Stoking Bubbles That May Result In Tears
It’s Friday desk clearing time for this blogger. “You may think a shoebox-sized flat in central London costing more than £1m is an insane illustration of a property price bubble, but it could be the bargain of the century. According to projections by one of the biggest investors in ‘prime’ property in the capital, that average flat could fetch £36m by the middle of the century. Hugh Best, LCP’s investment director, said: ‘The average price in prime central London is now £1.5m, and has been growing at 9% a year, which we think is firmly sustainable. They have been growing at that level for 40 years and we see no reason for that to change.’”
“Australian Bureau of Statistics data show almost 10 per cent of private dwellings in the Hunter are unoccupied, including holiday homes. The bureau’s figures indicate this is an increasing and widespread problem, with similar figures across the state and country. Real Estate Institute of NSW Hunter chairman Wayne Stewart said said some pensioners who ‘own a couple of properties don’t rent them out for fear of losing their pension.’”
“In Mumbai, there are 41.86 lakh houses, according to the 2011 Census. Of this 4.79 lakh houses remain locked throughout the year, a house-to-house survey revealed. ‘This means that 12% of the houses remain empty at a time when there is a huge shortfall of houses. These houses are mostly bought for investment purposes,’ Pankaj Kapoor, managing director, Liasas Foras, real estate research firm, said. ‘If these houses come in the market, the artificially created skyrocketing prices will surely come down. Also, rentals will go down,’ he said.”
“The market obviously has some bubbles. It is absurd that it should take up to 40 years of a person’s average annual income to buy a house in big cities such as Beijing and Shanghai. The central government’s crackdown on corruption has also put strong pressure on home prices. The era of luxury watches and top-end liquor for officials is gone. How long will it be before the housing market, which has played such an important part in corrupt officials’ money-hiding schemes, sees the end of its frenzied days?”
“‘A considerable share of the property market is meant for houses that do not need to be there at all,’ Wang Shi, a real estate tycoon, said recently. This is why the biggest measure the government can take to regulate the market is taking on corruption, he said.”
“So far this year, the Tallahassee housing market has seen approximately 5 percent fewer homes listed for sale within the Tallahassee MLS than compared to the same period in 2013, according to real estate expert Joe Manausa. Homes priced above $100,000 saw the average asking price fall by about 5 percent as well. Yet, 26.5 percent of homes for sale in Tallahassee over the past 30 days were distressed, while the same measurement a year ago only showed 17.4 percent distressed.”
“‘If this trend continues, we very well could see last year’s real estate appreciation turn into this year’s depreciation,’ wrote Manausa. ‘We know there are still thousands of homes in the shadow inventory, the big question is will they be seeping into the market at a faster rate in order for the banks to clear out their remaining pools of non-performing assets?’”
“The house is full of everything the Moody family wants to leave behind when their foreclosure nightmare—five years and counting—finally comes to a close. The Moodys missed a single mortgage payment in February 2009 after Paul injured his back, lost his job, and drew down his bank account faster than expected. Five years later, the Moodys still haven’t come to a resolution. ‘You keep getting notices. Then we fight. Then we stay another 45 days,’ says Kim Moody’ ‘It’s been like that for five years.’”
“In New York state, 48 percent of loans that are 90 days or more past due have been delinquent for more than four years, according to Fitch Ratings. Families are trapped in debt, banks have yet to write down the bad loans, and thousands of distressed properties hang over the estate market. Since January 2013, disabled pensioner Mary Ann Daino, whose Staten Island home was destroyed in Hurricane Sandy has been trying to sign over the deed, plus a $25,000 insurance check, to her bank and be released from liability. She wants to move on.”
“Daino’s lawyer, Renee Cadmus, alleges that Wells prefers to collect foreclosure fees instead of resolving the case. ‘This situation is worse than the hurricane,’ Daino said. ‘I feel like I’m a prisoner, they won’t let me go.’”
“Although real estate experts say the number of home foreclosures in Phoenix is at its lowest point in a decade, dozens of families attended a foreclosure prevention workshop. Workshop participants ranged from young families to retirees with various reasons for their financial struggles including costly medical bills, rising utility costs, and unemployment. ‘Utilities are going up, food is going up, gasoline is killing us,’ Sun City resident Patricia Larson said. Larson and her husband are retired and are trying to lower their mortgage payment by refinancing their home. ‘Everything is up except for your Social Security.’”
“Other attendees, like Peoria resident Elizabeth Stewart, are still ‘underwater’ on their homes. Stewart, who purchased her home 15 years ago, has postponed her retirement the last three years so she could keep up with her bills. ‘I’m hoping to get guidance on what I can do to keep us in the house. I want to keep it,’ she said.”
“In the past two years Hong Kong has introduced a range of measures aimed at cooling its domestic property market. It has had an impact. Canada has just said a 28-year-old visa scheme designed to attract wealthy foreigners to the country is to be axed, amid growing fears of a housing bubble. Back in Australia, where, for instance, the median price of an apartment in Sydney is now $530,000, our policy makers seem divided on whether we even have a problem.”
“From a social policy perspective a disaster long ago unfolded. First home buyers as a proportion of total borrowers have fallen to a record low of 12.3 per cent nationally, from about 20 per cent at the end of 2011. As academics such as Clive Hamilton, professor of public ethics at Charles Sturt University, have noted recently, affordable property plays a crucial role in the health of any vibrant society. ‘It’s where people live, put down roots, raise families and join in their communities,’ Professor Hamilton wrote last month.”
“A U.S. Federal Reserve policymaker who has long criticized its bond-buying stimulus said on Wednesday the program has lasted too long, and there are signs it is now distorting financial markets and encouraging risk-taking. Dallas Fed President Richard Fisher amplified some lingering concerns that the central bank’s policy stimulus is stoking asset-price bubbles that ‘may result in tears’ for investors acting on bad incentives.”
“‘There are increasing signs quantitative easing has overstayed its welcome: Market distortions and acting on bad incentives are becoming more pervasive,’ he said of the asset purchases, which are sometimes called QE. ‘I fear that we are feeding imbalances similar to those that played a role in the run-up to the financial crisis,’ he said.”
Elizabeth Stewart, who purchased her home 15 years ago
Peoria, AZ
Median home price 2000: $124K
Median home price 2014: $205K
Elizabeth Stewart, what did you do with the money?
It ended up in the banker’s wallet, where it belongs.
I read one discussion of China that pointed out the bubble question always came down to if the government could “handle” the landing. That’s funny if you think about it.
‘While China strains to rein in soaring home prices in major cities, some voices are asking policy makers to prepare for a possible price fall. Official data showed that 4.86 billion square meters of new homes across China were under construction last year, while home sales stood at just 1.16 billion square meters.’
“Further measures aiming to boost supply and curb demand may increase the risk of a property bubble burst,” said Zhong Wei, an expert in the sector with Beijing Normal University on Wednesday.’
‘Zhong is not the first to warn of such risks. Industry insiders said earlier that falling home prices will generate a wait-and-see mood among potential buyers and aggravate stockpiles in the sector as a result. A sluggish property market will mire related industries, such as steel, cement and home appliances, and result in waning land sale revenues, on which many local governments rely.’
‘Despite all the arguments, many Internet users said that they didn’t believe these experts and considered them mouthpieces of home developers and local governments.’
Remember when Chinese investors were buying Macau houses?
‘Ricacorp (Macau) Properties Ltd said it had begun selling commercial property and unfinished housing in Hong Kong to Macau investors in the fourth quarter of last year. ‘You could see the trend for local buyers to purchase Hong Kong property beginning to emerge in October last year, when some Hong Kong property developers were offering hefty discounts to promote sales of housing,” Ms Liu said.’
“Now prices of property in Hong Kong are gradually going down, and the rental yield for residential property is 3 percent or more, while in Macau it is under 3 percent,” Ms Liu said, “So for long-term investment it fits the interests of local investor-buyers.”
‘She expects estate agents to keep promoting Hong Kong property among Macau investors, as are all expanding their sales effort beyond Hong Kong.’
‘…if the government could “handle” the landing.’
Wouldn’t that depend on whether they remembered to foam the runway?
The landing I envision will be like that of the Asiana Airlines 777 in San Francisco. Only those who pay attention will know that something is wrong before the SHTF.
‘We know there are still thousands of homes in the shadow inventory, the big question is will they be seeping into the market at a faster rate in order for the banks to clear out their remaining pools of non-performing assets?’”
Thousands of excess empty houses in his own back yard. 25 MILLION excess empty houses coast to coast. Housing demand collapsed to 17 year lows…..
If you got a mortgage, you’ve a problem. A big one.
I think a huge point of the never-ending disagreement between you and the likes of Jingle Male and Rental Watch is whether empty home either owned by investors or in limbo between default and foreclosure should be counted in shadow inventory. They would argue no, while you (and I, for that matter) would argue yes.
There is no disagreement.
When there is trolling for buyers, I go trolling for liars.
No.
The homes between default and foreclosure are absolutely shadow inventory (and you should add in REO).
The homes investors buy and are empty are just another vacant home (and should be included as a vacant home, but not “shadow inventory”). If the investor’s home is rented, then their act of selling it will displace the occupant, and there is simply a game of musical chairs–not really shadow inventory in my view.
Said another way (regarding investors). There are over 10 million rental homes owned by investors in the US (and have been for a long time). I don’t think anyone here assumes that those 10 million+ rental homes are “shadow inventory”.
What I have been arguing for a LONG time now is that different states have been dealing with default/delinquency in different ways, and that different states have different amounts of vacant homes, and different levels of shadow inventory.
In some cases, the rise in home prices can ONLY be explained by government interference (slow processing of foreclosures, Fed intervention, etc.). Florida would be a good such example…lots of shadow inventory, high vacancy rates.
In other cases, it can be argued that the rise in home prices is much more related to true supply/demand pressures combined with low interest rates. California is such an example.
No CA isn’t .
CA has been experiencing falling demand and growing and excess inventory since 2007.
In my market (and I believe, most of CA) the majority of homes in foreclosure had people living in them up until the time they sold on the courthouse steps or thru a short sale. They were not vacant. So those houses do not count as vacant inventory.
The houses I picked up in 2008-2010 were mostly occupied by tenants. About 20% were vacant, some never occupied by the flipper or where the owner bailed and did not care to look back (and could have lived for another year rent free, if he wanted to wait).
However, in all cases, residents were ready to move into the houses the day I closed escrow. My occupancy rate the last 6 years has been 99.8%. That kind occupancy does not indicate any excess inventory availability.
From June thru December 2013, rents softened and availability was high. In the last 2 months, the rental market has tightened up in my area to levels I have never seen. There is almost no product to rent. It will be interesting to see what effect that factor creates. The builders need to get busy building houses to add supply.
Maybe the rental supply is going down because the houses have been put on the market to sell, and the sellers don’t want them to be occupied during that time. The inventory on the MLS is increasing, right?
Yes Uncle, good point. Very good point. Although listings are not up in the submarket where I play. There are down a bit.
Nonsense. Inventory is up 70%+ in Sacramento.
An empty house is shadow inventory if sits empty long enough. When the music stops, the house is going on the market (if it doesn’t fall down first).
Riverside County, CA Housing Demand Craters Another 12%; Now at 5 Year Lows
http://www.zillow.com/local-info/CA-Riverside-County-home-value/r_2832/#metric=mt%3D30%26dt%3D1%26tp%3D6%26rt%3D6%26r%3D2832%26el%3D0
Where is Furlow the crater police person? Not going to get that fat crater police person pension goofing off like this.
fat crater police person… BWHAHAHAHAHAHAHA
Here’s a currency angle on Chinese defaults:
‘China’s property sector, already a nagging economic risk, could become a victim of the unexpected weakening of the country’s currency as developers face rising debt costs.’
“Most Chinese developers are heavily exposed to U.S. dollar debt (up to 90 percent of their total debt) with no hedging,” Credit Suisse said in a note Monday. “A potential renminbi depreciation may have a meaningful impact on both developers’ earnings and net gearing – especially since Chinese developers are already highly levered financially.”
‘Credit Suisse estimates that if the renminbi depreciates by 5-15 percent, some developers could see their reported earnings decline by as much as 74 percent while net gearing could increase by as much as 21 percentage points.’
‘For example, around 87 percent of China Overseas Land’s debt is offshore, with nearly 33 percent of the total in U.S. dollars and around 55 percent in Hong Kong dollars, which are pegged to the U.S. dollar, the bank said, citing data from mid-2013.’
‘Investors appear somewhat nervous about developers’ U.S. dollar bonds.’
‘SINGAPORE — The median cash-over-valuation (COV) for Housing and Development Board (HDB) flats fell to zero last month for the first time in at least eight years. It was the first time that the median COV hit nil since it started compiling this data in 2006, the SRX said.’
‘Mr Ku Swee Yong, Chief Executive of real estate agency Century 21, said: “I don’t think the Government will step in, unless there are so many below-valuation cases that the valuations drop drastically.”
“In the last two quarters, the HDB index dropped and they considered the market stable, so if the decline continues in the next two quarters at about the same pace, they will not panic. If the resale price index drops 10 per cent a quarter, then that is alarming,” Mr Ku added.’
OK, so he’s worried about a 10% decline. Check this out:
‘the declines pale in comparison with the 102.9 per cent surge in the resale price index from the first quarter in 2006 to its peak in the second quarter of 2013.’
San Diego Housing Prices Crater 11%; Inventory Skyrockets 76%
http://www.movoto.com/san-diego-ca/market-trends/
$579K on March 31, 2013 — wow! Was that the all-time high median list price for San Diego? Thank you, QE3!
‘ABU DHABI - A law firm has won one of the cases it is handling for investors in a Reem Island project where construction stalled in 2011. House of Justice is representing a group of investors in the Dh7 billion Tameer Towers, four residential blocks that were scheduled to be completed that year.’
‘Mr Rahhal, a Syrian, said he had paid about Dh500,000 towards a residential flat in Tower D, including mortgage fees. While he said Tameer may be at fault, he thought more could be done to prevent similar situations occurring. “The Government should protect the investor,” he said.’
‘Johann Johannson, another investor who was not among those who filed cases against Tameer, said he invested 25 per cent of the price of the Dh2.1 million apartment, which he said was one of the less expensive properties.’
‘He said investors were initially optimistic about the property but the situation had “turned into a nightmare”.
‘Tameer was “really eager to sell out all of the units to the investors in the beginning and it was a very sort of hot deal, and there was a lot of promises made that turned into nothing”, said Mr Johannson, who is from Iceland. “All it was was just promises, and there was no action from their side.”
‘He said he goes once a month to check on the site but has seen no activity and that the site has started to deteriorate.’
“The Government should protect the investor,”
Apparently everywhere in the world.
‘Elizabeth and Gerry Hamilton describe their situation as “desperate.” The elderly couple in Inuvik, N.W.T. says they’re on the verge of homelessness.’
‘They had a house, but with a bad economy, the couldn’t afford the mortgage payments. “The home was supposed to be our retirement plan,” Gerry says.’
“The home was supposed to be our retirement plan,”
bwhahahaha.
If one of these a$$wipe journalists ever probes this this strange notion, I’ll stand on my head and spit jellybeans. I’ve yet to hear anyone explain this.
Actually it’s my retirement plan.
They work, I reap.
Inuvik lies above the Arctic Circle. Why anyone in their right mind would retire there, much less think of their home as an appreciating asset, is beyond me. I mean, Jesus, look out the window, you’re living on the #@)&*^# tundra.
If I’m missing something, Canadian readers are welcome to straighten me out.
“We know we have to downsize to go into housing but we can’t just get rid of all our stuff…”
Stuff sure can be a burden.
This reminds me of my retired neighbor. She downsized into a rental, and now she has enough boxes sitting outside to fill up another two houses. Her own house is also jam-packed full of stuff. She freaks out every time it rains because her boxes get wet. Like the world is just supposed to dry up and blow away because she wants to keep her stuff in cardboard boxes in the back yard. She needs to donate stuff and throw stuff away, but this is an option that quite literally has not ever entered her mind.
If they are elderly, then they don’t depend on the economy to make their house payments. They already earned their money. They have social security and fixed-income investments, not jobs.
“The home was supposed to be our retirement plan,” Gerry says.
Payments for the rest of your life.
‘Houston home-buying frenzy tapers in as New Year begins’
‘If there was one lesson to be learned from the sub-prime mortgage crisis it was that securitized bonds are only as good as the assets that are backing them. Or, put more succinctly: crap in, crap out.’
‘The quality of the rental streams backing these bonds is therefore of crucial importance. When Morningstar, whose credit rating unit rated the deal, recently released a review of its performance from October to January it revealed that rental collections were down by 7.6%, meaning that 8.3% of properties are vacant or occupied by delinquent tenants.’
‘A certain level of vacancy is to be expected – and indeed the renewal of leases for properties in the pool was higher than expected at 78.5%. But the concern with this deal is that net cashflow relative to the size of borrowing is high: the loan-to-cost ratio is 88% and it had a debt coverage ratio of just 1.68 times at launch.’
‘The loan-to-value ratio is lower at 75%, but has been determined using “broker price opinions” of the value of the property. It doesn’t take a genius to figure out that those opinions might be on the high side given that these properties are located in areas where values have been driven upwards because of the bid for property by the likes of Blackstone itself.’
properties are located in areas where values have been driven upwards because of the bid for property by the likes of Blackstone itself ??
But isn’t that part of the Gig with these bandits ?? If somehow you can inflate the valuations, then that gives you the path to off the bonds…Don’t they do the same with stocks ?? Yield may be low, cash flow maybe poor but hey, just look at that book value…Your buying @ 75% of book…
BOOKS! Yes, we should start a business buying and selling books. First, we buy up all the books, thereby creating a false shortage. Then, we start to trickle the books back on the market at inflated values. We will make tons of money. In the meanwhile, we can keep ourselves afloat by renting the books out to people, giving us plenty of time to keep our inventories high no problem. The only glitch is that we can only afford to buy about 5% of the books on the market. All we need is a genius idea for controlling the market movements of the remaining 95% of books on the market (for sale or lease). I know, we can just fudge the book value of our own books, thereby fooling bond-vestors into ignoring the actual value. Creating our own fudged books would add some books to the overall inventory of books on the market, but we can keep our own books without ever selling them. We can even keep a second set of secret books.
Whaddya say, Dave, ru in?
but HA can make a new book for only 5.5 cents… So your upside is limited by the replacement costs …..
Well you’re a “general contractor” right J._Fraud? Right?
‘New Delhi: Tata Housing on Thursday said it has sold 250 flats worth about Rs 100 crore in five housing projects during its four-day online campaign, despite a slowdown in the property market.’
‘In a statement, the company said the offer was oversubscribed 4 times with over 800 applications for the allocated 200 units across 5 projects. Seeing the response, the company offered 50 more units in this offer.’
‘In the campaign, Tata Housing offered homes at its launch price, assuring the consumer upto 33 per cent appreciation.’
‘Buyers in Melbourne can expect to pay 51% more per month on mortgage repayments than rent for a median valued house, while in Sydney they would pay 40% more, according to new analysis from Onthehouse’s property research arm Residex.’
‘Escalating property prices over the past year have prompted many Australians to shift their focus from buying to renting. For example, the median price at auction in Sydney last weekend was $942,000, according to Australian Property Monitors.’
‘Official home loan figures in December showed that first homebuyers had plummeted to just 12.7% of the total market. Meanwhile, the number of investors in the market rose, as did the value of their loans. At different times last year, investors were said to have made up 40% to 50% of the home loan market, according to a number of reports.’
“Investors are currently taking advantage of low interest rates, particularly older generations who are now investing in property through their self-managed super funds,” said Edwards. “People are now structuring their super fund investments in such a way that allows a form of negative gearing in residential property, allowing monthly super fund contributions from their salary to cover any rental income shortfall.”
You are not an investor when you have a negative cash-flow that comes out of your paycheck, gets routed through your “super fund”, and then pays the bank for the privilege! That makes you a gambla.
Back in Vegas, we have a saying.
San Francisco Housing Demand Crumbles 12%; Declines Accelerating
http://www.zillow.com/local-info/CA-San-Francisco-County-home-value/r_3227/#metric=mt%3D30%26dt%3D1%26tp%3D4%26rt%3D6%26r%3D3227%26el%3D0
HA, my son is ready to buy a house in San Francisco. He is going to wait for a while, as he observes the new trend: prices are softening. He seems to be listening to you! HA! Thank you! Thank you! Thank you!
Seriously, this is an important awareness for him. And he can plow more money into savings each month and take his time to make a smart purchase.
Whether or not the market value craters, tapers, levels, or accelerates, I find an attitude of patience and lowballing on multiple properties almost always provides the best opportunities. He has that now.
Why buy with those kind of losses built in?
You are not listening. He is not buying. He is waiting for the 65% drop……
“HA, my son is ready to buy a house in San Francisco.”
Shoeshine boy moment duly noted…
That shoeshine boy makes more money in a year than you will in 20 years……..don’t patronize yourself.
If you are sure your son makes more money than I and (presumably) any number of other posters here, then it stands to reason that the timing of his real estate purchase decision will make him even more money, especially since California real estate always goes up.
Got it.
Can you please tell your son that I have a multitude of items for sale? I am selling the following assets right now:
- A used newspaper
- An old pair of fashionable but used shoes
- A very small ring
- Some old furniture that came out of someone else’s house when they moved
- A collection of plastic grocery bags
- Some office supplies that may or may not be stolen, but you can’t prove it
Thanks!
-Uncle Fed
I don’t think you own anything he would want……but I’ll be sure to tell him.
The Talls of J._Fraud and The ShineBoy
When you get down to it, people who make more money than other people pretty much never lose money on their investments. The fact that they make more money pretty much guarantees this by definition.
Thus when Jingle Male’s son buys a home in SF, we can rest assured that the value of his home will always go up forever after. Because his son makes more money than me and almost anyone else who posts here. Which, by the way, means he is a more clever real estate investor than almost anyone who posts here, except for his dad, of course.
You are missing the points all the way around today Whac: 1) he is no shoeshine boy, 2) he is NOT buying a house in SF. He is taking HA’s advice and waiting.
His investments are no different than anyone else’s. Unless they don’t have any investments….
rent ratio in my hood is 200 months roi. This is in a hood where you get a bus straight to the Pentagon.
Crystal City. I lived there.
Are you saying if your rent is $1,000/month, the value of that home is $200,000?
Are you admitting you’re not a general contractor?
The London prediction by Mr. Best reminds me of one of my favorite episodes from the bubble, when NAR economist Lawrence Yun visited Ft. Myers and predicted that the average house in Lee County, Florida, would be worth several million dollars by mid-century. The persistence of linear thinking in what is so obviously a non-linear world has to be some kind of basic human flaw.
Yes, but it’s only basic to humans who are stupid. By stupid, I mean average.
“…average flat could fetch £36m by the middle of the century. Hugh Best, LCP’s investment director, said: ‘The average price in prime central London is now £1.5m, and has been growing at 9% a year, which we think is firmly sustainable.”
Is Mr. Best a real guy, or is one of you playing a joke on “The Guardian” ?
Maybe countries with lousy pensions and safety-nets are prone to more housing bubbles. Even USA didn’t really start freaking out about real estate until the middle-class got slammed.
“One reason for that expansion is that, since social welfare and pension systems are not as advanced in China as in more developed countries, people feel safer buying real estate. “
Will China Be the Next Real Estate Bubble to Burst?
http://www.theepochtimes.com/n3/545677-will-china-be-the-next-real-estate-bubble-to-burst-2/
Real estate in China has experienced a remarkable expansion in recent years. This development, however, has not gone parallel with the demand for real estate. If the situation reaches a crisis point, the consequences will be serious for the Chinese economy and for the world economy as well.
The real estate bubble in China affects mainly residential real estate. It reached its most rapid expansion between 2005 and 2009, when average housing prices tripled, because of government policies encouraging real estate purchases through increased bank lending at low interest rates. This is a policy that had begun in 2003 under Wen Jiabao.
People can’t buy real estate in China. Real estate is land. There is no private ownership of land in China. As soon as you see an article discussing the purchase of Chinese real estate, then it’s time to stop reading.
I’m gettin my bubble stroked in 22151. Tx to the bama voters-he’s still hiring
Virginia. Hmm….. and which president stopped hiring and reduced the work force in D.C.?
‘This means that 12% of the houses remain empty at a time when there is a huge shortfall of houses. These houses are mostly bought for investment purposes,’
It’s the unoccupied investment houses which I believe Rental Watch chooses to completely ignore in his optimistic reports on the future direction of real estate prices. (And I know the example is not for U.S. housing, but it doesn’t matter, as the same principle is in operation.)
Yeah, speculation is just gambling. If it’s educated speculation, then it’s more like poker than roulette, but it’s still a gamble (not an investment). If everyone else is speculating on the same asset as yourself, then you should be wary. You need to ensure that you are one of the people involved in the first rush for the exits.
“Unoccupied Investment Houses” are counted in the vacancy numbers.
And you note my “optimistic reports on the future direction of real estate prices”. Can you tell me what I’ve said in this regard? I forget.
RW, you left out HA’s “….which I believe…”. There is a big difference between what HA believes and what reality is. HA cannot recall things that have not happened…..though he will keep trying.
Yes. I recall 2 weeks ago you said you were a general contractor.
Do you recall I have some work for you in Sacramento? Are you interested?
Texas Housing~
All the data shows trend reversal in the last 2 months. YoY numbers will be solidly negative as the trend continues.
-Prices going south
-Housing demand going south
-Rental Rates going south
If you have a stake in housing in TX or you’re involved in the pimping of housing in TX, you best be looking to get out because TX housing is going toxic.
Then why is my rent for a 30+ year old apartment some 25 miles from the CBD going up AGAIN?!
Of course it is. That and a dollar will get you a cup of coffee.
Heard on the Street
Don’t Bet the House on Higher Spending
By Justin Lahart
March 6, 2014 5:22 p.m. ET
Wealth is on the rise. That doesn’t mean people are going to start spending more.
The Federal Reserve reported Thursday that Americans’ net worth—the value of their assets minus their liabilities—came to $80.7 trillion in the fourth quarter of 2013. That was up $9.8 trillion from a year earlier and well above the 2007 peak of $68.8 trillion.
Since then, of course, the population has grown and prices have risen. Still, net worth per person came to about $254,000 at the end of last year. Adjusting for inflation, that was only about $600 short of the 2007 peak on a per-capita basis. And by now, that has probably been surpassed, taking this year’s stock and home price gains into account.
So in this respect, the hole the housing bust and financial crisis created has finally been filled in. But the composition of wealth has changed dramatically since 2007, and as a result so, too, has its distribution—with important consequences for the economy.
Homeowners’ equity, the value of Americans’ homes minus their mortgage debt, hit $10 trillion last quarter. That is much better than the 2011’s low point of $6.3 trillion, but still well short of the prerecession high of $13.4 trillion. Against that, the value of stock holdings, including those in mutual funds and the like, came to $22.8 trillion at the end of 2013. That compared with a prerecession high of $18.3 trillion.
Stock-market wealth counts as a large portion of rich households’ net worth, while housing wealth matters more for Americans in the middle. So outsized gains in stock prices relative to property values mean that wealth is even more concentrated at the top.
Wealth gains that go to the richest Americans don’t power spending in the same way as when they are more evenly spread. The wealthy already spend at a high level, so feeling even wealthier isn’t as likely to make them splash out more.
There is an added twist: The recovery in home prices, while substantial, may not power spending in the way rising prices did before the crash. That is according to new research from economists Atif Mian at Princeton University and Amir Sufi at the University of Chicago’s Booth School of Business.
…
The price of houses and stocks should not be taken into account because if the owner sells the asset, then the buyer has to pay for the asset. This results in a net wash to the overall wealth of the economy. The equation should be as follows:
all income + all savings - all debt = net worth of economic system
You can get per capita numbers by dividing the above by the number of people in the economy. I don’t know how to account for noncitizens, since they are likely to ship their money out of the country.
Don’t forget depreciation (tip’o'the hat to HA)…
“In New York state, 48 percent of loans that are 90 days or more past due have been delinquent for more than four years, according to Fitch Ratings. Families are trapped in debt, banks have yet to write down the bad loans, and thousands of distressed properties hang over the estate market.”
Do these ‘trapped home debtors’ get counted in Rental Watch / Jingle Male shadow inventory? (Not meant as an ad hominem attack … just trying to straighten out some facts.)
4 fckin years %#^$^&& !
I though fl was the worst in terms of hiding kc/bk’s
Read this:
http://www.lpsvcs.com/LPSCorporateInformation/CommunicationCenter/DataReports/MortgageMonitor/201401/MortgageMonitorJanuary2014.pdf
See page 28.
The names at the top of the list are the biggest culprits, and the biggest source of shadow inventory.
Poor, poor homemoaners. They’re trapped in debt, living in a free house for FOUR YEARS! They should have enough money saved up by now to buy a mobile home on a rural lot.
Live long free-ride Nation!!!
“Families are trapped in debt, banks have yet to write down the bad loans…”
Living 4-yrs without payments, but they’re trapped? Journalism.
Yes.
These are the essence of the shadow inventory (of distressed homes). NY is one of the judicial states, who have been very slow to foreclose.
Don’t forget California. 4.4 million excess empty houses as a result of inaction by lenders, bankers and other syndicate operators.
The “Moodys” (if that is their real name) missed a single payment, and they’ve been in a nightmare for five years now? Yeah, right. They purposefuly missed the payment because they wanted a loan modification to reduce their principal. They won’t vacate until they get their reduction so they can sell at a profit, or at least a wash. If an auction notice was nailed to the door, then they missed more than one payment.
‘I fear that we are feeding imbalances similar to those that played a role in the run-up to the financial crisis,’
And in other late-breaking news, the sun is predicted to rise in the eastern sky the morning of March 8, 2014.