May 2, 2014

The Momentum Is Gone

It’s Friday desk clearing time for this blogger. “After a frigid and molasses-like start to the year, the metro Detroit housing market has blossomed this spring into a seller’s market. Out in Orion Township, Scott Herkes and his wife are building a two-story, four-bedroom house in the new Stonegate West development by Pulte Homes. About 40 of the Stonegate’s 140 house sites have been sold at prices ranging from $310,000 to $425,000. But they won’t be selling their Birmingham house quite yet. As they bought their existing house near the top of the local price market a decade ago, and have since made home improvements, Herkes said they are planing to rent the property as the market continues to rise.”

“‘At least in the short term, to see where the values go,’ he said.”

“Melia Campbell, president of the Sutter-Yuba Association of Realtors, said, in some ways, the buying frenzy actually hurt the market. The investors that concerned Campbell were large hedge funds and investment banks, which bought homes in bulk sales from banks at below-market price. These homes never went to the market and were never an option for traditional buyers. By skipping the conventional market, it limited supply, thereby raising home prices — sometimes past that point where people could afford them, Campbell said.”

“THR California, a subsidiary of the large hedge fund the Blackstone Group, bought about 1,000 homes in the Sacramento area that never went to the market, Campbell said. As a result of that, and other activity, median price increased by 24 percent in Yuba-Sutter between March 2012 and 2013, Campbell said. Last August, that activity began to taper off, Campbell said. ‘Home prices are up enough that investors are no longer interested because they can’t turn them for a profit, and that stabilizes the market,’ Campbell said.”

“After a decade of boom-bust-boom, the U.S. housing market is going downhill just when many economists thought it would be heading upward. Sales are slipping in Phoenix and Las Vegas, where traditional buyers aren’t stepping in to fill the void left by investors—whose activity pushed prices up. In Arizona, where investors helped drive a 44 percent increase in home prices in the past two and a half years, ‘momentum is gone,’ says Jim Belfiore, president of Belfiore Real Estate Consulting. ‘The market has been deteriorating since June of last year,’ Belfiore says.”

“Prices have climbed so fast in the past two years that buyers have sticker shock, says Lawrence Yun, chief economist for the National Association of Realtors. He projects that sales will decline 2 percent this year. ‘Housing is a victim of its own success,’ he says. ‘It’s just that the fast price growth is not healthy.’”

“Regina is the only major city where prices have fallen since the end of last year, according to the Canadian Real Estate Association’s home price index. ‘In the last six to eight months we’re certainly starting to see a little bit of a downward trend in pricing,’ says Mike Duggleby, a local realtor. His hypothesis? ‘The builders may have gotten ahead of themselves a little bit. We’ve got what for us is a fairly high inventory of resale homes right now. Buyers have got a lot of choice.’”

“Dozens of investors want their concerns to be properly addressed before accepting a handover of the Remraam apartments they sank their cash into seven years ago. ‘I’m frustrated and fed up because since my building has not come up, they will give me another one-bedroom in another building,’ said Ayman, a software professional who currently rents in Sharjah. ‘I want my money back, but if I cancel I will have to pay a huge sum and forget my first installment.’”

“Another buyer, H S, said he was in a bind because his contract did not specify a handover date. He has already paid Dh120,000 towards a Dh750,000 studio apartment. ‘I could wait 20 years or 30 years for possession,’ he said. ‘I just want my cheque back and to cancel the contract. But I’m told I have to make the remaining payments. I will never buy anything under construction ever.’”

“Developers first reduced home prices in Hangzhou on high vacancy rates. Meanwhile, the cities of Changzhou and Ningbo also face a housing glut. In Hangzhou, garment manufacturer Youngor Group and ceramic tile producer Hangzhou Nabel Group Co., Ltd. withdrew from the housing market by returning land, selling shares and making drastic price cuts. ‘Large developers will attempt to achieve their sales targets through price cuts. Cities and regions with an oversupply situation will see large slashes in home prices,’ said Zhang Hongwei, a director of real estate consulting company Tospur.”

“A general manager at a Hangzhou property company, who declined to be named, said developers were spurred to cut prices on home buyers taking a wait-and-see approach. ‘When the market is at a downturn period, the timing of price cuts is very important. The first to reduce prices will attract buyers, but those that cut prices later may not,’ said Li Xiaotao, general manager of Hangzhou Xinsheng Real Estate Development Company.”

“Anxiety around China’s rise today is a déjà vu of how the world’s leading economies once felt around Japan. But that rise could become a replay of Japan’s subsequent decline and stagnation, says Patrick Chovanec of Silvercrest Asset Management, an expert on the Chinese economy. ‘There are striking similarities between China and Japan in the 1980s and ’90s, and they’re not superficial,’ he says. ‘They’re two very different countries but they ended up with a banking system that basically produces the same result—the outcome being a rapid deceleration of (hitherto high) growth, as well as zombie banks and corporations.’”

“Carmen Reinhart and Kenneth Rogoff, two professors of economics, studied centuries of financial crises and panics, repeatedly coming to the same conclusion. ‘If there is one theme to the vast range of crises we consider,’ they wrote in their book, ‘This Time Is Different,’ ‘it is that excessive debt accumulation, whether it be by the government, banks, corporations or consumers, often poses greater systemic risks than it seems during the booms.’”

“The euphoria around economic booms often obscures the possibility for a bust, which explains why leaders typically miss the warning signs. ‘Debt fueled booms all too often provide false affirmation of a government’s policies, a financial institution’s ability to make outsized profits, or a country’s standard of living. Most of these booms end badly,’ Reinhart and Rogoff write. Indeed, it is possible that the flood-the-zone strategy of the Federal Reserve and European Central Bank to pump the system with money could backfire badly.”

“‘Critics contend that the mopping-up-after strategy sows the seeds of yet more bubbles. It is argued, for example, that the Fed’s super low interest rates after the stock market bubble burst led us directly to the housing bubble. The Fed now stands accused of being a serial bubble blower,’ Alan Blinder, a professor of economics and public affairs at Princeton and former Fed vice chairman, wrote in an Op-ed in The New York Times.”

“When did Blinder write that? Not in 2012, or 2014. He wrote it in 2008, just two months before Lehman Brothers collapsed. If he’s right, a crisis may well be coming again.”

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Comment by Combotechie
2014-05-02 04:33:45

“The momentum is gone.”

Momentum = the price’s rate of change.

Momentum chasers aren’t drawn to a market because of it’s price, they are drawn to a market because of its CHANGE in price - its momentum.

The change in price is what draws them in, and the process of drawing them in adds fuel to the change in price. And this will continue to feed on itself until …

Until the momentum is gone, which means until the change in price is gone. And this is the time when the momentum buyers become sellers. And they don’t become sellers one at a time, no, they become sellers all at once.

But, sellers to whom?

Oh, is this a good time to bring up the endless wonders of using leverage?

Comment by LolaLOL
2014-05-02 06:09:06

Where’s Jingle Fraud or Rental Paunch to give their twisted rationalizations of these articles and what will occur going forward?

Wile E. Coyote used to run along the top of a permanently high plateau also, until he ran out of plateau and dropped like a rock …. And then another rock dropped on his head also.

Comment by Doom
2014-05-02 06:16:46

These are just articles Lola, I can show you just yesterday one MLS of closed properties that you make you wonder, who in the heck is buying these homes, this is legal public records not a opinion of what may or may not happen?

Take it easy, everyday in life somebody is try to snow you to skew it their way, do what is best for you and you only.

Comment by Housing Analyst
2014-05-02 08:10:44

Is overpaying by 300% for a depreciating asset good for Lola?

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Comment by doom
2014-05-02 08:42:06

Look live in a vacuum, if I said it once I will say it again, live for what makes you happy, if you want to rent your life away no problem.

If on your death bed and you can speak the words, I have no regrets, I lived my life to its fullest then good for you.

Because you make it your life’s work to preach to people they shouldn’t buy a house, a nice car,60″ TV whatever, doesn’t mean a person shouldn’t have gambled in their life to enjoy something nice.

“You can’t take it with you”, always a great saying, don’t you think?

Comment by Housing Analyst
2014-05-02 08:43:30

Stay on topic.


-Grossly inflated housing prices 300% higher than long term trend

-Excess empty housing inventory in the 25 million housing unit range

-Collapsing housing demand to 20 year lows

-Housing and mortgage fraud in all 4 directions.

Now go.

Comment by Pete
2014-05-02 15:13:23

He is quite on topic in that psychology plays a huge part in our economy and in real estate. Not saying that’s good, but it is true.

Comment by Housing Analyst
2014-05-02 18:24:48

Psychology isn’t a fundamental.

Comment by Whac-A-Bubble™
2014-05-02 20:11:07

“…if you want to rent mortgage your life away no problem.”

Fixed it!

Comment by Ben Jones
2014-05-02 06:24:26

‘In the game plan for the 2014 economy, housing was assigned a crucial role: catalyst in chief. Pent-up demand, low interest rates and attractive prices would strengthen the recovery in home-buying and construction. This would then bolster confidence. Young families would finally get their piece of the America Dream. Satellite industries — appliances, carpeting, furniture — would flourish. Construction workers would be re-employed. Housing got us into this mess; housing would help get us out.’

‘Dream on. The housing recovery has stalled — and this contributed to the economy’s poor first-quarter performance when it hardly grew at all.’

Comment by Whac-A-Bubble™
2014-05-02 06:39:26

‘In the game plan for the 2014 economy, housing was assigned a crucial role: catalyst in chief.’

Unfortunately, now as ever, central planning generally doesn’t work out all that well for the planners.

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Comment by Whac-A-Bubble™
2014-05-02 06:42:02

The article Ben quoted has a rather catchy title:

Robert J. Samuelson
Opinion Writer
Another housing bust? Published: April 30, 2014

Comment by snake charmer
2014-05-02 07:07:51

If that alleged thought leader even asks the question rhetorically it is a significant development. Samuelson’s writing comes from a world of safe, comfortable economic certainties which for most people are not certain at all, and I put that charitably. Sometimes I wonder if he tries to look like Rudyard Kipling on purpose.

Comment by Ben Jones
2014-05-02 07:15:58

Who came up with this “game plan”? Because we got record stock prices, really high house prices and the GDP just collapsed. Who is going to take responsibility for this fiasco?

Comment by In Colorado
2014-05-02 07:46:40

Who is going to take responsibility for this fiasco?

Do you even have to ask?

Comment by Jingle Male
2014-05-02 08:13:09

No question. It is I, for I am a taxpayer……

Comment by Jingle Male
2014-05-02 08:09:06

I am right here LolaLOL, taking it all in and pondering the meaning. That is why I cherish this blog and keep coming back here, even though HA whips me without mercy!

Comment by jane
2014-05-03 20:23:35

Can HA whip me without mercy too? please please?

(j/k - I have a weird sense of humor, lol!)

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Comment by Housing Analyst
2014-05-02 04:34:47

Encino, CA Housing Prices Plunge 37%; Inventory Balloons 76%

Comment by ibbots
2014-05-02 08:59:01

New condo high-rise coming to Dallas’ booming Uptown district

“supplies of housing in the area are the tightest in decades because of a lack of construction and the booming North Texas economy.

The smallest of the 158 units at Bleu Ciel will be about 1,300 square feet and will sell in the high $600,000s”

Comment by Housing Analyst
2014-05-02 09:07:42

And we’re gonna keep building until prices are driven in the dirt.

Comment by ibbots
2014-05-02 10:35:59

Well you better get busy, prices are cratering all the way down to $461 / sq ft.

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Comment by Housing Analyst
2014-05-02 10:40:33

And not a buyer in sight.

Comment by ibbots
2014-05-02 10:47:44

Inventory cratering at 20% YOY!

Comment by Housing Analyst
2014-05-02 10:59:39

And still massively overpriced. Sounds like you’ve got a big problem growing in Dallas.

Comment by Housing Analyst
2014-05-02 04:36:54

Calabasas, CA Housing Prices Crater 15% As Excess Inventory Balloons

Comment by Whac-A-Bubble™
2014-05-02 20:23:55

Isn’t that the Tan Man’s old backyard?

Comment by Housing Analyst
2014-05-03 03:45:09

I do believe it is Mr. Mozilos neighborhood.

Comment by Housing Analyst
2014-05-02 04:38:23

San Diego, CA Housing Prices Cave 13% YoY As Inventory Explodes 80%

Comment by Housing Analyst
2014-05-02 04:39:39

Temecula, CA Housing Inventory Balloons 143% As Buyers Exit; Prices Crater 10% YoY

Comment by Housing Analyst
2014-05-02 05:16:21

Coral Gables, FL Housing Prices Plunge 10% YoY As Inventory Balloons 129%

Comment by Doom
2014-05-02 06:08:11

Movoto had my neighbors house undervalued by 110k, it sold for asking price, folks please take these sites with a grain of salt.

If you take this as gospel, then why do any research, just buy and sell what ever Zillow or this Movoto feeds you?

There are always numbers behind the numbers, don’t ever forget that.

Comment by Housing Analyst
2014-05-02 07:31:51

Prove it.

Comment by ibbots
2014-05-02 09:32:38

Disprove it.

Comment by Housing Analyst
2014-05-02 09:37:51

Its your claim to substantiate.

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Comment by Whac-A-Bubble™
2014-05-02 06:26:10

“Prices have climbed so fast in the past two years that buyers have sticker shock, says Lawrence Yun, chief economist for the National Association of Realtors. He projects that sales will decline 2 percent this year. ‘Housing is a victim of its own success,’ he says. ‘It’s just that the fast price growth is not healthy.’”

This is a major change of tune by Larry Yun.

Lookout below!

Comment by Ben Jones
2014-05-02 06:27:04

‘House prices have soared in Brazil’s big cities as salaries have grown and mortgages have become easier to obtain. But while millions of homeowners have benefited, others struggle to pay their bills.’

‘According to the FIPE-ZAP index, property prices in Rio have risen more than 250% in the past six years. In nearby Sao Paulo, they have climbed 200%. Open any newspaper here in Brazil and you are bombarded with adverts trying to sell the latest new launch of apartment blocks.’

‘But Luis Carlos Ewald, professor of finance at Fundacao Getulio Vargas in Rio, says the excitement surrounding property prices - especially in Rio because of the World Cup and the Olympics - has got out of hand.’

“Will foreigners coming here enjoy being hit by a bullet, being robbed?” he asks, sarcastically referring to Rio’s high crime rate. “Will they find this exciting and stay on afterwards? It’s a complete joke - we were living in a fantasy and we’re now returning to reality.”

Comment by snake charmer
2014-05-02 07:27:32

Where is Rio to comment on this? I suspect criminal activity will subside somewhat during the events, with favela dwellers trying to make money by offering foreign visitors tours of places like Rochinha and Mangueira.

What is the current verdict on real estate and the Vancouver Olympics of 2010? I seem to remember some grandiose plans not coming to their expected fruition, but that was before Vancouver property became a must-have accessory for the corrupt Chinese bureaucrat.

Comment by oxide
2014-05-02 11:04:21

Where in the US does/did Rio live? He mentioned that he has a paid off house in Rio, and that he eventually wanted to return to the US. If housing in Rio has skyrocketed, it might be a good time for him to sell out and return. Prices in CA are too high, but he could find a deal almost anywhere else in the country.

Comment by Whac-A-Bubble™
2014-05-02 06:27:16

“Regina is the only major city where prices have fallen since the end of last year, according to the Canadian Real Estate Association’s home price index. ‘In the last six to eight months we’re certainly starting to see a little bit of a downward trend in pricing,’ says Mike Duggleby, a local realtor. His hypothesis?’”

My hypothesis: Nobody wants to live there.

Comment by Ben Jones
2014-05-02 06:40:10

‘It’s 18,000 square feet of French-inspired grandeur that just can’t seem to sell. A Mississauga mansion that supposedly sold last January for $6.2 million — less than it cost to build — is back on the auction block.’

‘And this time it’s sharing the stage with an upscale neighbour, a resort-like, 9,000 square-foot home on prime Doulton Dr. whose owner is looking for some quick action after eight months on the Multiple Listings Service without a bite.’

‘The deal for so-called Saxony Manor, which drew daylong lineups for the unusual auction last Jan. 26, is on the verge of collapse. The buyer has been unable to come up with final financing. Their money is apparently tied up in overseas banks.’

‘As a result, they stand to lose over $100,000 in deposits if another bidder emerges at this second, joint auction. “Both houses are different — one is modern and one is traditional, so they won’t compete with each other,” said veteran Mississauga realtor Sam McDadi, who originally listed both houses on the MLS. In the case of Saxony, he even had a previous deal back in late 2013 which also fell through.’

“We just want to get this done. Both sellers are very motivated.”

Comment by In Colorado
2014-05-02 07:50:43

Isn’t Regina smack in the middle of the Canadian oil patch? Lots of mining there too. My FIL once worked as a project manager for some sort of mine there years ago.

Comment by Whac-A-Bubble™
2014-05-02 06:31:34

“The Momentum Is Gone”

That reminds me of something quite interesting. Wasn’t the Fed taper supposed to result in a steep increase in long-term interest rates?

Instead, the Fed has stayed the course on the taper, and long-term Treasury yields have steadily declined all year.

What gives?

Comment by Whac-A-Bubble™
2014-05-02 06:50:30

Bulletin Fed fund futures see first rate hike coming earlier in wake of jobs report »

May 2, 2014, 9:43 a.m. EDT
The household survey is insane
Opinion: Don’t believe the drop in the unemployment rate to 6.3%

Comment by In Colorado
2014-05-02 07:59:50

I don’t see how anyone can believe that. Employers are still super picky and they have no shortage of applicants.

The last time the unemployment rate really was 6% I remember employers fighting over candidates and you didn’t need to be a walk on water candidate to get a job.

Oh, and solid annual pay increases were a given.

Comment by Whac-A-Bubble™
2014-05-02 15:31:07

If enough unemployed people left the workforce, you could get unemployment down below 6% without a single additional new job.

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Comment by Whac-A-Bubble™
2014-05-02 06:57:43

This graph will give you the idea.

Comment by Whac-A-Bubble™
2014-05-02 20:28:16

Dropped s’more today…on track to soon retrace below May 2, 2013 levels.

May 2, 2014, 4:20 p.m. EDT
10-year Treasury yield hits lowest since February
Yields recover lower from jobs-induced spike; 10-year yield at 2.59%
By Ben Eisen, MarketWatch

NEW YORK (MarketWatch) — Treasury prices swung mostly higher Friday as tensions in Ukraine mounted, recovering from sharp losses after a jobs report that indicated a bounceback in hiring.

Members of the United Nations Security Council traded barbs as it met to discuss the conflict in Ukraine. Ukraine embarked on a military operation Friday to reclaim portions of the nation lost to pro-Russian separatists, raising further concerns about escalation of violence.

The 10-year Treasury note (10_YEAR -0.04%) yield, which falls as prices rise, was down 2 basis points on the day at 2.586%, though it climbed as high as 2.688% in the immediate aftermath of the jobs report, according to Tradeweb. The yield hit its lowest close since early February, nearing its lowest yield of the year.

The 5-year note (5_YEAR 0.00%) yield rose 1.5 basis points to 1.668%. The 30-year bond (30_YEAR -0.12%) yield fell 3.5 basis points to 3.367%, its lowest since last June. The difference between the two yields narrowed to 1.70 percentage points, its least since 2009.

Comment by Ben Jones
2014-05-02 06:31:44

‘The Colorado Springs-area housing market is off to a slow start in 2014. Single-family home sales and prices declined in February and March when compared with the same months last year, according to reports released Tuesday by the Pikes Peak Association of Realtors. Sales now have declined for five consecutive months.’

‘February’s price drop broke a streak of 23 straight monthly increases. The supply of homes listed for sale totaled 3,689 for both February and March, up 21.5 percent and 20.2 percent, respectively, over the same months last year.’

‘Bill Hurt, president of ERA Shields Real Estate in Colorado Springs, said he isn’t overly concerned that the local housing market is headed into a downward spiral.’

Comment by Whac-A-Bubble™
2014-05-02 06:37:46

Sounds like The Springs may have hit its echo bubble peak and just started its way down the second slope of hope.

It’s great to hear that Bill Hurt isn’t overly concerned that the local housing market is headed into a downward spiral. I’d be curious to know if he is normally concerned the local market is headed into a downward spiral?

Comment by snake charmer
2014-05-02 07:29:22

Wasn’t Colorado Springs having trouble keeping the streetlights on not too long ago?

Comment by In Colorado
2014-05-02 08:02:07

I think that was a game of chicken the local government was playing in trying to blackmail local voters to “de-Bruce” TABOR locally.

Comment by Ben Jones
2014-05-02 06:33:46

‘Figures compiled by Mike Figura, head of Mosaic Community Lifestyle Realty, show home sales rising a bit within the Asheville city limits for the first quarter but declining 11.6 percent in the rest of Buncombe County.’

“In the city of Asheville, anyway, the recovery is not coming to a halt. As far as Buncombe County, the numbers do kind of imply that,” he said.’

‘Analyst Don Davies said weather dampened sales countywide, but out-of-town buyers do not have the seemingly endless desire for a home here that they did early in the last decade.’

“I’m still not seeing the second home buyers coming out here saying, ‘I don’t care what it costs,’” he said.’

Comment by Ben Jones
2014-05-02 06:37:26

‘A house on a corner lot in Providence’s Olneyville section sits boarded up. Graffiti is scrawled on a wall. It’s called a zombie foreclosure.’

“The person who took a mortgage on it has been gone from the scene for a couple of years,” said Frank Shea, executive director of the Olneyville Housing Corp.’

“The bank that holds the mortgage or services the mortgage initiated a foreclosure process, but hasn’t completed that. So, there isn’t a responsible party looking out for this property,” he said.’

‘There are many of these properties all over the city — in Olneyville alone, about a dozen.’

Comment by Ben Jones
2014-05-02 06:43:35

‘The economy has been slowly picking up steam, say economists, and even the housing market is showing some modest signs of recovery, according to Maine State Economist Amanda Rector, with both values and sales activity growing.’

‘If both are true, then why is Stonington is wrestling with a growing number of property owners who are losing their land and building for nonpayment of property taxes?’

‘The local housing market hasn’t rebounded as quickly as the national real estate market, says Jeff Allen, a realtor with Downeast Properties. Housing sales along the Blue Hill Peninsula are up, but it’s not the same level of recovery as in other parts of the country, he said.’

“I’m reading about nationwide markets recovering,” Allen said. “Things in Maine, especially in rural areas of Maine, take time.”

‘Locally, it’s a buyer’s market, with lots of good housing stock to be had at relatively low prices.’

‘Rhonda Mitchell, a Realtor with the Island Agency, says many of the homes she’s selling are second homes for out-of-staters. There are plenty of those to be had on the market without having to go for the more challenging properties being acquired by the town.’

“A lot of the properties you’re seeing [being acquired by the town] are raw land, and raw land is a very tough sell right now,” Mitchell said.’

Comment by Ben Jones
2014-05-02 06:45:19

‘Local officials recently participated in a field trip to learn how Gunnison County is dealing with high housing costs and low availability in nearby communities. “I wish we had better rental properties and more options for people,” Baker said. “People do need to start out somewhere, and young families and young adults that come in can’t always afford to buy or build a house. Others may not want to, they may want to rent. It would be nice to have some options so they’re not living on BLM land in a tent.”

Comment by goon squad
2014-05-02 06:56:42

Per wikipedia, population density in Chaffee County is 16 people per square mile.

Now let’s hear some Realtor® tell us how they’re not making any more Chaffee County.

Buy Chaffee County now or be priced out forever.

Comment by Ben Jones
2014-05-02 07:01:00

And send in 100 armed BLM goons to run off these slacker tent people.

Comment by goon squad
2014-05-02 07:11:07

I am intimately familiar with the backcountry of Chaffee County.

It wouldn’t be a bad place to be when “Go Time” happens :)

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Comment by Doom
2014-05-02 06:47:22

Jobs…6.3% 288k added, keep telling yourself housing will fall 40% and mortage rates will drop. Buy now at 4% and underwater folks what a offer buy now people.

Comment by Housing Analyst
2014-05-02 07:30:38

Why buy when;

-Rental rates are half the monthly costs

-Current housing prices are 300% higher than long term trend

-There are 25 MILLION excess empty houses

-Housing demand is at 19 year lows


Comment by doom
2014-05-02 08:51:13

-American standard of living still highest in the world

-Almost any person in the world with money still wants to invest in America

-Worlds currency is still the dollar

-New tech advances means a strong market economy for US
going forward

-New administration 2015-2016 increase chances of better business climate in US and World

-Sheer numbers of US population increasing ensures housing demand

Comment by Housing Analyst
2014-05-02 08:54:33

1 out of 6 you managed to keep on topic. Let’s start there.

-US Population growth is the lowest in US history per 2010 Census

-Immigration flat to negative

Against a backdrop of 25 MILLION excess empty houses and an additional 35 MILLION just hitting the market as boomers expire.

Housing demand?

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Comment by Kidbuck
2014-05-02 12:07:53

I’ve seen many of these empty houses. Dumps that are old, we’re crap to begin with and are now old crap, have not been maintained, so are even less glorious now, can’t Be renovated at a reasonable price, are in a neighborhood of houses all heading the same way. In a word, they are used up. And yes, many of these houses are used up after 20 or 30 years.

Comment by Housing Analyst
2014-05-02 13:52:13

Right…. you’ve seen all 25 million of them.

Comment by LolaLOL
2014-05-02 17:36:50

Lots of shill throwaway accounts being used today. I love how they pop up for a day and then are gone for weeks or months or forever.

Comment by Housing Analyst
2014-05-02 18:23:11

No doubt. The desperation is entertaining. We even have our SF BooHoo Donkey reappear today.

Comment by Jingle Male
2014-05-03 04:21:15

” I love how they pop up for a day and then are gone for weeks or months or forever.”

They probably have jobs.

Comment by Housing Analyst
2014-05-03 04:24:29

Like a moth to a flame… Good job J._Fraud.

Comment by pazuzu
2014-05-02 16:25:31

Doom: “Jobs…6.3%”
If you actually believe this you might want to look at the “numbers behind the numbers”.!Hogi5

Comment by Whac-A-Bubble™
2014-05-02 06:49:07

Another puzzling aspect on the “momentum slows” theme:

The U.S. jobs recovery appears to be on track, even as workers are dropping out of the labor market in droves. It’s hard to say where this ends, but the labor market picture is extremely unsettled.

One thing is for sure: The households to which those 800,000+ recent labor force dropouts belong are not likely to purchase a home any time soon.

May 2, 2014, 8:34 a.m. EDT
U.S. labor-force participation rate falls sharply in April
By Jeffry Bartash

WASHINGTON (MarketWatch) - The U.S. labor-force participation rate sank to 62.8% in April from 63.2% in March to match a 35-year low, the government reported Friday. Some 806,000 people dropped out of the labor force, according to Labor Department figures.

Comment by Ben Jones
2014-05-02 06:54:39

‘It is reported that the situation with Chinese steel company debt continues to deteriorate. The situation is expected to continue worsening into next year, with concern that this is still the tip of the iceberg.’

‘According to an insider at the court, this year’s cases have some new characteristics. The first is the concentrated debt, such as the case of Xiao Jiashou, the Shanghai Steel Trading King, which involved seizing assets of JPY 460 million. Second are larger and larger cases in general with cases above JPY 10 million in debt more frequent. Third, the service rate is down (service of process) because the defendants have fled.’

‘Last year the assets in these cases were better, and people were willing to mediate. This year asset quality has deteriorated and so defendants don’t care.’

Comment by Ben Jones
2014-05-02 06:56:51

‘Vanke Vice Chairman Mao Daqing’s private comments about the Chinese residential property market recorded, posted online’

‘China’s anti-corruption campaign has had a greater impact on high-end property projects than most have realized. Investigations are ongoing into owners of property priced around 40K-50K RMB/sqm, not to mention more expensive properties. The increased scrutiny surrounding the anti-corruption campaign has caused demand to fall off in the high-end property market.’

‘The second-hand housing market has been even more impacted by the anti-corruption campaign. New listings for sale surged to 10-12 units per day, twice as many as before.’

‘Many owners are trying to get rid of high-priced houses as soon as possible, even at the cost of deep discount, because many corrupted officers have illegally accumulated several or more houses through bribery or embezzlement. As a result, ordinary people who want to sell homes in the secondary market must face deep price cuts.’

Comment by Ben Jones
2014-05-02 06:58:56

‘News of Li’s suicide spread around her neighborhood in the days following her death. In the small hours of Friday, 51-year-old Li, who lived in Beijing’s Chaoyang district, jumped to her death from the 17th floor of the building where she lived.’

‘Some of Li’s neighbors thought it was because she had been depressed, but few knew that she was one of the victims of a failed investment.’

‘At the end of 2013, Li invested around 110,000 yuan ($17,600) with a fund management firm named China-Europe Winton Fund. But in February this year, the company’s executives were all found to have disappeared.’

‘Li’s family was not that rich and the investment would have taken a large chunk of their savings. Li’s husband declined an interview request from the Global Times.’

‘Chen, a 59-year-old retiree living in Beijing, said that he heard about China-Europe Winton Fund at a supermarket when the company’s employees were handing out fliers. “Most victims of the company are retirees like me,” he said.’

‘China-Europe Winton Fund offers wealth management products and peer to peer (P2P) lending services that match lenders with borrowers.’

‘The company claimed that in each P2P lending deal, the borrower would provide real estate properties as collateral, in order to guarantee the safety of the investment. But Chen said this was just a lie.’

Comment by rms
2014-05-03 06:14:10

“…were all found to have disappeared.”

Interesting choice of words. :)

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Comment by Whac-A-Bubble™
2014-05-02 06:59:59

Tentative conclusion: Without crooks buying high-end Chinese real estate, the entire global economy might collapse.

Big-time real estate fraud is too big to fail!

Comment by Ben Jones
2014-05-02 07:03:16

‘Dear Mary: We are one month behind on our mortgage payments and plan to catch up this month. We have told our credit union we will pay half on the 1st and the second half on the 13th. This will bring us current. They call all day, every hour. When we answer they say they have to call us constantly until the amount due is paid. That is their policy. I say this can’t be true or allowed by law. It seems like harassment. — Cindy, Maryland.’

‘Dear Cindy: I can certainly understand your frustration, but I can understand your lender’s policy as well. I know of no laws they are breaking by calling you at reasonable hours during the day. (You may be confusing this with laws that protect you when a debt is turned over to a third-party collector.)’

‘Look, when you signed the original loan document, you promised to make your payments on time, every month, in accordance with the agreement. You failed to do this. It’s not the end of the world, but you have to look at this from their standpoint.’

‘If you broke your promise to make a payment on time, why should they believe that you will keep your promise to catch up on the 1st and 13th? If you didn’t have the money last month, what makes them confident you’ll have it this month in addition to your regularly scheduled payment?’

‘Rather than feeling entitled to paying late on your terms, why not consider this through their eyes?’

‘Untold thousands of people in this country have decided to walk away from their mortgages. But do they tell the lender this fact? No. They stop making their payments and then lie when the lender calls. They remain in the home until the lender can make it through the complicated and expensive maze called foreclosure. The statistics are staggering. Many people manage to eek out years of making no payments, while remaining in the home.’

‘You missed a payment, and that’s a red flag for your lender. Frequent calls are keeping them at the forefront of your every thought, which you have to admit is pretty smart.’

‘Here’s an idea: Tomorrow, call them before they can call you. Be kind and once again express your remorse for running late. Tell them exactly the day and time that you will be bringing them money, even if you’ve told them a dozen times. Then keep your promise. Show up in person. And be grateful for their long suffering.’

Comment by Mr. Banker
2014-05-02 07:12:53

“‘Here’s an idea: Tomorrow, call them before they can call you. Be kind and once again express your remorse for running late. Tell them exactly the day and time that you will be bringing them money, even if you’ve told them a dozen times. Then keep your promise. Show up in person. And be grateful for their long suffering.’”

And bring lots of Cheetos.

Comment by Housing Analyst
2014-05-02 07:20:39

‘Untold thousands of people in this country have decided to walk away from their mortgages.

The obvious solution is to walk away. How much did you pay in $’s/sq ft? If it was more than $40/sq ft for a used house, your option should be obvious.

Comment by oxide
2014-05-02 11:21:34

Maryland is a recourse state.

Comment by Kidbuck
2014-05-02 12:15:43

This would make sense if you could link to some nice houses at these prices. Can you show us some examples at these prices?

Comment by Housing Analyst
2014-05-02 15:20:17

Go pick one out. They all are built at $55/sq ft.

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Comment by snake charmer
2014-05-02 07:36:30

Without being sympathetic to the borrower here, the tone of that advice troubles me a little. Would it be OK to call the lender every hour if it kept “losing your paperwork,” as so often happened from 2008 to 2011? In those circumstances, should the lender be grateful for your long suffering?

Comment by Housing Analyst
Comment by Ben Jones
2014-05-02 07:26:57

‘After almost 60 years of serving as an industry mouthpiece, the Arizona Construction Association has filed for Chapter 7 bankruptcy. The nonprofit advocacy group filed on Wednesday in the U.S. Bankruptcy Court, District of Arizona, according to records obtained by the Phoenix Business Journal.’

‘In a Chapter 7 bankruptcy proceeding, a company generally goes out of business and a trustee is appointed to liquidate its assets as a means to satisfy debt. Court records show the organization has between $500,001 and $1 million in debt, but no more than $50,000 in assets.’

‘It’s no secret the ACA has run into financial troubles in recent years as its membership has plunged. Last year, the nonprofit lost its office condominium in midtown Phoenix to foreclosure. Then, in July, the lender filed a nearly $500,000 lawsuit against the ACA for deficiency, or the money still owed on the loan.’

Comment by Housing Analyst
2014-05-02 07:29:23

I expect to see a whole lot more of these events. These organizations were established to drive housing supply for the boomer generation.

It’s all over now. The boomer generation is the pig in the python.

Comment by Housing Analyst
2014-05-02 07:27:26

“The Housing Crater: Phase II Underway”

Comment by Ben Jones
2014-05-02 07:39:20

‘Thirty-nine condominiums will be sold by the developer of the Lodge at Suncadia in Cle Elum on May 25. Auctioneer Kennedy Wilson said the launch prices, when the lodge opened in 2007, ranged as high as $985,500 for a 1,325-square-foot condo, which is being sold at auction with bids beginning at $160,000. Starting bids on an 870-square-foot condo, which had a launch price of $671,900, will begin at $75,000, according to a Kennedy Wilson brochure.’

‘The Lodge is a 183-unit project that is part of the 6,300-acre Suncadia resort community located 80 miles east of Seattle. Suncadia condo sales were battered by the 2008 recession. In a 2012 PSBJ story, it was reported that prices for homes in Suncadia and the hotel/condo units at the lodge fell between 40 percent and 60 percent from the market’s peak.’

Comment by Ben Jones
2014-05-02 07:47:13

This was posted here yesterday:

‘“Homes in more than 1,000 cities and towns nationwide either already are, or soon will be, more expensive than ever,” Zillow reported gleefully the other day. “National home values have climbed year-over-year for 21 consecutive months, a steady march upward….”

‘Glorious recovery. Our phenomenal housing bubble that, when it blew up spectacularly, helped topple our financial system, threw the economy into the Great Recession, caused millions of jobs to evaporate, and made people swear up and down: never-ever again another housing bubble.’

‘Steps in the Fed, and trillions of dollars get printed and handed to Wall Street, and assets prices become airborne, and Wall Street jumps into the housing market and buys up hundreds of thousands of vacant single-family homes, drives up prices, and armed with free money, shoves aside first-time buyers and others who would actually live in these homes, and turned them instead into rental units. Now in over 1,000 cities, prices are, or soon will be, as high as they were at the peak of the last housing bubble.’

‘The difference? Last time, all that craziness was called a “housing bubble” with hindsight. This time, it’s called a “housing recovery.”

Comment by salinasron
2014-05-02 14:01:51

“This time, it’s called a “housing recovery.” It is a recovery! It’s a recovery because the bank’s are getting their monies back first from the government and then the individuals. Slick, slick, slick. I imagine the Blackstone and other hedge companies have been making so much money on their Flash Trades that they needed to launder it into housing and after the stock market crash can then sell off a hard asset and get rolling in the market anew.

Comment by Ben Jones
2014-05-02 08:03:12

‘THR California, a subsidiary of the large hedge fund the Blackstone Group, bought about 1,000 homes in the Sacramento area that never went to the market, Campbell said. As a result of that, and other activity, median price increased by 24 percent in Yuba-Sutter between March 2012 and 2013, Campbell said. Last August, that activity began to taper off, Campbell said.’

Dang Jingle, you might be hanging by a thread there.

Comment by Ben Jones
2014-05-02 08:09:43

‘For Rebecca Diamond, a marketing manager in Randallstown, Md. who’s getting married this month, buying a home with her new husband would seem like the logical next step. But she’s not even considering it.’

“No interest whatsoever. I don’t want the cost and responsibility of one right now,” she says. “Let [the landlord] have all the headaches,” adds Diamond, who rents a three-bedroom condo outside of Baltimore.’

‘She’s hardly alone. Just 74.4 million American households — less than 65% of the country — owned the homes they lived in during the first quarter of this year, according to a U.S. Census Bureau report this week. That was the lowest level since 1995 and a big drop from 2006, when a peak of 76.5 million households, or 68.9%, were owner-occupied.’

‘Stephen Alberts, a Long & Foster realtor in Williamsburg, Va., who does many of his deals in the coastal retirement community of Virginia Beach, says his business is tougher than ever. “Even I’ve got to pound the ground,” he said. “Buyers just aren’t coming to me anymore.”

Even you Steve?

Comment by In Colorado
2014-05-02 09:35:00

High prices + low wages = few sales

Comment by Housing Analyst
2014-05-02 08:29:59

Agoura Hills, CA Housing Prices Collapse 23% YoY; Inventory Grows 20%

Comment by Doom
2014-05-02 12:23:59

HA…Your whole mantra on this blog (which you have every right) is to convince people to stop buying houses,cars,maybe a good steak.

By accomplishing this, it your assumption the powers to be who run the show will cave in and make everything 1957 all over again.

Make me understand your thoughts, I just want to know if you really think by pleading your demands on this blog will convince people to stop buying houses and cars, a massive strike of buying will actually work or force a change and would it be for the better?

Comment by Puggs
2014-05-02 14:24:20

I don’t think he’s railing against NOT buying anything. Just don’t OVERPAY and use cash.

Comment by doom
2014-05-02 15:32:49

Nothing wrong with that, be safe this weekend!

Comment by Housing Analyst
2014-05-02 15:23:12


You’re not paying attention.

Comment by Whac-A-Bubble™
2014-05-02 20:30:30

“…stop buying houses,cars,maybe a good steak.”

If you refrain from throwing away your life’s savings on an overpriced house, you will have so much money left over that you can pay cash for your cars and eat all the steak your stomach can hold.

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