyer who represents clients facing foreclosure, sees little to celebrate. Even though A.B. 284 has benefited his clients, ‘there has to be turnover in the housing market for it to recover,’ he says. ‘It’s caused another bubble to erupt. We saw the same thing eight years ago. We know it’s unsustainable.’”
‘Nearly 40 percent of households are burdened by the cost of living, meaning they spend more than 30 percent of their total income on housing, according to the recently released results of the Summit County Workforce Housing Needs Assessment. More than 60 percent of local households say the availability of affordable living options is a serious or critical problem for the county.’
‘The housing market is recovering and the rental market has made a significant rebound, but employees in Summit County have not, the study showed. More than a third of local households lost an average of $30,000 in annual income to the recession, and many employees hold fewer jobs now than they did before the economic downturn began in 2008.’
‘A total of 13,750 single-family homes were up for sale on the Greater Las Vegas Association of Realtors’s listing service at the end of June, down 19 percent from a year earlier. However, more homes were available for sale without any kind of offer attached to them.’
‘By the end of June, 3,828 single-family houses were listed without an offer, up 4 percent from a year earlier. There were 1,464 such condos and townhomes, up 35 percent from a year ago.’
‘Nearly 40 percent of households are burdened by the cost of living, meaning they spend more than 30 percent of their total income on housing, according to the recently released results of the Summit County Workforce Housing Needs Assessment.”
By contrast, in one of the most expensive cities in the U.S., we remain somewhere below 25% of income on our monthly rental payments. And we didn’t have to endure a huge capital loss due to buying an overpriced home at an epic bubble top.
“Get what you can get for your house today because it’s going to be much less tomorrow for many years to come.”
Correct.
Combined with the massive excess housing inventory of 25 milllion AND an additional 35 million empty houses vacated as boomers die off, todays price is your best price.
Comment by Housing Analyst ;
…houses vacated as boomers die off
————————
LoL! You can’t fool Mother Nature!
The last full blown Kondratieff Long-Wave contraction occurred in the 30’s. The next Kondratieff Long-Wave finally commenced in 2007-08, after being delayed by several foolish and ultimately unsuccessful interdictions of the US Monetary and Fiscal authorities. Its reemergence is now ordained with the FED’s insanely structured ZIRP! Therefore, the Kondratieff’s full impact is due to reassert itself in the next 18 to 36 months.
http://polestarcomm.blogspot.com/
To The Reading Public:
The paid PR thugs and hired hands are busy posting here today. And we’ve noticed that some of them who pose as long term posters have recently had difficulty keeping their predilections and intent hidden from all of us. They know who they are and you should too. They can’t be missed. They are easily recognized as they are the same people who plant the seeds of doubt through lofty platitudes and carefully crafted responses. They imply “housing has turned around” and sometimes come right out and say it. They’ll invoke tall tales of “we bought” to disarm you and clear you a personal path to financial hell. These literary illusions are flat out myths and when you read them, your BS radar should be screaming. Beware.
Make no mistake about it…. have no doubt in your minds. Housing today is twice the mess it was in 2008. The personal financial risks of buying housing at current inflated asking prices is tremendous. And always bear in mind that houses depreciate rapidly
“Why buy a house at these grossly inflated prices when rental rates are half the monthly cost?”
“paying mortgage interest to a bank is slavery.”
And those who suffer the real consequences are those who pay inflated prices for depreciating assets like a house, borrow and repay 2x the transaction costs and continue paying for decades. In the end? They might recover 15% of what they have in it. Losses like that are stupendous.
Losses to depreciation on housing is crushing
“paying mortgage interest to a bank is slavery.”
The interest I pay gets automatically sucked out of my checking account. I do walk into the bank to deposit the checks but that is hardly comparable to picking cotton in the hot sun.
I suppose i’d have less debt and little interest if I did more of the work myself but THAT would be physically demanding.
Sorry, I just can’t get worked up about interest that is 8% of income. (not 8% of the principal, 8% of the annual income).
Junk it up my underwater junkie.
“The Coming Housing Collapse: The Fed, Instead Of Lehman, Owns The Mortgage Market”
http://www.forbes.com/sites/afontevecchia/2013/03/05/peter-schiff-and-the-coming-housing-collapse-the-fed-instead-of-lehman-owns-the-mortgage-market/
There are many reasons NOT to buy a house right now.
1) Prices are massively inflated
2) Rental rates are half the cost of buying at current inflated prices
3) The cost of new housing is a fraction of resale housing in $/square foot.
4) Excess housing inventory is massive in the tens of millions.
…. and most importantly… You’re going to lose alot of money if you buy a house now. ALOT of money.
“18,700,000 vacant units across the country”
Given the rampant lies and deceptions endemic to the U.S. real estate industry, is it safe to assume that 18.7 million is an undercount? Especially given the new wave of construction underway in the wake of the Fed’s QE3-fueled housing market stimulus?
http://www.thefiscaltimes.com/Articles/2011/08/04/9-Worst-Recession-Ghost-Towns-in-America.aspx#page1
There are currently 18,700,000 vacant units across the country, according to Census data, and vacancies rates in the homeowner market have grown 12 percent since the recession started. Vacancies are the highest in the southern and western regions of the country.
The risk is high…. the losses are massive.
Vacancies are the highest in the southern and western regions of the country.
Wait a minute…isn’t that where all the big gains have been recently? How can that be?
You can see the state-by-state data here:
http://www.census.gov/housing/hvs/data/rates.html
AZ, FL, NV are all double digit vacancy rates for rentals (among others), CA and CO are about 6%.
AZ, FL, NV have a 2-2.5% homeowner vacancy rate (highest is Texas at 3%), CA and CO are about 1.5%.
There is plenty of variability to where the vacancy is located.
And in walks the liar.
From census, housing units in absolute terms
2012 and start 2013:
http://www.census.gov/housing/hvs/files/qtr113/tab4.xls
2011 and 2012:
http://www.census.gov/housing/hvs/files/annual12/ann12t_11.xls
1990, 1995, 2000, 2002 and 2005-2010:
http://www.census.gov/compendia/statab/2012/tables/12s0982.pdf
Dividing all vacanct units by the total, vacancy rates are:
1990: 11.3%
1995: 11.2%
2000: 11.6%
2002: 12.0%
2005: 12.6%
2006: 13.0%
2007: 13.7%
2008: 14.3%
2009: 14.4%
2010: 14.3%
2011: 14.1%
2012: 13.9%
2013 so far: 13.8%
About 25 MILLION of them.
‘Harmony has sold 57 homes this year to cash buyers, compared to 70 in all of 2012. Realtors say investors are planning to flip the homes to a new buyer on the bet that prices will have jumped even more by the time the homes are built’
Oh boy. I guess the reporter forgot to ask if the buyers camped out.
I wonder if the reporter forgot to ask how many flippers are aware of potential buyers with positive employment prospects.
That this gets admitted in the MSM is astounding.
Yes, but “skyrocketing” prices alone could never price someone out of a home?
Rising rates alone could never reduce the price a seller will receive?
Not sure how old this quote is, because it seems to me that both have already happened recently. So now what Gary?
so in 2 weeks we’ve gone from tight inventory to empty homes piling up?
As if inventory was ever tight in the first place.
The tight inventory is because the empty homes are in a legal limbo…unable to be foreclosed and re-sold.
The number I heard recently was that 60k homes in Vegas had their power turned off…that’s a LOT of homes with no A/C in the scorching heat of Vegas.
These homes will need to get through the process and will come back to the market, adding listings.
I read recently that a new law in NV (AB 300, I think) has reduced some of the restrictions in AB 284…that could speed things up a bit.
Las Vegas is also home to a lot of criminals. I would hate to have a house sitting vacant very long in that town. I lived there for a while.
“Plenty Of Empty Houses”….. and many more empty skulls yammering realtor-isms.
Here in Tucson, I’m seeing a lot of re-listings of previously listed resale houses. And those lofty prices STILL aren’t wowing the buyers.
http://www.reviewjournal.com/business/housing/assembly-bill-would-modify-requirement-said-delay-foreclosures
http://www.leg.state.nv.us/Session/77th2013/Reports/history.cfm?billname=AB300
Looks like it was made effective on June 1, 2013.
Floodgates may soon open, moving this inventory through the system…that is, as long as AB 300 made sufficient changes, AND/OR banks actually foreclose as fast as they can.
“That gave him enough time to pay off debts, repair his credit, and begin saving for a down payment on his next home.”
It says he went through bankruptcy in ‘08. Doesn’t that stay on your credit report for nine or ten years?
That doesn’t mean someone with a BK on their record doesn’t get a loan for 10 years. Most lenders will lend to someone with a BK after 2-3 years of good credit history.
Just at a higher interest rate. The rates might be low enough now to make up for it though.
“Most lenders will lend to someone with a BK after 2-3 years of good credit history.”
Only if the lenders have the “fed/gov” mortgage guarantees.
“Many real-estate agents, home builders & consumer advocates argue that the law, intended to remedy foreclosure-processing abuses, has backfired.”
You mean to tell me govt intervention in the free market ended up doing the exact opposite of what was intended? This is un-possible.
“Many real-estate agents, home builders & consumer advocates argue that the law, intended to remedy foreclosure-processing abuses, has backfired. Some owners who are behind on payments aren’t maintaining their homes as banks refrain from eviction proceedings. The perverse outcome: Inventory shortages have spurred new developments despite a glut of properties stuck in foreclosure limbo.”
When this severe case of housing market constipation blows, it’s gonna get really messy!
“But if prices of homes go up by $20,000 and interest rates go up substantially, ‘that can price someone out of a home,’ Horvath said.”
On what planet would it make sense to assume home prices would go up if interest rates rose substantially?
An increase in rates to anything resembling normal housing market conditions would drive a stake through the heart of the bubble.
Even the Wall Street Journal gets the story wrong. Rising rates do not make homes more expensive for buyers, as they don’t lead to increases in income. Rather, purchase prices which prospective buyers are able to afford are reduced, as more of their monthly payment goes to the bank as interest paid rather than to purchase proceeds.
Hence the effect of rising rates is to reduce demand and, by implication, sales proceeds for sellers.
July 8, 2013, 4:27 PM
Why Home-Price Gains Will Slow Amid Higher Mortgage Rates
By Nick Timiraos
Home prices moved up at a torrid pace during the first half of the year, but don’t expect them to keep pace during the second half.
The big spike in mortgage rates over the past two months has reset the housing market and figures to take a bite out of demand at a time when more sellers have listed homes for sale and when price gains have tested investors’ purchasing appetites.
Mortgage rates, which stood at a low of 3.59% at the beginning of May, jumped to 4.58% during the last week of June, according to the Mortgage Bankers Association. Rates rose even more last Friday, after a strong jobs report firmed up investors’ expectations that the Federal Reserve would begin to curtail its bond-buying program later this year.
A rule of thumb holds that every one percentage point increase in interest rates reduces affordability by 10%, so the recent move in rates just made homes about 10% more expensive to buyers who need to finance their purchase.
“There’s no one in the business right now who doesn’t think the market hasn’t taken a step back. The evidence is all around us,” said Glenn Kelman, chief executive of real-estate brokerage Redfin. The number of Redfin customers who requested tours during the last week of June was down 5% from the average for the previous three weeks, while the number of customers making offers was down by 8% and the number of new customers edged down by 2%.
…
Lifestyle
7/10/2013 @ 12:16PM
Rising Mortgage Rates Giving Would-Be Homebuyers Jitters
Trulia’s Chief Economist reveals that rising mortgage rates are the top worry for people thinking of buying a home someday, and 56% of Americans say they would be discouraged from homeownership if rates reach 6%. But consumer surveys aside, pay more attention to what consumers do than what they say.
After years of low-and-lower mortgage rates, the 30-year fixed rate shot up from a near-historic-low of 3.35% in early May to 4.46% in late June before settling back to 4.29% last week, according to Freddie Mac. The rate increase was sudden and steep, but not a surprise. Economists and forecasters have been waiting for rates to go up for two reasons: (1) the strengthening economy tends to push up rates, and (2) the Fed is expected to pull back on bond-buying and other measures that have kept rates low, which they reaffirmed in mid-June. By historical standards, rates are still low: remember that mortgage rates hovered around 6% for most of the 2000s, 7-9% in the 1990s, and above 10% in the 1980s. Nonetheless, the recent rate climb has been steep.
…
Mortgage applications continue to fall
Ben Mitchell, USA TODAY 12:23 p.m. EDT July 10, 2013
Story Highlights
- Mortgage activity has fallen nearly 44% over the past two months
- The rate for the 30-year fixed-rate mortgage reached a two-year high at 4.68%
- Mortgage applications are now 33% below their level a year ago
Mortgage applications fell for the fourth straight week as interest rates continued to tick up.
According to the Mortgage Bankers Association (MBA), mortgage applications fell 4% last week after plummeting 11.7% the week before. The Market Composite Index, a measure of mortgage loan application volume, decreased 4.0% on a seasonally adjusted basis from one week earlier. Mortgage applications are now about a third below their level from a year ago.
The decline in mortgage activity is fueled by the rise in interest rates which have reached their highest level since July 2011. The average rate for the 30-year fixed rate-mortgage increased to 4.68% from 4.58% last week. The spike in rates has driven the refinance share of mortgage applications down to 64%.
Mike Fratantoni, MBA’s vice president of research and economics, said last week that refinancing applications reached their lowest level in two years. The rate remains unchanged.
According to economists at Contingent Macro Advisors, mortgage activity has fallen 43.6% over the past two months.
“Mortgage applications had been on a rising trend over the past 18 months although there has been substantial week-to-week volatility, but the trend now appears to have topped out and begun a steady retreat,” according to a statement from Contingent Macro Advisors.
…
Economy
Interest Rate Surge Hammers US Mortgage Apps
Wednesday, 10 Jul 2013 | 8:54 AM ET
An unrelenting surge in interest rates for home mortgages pushed borrowing costs to their highest level in two years, stymieing demand from potential homeowners, data from an industry group showed on Wednesday.
Interest rates on fixed 30-year mortgages rose for the ninth week in a row to average 4.68 percent in the week ended July 5, the Mortgage Bankers Association said. It was the highest level since July 2011 and a 10 basis point increase over the week before.
The surge in costs has been expected to push some undecided buyers into the market as they rush to lock in rates before they rise even more, but MBA’s seasonally adjusted gauge of loan requests for home purchases fell 3.1 percent, the second-straight week of declines.
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Goldman Sachs: Treasury Yields Will Hit 4%
Monday, 8 Jul 2013 | 5:06 AM ET
By: Matt Clinch | Assistant Producer
A rise in 10-year Treasury yields above 2.7 percent on Friday for the first time since August 2011 is just the start of a long-term upward trend, Goldman Sachs said, with the investment bank forecasting yields will now enter 2014 at 2.75 - 3 percent and will climb to 4 percent by 2016.
Yields moved to a near 3-year high following better-than-expected payrolls number on Friday on expectations that the positive data will prompt the Federal Reserve to start scaling back bond purchases.
“Factors driving yields higher include the improving outlook for growth in the U.S. (and partly also in Europe), a decline in systemic risks stemming from the euro area, and the reduction in the pace of Fed purchases,” Francesco Garzarelli, head of market research for Europe at Goldman Sachs said in a research note on Sunday.
“In this regard, our U.S. Economics team now calls for the Fed to announce its intention to taper its monthly purchases of Treasuries and Agency MBS (mortgage backed securities) in September.
This follows Goldman Sachs’ bearish call on Treasurys at the end of May when rates began to rise off record lows. “The bond sell-off: It’s for real,” the bank’s fixed income team said at the time.
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First Take: Fed preps us for end of its stimulus
Tim Mullaney, USA TODAY 5:56 p.m. EDT July 10, 2013
Call them crazy, but in the end the Federal Reserve policymakers decided to prepare Wall Street for a slow down in the huge bond-buying program it has used to nurture the stop-and-start recovery because it decided the financial markets were acting like grownups.
That’s the picture that emerges from the minutes of the June 18-19 meeting of the central bank’s Federal Open Market Committee, which sets monetary policy. Despite gyrations in bond and derivatives markets after Fed Chairman Ben Bernanke hinted at possible future tightening when he testified before Congress on May 22, the Fed looked at the stability in the stock market since its previous meeting in early May and decided the recovery would keep going even if the Fed took its foot off the gas.
“It was noted that (the gap between bond rates for the government and private companies) had not widened substantially and that the stock market had posted further gains, suggesting that the higher rates reflected, at least in part, increasing confidence that moderate economic growth would be sustained,” the ever-dry minutes read.
…
Up, up and away!
30-year Treasury yields are up 20 bps so far just in July.
Daily Treasury Yield Curve Rates
Date 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
07/01/13 0.01 0.04 0.09 0.15 0.34 0.65 1.39 1.93 2.50 3.19 3.48
07/02/13 0.02 0.03 0.08 0.14 0.34 0.64 1.38 1.92 2.48 3.18 3.47
07/03/13 0.03 0.05 0.08 0.14 0.36 0.67 1.42 1.97 2.52 3.22 3.49
07/05/13 0.03 0.04 0.08 0.15 0.40 0.77 1.60 2.19 2.73 3.41 3.68
07/08/13 0.02 0.05 0.07 0.14 0.37 0.71 1.51 2.11 2.65 3.35 3.63
07/09/13 0.04 0.04 0.08 0.14 0.37 0.71 1.50 2.08 2.65 3.36 3.64
07/10/13 0.03 0.04 0.08 0.13 0.38 0.73 1.54 2.12 2.70 3.40 3.68
It’s 100% going nite, nite. The market is putting on it’s pajamas. IIt’s a good thing not too many people were able to buy because that’s less people that will be under water.
This seems a modest amount for such a key figure in British art compared to, say, another young British artist, Glenn Brown, who paints completely flat versions of other artists’ work. Last year, Brown’s auction record peaked at ?5.2million, and now both Sotheby’s and Christie’s have examples of his rare and highly sought-after science fiction paintings based on the illustrations of Chris Foss. Each is estimated at ?2million to ?3million, the Sotheby’s example having been acquired at auction in 2002 for what was then a record ?33,000.