November 8, 2013

A Kind Of Mental Illness

It’s Friday desk clearing time for this blogger. “‘Some sellers are acting like their house is a Louis Vuitton store and are sort of saying, ‘If you can’t afford it, don’t walk into my house,’ said Patty Da Silva, owner of Green Realty Properties in Davie, Fla. Letting the seller know why you want to live in the property they once called home improves your chances of winning a bid. That’s how home buyer Ann Banks recently landed a contract on a Cooper City, Fla., home.”

“‘I wrote a letter to the sellers and said that I wanted to be close to my grandchildren and that their home was so beautiful, so spacious and close to their school,’ Banks said. If you are not sure what to write the seller, speak from the heart, Banks said. ‘Let them know how important the house is to you, how special it is,’ she said. ‘Let them know you are going to take good care of it.’”

“According to Trulia, median home prices in Palo Alto have gone up 16.8 percent in the last 12 months, with the price per square foot jumping 23.4 percent in that time to $1,107. Local realtors have attributed that rise partly to the impact of Chinese buyers who are using cash to buy houses a continent away, often sight unseen. ‘I just sold a house yesterday where there were four people from China interested, and none of them had seen the house,’ said. ‘There has been an impact on market values because they’re all coming with cash and they know that in order to beat the other four, you need to bid it up.’”

“According to Patrick Chovanec, former professor at Tsinghua University, vulnerabilities have been driving wealthy Chinese to invest abroad. ‘Wealthier people in China have a sense of political insecurity, that if you get on the rich lists or attract too much attention bad things can happen to you,’ Chovanec explained. ‘So why not take at least some of their money and put it overseas? If the winds change, or if there is ever a crackdown, at least you won’t be poor.’”

“House prices are surging thanks to low interest rates and investor-led demand. Offshore buyers, mainly from China, are also becoming a driving force in the property market in Australia. In Sydney, supply can’t keep up with demand, and there is talk of a housing boom and even a bubble. Robert Mellor, from property forecaster BIS Shrapnel, has concerns about the over-supplied Melbourne market. ‘The biggest danger is where those overseas investors come in and don’t look at the fundamentals,’ he says. ‘There’s an excess supply developing and there won’t be enough people to occupy those dwellings.’”

“Reserve Bank Governor Graeme Wheeler shies away from saying the housing market is a ‘bubble’ but prices in Auckland are ‘certainly inflated.’ ‘My concern is that in this country, (New Zealand) there is a general feeling amongst many that house prices are always a good investment, that they will always continue to rise in price,’ he said. ‘The biggest risk [for New Zealand] is if anything happened to the Chinese economy.’ Over 235 years in the United States, bank loans had generated about US$14 trillion worth of assets. China had done the same in just the past five years. ‘So if anything serious happened to the Chinese financial system, it would rapidly feed through the Chinese economy and certainly affect New Zealand and Australia quickly,’ Wheeler said.”

“The credit crisis arising from a flood of loans advanced by underground banking services looms over Wenzhou, the mainland’s private business capital. It has wrecked the city’s property sector, driving some speculators to suicide. Wang Ye, a businessman in his early 30s, is choked up with emotion when he talks about the roller-coaster ride taken by the housing market, which cost him more than 1 million yuan (HK$1.27 million). ‘I borrowed money and bought two flats in 2010, when everybody was upbeat about the property market,’ Wang said. ‘Now I am debt-ridden and I have paid a high price for those stupid decisions.’”

“Wenzhou people have a deep-rooted habit of speculating,’ said Zhang Wei, an entrepreneur. ‘They are quick to buy and invest in any product whose price has the potential to rise in future.’ Unfortunately, those bold Wenzhou residents inflated property prices into a bubble that burst with tragic consequences.”

“Toronto condo developers are ramping up efforts to attract buyers, offering their biggest incentives yet amid a market glut. There are some 300-odd new condominium projects that are actively selling units in the Greater Toronto Area, says Mimi Ng, VP of marketing at Menkes Developments Ltd. ‘That’s a lot of developers with a lot of product that’s still sitting on their books that they have to sell.’”

“Sales of these units are being watched closely in Montreal, where real estate players are increasingly concerned a similar glut is forming. ‘In the spring of last year the market was a bit frothy and we saw a lot more undisciplined buying activity happening, and a lot of that was investor driven,’ Ms. Ng says.”

“Home prices in Oregon and the Portland area remain slightly overvalued, according to Fitch Ratings. Nationally, home prices are about 17 percent overvalued, Fitch says, driven largely by major price increases in coastal California. Home prices there are nearing their housing bubble peaks and may soon set new records. Investors and flippers may be contributing to a run-up in prices not supported by actual demand. That means recent double-digit annual increase are unlikely to continue.”

“‘A lot of people have gotten really excited about rapidly rising prices,’ said Stefan Hilts, a director at Fitch. ‘We’re just trying to plant a flag of caution.’”

“The combination of dramatic price increases and fewer bargain deals has been causing investor activity to wane. Investor purchases made up 22.7 percent of all sales in September — down from 23.7 percent in August and the peak of nearly 40 percent in July 2012. The local housing market overall has actually ‘cooled dramatically’ since July, says Michael Orr, real estate expert at Arizona State University’s W.P. Carey School of Business. ‘The main change is a steep fall in demand, which we can see in the 12 percent drop in single-family home sales activity just between August and September alone … The sudden weakness in owner-occupier demand since July is unusual and unexpected,’ said Orr.”

“Nobel Prize winner Dr Robert Shiller was asked when a financial bubble can be defined and how you can tell when there is a bubble. He repied as follows: ‘The core of it is that a bubble is a kind of mental illness. It has to have story: a price goes up, possibly speculatively, which draws attention, people wonder why the price is going up. Then others try to use this. They try to get people interested in the product, and so chase the price up even further.’”

“A new way of measuring poverty reveals California has by far the biggest share of people in economic despair, eclipsing states such as Mississippi and Louisiana, when housing and other costs are factored. The alternative yardstick, known as the supplemental poverty measure, found nearly 2.8 million more people are struggling across the country than the traditional benchmark shows. Using the alternative measure, California had the highest poverty in the country between 2010 and 2012 — 23.8 percent — followed by the District of Columbia and Nevada.”

“‘Anyone who has moved to California from somewhere else knows the dramatic increase of the cost of living,’ said Ann Stevens, director for the Center for Poverty Research at UC Davis. ‘It’s not more surprising that California looks more impoverished. It is really driven by the cost of housing.’”




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125 Comments »

Comment by Housing Analyst
2013-11-08 05:58:56

“The sudden weakness in owner-occupier demand since July is unusual and unexpected,’ said Orr.””

No Mr. (wh)Orr…… it was entirely expected and quite typical.

Not that demand hadn’t already cratered before July.

Comment by brother_jimmy
2013-11-08 08:21:59

It shouldn’t be a surprise. That’s what happens when out-of-state speculation gets confused with organic demand.

On my old street, selling price of one home:
2000: 165k
2006: 340k
2011: 135k
2013: 280k

Haven’t heard any stories of bidding wars from Phoenix lately.

Comment by Ben Jones
2013-11-08 08:35:22

http://www.movoto.com/statistics/az/phoenix.htm#city=&time=1Y&metric=Inventory&type=0

For whatever reason, Orr jumped into the cheer-leading cut out. Now he’s stuck with it. “There’s no bubble, it’s impossible”. Start the climb-down Orr, it’s gonna be a long slide.

Comment by brother_jimmy
2013-11-08 08:45:00

I recall a few months ago seeing a PHX rea mentioning that it couldn’t be a bubble because “There has never been two bubbles in the same asset class in a single generation”. Well, there’s a first time for everything.

Recall back in 2012 I mentioned flying between Chicago and Phoenix in first class cabin each week - everyone, EVERYONE was talking R/E and speculation. I’ll be on the same flight next week - I’ll speak loudly how I’m getting out of my R/E investment while the getting is good, and see what kind of response that brings.

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Comment by Ben Jones
2013-11-08 08:58:00

‘There has never been two bubbles in the same asset class in a single generation’

That was Orr that said that. It gets down to a serious question, that IMO is answered by, it’s the same bubble. It never went away. Look at how quickly some re-embraced gambling in real estate.

Let me ask this; did China have one bubble, or two? Or Canada, or Australia, or New Zealand, or London, or Dubai? You’ll hear lots of people say China has a bubble, but they don’t say, China’s had two bubbles in just a few years.

 
Comment by Whac-A-Bubble™
2013-11-08 15:14:19

“…it’s the same bubble. It never went away.”

Spot on — aided and abetted by top-down not-so-stealthy intervention.

 
 
 
 
Comment by AnonyRuss
2013-11-08 14:34:12

“2000: 165k
2006: 340k
2011: 135k
2013: 280k”

I think that the trend on a house on your old street in the Phoenix area is a pretty decent representation of price movement in the area as a whole. Maybe not quite as close to the late 2005/2006 peak in 2013 as your example, but certainly way too close to be considered a safe purchase price. Depending on condition, many of the 2010/2011 purchases were probably reasonable, but paying 50 to 100% more than those prices two years later is absurd.

Orr’s “Cromford Report” on market conditions is still touted by many Phoenix UHS. Because it uses local MLS data, I think it was originally free to MLS members a couple of years ago, but it now requires a separate subscription so I see fewer postings of the updated charts.

He actually also has a “Good News” index on his website, so UHS or media can find pre-fab articles/arguments on anything that is “good,” which I am guessing means more transactions, higher prices, and fewer foreclosures. It requires a subscription to read them all, but I think that you might find various versions of the spin in AZ Republic articles or local realtor blogs.

My funniest recollection about Orr (funny to me) was some article he appeared in 2 or 3 years ago. As he was discussing his Arizona market insights, there were photos of him poking around a Queen Creek (yes, that Queen Creek) foreclosure that he had purchased as a speculative venture. It did not seem like a high integrity move for the new go-to guru/ASU data man, but I doubt that I would have found him all that credible either way.

Comment by Ben Jones
2013-11-08 14:43:18

‘many of the 2010/2011 purchases were probably reasonable’

Phoenix was getting close. Had prices stayed there or drifted up/down by negligible amounts, and the economy healed organically, they’d be having a renaissance by now. Cheap housing would have benefited all. But I went down there in summer 2010, and sure enough, the trustee sales were a circus. Now, they’ve blown prices too high.

One thing about Phoenix; most of the houses are freaking old. Probably cost $15k to build. Now 40-60 years later and they want $80k or more?

Comment by Whac-A-Bubble™
2013-11-08 16:00:32

How about an extra $500K for a San Diego home that cost $50K to build thirty years ago?

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Comment by brother_jimmy
2013-11-08 15:56:44

Yes, that was one house in N. Scottsdale, but I feel the movement signifies exactly what happened in Phoenix, and what is wrong with the market as a whole.

Median incomes are 75k in that zipcode (85260), so realistically $135k might have been slightly low. But there are numerous homes in this subdivision that sold around that price, and then suddenly skyrocketed.

I wish that prices were normal based on local incomes, but they’re propped up because of rampant speculation from out-of-state investors.

 
 
 
Comment by Housing Analyst
2013-11-08 06:03:35

‘The core of it is that a bubble is a kind of mental illness. It has to have story: a price goes up, possibly speculatively, which draws attention, people wonder why the price is going up. Then others try to use this. They try to get people interested in the product, and so chase the price up even further.’”

Clearly it is a mental illness.

Answer the question;

What would make an otherwise rational, reasonable intelligent person go off the rails and make astonishingly distorted statements and lose all perspective, even at their own peril?

Comment by Whac-A-Bubble™
2013-11-08 16:03:55

“What would make an otherwise rational, reasonable intelligent person go off the rails and make astonishingly distorted statements and lose all perspective, even at their own peril?”

When everyone else is dancing, you have to join in and keep going until the music stops. Otherwise forget about even attending the party.

Insanity is the exception in individuals. In groups, parties, peoples, and times it is the rule.

– Friedrich Nietzsche

 
Comment by Whac-A-Bubble™
2013-11-08 19:17:36

A good term to sum up the folks making the massive investing error is “deviant overconformity.” Since everybody else is out buying houses, it must be a good investment idea; hence there is a massive pile-on effect even as homes get increasingly overvalued.

 
 
Comment by Overtaxed
2013-11-08 06:22:33

““‘I wrote a letter to the sellers and said that I wanted to be close to my grandchildren and that their home was so beautiful, so spacious and close to their school,’ Banks said. ”

I swear to god, if someone made an offer on my house and included a letter like this, I might come back and tell them that the price just went up 10K because I had to read their sob story about how they really want to live here. Buying houses (or cars, or anything else really) is a business transaction. You don’t bring emotion into it unless you want things to end very badly for you (this goes for both the buyer and the seller). This kind of stuff just drives me nuts.

““Toronto condo developers are ramping up efforts to attract buyers, offering their biggest incentives yet amid a market glut. There are some 300-odd new condominium projects that are actively selling units in the Greater Toronto Area, says Mimi Ng, VP of marketing at Menkes Developments Ltd. ‘That’s a lot of developers with a lot of product that’s still sitting on their books that they have to sell.’””

They better ramp up efforts. Because they are heading for a crash that will make Florida 2006 look like a bastion of value. I’ve mentioned it before but when I any of the housing shows in Canada my jaw just hits the floor. What are the those people thinking?? 500 dollars a sq/ft for a shack 20 minutes outside of Toronto? You do realize, that’s Toronto, right? It’s not NYC. It’s not San Diego. Shoot, it’s not even Denver or any of the other 2nd tier cities in the US that have houses all around them at 100-200/sq/ft. It’s CANADA, not Ibiza people. There’s land everywhere. Everyone doesn’t want to live there (in fact, most people don’t want to live there)!

Comment by aNYCdj
2013-11-08 07:59:50

So its OK to over pay by 10-15% but its nuts to overpay by 25%…is that what you are saying Ms. Ng?

———————
In the spring of last year the market was a bit frothy and we saw a lot more undisciplined buying activity happening, and a lot of that was investor driven,’ Ms. Ng says.

 
Comment by inchbyinch
2013-11-08 10:09:48

Overtaxed
While I agree with you on the buyer’s “pick me” letter, I’ll confess I did it. 9 offers in, we wanted the fixer, and we were all cash. Once we got the deal, we were tenacious in using the inspection report to knock the price down. The letter was the emotional hook that helped us with a very religious seller’s representative. I got a handle on the opposing party and worked it accordingly.

Comment by Overtaxed
2013-11-08 10:40:12

” very religious seller’s representative. I got a handle on the opposing party and worked it accordingly.”

Good for you. I’m all for using any advantage you can get in a negotiation; I’d write a letter like that myself if I thought it would matter. My problem, I just don’t understand other people, so it’s hard for me to think that someone would take 1,000s less for a property because of a good note. I wouldn’t take 100 dollars less for something I was selling, be it a house or anything else because I “liked” the buyer. That’s just not how I operate, arm’s length transaction with everything, remove all emotion from the asset your selling or buying.

If I found out the seller of something I wanted to buy was religious I might dress my wife as a nun to get 10 bucks off. ;) Actually, I’d probably shut my mouth and let me wife do the talking, religious babble (God wants you to have this house) just makes my hair stand on end. I’ll blurt out something derogatory, tell them I’m an atheist and hand them a copy of Atlas Shrugged. ;) I always have my guard up when dealing with other people, and that goes double for anyone who’s overtly religious. I’d prefer to deal with bankers than priests, that’s for sure. At least I understand that they are greedy amoral sharks; I know how to operate with those kinds of people. Those that profess to be all loving and then try to sell you a house that’s in a sinkhole or with the roof about to fall off.. That’s what I don’t get.

Comment by inchbyinch
2013-11-08 11:14:01

Overtaxed
Dealing with us isn’t a neophyte leash game. We sat down, figured out how to work the situation, willing to say drop dead and proceeded with our dance.

We had done the letter thing before for a relocation home (the seller was a well paid Chemist Ph.D.) and he thought we’d pay full price. We had him chasing us for a deal we decided would not work. Screw him and his “full price or no deal” scenario and then giving up $15K on an overpriced tract home.

So this time we mapped out a plan to get the house on our terms or close to.

Yeah, religious people are a different flavor. Religion vs. Reality= you are what you say and do. Forgo the rituals, superstitions and hocus pocus.

btw, I started to feed the squirrels (by choice) and the clean up became overwhelming. I had shells floating in the pool, and so forth. Messy little critters.

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Comment by Housing Analyst
2013-11-08 12:04:13

… and you still overpaid by how much…… $150k? 200k? More?

 
Comment by Dale
2013-11-08 15:02:08

I’d feed the squirrels all right …….to my kids!!! Bwahahahaha (laughs maniacally)

 
Comment by incbyinch
2013-11-08 19:54:44

Dale
My other half has eaten squirrel as a young boy in Kansas. He likes it. I named the two loafers in our backyard Sinatra and Sammy, with no plans to eat them.

My husband has also eaten Rabbit. Big Bugs Bunny fan here. I’ll pass on rabbit as well. “What’s Up Doc?”

 
Comment by Bill, just South of Irvine, CA
2013-11-09 18:19:20

Seller was a Phd Chemist yet his representative was religious?

That does not compute.

 
 
 
Comment by Puggs
2013-11-08 11:31:19

I have pity for people who have to write a letter and then take out a loan to pay for their mistake. I’m not impressed unless they paid cash.

Comment by Dale
2013-11-08 15:06:16

Every single house we rented we always found reasons why we would not want to buy that house after living in it for a while. EVERY SINGLE ONE!!!

Eventually it would just be time to move on.

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Comment by Housing Analyst
2013-11-08 18:02:03

Cash or finance…. if you pay current prices or past prices going back to 1997, you’ll get or got ripped off.

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Comment by scdave
2013-11-08 14:58:54

9 offers in, we wanted the fixer, and we were all cash. Once we got the deal, we were tenacious in using the inspection report to knock the price down ??

Hmmmm….9 offers and you used secondary negotiation to knock the price down…Sounds suspicious to me…#1. with that many offers there would likely be a qualified back-up…#2. if the seller (or seller representative) did not have you on a very short leash (time) then they deserve what they got in you negotiating the deal down later…

Comment by inchbyinch
2013-11-09 11:37:21

scdave
House needed work and would not qualify for a FHA loan. And we won the hearts of the players. Secondly, the Trustee had assisted living bills on the owner, and she was in a bind. We were a guarantee close, the only cash deal.

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Comment by Housing Analyst
2013-11-09 19:46:44

See that? Everything you say is suspect.

Here me now?

 
 
 
 
Comment by steadykat
2013-11-08 10:31:02

Yea, but are they going to keep feeding the squirrels that live on the property?

 
Comment by Puggs
2013-11-08 10:33:00

Totally right on. It’s like going to a car salesman and telling him you’d do whatever it takes to get into a red car. Stupid.

 
 
Comment by Taxpayers
2013-11-08 06:35:56

inventory back down in my hood 22151 - bama be hiring ,yo

u be payin

Comment by goon squad
2013-11-08 08:54:26

Is that a sarcastic attempt to speak Ebonics?

If so, it is racis. Bad racis, bad.

 
Comment by inchbyinch
2013-11-08 10:15:05

Springfield, VA -Zip 22151
Say, are there Sears or Montgomery Wards (Wayward) kit homes in your town?

Comment by oxide
2013-11-08 10:49:17

Anything from the 1920’s or 30’s is far closer to the city line, not out toward the Beltway. The Beltway itself was built in the 1950’s, followed by a rash of cold-war subdivisions straddling it. There are some Craftsman homes on major arteries going out of town, the country houses of the day, I guess, but nothing on a grand scale.

Try towns on the DC border border: Silver Spring, Chevy Chase, or in DC itself. Takoma Park near the metro station is practically bursting with gorgeous bungalows.

Comment by inchbyinch
2013-11-08 12:08:22

Thanks, oxide.
I’ve been fascinated with Rosemary Thornton’s “Modern Sears Home” blog. Who knew people built catalog kit homes starting in 1908. IIRC there were 130 models to chose from, Victorian, Prairie, to Bungalow styles. Most were built within 2 miles from railroad tracks. A railroad car loaded with your home parts. Can you imagine how many Model T truck trips hauling 12,000 pieces of the kit it took? Good Lord! Not to mention building your own home, recruiting family, friends to lend you a hand.

Standard Oil and DuPont bought the kits and had them built for their workers as well. Great stuff and part of our history.

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Comment by Housing Analyst
2013-11-08 12:17:33

Keep going….

We want to hear more pining for Little House On The Prairie.

 
 
 
 
 
Comment by Whac-A-Bubble™
2013-11-08 06:44:25

“‘Let them know how important the house is to you, how special it is,’ she said. ‘Let them know you are going to take good care of it.’”

Let them know what a moron you are and just how eager you are to bend over and take it from behind.

 
Comment by Whac-A-Bubble™
2013-11-08 06:46:06

When this blows up, it will be utterly spectacular to behold:

“Local realtors have attributed that rise partly to the impact of Chinese buyers who are using cash to buy houses a continent away, often sight unseen. ‘I just sold a house yesterday where there were four people from China interested, and none of them had seen the house,’ said. ‘There has been an impact on market values because they’re all coming with cash and they know that in order to beat the other four, you need to bid it up.’”

Comment by snake charmer
2013-11-08 08:20:00

“Over 235 years in the United States, bank loans had generated about US$14 trillion worth of assets. China had done the same in just the past five years.”
________________________________/

Yeah. I mean, there’s no problem here, right?

Back in 2006, I remember thinking that I’d never seen greed like this before — not during the late 1980s, and not during the tech stock bubble, which were the two prior high-water marks for avarice in my middle-aged lifetime. But with respect to the present, I’ve never seen failure like this.

We are living in an era of absolutely extraordinary political failure, almost worldwide. And when the social consequences finally arrive, whenever that is, it would not surprise me if millions of people lose not just their money, but their lives.

 
Comment by scdave
2013-11-08 15:05:28

When this blows up ??

Blow up it may but the statement is correct…And its not just Chinese…They are coming from many different countries…I have suspected and still believe that some of it is a money laundering racket…

Put dirty money in, refinance later and pull clean money out…

 
 
Comment by Whac-A-Bubble™
2013-11-08 06:47:53

‘So why not take at least some of their money and put it overseas? If the winds change, or if there is ever a crackdown, at least you won’t be poor.’

Sounds like U.S. residential housing is the new Swiss bank account?

Comment by In Colorado
2013-11-08 08:15:29

As much as some Americans think that Obama is going to declare himself dictator and round up millions of dissenters, people who really do live in totalitarian nations see us as a paragon of stability and safety.

Comment by goon squad
2013-11-08 08:52:08

“declare himself dictator”

I’m beginning to think he’s just a setup for the coming Clinton gulag. He’s just an errand boy, president in name only, as the DHS thug army parallel government (helped by the eyes and ears of NSA) sets up the FEMA gulag. And yes, they will round up millions of dissenters.

Comment by Dale
2013-11-08 15:24:50

Considering all the things/scandals that the white hous had no knowledge of, I think you might be right.

So it will be Hillary and the Chelsea?

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Comment by scdave
2013-11-08 15:09:31

+1 Colorado…I agree…Its a diversification angle seeking perceived safety…

Comment by Dudgeon Bludgeon
2013-11-08 19:54:35

No. It is pure speculation. Chinese buyers are buying where there is the greatest and most rapid appreciation. The “story” that they are looking for good schools and political stability is realtor spray. They are priced out of the first tier cities at home where appreciation is highest so they go to the next best market where they can easily do biz via Mandarin speaking contacts.
Diversification? The Chinese don’t know what that means. Oh yea, they buy gold too - at every dip.

15% of Chinese own more than one dwelling. 6% own more than three.

When the Chinese bubble pops it will take the planet with it. And it won’t happen through simple economic processes either, it will happen through political and social upheaval.
Pay close attention to China. EVERYTHING hinges on it. The euro zone? Insignificant. US housing? Again, insignificant.

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Comment by Bill, just South of Irvine, CA
2013-11-09 18:25:43

At the same time, those same people are used to bending over and getting reamed from behind. They become U.S. citizens, they become Democrat Pelosi supporters. Most California Asian Americans are suspected as having voted for The One in 2008 and 2012.

 
 
 
Comment by Whac-A-Bubble™
2013-11-08 06:51:10

“‘The biggest danger is where those overseas investors come in and don’t look at the fundamentals,’ he says. ‘There’s an excess supply developing and there won’t be enough people to occupy those dwellings.’”

Why is this a danger for the overseas investor if they are merely buying for the sake of laundering dirty money or for insuring against unfavorable political developments back home? Nobody buys insurance expecting to make money off the purchase!

 
Comment by jose canusi
2013-11-08 06:58:33

“That’s how home buyer Ann Banks recently landed a contract on a Cooper City, Fla., home.”

“‘I wrote a letter to the sellers and said that I wanted to be close to my grandchildren and that their home was so beautiful, so spacious and close to their school,’ Banks said. If you are not sure what to write the seller, speak from the heart, Banks said. ‘Let them know how important the house is to you, how special it is,’ she said. ‘Let them know you are going to take good care of it.’”

Are you fuggin’ kidding me? We’re back to the “feed the squirrels” meme? At least that was in California. Now it’s Cooper City, Florida? Cooper City????????????? I mean, it’s a semi-nice area, nothing special, though.

Comment by goon squad
2013-11-08 07:09:16

“how special it is”

Seriously, I just threw up in my mouth reading that.

 
Comment by In Colorado
2013-11-08 08:17:25

Are you fuggin’ kidding me? We’re back to the “feed the squirrels” meme?

It’s localized. In many markets sales have cooled and buyers have vanished. Not everyplace is San Jose or Highlands Ranch.

Comment by goon squad
2013-11-08 08:36:56

Highlands Ranch is for plastic yuppie scum.

Meanwhile the real Highlands (centered on West 32nd and Lowell) is on fire. 2BR Cape Cods on tiny lots selling for $300K+. The gentrification is oozing into Sunnyside and Sloan’s Lake.

My own South Denver nabe has visibly gentrified in the 3-1/2 years I’ve lived there. The cyclists on the streets riding $5,000 bicycles are replacing cyclists who only bike because they can’t afford cars or have DUIs. The obese, stroller-pushing Latina women (with another few sprogs hanging off them) are being replaced by designer stroller pushing white MILFs on the sidewalks.

The future’s so bright, I gotta wear shades.

Comment by Overtaxed
2013-11-08 10:48:28

Ahh yes, cycling, one of the ultimate elitist sports. My bike costs more than your car, but I’m going to ride this instead of the car just because I feel like it. Out of my way illegal immigrant riding your bike to work, I have places to go (well, not really, just making a loop) and people to pass!!

Yes, I’m a cyclist, and yes, I really enjoy it. However, it’s funny down in my area (Jupiter, FL), out of the dozens of bikes I see on every ride, probably 50% or more of them are 5-10K jobbers. And then, if I get in my car and actually drive somewhere “useful” (instead of just riding through neighborhoods like I do when I’m riding for fun) I’ll see a mass of bikes parked in front of the grocery (or liquor) store that’s worth less than one carbon wheel from the bikes I was just riding with. ;)

Biking has to be 2nd only to golf as a total “snoot” sport. I like it because I can be alone, get some exercise and see the landscape rip by, I could care less about the snooty aspect of it. That said, I’m not immune to peer pressure (says the guy with 4 Chris King hubs on order to build up new wheels that won’t make a lick of difference in my performance, but will let others know how cool I think I am)..

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Comment by snake charmer
2013-11-08 11:55:51

At least the snoots are riding. A retired relative has a sailboat that he sails nearly every week, weather permitting. When last I visited, we went down to the marina and I asked how many of the boats simply sit there unused. He said most of them.

I ride my basic Trek from time to time. I’ve read that bike shop mechanics are second only to IT people in terms of their condescension, but that hasn’t been my experience, at least not yet.

 
 
Comment by scdave
2013-11-08 15:14:07

LOL Goon…That was funny…

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Comment by snake charmer
2013-11-08 08:43:15

I had the same reaction. I looked up the address after going to the Broward County Property Appraiser website, and the house she bought, for $386,000, is an unremarkable Florida suburban residence not worthy of a tribute.

 
 
Comment by Whac-A-Bubble™
2013-11-08 07:08:22

‘So if anything serious happened to the Chinese financial system, it would rapidly feed through the Chinese economy and certainly affect New Zealand and Australia quickly,’

I wonder what kind of “serious happenings” he had in mind?

Nov. 6, 2013, 11:01 a.m. EST
Why China may change forever this weekend
Major reform expected from Communist Party Plenum
By Michael Kitchen, MarketWatch

Interest rates and the housing bubble

China is famous for its housing bubble. With interest rates on savings so low, real estate is a very popular investment option for those with funds, sometimes resulting in “ghost housing developments” where the owners sit on uninhabited investment properties as they wait for prices to rise.

The government is of course concerned, having launched a long series of curbs on the property market in recent years, but until the banking sector — dominated by the big state-owned players — offer a viable investment alternative, the housing bubble may remain a growing danger to China’s economic future.

Enter People’s Bank of China Gov. Zhou Xiaochuan. The Wall Street Journal reported this week that the central-bank chief shockingly lambasted party leaders late last year over the need to provide depositors with higher interest rates and to open up the financial system to more competition.

Comment by snake charmer
2013-11-08 08:27:53

These reports of possible Chinese reforms are akin to speculation that the Fed might change course on QE. Both are a staple of financial reporting, and no one should hold his or her breath. China can’t voluntarily stop and neither can we.

Comment by Ben Jones
2013-11-08 10:45:57

‘With China’s debt swelling from $9 trillion to $23 trillion during the past five years, Rothschild Wealth Management feels the credit bubble will burst at some point.’

Comment by Ben Jones
2013-11-08 12:15:05

‘Snippets of information received in recent weeks have again raised concern over whether the Australian economy has become more structurally imbalanced, raising the likelihood of a disorderly unwind down the track.’

‘The news that Holden is likely to join Ford in ceasing its Australian car production from 2016, along with the recent closure of the Electrolux refrigerator factory in Orange and today’s announced closure of the Qantas heavy maintenance base at Avalon, is set to place further pressure on Australia’s manufacturing sector, which already looks to be in terminal decline, with the total number of people employed in manufacturing and the industry’s employment share falling sharply over the past 30-years just as manufacturing capital expenditures are at an all time low.’

‘While all will remain fine as long as Chinese demand for Australian commodity exports remains voracious, we risk a protracted downturn in the event that China’s economy slows unexpectedly and/or it rebalances abruptly away from investment-led growth.’

‘While it may not seem apparent at the moment, given the cyclical bounce from record low interest rates, the risks facing the Australian economy are growing from an increasing lack of diversification and heightened dependence on one sector (construction) of one economy (China).’

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Comment by scdave
2013-11-08 15:20:48

Wow Ben…Nice post…I had know idea that China had that much Debt…There is always talk about the Trillion they have in USA bonds but look at their Debt…Who the hell holds that Debt…Is it in the hands of the Government ??

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Comment by Bill, just South of Irvine, CA
2013-11-09 18:31:55

Yeah this is an interesting angle I did not know existed.

 
 
 
 
 
Comment by Whac-A-Bubble™
2013-11-08 07:15:20

“Investor purchases made up 22.7 percent of all sales in September — down from 23.7 percent in August and the peak of nearly 40 percent in July 2012.”

I assume that comment (in the Phoenix Business Journal) was specific to the Phoenix housing market? Have other areas around the U.S. seen a similar precipitous year-on-year drop in the share of purchases by investors?

 
Comment by Combotechie
2013-11-08 07:23:03

“A lot of people have gotten really excited about rapidly rising prices.”

Rapid rising prices translate into rapidly rising VALUES and therefore one must get in at any cost else he will be priced out - he will be valued out - and once you are valued out you will never be able to get in.

But then again, if the prices go back down then that must mean the values go down and then the incentive for buying goes away if the values go down because few people would want to spend good hard-to-get money on something that has a decreasing value, and that’s because “People are smart”.

(No, people are crazy.)

Comment by Whac-A-Bubble™
2013-11-08 07:42:06

“But then again, if the prices go back down then that must mean the values go down and then the incentive for buying goes away if the values go down because few people would want to spend good hard-to-get money on something that has a decreasing value…”

That’s when the gubmint steps up to ensure prices can’t ever go down.

 
Comment by Blue Skye
2013-11-08 07:43:14

It’s a kind of mental illness.

 
 
Comment by Taxpayers
2013-11-08 07:49:21

Oct jobs report is decent- let’s chop the 800,000 non essentials for good

 
Comment by Doom
2013-11-08 08:00:01

Who were the rational people who paid over sticker for the ” got to have a Pt cruiser crowd”?

It’s a world of over 7 billion people, you are going to have a kind of mental illness crowd who throw rational thinking out the window, always will be that way.

Comment by In Colorado
2013-11-08 08:23:26

Who were the rational people who paid over sticker for the ” got to have a Pt cruiser crowd”?

Oh yes, I remember that. For an unremarkable car with a dud power train.

Comment by Puggs
2013-11-08 16:38:52

A dodge Neon with a HUGE A$$.

 
 
Comment by Bill, just South of Irvine, CA
2013-11-09 18:34:38

Sorry to anyone here who has one, but I got tired of the rental car company giving me PT Cruiser cars. A very ugly humbug car. That I started asking for something else. Kia Souls are almost as bad.

 
 
Comment by Ben Jones
2013-11-08 08:30:08

‘Homes sales were up nearly 7 percent in the Nashville area in October versus a year earlier, but last month did mark the first time in nearly three years that monthly year-over-year home closings didn’t improve by double-digit margins.’

“You’re really seeing a leveling off of the market and sort of a return to normalcy,” said appraiser Richard Exton with Manier and Exton in Nashville.’

‘Price Lechleiter, president of the Greater Nashville Association of Realtors, which releases sales figures, said closings have been up each month this year despite slower growth. He the latest 6.8 percent increase for October reflected in part how declining interest rates pulled some buyers back into the market.’

“When you’ve had really high sales for a long period of time, it’s not unusual to have a stall,” he added, calling previous double-digit increases unsustainable.’

Unsustainable. But for 3 years. I wonder if being unsustainable for 3 years might have resulted in people paying too much?

It’s freaking Nashville. When this started, people would ask me, ‘it’s really picking up in…’ I would reply, yeah, everywhere all at the same time. How do almost all markets in the US take off for the moon at the same time?

Comment by scdave
2013-11-08 15:27:08

How do almost all markets in the US take off for the moon at the same time ??

I have asked that question so many times in my mind…Its not just USA either…As you have exposed Ben, its world wide…Easy, cheap money is the common denominator…

 
 
Comment by (Neo-) Jetfixr
2013-11-08 09:05:20

What i want to know is what, exactly, these “overseas” buyers are expecting for their money.

An investment/cash flow generating property? Or a safe haven/green cards for themselves and the extended family, if the SHTF in China?

Here in BFE, all but the most exclusive neighborhoods/residential areas are “bilingual”. I was reminded of this on Halloween, when the nabe was invaded by full size vans, packing 4-5 Latinas and 10-15 kids that nobody has ever seen before, hitting the doors with no costumes (or a most, some kind of cheap mask), and carrying giant pillowcases to load up on Gringo candy handouts.

Yeah, a minor irritation…….but when you multiply this by several irritations like this every day……….

The natives are really going to get pizzed if they and their kids get outbid for homes by across the Pacific money.

“Diversity” ain’t all that

Comment by In Colorado
2013-11-08 09:28:11

The natives are really going to get pizzed if they and their kids get outbid for homes by across the Pacific money.

It’s not like there isn’t room in flyover to build more houses.

 
Comment by In Colorado
2013-11-08 09:30:45

I was reminded of this on Halloween

We don’t do Halloween. We barricade the front door with a bench and leave the porch lights off. The doorbell didn’t ring a single time.

Comment by Strawberrypicker
2013-11-08 19:17:17

The life of the party. Cripes, live a little.

Comment by Bill, just South of Irvine, CA
2013-11-09 18:36:49

Lots of people do the same. Most people I know make it look as if no one is home.

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Comment by cactus
2013-11-08 09:38:49

The natives are really going to get pizzed if they and their kids get outbid for homes by across the Pacific money.’

Isn’t the first time the natives got pizzed because of what emigrated from across the Ocean.

Comment by (Neo-) Jetfixr
2013-11-08 10:08:16

Won’t be the last time some of the “pioneers” got scalped, either.

From what I’ve seen of “diverse” cultures from overseas/across the border, what we are getting isn’t an improvement.

We need more “Best and brightest”……. as long as best and brightest isn’t the bankster class. We’ve had more than we can stand of their “innovation”.

Fewer “wretched refuse” and “economic locusts”.

Comment by (Neo-) Jetfixr
2013-11-08 10:20:12

Somebody needs to explain to me how this works.

Problem: High unemployment and low pay for the worker bees

Solution: Bring in more people looking for work.

How is unchecked/uncontrolled immigration going to help this?

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Comment by steadykat
2013-11-08 10:38:32

It “helps” in hastening the collapse of the middle class.

 
Comment by Housing Analyst
2013-11-08 10:47:13

That already happened.

Welcome to 2013.

 
 
Comment by Bill, just South of Irvine, CA
2013-11-09 18:38:34

It is not about labor shortages. It is to make them become Democrats to vote for even more taxes and more redistributed wealth.

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Comment by scdave
2013-11-08 15:32:48

Or a safe haven/green cards for themselves and the extended family, if the SHTF in China ??

Not sure about the green card but safe Haven….U-Betcha…Send kids to California universities (even High School) while they live in the house…Chinese student meets American Student…Get married or get pregnant…Either way they are here to stay…

 
 
Comment by Ben Jones
2013-11-08 09:07:19

‘A new way of measuring poverty reveals California has by far the biggest share of people in economic despair, eclipsing states such as Mississippi and Louisiana’

This just in:

‘Housing affordability fell for the sixth consecutive quarter in California, after reaching an all-time high in the spring of 2012, as significantly higher home prices shut out more California homebuyers during the third quarter of 2013, according to the California Association of Realtors (CAR).’

‘In San Diego, the percentage of homebuyers who could afford to purchase a median-priced, existing single-family home dropped to 27 percent in the third quarter, down from 32 percent in the second quarter and 43 percent in the third quarter of 2012, according to CAR’s Traditional Housing Affordability Index.’

‘San Diego homebuyers needed to earn a minimum annual income of $99,670 to qualify for the purchase of a $485,040 median-priced, existing single-family home in the third quarter.’

Poorer than Mississippi and Louisiana.

Comment by Housing Analyst
2013-11-08 09:10:23

Worse yet, poorer and living in a God forsaken sh°t hole like CA.

Comment by Ben Jones
2013-11-08 09:37:50

In light of this, consider that the stated policy of the federal government and central bank is revive the economy through higher house prices.

Is it any wonder so many people are on food stamps?

Comment by (Neo-) Jetfixr
2013-11-08 10:14:46

There is “stated” policy. Talk is cheap.

Then there is the real “defacto” policy.

If house prices fall/collapse, anyone who’s income depends on high house prices is screwed.

Those people vastly outnumber/outspend/outlobby those who would benefit. Simple as that.

As WOPR said, “The only way to win, is not to play the game.”

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Comment by Ben Jones
2013-11-08 10:21:06

‘anyone who’s income depends on high house prices… vastly outnumber/outspend/outlobby those who would benefit’

What? I’d say these used house salespeople and mortgage brokers, etc, are about 1% of the population. Maybe not even that.

We used to do just fine without $400,000 houses, you know. It won’t be the end of the world.

 
Comment by Housing Analyst
2013-11-08 10:46:01

“We used to do just fine without $400,000 houses, you know. It won’t be the end of the world.”

In fact it would be the beginning of a brand new one.

 
Comment by kenWPA
2013-11-08 11:06:05

I think the key is that a big part of the economy is based on increasing housing prices to some degree. Just not the insane increases that have been happening across a large part of the country for the last decade.

If home prices are going down or stagnate, it is very hard for the average homeowner to justify improvements or maintenance to their homes. It is much easier to make the decision to put a new roof, updated bathroom, landscaping, etc. into a house if you know that in five years time you will at least get your money back on the purchase, just due to increasing prices.

In an area of decreasing prices…why bother. Lotsa bankers, carpenters, hardware stores, lumber mills, etc rely on people buying, maintaining and improving homes for their jobs.

But I don’t think anyone needs a 400k house, and in most of the country those types of houses are for the people who like to think they are special.

 
Comment by Ben Jones
2013-11-08 11:21:51

This is basically the consumer based economy logic. I understand what Bernanke is trying to do. I still don’t think it will add anything to the economy. Reports like this suggest high house prices make us poorer.

Again, if high house prices made for a healthy, sustainable economy, it would never have fallen in the first place.

So house prices have gone up:

‘On the surface, the addition of 204,000 new jobs looks pretty good, in fact, it’s statistically above the 190,000 average of the last twelve months. “It’s a weird report” says Zachary Karabell, the head of global strategy at Envestnet and founder of River Twice Research. “It’s people tending bar. It’s lower wage retail jobs. It’s lower wage health services jobs” that the economy is creating, and “a lot of these are not particularly well paid and they don’t have a great future.”

‘And that’s a problem. Not only for the 14-million American who are still out of work and looking to get hired, but more broadly, it undercuts the entire economy. “If you’re earning $18,000 a year as a bartender, that’s not going to translate into massive consumer spending,” Karabell says.’

A comment:

‘There are Jobs out there…You Just Need:

Assistant Dishwasher Needed:

* Unemployed Need Not Apply
* Masters Degree or Higher
* H1B Visa Preferred
* 5+ Years Current Experience - (No Employment Gaps)
* Speak English and Spanish
* No Older Than 35
* Pass Background Check - (Criminal, Interpol)
* Pass Credit Check - (Score 2000+)
* Be Available 24 / 7
* Paid Holidays (Only If You Work Those Days)
* 1 Day Vacation After 5 Years
* $8.00 Per Hour After 1 Year Probation
* Insurance Not Provided
* Must Have Own Vehicle and Tools
* 2 Week Written Notice Before You Die

 
Comment by Housing Analyst
2013-11-08 11:47:48

If home prices are going down or stagnate, it is very hard for the average homeowner to justify improvements or maintenance to their homes.

Ken,

I think you’re tripping over notions that aren’t entirely founded in reality.

Houses prices DO go down and they always have(housing fraud years excluded) as a result of depreciation. The only way to offset depreciation is to maintain it by throwing more $$$ at it, regardless of price point.

The mental gymnastics debtors do to convince themselves a house is somehow money in the bank is the core of the problem and it’s created intentionally by the Fed.

The end result of those gynamstics is anguish. The losses are large even if you acquired a house at no cost. If you paid a massively inflated price (more than say $40/sq ft), the loss is tremendous. If you finance it? The loss is irrecoverable.

 
Comment by kenWPA
2013-11-08 12:04:35

I think housing in some of the more desirable areas of the country is way too high priced, but in many other parts of the country it is not too crazy.

The problem is that wages are stagnate or going down as property taxes, health care/insurance, education, food and other things continue to get more expensive.
We have gotten to the point where the addition of women to the workforce adding to household incomes has been outpaced by wage deflation and price inflation.

But where is the spread going? The increased prices and reduced wages are going somewhere. My guess is that they are going into government jobs, pensions and future obligations and to the 1% ers that own most of the countries assets.

The middle class is becoming extinct. The middle class is rapidly sliding downwards, but putting up a good show as long as the credit score allows.

 
Comment by Housing Analyst
2013-11-08 12:10:41

I think housing in some of the more desirable areas of the country is way too high priced, but in many other parts of the country it is not too crazy.

Be specific about “other parts of the country”.

 
Comment by kenWPA
2013-11-08 12:33:47

Most of fly over country. The coasts are definately overpriced, but the rest of the country has a lot of Oil City type areas that have affordable housing if your tastes aren’t too particular. The problem is that these areas have seen a very deep erosion of earning/purchasing power in other areas….not so much housing.

Sure housing went up some during the bubble times, but that was more due to the banks pushing home equity loans, refi’s etc. The problem in a lot of these areas are the property taxes that are added to housing prices to keep bloated governments afloat.

 
Comment by Ben Jones
2013-11-08 12:46:15

‘More than 80,000 homes were sold in Texas during the third quarter, the highest volume since the Texas Association of Realtors began issuing its quarterly housing report in 2009.’

‘longtime real estate agent Camille Johnson said demand has increased for homes priced from $200,000 to $400,000, adding she recently sold two neighboring homes in that range on Deerwood Drive in North Waco.’

‘Kent Garbett, president of the Heart of Texas Builders Association, said home construction has cooled with the weather. “But it has been strong, and I think it will remain so through next year. All indications point that way,” he said.’

‘He added builders have expressed concern about a shortage of available lots in the U.S. Highway 84 corridor between Waco and McGregor. “We need medium-priced lots that sell for $40,000 to $50,000, where homes can be built for just under $300,000,” he said in a phone interview.’

You don’t get any more fly-over than Waco.

 
Comment by Housing Analyst
2013-11-08 13:00:55

“Most of fly over country.”

And in your best guess, what is the price roughly speaking?

 
Comment by Ben Jones
2013-11-08 13:16:21

‘The number of Washington-area homes in foreclosure in September surged 53 percent from a year ago, bucking a nationwide trend, according to RealtyTrac.’

‘Maryland was one of 16 states that noted a jump in overall foreclosure activity compared to a year ago. The Old Line State reported a 230 percent increase in foreclosures, and was led by a 381 percent increase in foreclosures in the Baltimore area.’

‘Virginia posted a 36 percent quarterly increase in the number of bank repossessions from a year ago, the fourth-highest jump by state in the nation.’

‘Christine Chmura of Chmura Economics & Analytics said the sharp rise in foreclosure activity in Northern Virginia could be due in part to sequestration.’

‘However, “federal contracts awarded to Virginia firms have declined over the last year,” Chmura said. “Based on that reduction, firms are probably laying off some workers who are now unable to pay their mortgages.”

 
Comment by Ben Jones
2013-11-08 13:21:04

Fly over Michigan:

‘With new pockets of construction already dotting Canton’s landscape, developers are gearing up for hundreds more homes as strong demand outpaces the local housing inventory.’

‘Real estate officials have said homes are selling faster and prices are increasing amid the most robust housing resurgence Canton has witnessed in years.’

‘Jason Borregard, sales manager for Clients First, Realtors, which has offices in Canton, Westland and Shelby Township, told the Observer in August that only 220 homes and condominiums were on the Canton market. In many cases, he said, potential buyers were competing to buy homes.’

‘Local officials, however, said the low housing inventory didn’t reflect one key factor – that banks still hadn’t put up for sale some of the homes they now own due to foreclosures.’

 
Comment by scdave
2013-11-08 15:39:47

You don’t get any more fly-over than Waco ??

LOL Ben…I just up-chucked my Coors Light on that quote…Really !!

 
 
Comment by Beer and Cigar Guy
2013-11-08 13:55:22

“In light of this, consider that the stated policy of the federal government and central bank is revive the economy through higher house prices.”

As housing continues to flail and slip beneath the surface of the lake of liquidity that the FED is frantically creating, what happens to the value of the MBS and CMBS that Wall Street is holding? The MBS that the pension funds are holding? The 85 billion $$ of MBS that the FED is buying every month? This is just a continuation of the same housing bust and the same economic crisis that became too big to hide back in 2008. Its no different- except that they have now increased the pain of collapse. This will be EPIC.

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Comment by doom
2013-11-08 14:36:42

Gosh you love to generalize. Yes Cal has its ills, but I can assure you the areas you can’t afford are very, very nice.

Comment by Ben Jones
2013-11-08 15:39:37

‘the areas you can’t afford are very, very nice’

Meaning nice air. A few years ago an HBBer drove me around San Marino. Well kept yards. But the houses themselves were just like any I might have seen in a middle class area growing up in Texas. We drove around other places near the coast. Crowded. The water looked cold. I prefer warm water beaches.

I think it’s ugly how they stick houses all over every little hill and rock in the landscape. I’m not real crazy about those 10 lane freeways either.

Overall, California is OK. It’s just over-rated.

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Comment by Whac-A-Bubble™
2013-11-08 19:22:35

‘the areas you can’t afford are very, very nice’

Meaning nice air.

Not always. For instance:

La Jolla Cove Faces Another Smell Problem
Editor’s note: an earlier version of this story listed seals at La Jolla Cove. It is only sea lions.
Wednesday, November 6, 2013
By Dwane Brown

The decades-old problem of smelly bird poop in La Jolla Cove is being replaced by a new problem — smelly sea lion poop.

The decades-old problem of smelly bird poop in La Jolla Cove is being replaced by a new problem — smelly sea lion poop.

With the arrival of pupping season, the resulting odor in the area has become bothersome for tourists and San Diego residents alike.

Susan Fisher, an El Cajon resident, visits the cove twice a week and said the smell detracts from the beauty of the area.

“If I were a tourist I’d probably walk by very quickly and want to go some place else,” Fisher said.

Nearby businesses are facing challenges due to the smell. Some visitors staying at the historic La Valencia Hotel have had to seek accommodations elsewhere, and George Hauer, owner of George’s By The Cove restaurant, told 10News the smell is killing business.

A representative from City Councilwoman Sherri Lightner’s office said solving the problem is complicated because of state and federal environmental protection laws. Lightner’s council district includes La Jolla.

The city did perform a two-day cleanup of bird poop in June and a follow-up treatment in September, but there is currently no specific plan to address the seal and sea lion poop.

Until a plan is created, visitors will have to find ways to ignore the smell. Katie Lawler, visiting from New Jersey, chose to focus on the scenery.

“I think the beautiful weather and nice sunshine outweighs the fishy smell. We can ignore that, but it does smell a little interesting,” she said.

 
 
Comment by Strawberrypicker
2013-11-08 19:23:26

It is a sewer or sewer adjacent everywhere. Overpriced. Too many rats in the cage. The 1% are in for a huge shock out there in the next 10 years.

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Comment by Ben Jones
2013-11-08 10:14:37

Oh dear.

‘San Diego trustee deeds increased 24 percent in October from September, but local experts say this isn’t the start of a trend.’

Comment by Whac-A-Bubble™
2013-11-08 15:17:13

‘…increased 24 percent in October from September, but local experts say this isn’t the start of a trend.’

More of a race to the exits, I’d say…

 
 
Comment by Puggs
2013-11-08 10:29:11

“Home prices in Oregon and the Portland area remain slightly overvalued.”

It’s still a bargain compared to So. California metro areas or Seattle.

Comment by rms
2013-11-08 23:35:59

“Home prices in Oregon and the Portland area remain slightly overvalued.”

The nicer Portland neighborhoods where people mow their lawns and park their cars in the garage are still WAY over-priced, never really dropped much.

 
 
Comment by Puggs
2013-11-08 10:31:03

I picked a small pocket area around Long Beach area on Zillow and found many homes have been listed for more than 100 days with some price cuts and more pre-forclosure listing than normal listings.

 
Comment by Ben Jones
2013-11-08 12:52:37

‘Protesters with Occupy Homes Minnesota held what they call a Vampire March in downtown Minneapolis. They want to keep people, like Jaymie Kelly, in their homes. Kelly is in foreclosure on her Powderhorn Park area home.’

“I’ve been in my home 30 years,” she said. “I’ve paid more than $425,000 for a home I bought for $74,900 30 years ago. Had I not run into predatory lenders I would have had my home paid off as of last Aug. 1.”

Comment by oxide
2013-11-08 13:41:17

Oh Ben, you really found us some red meat this time, didn’t you.

 
Comment by Whac-A-Bubble™
2013-11-08 16:07:01

Did some evil mortgage lender put a gun to Jaymie’s head and force her to liberate her accumulated home equity wealth gains against her will?

 
Comment by rms
2013-11-08 23:41:18

“Had I not run into predatory lenders I would have had my home paid off as of last Aug. 1.”

Come on Jaymie…what did you do with the money?

 
 
Comment by tj
2013-11-08 12:59:23

“Had I not run into predatory lenders I would have had my home paid off as of last Aug. 1.”

pathetic isn’t it?

translation: “if i hadn’t been so stupid i would have had my home paid off as of last aug. 1. i have to blame someone else for my own shortcomings, since it would damage my bloated ego to see the truth.”

 
Comment by Ben Jones
2013-11-08 14:32:28

‘The good times may be rolling again for South Florida’s real estate industry, but survivors of the last bust warned Tuesday that there may be too much exuberance over the latest boom.’

‘Panelists gathered for a real estate forum at a luxury hotel ticked off a series of cautionary notes that harkened back to the last time housing prices soared too high: developers launching construction without the reserves to handle a drop in sales; lending plans based on price increases; and a stream of condo projects chasing cash not from local buyers but from foreign investors.’

“How many condo units are necessary in this town?” asked Carlo Melo, whose family’s Melo Group is building condominiums in Miami’s Edgewater district. “The answer is: unlimited. Because we are selling to the world. It is not a city that is sustained by itself.”

‘But if developer over-confidence sunk the market last time, industry veterans see this cycle as spawning its own breed of hubris. John Sumberg, one of the city’s top lawyers for developers, said some projects are starting construction with cash from their deposits even if they don’t have a lender aboard pledging to put up the money to finish the project.’

“Many of the projects are using the deposits to start construction, and then getting the financing later,” said Sumberg, a founding partner at Bilzin Sumberg. “This works, until it doesn’t.”

‘Already, some lenders are backing off projects in Miami’s downtown out of fear to too much supply, he said. Stuart Miller, CEO of Lennar, a national home builder based in Miami, noted that it’s easy to pencil out enough profit from a real estate project when good times are forecast to continue.’

“The more the good times roll, the more attenuated our memory becomes,” he said. “It’s amazing what can start working on paper when you have big price increases.”

“The good thing is that developers don’t need to go to the bank until the last part of the project, if they even need to. They’re able to reach the shell without any bank financing. This saves the developer soft costs, which should be and often is passed down to the buyers,” said Jeff Morr, a 29-year real estate veteran whose Majestic Properties has helped develop emerging neighborhoods such as North Beach, North Bay Village and Miami’s Biscayne corridor.’

“That’s where the benefit is to the buyer and the developer,” Mr. Morr said. “The risk is that you run into an inexperienced developer or a dishonest developer who delivers a shell of a building and never finishes, so the buyer is stuck holding the bag. There is risk – a lot more than there was when buyers were just putting 20% down.”

“Some developers are avoiding the screening process in which banks would evaluate their financial strengths and their project’s true feasibility.”

Comment by snake charmer
2013-11-08 15:40:23

“How many condo units are necessary in this town?” asked Carlo Melo, whose family’s Melo Group is building condominiums in Miami’s Edgewater district. “The answer is: unlimited. Because we are selling to the world. It is not a city that is sustained by itself.”
______________________________/

This is worse than Icarus, just a mythological level of hubris. Let’s all fly a little closer to the sun.

 
Comment by Puggs
2013-11-08 16:33:57

“Many of the projects are using the deposits to start construction, and then getting the financing later,” said Sumberg, a founding partner at Bilzin Sumberg. “This works, until it doesn’t.”

That’s kinda like a Ponzi scheme.

 
Comment by Whac-A-Bubble™
2013-11-08 22:24:48

‘… but survivors of the last bust warned Tuesday that there may be too much exuberance over the latest boom.’

Exactly when did the South Florida bust end?

 
 
Comment by Whac-A-Bubble™
2013-11-08 22:19:39

“‘Anyone who has moved to California from somewhere else knows the dramatic increase of the cost of living,’ said Ann Stevens, director for the Center for Poverty Research at UC Davis. ‘It’s not more surprising that California looks more impoverished. It is really driven by the cost of housing.’”

Yep.

 
Comment by Whac-A-Bubble™
2013-11-08 22:26:03

Would you trust the reports that came out of a sample of liars with unrepresentative data over the report of an independent firm with an unbiased data source?

 
Comment by Whac-A-Bubble™
2013-11-08 22:34:51

I may be missing it, but it sounds to me like RealtyTrac relies on a (presumably) unbiased sample (near-census) from the population of all homes that sold while real estate agent-based data relies on a systemically biased sample of the part of the population sold by realtors (e.g. excluding bulk sales, FSBOs, etc). I’m not sure how important the data gap may be, but it seems clear the share of foreclosures is much higher in the subpopulation which the realtor-based reports systematically exclude.

November 5, 2013, 11:10 AM
Distressed Home Sales: Rising or Falling? It Depends on the Source

A report from data firm RealtyTrac released last month showed that sales of distressed homes increased in September compared with one year ago. One problem: the RealtyTrac conclusion is contradicted by many other sources.

Home prices have rebounded over the past year in part because of the shrinking share of distressed sales, so the question of whether they are rising or falling gets to the heart of where home prices are headed. Home prices soften during periods when distressed sales rise, and they can appear stronger in periods when the share of distressed sales is falling.

One possible reason for the outlier is the tracking methodology used by RealtyTrac, said Daren Blomquist, vice president at RealtyTrac. He said the company tracks homes that aren’t sold on multiple-listing services and that it builds its tally by searching sales deeds in some 2,300 counties nationwide.

RealtyTrac said that sales of foreclosures and short sales, where lenders allow homeowners to sell their properties for less than the amount owed, accounted for 25% of homes sold in September, up from 18% one year ago. Short sales accounted for 15% of all homes sold in September, up from 9% one year earlier, while bank-owned homes accounted for 10% of sales, up from 9%.

Other sources, however, show that the opposite trend is happening:

CoreLogic Inc. (CLGX +3.79%), for example, reported that sales of foreclosures and short sales accounted for less than 15% of all home sales in September (8.2% of all sales were bank-owned sales and 6.4%, short sales), compared with 21% one year earlier.

The National Association of Realtors, which relies on a survey of its members, found that its tally of bank-owned sales and short sales fell to 14% in September from 24% one year earlier.

Data from Hope Now, an industry group, shows that short sales and foreclosures have continued to decline this year, reaching new lows this summer. Fannie Mae (FNMA -3.32%) and Freddie Mac (FMCC -1.76%) have also reported double-digit declines from one year earlier in foreclosures and short sales, according to data released by their regulator.

Local real-estate data also show big declines in many markets that had been hardest hit by foreclosures. In California, short sales accounted for 13% of homes sold in September, down from 27% one year earlier, according to DataQuick (MDA.T +0.29%), while bank-owned foreclosures accounted for 7% of sales, a six-year low and down from 18% one year earlier. The California Association of Realtors showed the same trend: short sales fell to 9% of sales and foreclosures were 4.3% of all sales, down from 24.3% and 12.5%, respectively.

The data suggest two possibilities: either RealtyTrac’s methodology offers greater insight into what’s happening to the share of distressed sales than the rest of the industry, or RealtyTrac’s methodology isn’t capturing the broader trend. RealtyTrac was one of the earliest vendors to provide monthly data on foreclosure listings in 2007 and has become a go-to source for much of the media in reporting on the foreclosure crisis.

RealtyTrac reports its numbers based on what we see in the data. The data is certainly not infallible, but our loyalty is to accurately communicating that data,” said Mr. Blomquist. He said that the real-estate data firm was criticized early during the foreclosure crisis in 2007 for overstating the extent of the foreclosure problem, which ended up being “worse than most people imagined.” And he said RealtyTrac has consistently refined its data collection in response to specific critiques.

 
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