On A Road To Bubble Country
It’s Friday desk clearing time for this blogger. “Metro Denver, like many large metropolitan areas around the country, has seen home prices steadily rise in recent months, but wages haven’t kept pace. Linda Philpott, chairwoman of the Aurora Association of Realtors board of directors, said sellers are seeing multiple offers on their homes and those offers are coming in quickly. ‘Buyers who are interested in a property have to make a decision and put in an offer right away,’ she said. ‘Or they won’t have a chance to get a property.’”
“Stanislaus County prices dipped a bit last month to a median of $180,000. ‘There has been a shift in the local real estate market,’ confirmed Chad Costa, co-owner of Re/Max Executive realty in Modesto. ‘We went from significant month-over-month increases from the beginning of the year to a much-needed plateau in just the last month or two. We are moving out of a depressed market, and the last thing we need is to see price increases exceeding the average income,’ he explained. ‘History has proven that what goes up must go down, especially when the increases are not in line with income and unemployment.’”
“Angie Domichel Nelden, a Salt Lake-based real estate agent, said the hectic pace of home sales over the summer is clearly easing back. The Realtor recently listed two homes and when no calls came in after a day or so, she actually checked the listings to make sure there wasn’t a mistake. ‘You can just feel it,’ said Nelden. ‘It’s taking a little bit longer now.’”
“Kim Casaday, president of home financing for Zions Bank in Utah and Idaho, said historically low interest rates reached last spring helped to inflate home price increases in the summer months. ‘You had so many people out buying homes,’ she said, ‘it almost created kind of an unnatural bubble.’”
“Monthly gains in home prices are slowing down. That’s OK, says Chase Private Client Chief Economist Anthony Chan. ‘The numbers were, in fact, too robust to begin with,’ Chan said. ‘I don’t think Portland should want 13 percent year-over-year and neither should the nation want 12.8 percent. That’s on a road to bubble country.’”
“A friend of mine, a high-income executive, and her husband, also on a good income, want to buy a bigger home on Sydney’s north shore. When they see Chinese buyers turn up, their hearts sink. It usually means doom. ‘When we encounter more than one Chinese buyer interested in a house, we know we are not going to get it,’ she said. ‘We get priced out.’”
“A Sydney property developer who is working with Chinese investors told me that if Chinese stopped buying in areas that are popular with Chinese home buyers, the value of these local markets would fall by about 25 per cent. These local bubbles are having a ripple effect, pushing buyers into other areas of the Sydney market. The same is happening in parts of Melbourne.”
“The property bubbles in China’s third- and fourth-tier cities are bursting, according to Li Wei, director of the State Council’s Development Research Center. With inadequate demand and blind investment, the property market in quite a few third- and fourth-tier cities is seeing greater supply than demand, resulting in a property price slump. Given their edge in attracting migrants and industry clusters, the bubble existing in first-tier cities might burst later, but the risks involved cannot not be overlooked.”
“When the bubble bursts, some cities will become ‘ghost towns,’ and financial revenue will drop sharply, according to a source within the property sector. A lot of residents were also expected to dump their houses on the property market and banks could seize property that had lost value, impacting the financial system and resulting in a series of chain reactions.”
“The Construction and Planning Agency (CPA) said yesterday that the number of vacant housing units in 2012 had increased by 50,000 over the previous year. The agency said that more than 863,000 housing units had recorded less than 60 kilowatt hours of electrical use per month in 2012, which suggests that the units in question are largely unused or vacant. The newly announced figure accounts for 10.6 percent of all housing units in the nation. The Ministry of Finance said that there are more than 600,000 people who own more than three housing units.”
“Comparing realty data with data acquired from the Taiwan Power Company, the CPA explained that the term ‘minimally used housing unit’ refers to units that record less than 60 kilowatt hours of power a month. According to the Directorate-General of Budget Accounting and Statistics, the island had a total of 1.56 million unoccupied housing units in 2011, substantially higher than the CPA’s 813,000 minimally used housing units recorded in the same year. The agency also announced the figures for new housing units and housing units less than 5 years old ready to be sold. As of the fourth quarter of 2012, there were 30,123 such units in total, signifying an increase of 1,200 from last year, the CPA said.”
“About a quarter of Canadians spend too much on housing costs, Statistics Canada says. How can you tell if you’re house poor, aside from the fact that your bank account is hemorrhaging funds? To answer that question, dig deep, and we’re talking in your soul, not your piggy bank. ‘Your first sign is that you are beginning to resent your house,’ says certified financial planner Scott E. Plaskett, CEO of Etobicoke’s Ironshield Financial Planning. ‘You don’t look at it with the sense of pride you did when you first bought. You now see it as the thing that is standing in your way of other financial goals.’”
“Regional foreclosures rose by 26 percent in the third quarter, compared to the same period in 2012. Home repossessions, property auction warnings and mortgage default notifications in the Scranton/Wilkes-Barre metro area advanced for the third straight quarter, according RealtyTrac. ‘It’s the unemployment issue and underemployment still playing a pretty big factor’ in rising foreclosures, said Jesse Ergott, executive director of a nonprofit budget counseling agency based in Scranton. ‘It’s simple mathematics. People aren’t bringing in enough to pay those bills and something has to go.’”
“Sales of repossessed homes at sheriff auctions in Lackawanna County totaled 209 through September, down from 435 in the year-earlier period. The Lackawanna County decrease could be misleading, said Michelle Valvano, who manages sales of bank-owned real estate for Classic Properties in Clarks Summit. There are 117 properties on the list for a Lackawanna County sheriff sale on Tuesday, she said. ‘There’s no way foreclosures are slowing down,’ Valvano said. ‘People are just walking away’ from their homes.”
“Starting Friday, New Castle County plans to reduce a fee builders pay before breaking ground on a home from $12,782 to $9,815 for single family dwellings. Leann Ferguson, of Middletown, is skeptical of whether the fee changes will benefit residents dealing with a sluggish economy overall. The housing market below the canal suffers from a glut of supply, and adding new homes might hurt the value of existing homes, she said.”
“‘Who is going to buy all these homes? We have empty houses already,’ said Ferguson, the former vice president of a civic group called Southern New Castle County Alliance. ‘We need more demand. It sounds good to give incentives to get development back in the game, but you can’t realistically say it’s a good idea without looking at the whole picture. And the whole picture is bleak.’”
“foreclosures rose by 26 percent in the third quarter”
Foreclosures up up up!
2013 Quote Of The Year
“If you have to borrow for 15 or 30 years, it’s not affordable nor can you afford it.”
Home Sales Collapse At Fastest Rate In 40 Months;
http://investmentwatchblog.com/home-sales-collapse-at-fastest-rate-in-40-months-congress-is-now-unable-to-get-things-done-fed-will-do-the-opposite-of-tapering-more-money-printing/
has any re market boomed and buster more than denver……….and dallas
the 2 that are over 2005 highs
Boston.
New York
Bahstin has been pretty steady up and only hit down 12%? in this last bust
Vegas, baby!
San Diego, and all of SoCal (including Las Vegas)…
Sacramento.
While it has not returned to 2005 highs ($200/SF +) by a long shot….
However, it went so low in 2010 ($80-90/SF) it is now up about 70% off the bottom in 2013 ($150/SF).
I cannot speak to Denver or Dallas. How to $/SF prices compare in those areas?
“Your first sign is you are beginning to resent your house.”
You know, that big expesive thing that was supposed to fill that empty void in your life just as everything else that you buy that is beyond your means is supposed to fill that empty void in your life?
“You don’t look at with a sense of pride when you first bought. You now see it as a thing that is standing in your way of other financial goals.”
Other financial goals, meaning other ways to try to fill the empty void that dominates your life. Endlessly searching of ways to fill this void means endless spending, and not having the money on hand to finance this endless spending is where I get to come into your life.
Me, your banker, your newest best friend.
An unfilled, empty void is a terrible thing to waste.
“You know, that big expesive thing that was supposed to fill that empty void in your life just as everything else that you buy that is beyond your means is supposed to fill that empty void in your life?”
That would be hilarious if I didn’t have close relatives who fit the description to a “T”. One of the families among my wife and my immediate siblings were serial move-up buyers. They were on maybe their third move over the span of a decade when they found themselves with a newly-built McMansion, a $500K+ mortgage, and a divorce. Matters went downhill from there.
‘Linda Philpott, chairwoman of the Aurora Association of Realtors board of directors, said sellers are seeing multiple offers on their homes and those offers are coming in quickly. ‘Buyers who are interested in a property have to make a decision and put in an offer right away…Or they won’t have a chance to get a property’
http://www.movoto.com/statistics/co/aurora.htm#city=&time=1Y&metric=Median%20%24%2Fsqft&type=0
Check out the inventory graph and note the price decreases line at the bottom.
Check out the inventory graph and note the price decreases line at the bottom ??
Roughly a 15% drop…More striking is that it occurred in a very short period of time…It appears to be in the month of September…
Doesn’t this suggest that realtors are liars?
It’s happening all over the country. In a simple view, prices went up for years, peaked in 2006-07, fell for years, rose starting 2011-12 until late summer, early fall. One, two, three. Of course, anything could happen. But if this keeps up it will be a big turn.
But if this keeps up it will be a big turn ??
Hearing deflation talk with all the talking heads…If the economy goes negative in the 4th or 1st quarter watch out below…
‘The Realtor recently listed two homes and when no calls came in after a day or so, she actually checked the listings to make sure there wasn’t a mistake. ‘You can just feel it,’
This reminds me of people a few years ago that would be reported picking up their phones to make sure there was still a dial tone.
‘We’ve had “pent up supply” going back to 2006: sellers who either couldn’t sell or chose not to sell have been essentially stuck until just recently. There have been seven-plus years of fewer-than-normal real estate sales. That’s a lot of people who would normally have moved, but didn’t because their homes had fallen in value. That’s a lot of homeowners who have rational, justifiable reasons to list their homes at the first sign of home prices weakening again.’
‘Yesterday, The Fed weighed in, reaching the same conclusion that we did.’
“All these institutional investors are going to behave differently than the homeowner of the past,” noted Shiller. “That’s another reason to suspect that there could be a rapid turn down in the housing market, because these investors are not going to sit tight when home prices start falling. If they think they’re going to continue falling, they’ll get out.”
“That’s another reason to suspect that there could be a rapid turn down in the housing market, because these investors are not going to sit tight when home prices start falling. If they think they’re going to continue falling, they’ll get out.”
We’ve already been over that here ALOT!
‘After a long abstinence, Sydney’s love affair with property has flamed back to life. Stories missing from the city’s narrative for much of the past decade are in the news: dumps are selling for squillions, auction clearances are through the roof and, best of all for sellers, reserve prices are being smashed. All of a sudden, property is back on the agenda at dinner parties.’
‘A Herald report earlier this week summed up the angst. A Sydney lawyer had bought a $710,000 Potts Point apartment for his five-year-old. The buyer felt he had to act now or his son would be forever priced out of the market.’
‘The city now has 123 neighbourhoods with a median price in the million-dollar range, nearly 100 more than Melbourne. ”A million dollars is not really a significant price tag on a property in Sydney any more - it’s really around the middle of the market,” APM’s Andrew Wilson says. “We are seeing Sydney operate at a different level to other markets in Australia.”
‘The Reserve faces a tricky balance. It has cut interest rates to record lows in a bid to encourage businesses and consumers to spend and invest as the effects of the mining boom fade. The aim is to boost non-mining sectors, such as home building, so they can take over from mining and drive national economic growth.’
‘But if the housing market becomes too frothy, the Reserve might lift rates to prevent an unsustainable price boom. That would be bad news for the whole economy, not just the housing market.’
This is the thing that gets to me. Bubbles burst and you thing that sanity has finally returned. But no, the bubbles return with a vengeance. It really is true, people around the globe have been brainwashed into believing that housing is supposed to be utterly unaffordable.
I got a call yesterday and it was mentioned this is entirely a government bubble. In the US, the feds make 90% of the loans. They are taking bad loans from the private sector through HARP. The central bank is buying bonds to keep rates low and keep the mortgage industry funded.
It wasn’t so long ago that markets restrained central banks. No more. It was considered a truism that the Fed didn’t control long term rates. Now Bernanke holds press conferences and tells everyone rates will do this or that.
It isn’t just rates that now operate outside of conventional economics. It was also a truism that excessive money supply would cause inflation. We’ve seen money created like never before, but pay is going down. What we do get is asset inflation.
I’ve said this before; it could be that decades of money printing and globalization have created so much excess capacity that we’re in a deflationary spiral. You want cheap Chinese stuff on the shelves? We got it. Students loaded down with debt? We’ve got it. But don’t expect US wages to go up. Heck, we’ve got 20% + unemployment in some sectors. How could you possibly expect wage inflation in that environment?
There’s a lot of things going on in these economies that’s never happened before, and isn’t explained by any school of conventional economics.
Let’s be real about this……. The Fed is buying $1 trillion in houses every year. They are making the market.
Read it again brother…… $1 trillion…… Yet housing demand is at 14 year lows.
Got recovery?
How could you possibly expect wage inflation in that environment ?
Precisely Ben…Some economists was pounding the table this morning with just that…He said;
“Forget about the unemployment rate…Forget about the GDP…Its ALL about wages & wage growth…Watch that indicator and it will tell you everything”…
I like Mid-Century modern stuff. I was in Salt Lake last year and purchased an Eames lounge chair from a dealer that has a shop downtown. I haven’t bought directly from a dealer in over a decade. However, the store owner needed to cover a loan payment so he offered me a deal that was too good to pass up.
What I found interesting is that he had used the same Bank for over ten years. When things crashed the Bank killed his line of credit so he has been using local hard money lenders ever since. It appears that these lenders, being the only game in Town for some of the local small businesses, are charging more than the normal vig and requiring payments on a shorter timeline than the Banks.
There is a world wide debt crisis. Too much debt. Too much defaulting debt.
And the central bank’s and policy makers’ response to this issue is to push yet more debt onto the society.
Two reasons I see for this:
1) “When the only too you have is a hammer, every problem looks like a nail.”
2) Follow the money - who’s getting rich off of these policies?
“There’s a lot of things going on in these economies that’s never happened before, and isn’t explained by any school of conventional economics.”
Viewed in another light, the U.S. has a real-time economic experiment going in command-and-control economic policy on an unprecedented scale. Time will tell whether or not the experiment was a success.
Return of a bubble mentality used to be a multi-generational phenomenon. But not anymore, because the global economy depends utterly upon no one learning from mistakes, or even admitting that mistakes were made in the first place. I nonetheless am surprised at the lack of strong opposing voices coming from Australia. The idea that a domestic economy can transition from mining to building and selling houses that only can be afforded by foreigners, many of whom are corrupt, is dumb. Period.
They’re pricing their own young people right out of the country. Let’s see how that works out.
On another subject, earlier this week I was in a place that had one of the financial networks on. The show actually had a countdown clock running on the Fed’s announcement, which of course was that QE would continue unabated. A squadron of anchors and alleged experts breathlessly awaited, and then analyzed, the “news.” I don’t know how anyone regularly covers these things without being drunk or stoned, such is the depth of cynicism and phoniness required.
“‘Buyers who are interested in a property have to make a decision and put in an offer right away,’ she said. ‘Or they won’t have a chance to get a property.’”
Sounds like Metro Denver has the right kind of buyers and lenders for the sellers to royally fleece them.
Too many people keep moving here.
With or without jobs, they won’t stop coming.
‘It’s simple mathematics. People aren’t bringing in enough to pay those bills and something has to go.’
That simple mathematics will become increasingly brutal as wealthy, well-paid Baby Boomers leaving the workforce gradually sell their empty nests to underemployed, unwed, overly-indebted twenty somethings at steep price discounts.
Sacramento Housing Demand Collapses 10% In A Single Month; Down Every Year Four Years Straight
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Contra Costa County CA Enclave Housing Demand Collapses A Whopping 23% In A Month
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