The Kind Of Growth That’s Not Sustainable
The Wall Street Journal reports on Nevada. “During the darkest days of the Las Vegas housing bust, most luxury homeowners sat on their homes, waiting for the market to improve. Now, real-estate agents say, they are returning to the market en masse, sensing a window of opportunity. And many are looking to sell quickly, having been spooked by the last downturn—which means they are willing to negotiate on price. Cecilia and Lawrence Ventimiglia, luxury-home builders, bought their lot for $800,000 in 2006 and built an 8,000-square-foot custom house on almost half an acre. When the market tanked, and similar lots in the same neighborhood were selling for half what they paid, they decided to stay in the house because they had too much money in it.”
“When the market started to improve last year, they decided to list it for $3.4 million—and sold it for $3 million. Though they said it meant a loss for them—they won’t say how much. ‘The higher-end homes have lagged in appreciation and people feel the timing may now be right to sell,’ says Dale Thornburgh of Synergy Sotheby’s International Realty.”
The Coloradoan. “Fort Collins’ housing market is squeezing out its working class. Retail and service workers, young professionals and others whose wages fall below Larimer County’s median household income of $75,800 are choosing to leave the Choice City in search of affordable housing. Chris Smith grew up in Fort Collins and has considered this home for most of his 46 years. But he and his wife just closed on a house in Severance. ‘I’m a native, but despite working two jobs and nearly 70 hours a week, plus adding my wife’s income, we can’t afford to buy here,’ Smith said.”
“The median value of an owner-occupied home in Fort Collins was $248,000 in 2012, an increase of $79,800 from 2000. According to the analysis, homeowners would need to earn about $19,300 more to afford the increase. ‘The area median income has gone down for the last two years and the average rents have continued to step up every year, aggravating an existing trend,’ said Sue Beck-Ferkiss, social sustainability specialist with the city of Fort Collins.”
“‘The problem is geography. We are landlocked and that restricts our supply,’ said commercial Realtor Eric Nichols, who helped build several Fort Collins condo projects. ‘It’s too late to expand our growth management area. We’ve gone from a huge oversupply to undersupply and the market is having a difficult time.’”
From Arizona Newszap. “The big home-price rebound in the Phoenix area may officially be over. For the first time since last summer, the market experienced a month-to-month decrease in the median single-family-home sales price, according to a report from the W. P. Carey School of Business at Arizona State University. ‘Despite the huge price increases between January 2013 and 2014, the total dollars spent on homes here this January actually dropped by 7 percent. This is the second lowest level of demand we’ve seen in 14 years, behind only 2008,’ says the report’s author, Mike Orr.”
“Even though the available supply of homes for sale was up 47 percent from Feb. 1 of last year to Feb. 1 of this year, sales activity plummeted.”
From AZ Family in Arizona. “It’s a case of supply and demand. Many people are looking to sell, but not a lot of people are looking to buy. In fact, many houses are sitting on the market for months. ‘It’s become more of a buyer’s market,’ says Michael Orr, author of the report. ‘The advantage lies with the buyer,’ he says.”
“Prices are dropping drastically in some parts of the Phoenix area, in an attempt to attract the pickiest buyers. ‘January is usually the quietest month of the year for sales, but this January was far weaker than January 2012 and 2013,’ says Orr.”
“At Hunt Real Estate ERA, realtors call it unprecedented. ‘It’s great when I’m working with buyers now, because we have all this inventory to choose from,’ says Taylor Pfeifer. ‘In the last 24 months was saw prices increase by about 20 percent, and that kind of growth is not sustainable.’”
The Phoenix Business Journal in Arizona. “Bobby Lieb, a broker at HomeSmart International in Phoenix, said he’s seen a slowdown in buyer activity. ‘Because the inventory has doubled now, they’re not in a hurry to buy right now … what I’m telling sellers is you have to price your home right,’ Lieb said.”
“The median value of an owner-occupied home in Fort Collins was $248,000 in 2012, an increase of $79,800 from 2000.
If you had any doubts that housing prices were massively inflated in 2000, this should remove it.
14 years ago…
And they’re more overpriced today.
“14 years ago…”
And wages are DOWN since then.
… and…..
Realtors are liars.
From the WSJ piece:
‘Many of the new luxury buyers in town hail from the same place: California. “Half my buyers last year came from California,” says Zar Zanganeh, with LUXE Estates Collection. Last year 13.8% of all homes sold for $1 million or more in the Las Vegas area went to buyers from California.’
‘realtors call it unprecedented. ‘It’s great when I’m working with buyers now, because we have all this inventory to choose from,’ says Taylor Pfeifer. ‘In the last 24 months was saw prices increase by about 20 percent, and that kind of growth is not sustainable’
Hoo boy, here it comes. I’d bet 6 months ago this guy was working the phones telling everyone how much it was going to go up in 2014, in his opinion, of course. Now we see a glimpse of the past and future:
“Oh sellers, those prices were crazy, unsustainable! You’re going to have to get realistic. Like Bobby here says, ‘you have to price your home right’. ‘Right’ means lower, by the way. This is the new normal. So we need sellers to adjust.”
Bend to my will, smelly sellers.
Twist in the wind, greedheads.
‘Single-family building permits continues to be a fickle game in the Tucson area…For resales, unit sales dropped a bit year-over-year (854 versus 884), according to the Tucson Association of Realtors Multiple Listing Service. The market also has more options: active listings numbered 5,477, a bump from December (5,150 listings) and considerable increase over the 4,459 listings in January 2013.’
‘For the third time in less than two years, I’ve been perusing the classifieds for a place for my family to rent in Durango, Colo., the town in which I grew up. Each time the pickings get slimmer, the prices get higher, and the process gets more agonizing.’
‘We’ve been driven to this masochistic ritual because this home — like the last rental we lived in — is going on the market. Given the exorbitant amount of money they are asking for the home, we shouldn’t have to worry about it selling anytime soon, so should feel secure here. If, that is, we lived in a rational real estate universe. Durango, like so much of the West, is not a rational real estate universe.’
‘The median Durango household could afford — meaning housing costs don’t eat up more than one-third of their total income — a $250,000 house, maybe a tad more. As long as they had a $10,000 down payment their monthly payment would be about $1,350. Good luck with that. There simply are no homes in Durango for that price: The median home listing price is $359,900 right now, and a 3 bedroom rental, if one becomes available, fetches $1,500 at the very least.’
‘In other words, Durango is like a good portion of the West: unaffordable. In fact, according to a report put out by the Center for Housing Policy last month, the West is plagued with some of the highest share of working households with a “severe housing cost burden,” meaning they pay at least half of their income on housing.’
‘California’s the worst, with 32 percent of households under the severe housing cost burden, but Washington, New Mexico, Arizona, Nevada, Oregon and Colorado are all above the 20 percent mark. Not good.’
All the CO mountain towns are bubbly unaffordable.
I picked up a hitchhiker yesterday who recently moved from Frisco to Leadville because the rents in Frisco are too damn high.
‘We are landlocked and that restricts our supply,’ said commercial Realtor Eric Nichols’
Of course you are. You drive over one hill, and there you find, another valley! And so on.
summit county, co is wall to wall sprawl. breckenridge, frisco, dillon, silverthorne are just one massive blob of condos, mcdonalds, outlet malls, etc.
and yes, you do drive over the hill into the next valley. that’s why all the mountain lucky ducks have one hour plus commutes each way.
i had the misfortune of driving into aspen from glenwood springs on a weekday morning a few months ago, hour and fifteen minutes to go 40 miles. the lucky ducks who serve the aspenite 0.1%ers get to do that every day.
This country needs a high speed rail system in the worst possible way. Driving around in cars is a failed model. Gridlock is getting really bad.
If Jesus hadn’t meant for us to sit in traffic, he’d have given us wings.
‘ Frisco to Leadville because the rents in Frisco are too damn high.’
Keep an eye out for one that looks like a Colorado Trail hiker. It could be me next time !
Just import more messicans. They will fill up all the houses to keep house prices increasing, which is good for the economy. Wages don’t matter (just like deficits).
“Messicans” went apesh!t buying houses with subprime loans. They can be counted on to consume whatever sophisticated financial booby trap a pigman wants.
This;
the total dollars spent on homes here this January actually dropped by 7 percent. This is the second lowest level of demand we’ve seen in 14 years, behind only 2008,’
and this;
“Even though the available supply of homes for sale was up 47 percent from Feb. 1 of last year to Feb. 1 of this year, sales activity plummeted.”
and this;
“It’s a case of supply and demand. Many people are looking to sell, but not a lot of people are looking to buy. In fact, many houses are sitting on the market for months.
and that;
“Prices are dropping drastically”
and this;
“we have all this inventory to choose from,”
and this;
‘Because the inventory has doubled now,
Results in this;
“But not in my area.”
But I have a bulletin for you. There is no “shortage” of housing, there is no housing demand and resale prices are inflated 250% higher than long term trend.
So do you really believe wages are going to triple to meet grossly inflated prices when housing demand is at 17 year lows and prices are just beginning to slip from massively inflated levels? And remember this….. houses depreciate rapidly.
Are you on the hook for a rapidly depreciating asset like a house?
‘My family bought a very nice home in Pagosa Springs in 1994, for $128,000. By 2007, the average price of a home in Archuleta County was $305,000, according to the 2008 Archuleta County Housing Needs Assessment.’
‘In order to afford a home costing $305,000, a working class family needs to have one wage earner making $42 per hour, or two wage earners each making $21 per hour. In 2007, the two industries with the highest “growth” were Retail and Tourism, according to that same 2008 housing study. The average wage for a Retail worker was $11.53 per hour. The average Tourism wage was $9.39 per hour. In other words, for the average working class family in Pagosa to afford an average home in Pagosa in 2007, the family needed hold at least four average full-time jobs.’
‘That was the situation produced by “economic growth” between 1996 and 2006… a situation where working class families could not longer purchase a home in Archuleta County. No wonder our schools were seeing a steady decline in enrollment.’
‘But Mr. Parsons and the PSCDC feel that our community has been suffering from “Barriers to Progress.” By removing those “barriers,” they apparently wish to see a return to unchecked population growth and more ranches converted to half-vacant subdivisions. Because that’s progress?’
‘Mr. Parsons then told us that he and the PSCDC see a light at the end of the tunnel. “What I saw gave me hope,” he told us. “Can we have the next slide please? What I noticed is that since 1994, the population has shifted from 50 percent Hispanic to 25 percent Hispanic. The younger Hispanic people came and they bought housing in the County, so the Town itself has shifted, and many more young families are moving in, so that’s something that’s been noticed.”
RE: Pagosa Springs, more local anecdotes. Talking to a tow truck driver who lives in Pagosa who also works as a liftie at Wolf Creek Ski Area, he told me a lot (alot) of the kidz who work at Wolf Creek commute from Creede (nowheresville), per Google maps that’s 40 miles each way.
Can we have the next slide please?
Yes.
“In other words, for the average working class family in Pagosa to afford an average home in Pagosa in 2007, the family needed hold at least four average full-time jobs.’”
God love trickle-down economics!
“In order to afford a home costing $305,000, a working class family needs to have one wage earner making $42 per hour, or two wage earners each making $21 per hour.”
Not really. Two peeps need two cars, two sets of clothes, two…
‘What a difference a year makes—if you’re on the West Coast or in Florida. Compared to this time in 2013, inventory levels in many of the California, Arizona, Nevada, and Florida metros we survey for Movoto Real Estate’s monthly State of the Real Estate Market report are up significantly.’
‘Minneapolis, MN: Minnesota’s largest city also saw the largest year-over-year gain in median price per square foot on our index, going from $118 in February 2013 to $153 in February 2014, an increase of $35 or 29.7 percent. Houston, TX: The median list price per square foot in this city increased by 22.4 percent between February 2013 and February 2014, going from $76 to $93, a different of $17.’
‘Boston, MA: The capital of Massachusetts saw its median price per square foot climb $79 from $399 to $478 in the past 12 months, an increase of 19.8 percent.’
‘Colorado Springs, CO, Charlotte, NC, and Cleveland, OH all saw decreases in their median price per square foot of 1.7, 2.0, and 2.1 percent, respectively. Fresno, CA, saw its inventory increase by a staggering 98.3 percent from February 2013 to February 2014, going from 593 homes on the market to 1,176.’
‘Phoenix, AZ: This Arizona metro had 2,816 properties for sale in February 2013 versus 5,155 last month, an increase of 2,399 home or 83.1 percent.’
‘Mesa, AZ: Elsewhere in Arizona, this city witnessed a 79.1 percent increase in year-over-year inventory, going from 1,118 homes for sale to 2,002 between February 2013 and February 2014.’
It’s easy to sell a house in PHX. Just lower the price until it sells.
8,000-square-foot custom house on almost half an acre ??
20,000 square foot lot with a 8000 square foot house in Las Vegas…R U kidding me! Talk about 10 pounds in a 5 pound bag…Who would build or buy such a thing unless it was in a mega metro city…They say they got 3-mil…Not quite sure thats believable…
I know. A half-acre is not big enough to justify an 8,000 sq ft house. I live (sometimes) in an 1800 sq ft house that sits on 2.5 acres. That seems perfect to me. Plenty of space between me and the other humans. I can’t imagine making the house >4 times as big, while decreasing the land by 80%.
other than Austin,boston and dc -are any markets still “HOT ?”
Like it was show yesterday, DC rental rates and prices are sinking as is housing demand.
Boston? Rental rates down YoY
Remember…. Current asking prices of resale housing is 250% higher than long term trend.
bama was giving soviets a tax credit to move to DC - TAX CREDIT !
http://finance.yahoo.com/news/obamacare-may-failing-uninsured-101500339.html
25 MILLION excess, empty and defaulted houses CHECK
Housing demand at 17 year lows and falling CHECK
Housing prices inflated by 250% CHECK
Household formation at multi decade lows CHECK
Rampant housing fraud CHECK
Public denial formed and supported by a corrupt media CHECK
Population growth the lowest in US history CHECK
Immigration flat to slightly negative CHECK
And you wonder where housing prices are headed?
‘The email from a Credit Suisse executive was blunt: The bank seemed to be pushing through risky home mortgages from questionable applicants.’
‘One borrower, the executive wrote, appeared to be a gas station attendant who was living with his mother while claiming to make $93,000 a year. Another was a former sales clerk at Nordstrom who was said to be making $110,000 a year.’
‘A different email, from another Credit Suisse executive in June 2007, went further: “Our diligence process is such a joke.”
But of course, prices returning to these levels is no problem at all.
‘By Amy Hoak, MarketWatch‘
‘Home buyers, prepare for sticker shock.’
‘Prices of homes are expected to tick up again this year, and mortgage rates are due to creep up, too. And that’s on top of the increases already experienced over the past year.’
‘A median-priced, three-bedroom home bought in the fourth quarter of 2013 costs a homeowner 21% more a month, compared with one bought a year before, according to an analysis by RealtyTrac, a housing data provider. “There’s no doubt about how affordability has been affected here in the past year or so,” said Loren Haley, a Redfin agent in Silicon Valley. “Prices have been driven up so quickly and intensely; there are a lot more buyers in the market than there is inventory.”
‘Of course, you should make sure that you focus on a home that fits your needs, with access to the school districts or other amenities you desire, Fleming said. But once you’ve done that, decided how much you can afford and found the place you want to buy, make a move — and quickly.’
“Sooner is better than later because interest rates will probably rise this year and house prices will rise some more,” he said. So start soon. “If you’re thinking about doing it this year, do it early.”
‘ A good agent will also be able to tell you if a list price is misleading, Haley said. For example, if it’s listed for $500,000 but is in a neighborhood where homes are getting five to 10 offers and it’s more likely that the home will sell for $600,000, your agent should be able to tell you that up front.’
‘And they can tell you how tight the inventory is where you want to live, including how long homes typically last on the market. That’s the best indicator of how fast you’ll need to make a decision — and how hard it will be to find a home to meet your needs.’
Jeebus, this woman is a piece of work.
She’s a moron-quoting moron.
Sour grapes because this housing recovery has passed you by?
And I doubt that you’re even a real housing analyst like the renowned experts that I quote in my article.
“A good agent will also be able to tell you if a list price is misleading…”
Oxy-moron, mania and misrepresentation all rolled into one phrase!
“Oxy-moron”
Be nice.
Yeah, ignore that the FHA limits have dropped drastically in all markets. Jump right in and do it now, early in the year before the reporting by morons like her has a chance to catch up.
Who are these people related to or sleeping with in order to get these jobs.
‘before the reporting by morons like her has a chance to catch up’
We’re at an interesting point in that regard. We know about Phoenix only because ASU has been putting out reports to cover it’s a@@ after all the cheer-leading. Of course, Movoto was right all along. We’ll see Zillow guys or Corelogic, Realtytrac, NAR people quoted all day and night. Why does the press ignore Movoto?
Notice the absence of Nevada news? Why, the Las Vegas press is pretty quiet these days. However, I happen to know it’s a bloodbath in real estate up there.
“I happen to know it’s a bloodbath in real estate up there.”
Take a leisurely stroll through the mid-atlantic and New England if you want to observe a grand-mal seizure in real estate that only the lobotomized are blind to.
I certainly have, living here, and paying a high rent (>2x monthly mortgage.) I could buy my rental and watch my 20% down payment disappear, but I just can’t do it.
Any details you have time to share?
“Notice the absence of Nevada news? Why, the Las Vegas press is pretty quiet these days. However, I happen to know it’s a bloodbath in real estate up there.”
The cheerleading Realtwhores are still celebrating the increasing prices, telling everybody to hurry up and buy now or be priced out forever. Same as it ever was.
I feel ill - our rental is 50% up from the bottom and I don’t know if I can deal with moving again. Our accidental LL told me he would sell if his costs were covered.
Renting is a bitch here; if we don’t buy it, it will be our fourth move since 2006. Also, it’s quarterly inspection time again (property manager), grrrrr.
A piece of work? What’s that supposed to mean?
The experts I quote in my article all prove that I was right when I said that rising interest rates will increase home prices. So don’t say I never told you so.
Buy now or be priced out forever!
Amy:
In what year did you officially sell your soul to the devil?
U R a Riot!!!
+1.
In what year did you officially sell your soul to the devil?
Renting is cheaper.
“Sure, I lied to you when I said the same thing in 2006, but trust me….this time i’m being… honest…?” -Amy Hoax
“Buy now or be priced out forever!”
SCAMS-Я-US
That’s right, buyers. Trust your realtoR to tell you when you need to pay 20% over asking right out the gate. Because realtoRs know that they don’t make their commish until you buy high and buy now. After all, if you waited, then you might change your mind.
The purpose of the MSM and political and central bank commentators is not to REPORT REALITY but to SHAPE OPINION.
They keep quacking the same meme, impervious to the data. The Iraqi Press Minister was a huge joke here, but the opinion shapers here do the same thing.
It’s the Emperor’s New Clothes syndrome. They keep praising the naked Emperor’s clothes. Their agenda is to get people to believe that the Emperor’s clothes are beautiful. Regardless of whether he’s wearing clothes or not.
“Realtor Sentenced to 30 Months for Mortgage Fraud”
http://www.fbi.gov/oklahomacity/press-releases/2013/realtor-sentenced-to-30-months-for-mortgage-fraud
This image appeared on the front page of Barrons in 2008.
http://www.youngagain.org/images/barron.PNG
You gotta ask…. How much did they earn on this one?
“despite working two jobs and nearly 70 hours a week, plus adding my wife’s income, we can’t afford to buy here…”
Apparently you would if you could. All for a house.
That’s right, sellers. You better price your houses right, and I mean right into my bank account, for pennies on the dollar. Hahahahahahaha! What a bunch of suckers. Hee-haw.
I can’t wait until Ben Jones starts buying more real estate in the Joshua Tree fund. I wanna be rich-rich-rich. Moooove over debt donkeys, make room for the cash cow!
N. Bethesda, MD Housing Prices Slowly Sink To 2009 Levels; Down YoY
http://www.movoto.com/north-bethesda-md/market-trends/#city=&time=5Y&metric=Median%20List%20Price&type=0
Blockquote>Comment by Bill, just south of Irvine
2014-03-10 04:49:16
There is no such thing as good debt.
EVER.
Especially on a rapidly depreciating asset like a house.
Did you see what Mz. Craterton was up to last week? I posted one of her vacation pics yesterday.
I did. And I laughed so hard I got a headache.
You can write that again!
Arlington, VA Housing Prices Crater 12% YoY As Inventory Balloons 27%
http://www.movoto.com/arlington-va/market-trends/
Burke, VA Housing Prices Disintegrate 18% YoY; Inventory Skyrockets 69%
http://www.movoto.com/burke-va/market-trends/
Baltimore, MD Rental Rates Dive 9% YoY; Sink To 3 Year Lows
http://www.zillow.com/local-info/MD-Baltimore-home-value/r_3523/#metric=mt%3D48%26dt%3D1%26tp%3D5%26rt%3D8%26r%3D3523%26el%3D0
“Prices are dropping drastically in some parts of the Phoenix area, in an attempt to attract the pickiest buyers. ‘January is usually the quietest month of the year for sales, but this January was far weaker than January 2012 and 2013,’ says Orr.”
Depression is what happens when you REALIZE you OVERPAID in 2013.
Renting is just throwing money away.
Buy a home, build equity with every mortgage payment, and deduct the interest on your taxes.
And you can paint the walls any color you want!
Renters can’t do that
Vomit, feces, blood and tears. Those are the colors for your palette if you buy a house now or bought recently.
You’re just in the denial phase Aim. Don’t worry though, it will pass.
If you bought between 2005-2009, didn’t you throw tens of thousands of dollars away?
Norfolk, VA Housing Demand Collapses 24% YoY
http://www.zillow.com/local-info/VA-Norfolk-home-value/r_6210/#metric=mt%3D30%26dt%3D1%26tp%3D4%26rt%3D8%26r%3D6210%26el%3D0
same for FL since we know no one does there in the winter
The Phoenix Business Journal in Arizona. “Bobby Lieb, a broker at HomeSmart International in Phoenix
Agents love this news, drop your price, well how about the standard 6% commission in the industry drops to 4.5% since all should take a bath not just the sellers?
As far as buyers are concerned, what I observed is a standoff, many sellers are underwater and they priced the market to take a loss but not back to bubble levels.
Investors can wait it out, real buyers who are transferred, or want to get into retirement now (their clock on life is ticking ) will buy because they have no choice or place to go, they already sold their homes.
The market is a level off period, spring will see a bump (winter was brutal), all know interest rates will soar this summer, houses will sell very well in the next 4 months.
‘houses will sell very well in the next 4 months’
I’ll take that bet.
Ben, houses that are priced right (10 to15%) increase over bubble prices and clean well maintained properties are selling.
What is not selling is very under water folks who want to be bailed out, these homes have been sitting for months and the owners are losing interest in them in regards to maintaining them.
Some folks will take hit to get from under, others will wait it out, and real buyers not investors (they are history) will have to make a decision, wait for a another crash (not likely) or pay the mortgage increases coming soon this summer (5% to 5.5%)?
“…wait for a another crash (not likely)…”
So we’ve reached the permanently high plateau?
LOL; “brutal”. Not really. No 10 foot snows. A few degrees colder than normal and a week or two longer. It didn’t stop me from any purchases or trips or attending classes.
Brutal only if you earn your living selling stuff that is overpriced to people who cannot afford it. Then yes.
I don’t know, my relatives and friends in Chicago (75 inches of snow and zero temps) would give you a good argument as to why they want to head to warmer locations if they could get out?
“…they want to head to warmer locations if they could get out?”
What’s holding ‘em back?
Housing demand at 17 year lows and houses will all of the sudden “sell very well” this spring?
Other than “Realtors are liars”, what can be said?