A New Paradigm For Economic Prosperity
It’s Friday desk clearing time for this blogger. “Southern Oregon continues to give mixed signals on economic growth in the wake of the Great Recession. The number of jobs and workforce are in decline. Guy Tauer, a regional economist for Oregon’s Employment Department, suggests Jackson County construction outstripped demand prior to the recession, making for a bigger hole to emerge. ‘We overbuilt during the boom years, outpacing Oregon in terms of permits and construction employment,’ Tauer said. ‘In-migration, which fuels our population growth, has slowed. There’s an excess in available properties, rather than a demand to spur additional building.’”
“In many Milwaukee neighborhoods, the homes have a colorful but troubling name attached to them. ‘Zombie’ properties. Housing advocates say a zombie property is generally defined as one that is in foreclosure but hasn’t been resolved for more than three years. ‘These things keep rotting in our neighborhoods,’ says Art Dahlberg, commissioner of the city’s Department of Neighborhood Services. ‘I say to banks, ‘Help us understand why you don’t take responsibility for the property. And if you do not foreclose, why do you start the process at all?’ I’ve never gotten a satisfactory answer.’”
“Full recovery continued to elude the Philadelphia region’s residential real estate market in the first quarter of this year, as the value of a typical home fell 4.9 percent from the last three months of 2013. University of Pennsylvania economist Kevin Gillen said that with the latest decline, average house prices in the region were ‘barely above the post-bubble bottom they hit two years ago.’ Price declines were spread almost uniformly across the region, Gillen said, with nearly every county experiencing some price deflation.”
“‘That 4.9 percent decline is a seasonally adjusted number,’ he said, ’so it actually masks just how severely depressive this winter was. If you look at just median or average house prices, the quarterly decline was much larger.’”
“Mortgage broker Wendy Kircheck spoke at the Chamber of Commerce gathering about housing trends in Calabasas. The market recently doubledipped, but is recovering. The median price for homes sold in the city from February to May was $859,500, down a whopping 27 percent compared to the previous quarter, Kirchik said. But the drop had come on the heels of a 26 percent uptick during the previous five years. She said 78 percent of Calabasas homes are owner-occupied, which is contrary to the belief that landlords are snapping up homes in the city for use as rentals. She also said, ‘Many people think there’s a lot of cash buyers, but 85 percent (of the owner-occupied homes) still have mortgages.’”
“One leading Ottawa broker isn’t convinced the city’s condo market will heat up, despite optimistic reports from the Canada Mortgage and Housing Corporation. ‘I don’t think we’ll see it heat up – we’re seeing that the prices of condos have gone down five to 10 per cent,’ broker Sam Himyary. ‘Most condo buyers purchase them for investment purposes. For example if you buy a $300,000 condo with 20 per cent down, after the condo fees and taxes, the rent will barely cover your mortgage.’”
“Resale prices of completed non-landed private homes continued to fall last month, the Singapore Residential Price Index flash estimates showed, as sellers cut prices to keep pace with discounts for new homes, with the sharpest declines seen in non-central areas. ‘With developers giving discounts on new homes to move sales, resale sellers are under pressure to match such moves in price cutting to compete for the same pool of buyers,’ said Ms Anne Tong, chief executive officer of HSR International Realtors. ‘The drop in private resale prices is (also) due to an oversupply of units.’”
“Mainland developers are facing fresh roadblocks in their rush to reduce inventory by offering hefty price cuts as several local governments have set a cap on such discounts at 15-20 percent of a flat’s original price. Prices of new flats in Hangzhou can be reduced by up to 15 percent, China Times reported. Further reductions would nullify any transaction, the report said. A similar rule prevails in Dongguan, where buyers recently complained of not being able to sign online contracts after buying homes carrying a 20 percent discount. ‘Such rules limiting price hikes and cuts exist in almost all mainland cities,’ an official said.”
“The rule was intended to avoid volatility in property prices that might result in social unrest. ‘We can hardly achieve good sales without slashing prices to a larger extent as the market lacks confidence in the property market. If government hinders us from cutting prices freely, our days will be harder,’ a person in charge of the marketing department of a listed developer said.”
“Strangled by regulation and high prices, weak French housing investment is proving a major drag on the euro zone’s second-biggest economy. Bank of France Governor Christian Noyer has pointed out that housebuilding is falling short even though France ploughs more public money into the sector than any other developed country through a range of measures to encourage home ownership. ‘It’s a valid question whether these policies have only led to higher prices rather than construction,’ said Gardner.”
“Longer-dated mortgages have allowed French households to borrow more. Bank of France data shows household debt has risen to a record 84.8 percent of gross disposable income. Economics professor and real estate expert Michel Mouillart sees few options left for the sector short of allowing smaller deposit payments than the 20-25 percent usually required. ‘If we want to revive construction without using more debt or more public aid, all you have to do is make the French rich,’ Mouillart quipped.”
“We are living in an Orwellian economy where image is everything. Housing inflation in key hotspots is labelled a purely supply side issue by the Government despite the lack of credible data showing what is actually happening in these markets. The Government has a remarkable reluctance to collect such data. An Orwellian economy is reliant on the absence of truth.”
“The bulk of middle New Zealand has seen their perceived personal wealth rise largely as a result of housing inflation rather than increases in their earnings. Unless New Zealand has discovered a new paradigm for economic prosperity this is not sustainable. No country has ever become rich through house price inflation although before the global financial crisis many deceived themselves this was possible. What this Government appreciates is that if people are feeling wealthier they tend to vote for the status quo.”
“Surveys show an enduring desire to own one’s home. But the love is not what it was. So customer demand continues, Jane Zavisca, a University of Arizona sociologist, told me, ‘but not homeownership at all costs.’ ‘Young people who’ve seen others’ lives ruined by the pain of foreclosure seem especially wary of taking on a mortgage, according to Zavisca. The idea of a home as a means of saving for retirement — as something one could sell in hard times — persists. It is a financial asset, Zavisca said, ‘but not in the sense that the average individual should be making a living buying and selling real estate.’”
“What amazes me is that more Americans aren’t seething over one of the biggest con jobs ever perpetrated on an unsuspecting public. The housing bubble was a product of public policy. The Fed under Alan Greenspan kept interest rates low to keep the speculative frenzy going. Financial deregulation let lenders push snake-infested mortgage contracts onto the shoulders of ordinary people.”
“When the bubble splattered, ordinary people were left bankrupt, foreclosed upon and devastated both financially and psychologically. If Americans are less than enthusiastic about real estate, who can blame them?”
“Full recovery continued to elude the Philadelphia region’s residential real estate market in the first quarter of this year, as the value of a typical home fell 4.9 percent from the last three months of 2013. University of Pennsylvania economist Kevin Gillen said that with the latest decline, average house prices in the region were ‘barely above the post-bubble bottom they hit two years ago.’ Price declines were spread almost uniformly across the region, Gillen said, with nearly every county experiencing some price deflation.”
“‘That 4.9 percent decline is a seasonally adjusted number,’ he said, ’so it actually masks just how severely depressive this winter was. If you look at just median or average house prices, the quarterly decline was much larger.’”
So it is everywhere else in the country. Price reversals and accelerating declines because housing prices are massively inflated by 250%+.
Again….. Why sustain massive irrecoverable losses when you can rent for half the monthly cost? Buy later after prices bottom for 70% less.
“Guy Tauer, a regional economist for Oregon’s Employment Department, suggests Jackson County construction outstripped demand prior to the recession, making for a bigger hole to emerge.”
That happened many other places relative to fundamental (end-user) demand. However, the overbuilding in many other markets is temporarily masked by investor purchases. It may take a while for the oversupply to manifest itself in the form of negative home equity wealth gains.
County construction outstripped demand prior to the recession, making for a bigger hole to emerge.” ??
Southern Oregon was totally dependent on California money and net in-migration from the same…”The Boomers Are Coming” was the mantra and awash in easy money they built…
Phoenix is deep into the overbuild phase. Deep. Demand has collapsed but they are still trying to sell based on price projections that include 20 percent gains every year.
I’m sure the builder obtained loans to build based on numbers that while facially plausible were a mess if you scratched below the surface even a little bit.
This is not true, where do you get your information. Builders in Phoenix are avg less then 50 homes a development which means sells of these homes typically sell out in 9 months.
Check the ads, many builders just this month are running close out deals with as few as 5 houses remain in many of the developments valley wide.
Phoenix developers to the contrary are not in the mood even if they find enough land to build mega developments unless they are of the resort style such as Trilogy in West Peoria where 1k homes are in the works for Feb 2015.
They did there due diligence this time and built just enough homes to satisfy the demand. I went to a large development just this past week where 212 homes were built in Jan 2013 as it stands 7 remain, the builder made his money, there is no panic?
‘In Phoenix, where home prices have bounced back and Wall Street money has vacuumed up thousands of distressed properties, the market has gone flat. In Belfiore Real Estates’ April market report, Jim Belfiore wrote, ‘The bad news for home builders is they have created a glut of supply in previously hot market areas… Potential buyers, as might be expected, feel no sense of urgency to buy because they believe this glut is going to exist indefinitely.’
http://thehousingbubbleblog.com/?p=8396
I get my info from driving down the streets day after day after day. Every bit of developable land is being built out now. There are sign spinners on every corner on the weekends all hawking the new developments. I see the new developments everywhere. The construction equipment is going full blast. And I know the demand is zilch. You are deliberately lying.
Lets see you get your info from driving down the streets day after day after day?
How about you actually stop in and ask the sales consultants how many homes are left. Is the market robust no, are the builders in a panic no, sign spinners don’t constitute a housing bubble. The barber near my house does a brisk business, who hired a sign spinner because the barber down the road hired one.
You can’t afford a home so you result to calling me a liar, you are frustrated by your plight in life and you know that housing is never reverting back to 2008?
You should have bought on the down trend and sold for a nice profit in 2013, you are the preverbal Monday Morning QB?
No. You’re a liar.
“You can’t afford a home so you result to calling me a liar, …”
Why do you assume he can’t afford a home? Does everyone who can afford to buy automatically buy a home?
It didn’t turn out that way the last time Uncle Sam tried to get everyone who could smoke a mirror to buy; maybe this time is different.
why do states have economists ? to raise rates or grants stimulus $$$ ?
I don’t know that west side of Portland is doing any better than southern Oregon. Here is a house in my hood. Take a look at the price adjustments and then compare asking price to the wishing price Zillow puts on. But, he is now listed with a UHS, so now I am sure things will get moving!!
http://www.zillow.com/homes/for_sale/Hillsboro-OR/70937900_zpid/11914_rid/days_sort/45.547317,-122.99477,45.545063,-122.999078_rect/17_zm/
“Here is a house in my hood.”
A 5br/3ba w/3700-sqft at $489k is pretty rich for Oregon, and then add a couple of $35k cars in the driveway. I’d have a difficult time getting sleep since I don’t function well in captivity.
“What amazes me is that more Americans aren’t seething over one of the biggest con jobs ever perpetrated on an unsuspecting public. The housing bubble was a product of public policy. The Fed under Alan Greenspan kept interest rates low to keep the speculative frenzy going. Financial deregulation let lenders push snake-infested mortgage contracts onto the shoulders of ordinary people.”
Isn’t the old plan also the current plan?
And this is why all the “progressives” here should be hanging their heads in shame. This is gonna hurt the poor and lower middle class much more. They’ll just keep carrying water. You all know who you are. Keeping quiet.
So long as they never admit blame, it can’t be their fault when millions of low-income families see their meager savings vanish down the real estate ownership rathole.
I’m progressive, I don’t keep quiet, and I don’t carry water for these people. Nor have I seen anyone here defending the Fed, the federal government’s involvement in mortgage finance, or Alan Greenspan. The real revelation since 2008 has been that American political and economic leadership, regardless of political affiliation, has reached a consensus hostile to both democracy and capitalism. We can’t let markets work when they benefit the financial services industry, and intervene and manipulate markets when they don’t, and indefinitely suspend the rule of law for large banks while ruthlessly enforcing it against everybody else. But that is the game plan.
I’m also amazed at the general lack of seething, although in a similar vein I don’t read of people seething at their gambling losses. They seem all too eager to give the wheel another spin. That’s why gambling is illegal in some places.
‘Nor have I seen anyone here defending the Fed, the federal government’s involvement in mortgage finance’
We have a few of those. And we get the “it would have been a lot worse if they didn’t print a gazillion dollars and hand it out”.
The real revelation since 2008 has been that American political and economic leadership, regardless of political affiliation, has reached a consensus hostile to both democracy and capitalism.
+1. Two sides of the same coin.
And I’m a red-hot flamin’ liberal. As you all know, I sure don’t carry water for other people or keep quiet.
There are plenty here who do carry the water. And I’m not talking about old news of the last time around. I mean NOW. Where are the “progressive” diatribes against Mo Credik Mel and his attempts to turn on the spigot again and leave millions worse off?
Do you read the same blog?
So, not writing diatribes against something means people agree with it?
Got it.
So, not writing diatribes against something means people agree with it?
“Eleanor” when that something is the biggest change in policy in several years and a throwback to everything that was wrong with the prior bubble and this is a housing bubble blog, yes it does. Remaining silent in the face of Mo Credik Mel and this scam they are trying to pull speaks volumes you shill.
Why in my life where I have risk to obtain a nice life, be ashamed that I don’t somehow cry and look back that me being a ultimate capitalist should hang my head.
BTW the sign spinners, why don’t you mention the 21 year old beggars at the stoplight who want money and not work for it, they should be ashamed the scam artist they are, they should be spining signs for Toll Brothers and make a honest living, don’t you think??
Pushing crushing debt on poor and minorities is one of the most cynical trickle-up policies out there. And it’s perpetrated by government, the thing that’s supposed to be looking out for them! Talk about a fifth column.
The response to this is, “Well, instead of burning money on rent, you get to ‘build equity’ and at the end of it, you’ll own a house. Then you really start building your savings because you don’t have to pay rent.’”
My response: “You get to burn money on interest, taxes, insurance, higher utility costs, maintenance and fees. Then at the end of it, you have an illiquid asset and you still have non-trivial carrying costs, and a limited bank account. Take out a home equity loan? This was considered financial madness, an act of desperation, just a couple of decades ago.”
But trickle-up is good for the cronies. The ‘regulators’ quickly head to the private sector and their reward after their term in DC expires.
The danger here is throwing the baby out with the bath water. There seems to be a growing attack on capitalism, which at its best, harnesses human desire to benefit society. But it’s turned into crony capitalism - a descent into oligarchy - where companies capture politicians and regulators who just become proxies for these organizations, the goal of whom is amoral pursuit of profit, not to “form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.”
Neuromance: My response: “You get to burn money on interest, taxes, insurance, higher utility costs, maintenance and fees. Then at the end of it, you have an illiquid asset and you still have non-trivial carrying costs, and a limited bank account. Take out a home equity loan? This was considered financial madness, an act of desperation, just a couple of decades ago.”
Also… the poor tend to be in lower-skilled jobs. Their employment prospects are more limited. So they have to have some mobility - ability to move to jobs. A house makes that significantly more difficult.
“Talk about a fifth column.”
+1 Indeed. More truth right there than many realize. The financial occupation of this country has been thorough, a metastasis.
So who do we vote for? I’m not seeing a viable option to end that.
Republicans are good at paying lip service to proper microeconomics, while they’re horrific at their macro.
Democrats are blatantly bad at both, but are at least willing to step in with regs when it goes bad.
So, do you like being pushed or pulled over the cliff?
“The bulk of middle New Zealand has seen their perceived personal wealth rise largely as a result of housing inflation rather than increases in their earnings. … What this Government appreciates is that if people are feeling wealthier they tend to vote for the status quo.”
Paging 2banana!
But I feel so much richer!!!!
“Longer-dated mortgages have allowed French households to borrow more. Bank of France data shows household debt has risen to a record 84.8 percent of gross disposable income.
That is not enough left for even for a ramen noodle dinner…
‘A 30 percent jump in prices over the last decade has made home ownership impossible for many even though the market has cooled over the last two years. Prices fell 1.4 percent in the first quarter compared with a year before, data from INSEE show.’
‘Figures from the OECD suggest prices relative to household income are now less affordable in France than in Britain, where the central bank has warned of a potential housing bubble.’
‘Bank of France Governor Christian Noyer has pointed out that housebuilding is falling short even though France ploughs more public money into the sector than any other developed country through a range of measures to encourage home ownership.’
“It’s a valid question whether these policies have only led to higher prices rather than construction,” said Gardner.’
What’s the old saying about what to do when you find yourself in a hole?
If you keep digging, maybe you will soon find yourself in China.
“The idea of a home as a means of saving for retirement — as something one could sell in hard times — persists.”
That seems a rather odd idea to persist, as we recently learned that hard times are a very bad time to offload a devalued home, when many others are losing their jobs and doing the same.
The place to be in hard times is Treasurys.
not to mention that “buying” that home may largely be responsible for the hard times.
No, it’s a perfectly fine idea for retirement, under the assumption that the house is paid off by the time you retire. If you paid $70K for a house, what do you care if the value 30 years later drops from $195K to $170K?
And no, goon, this message is NOT brought to you by the National Association of Realtors. The LAST thing they want is for somebody to buy only one house in a lifetime.
You are living in the mania. Your house will not triple in “value”, that happened before you bought it. What lies ahead is an unraveling of the debt pyramid.
What lies ahead is an unraveling of the debt pyramid.
I totally agree, Blue Skye; however, the jury is still out, in my mind, as to whether the asset-price declines will outweigh the dollar-purchasing-value declines over the next couple of decades that it takes for the unraveling to unfold.
That would be a bet on the honesty of the currency and the government, wouldn’t it?
We’ve watched what the PTB has done over the past years. They have let individuals be crushed by the millions in order to feed the center. One can avoid being crushed by a tsunami of debt defaults, everyone has heard how to do this and that is when some cash will be a safety precaution. It won’t be worthless in that situation because few will have much. The center prints for itself and not everyone.
Lesson from the Great Depression: “At first there was no seed to be had, and then there was no money to pay for it.”
Of course the PTB will print like mad (but not give it to you and me). They won’t be able to tax us enough to keep the center intact (they already can’t). Eventually it would be handy to have real wealth rather than FRNs, but I don’t worry about that. I already have a handful of it and by the time it is useful we are likely to be long gone from the scene. First cash is King and later something more real is King, JMO.
“…housing trends in Calabasas. The market recently doubledipped, but is recovering. The median price for homes sold in the city from February to May was $859,500, down a whopping 27 percent compared to the previous quarter, Kirchik said. But the drop had come on the heels of a 26 percent uptick during the previous five years.”
As the location of Countrywide Mortgage headquarters, Calabasas was one of the many ‘ground zeros’ for the Housing Bubble.
So it seems somehow fitting that the Echo Bubble is ending there in such a spectacular manner.
‘A rebound in house prices and near-record-low interest rates are prompting homeowners to borrow against their properties, marking the return of a practice that was all the rage before the financial crisis.’
‘Home-equity lines of credit, or Helocs, and home-equity loans jumped 8% in the first quarter from a year earlier, industry newsletter Inside Mortgage Finance said Thursday. The $13 billion extended was the most for the start of a year since 2009. Inside Mortgage Finance noted the bulk of the home-equity originations were Helocs.’
‘In 2013, lenders extended $59 billion of Helocs and home-equity loans. The last pre-boom year near that level was 2000, when lenders extended $53 billion, according to Inside Mortgage Finance.’
“We’re seeing much more aggressive marketing campaigns [for Helocs] by banks in locations where home prices have risen,” said Amy Crews Cutts, chief economist at Equifax Inc., a firm that tracks consumer-lending trends. She said Heloc originations picked up in recent months as consumers began home-improvement projects. “We expect to see quite an uptick in Heloc activity” in the spring, she said.’
Bad, bad, bad and everyone knows it. This is going to lead to more sob stories about people losing their houses where no one asks what about all that cash you took out.
Also in the future outlook: More “Save Our Homes” bailout programs for people who Helocked themselves into a state of permanent underwaterness.
‘In recent years April has marked the beginning of the busy real estate season in the High Country, as least with regard to listings. Since 2010, it has been the busiest month of the year for new or renewed listings, with an average of 464 added to market.’
‘This year 498 new or re-listed properties were added in April, the most within any month in at least the past eight years.’
‘As of May 11, 2,857 properties were available in the High Country MLS, which tracks Realtor listings in Ashe, Avery and Watauga counties. The READReport, which records all real estate transactions in the High Country, also reported a decline in April. There were 204 listings sold for $36.12 million during the month, a 19 percent decline from the 251 listings worth $44.65 million sold one year prior, in April 2013.’
“We seem to be following the National Association of Realtors housing trend which shows that sales are down and inventory is up,” said Laurie Phillips, executive officer of High Country Association of Realtors.’
‘The median sold price is down 4 percent, from $185,000 to $179,000.’
‘The 2013 surge in Chinese real-estate prices might have pinched homebuyers, but it made developer heads the wealthiest executives in China. Among publicly traded Chinese companies, eight out of the 10 best-compensated executives head up real-estate firms, according to a report by Horicon (link in Chinese), a real-estate research firm, and Caixin, counting salary alone. ‘
‘The weird thing is that the Chinese government—or its proxies—doesn’t seem to want this information out there. Pretty much all of the dozens of articles (link in Chinese) that show up in a search for news about the Horicon report have been zapped from major websites. (There are still a couple of exceptions, including articles in Chinese on local newspaper sites.) In addition, microblog messages about Xia Haijun and other developers’ salaries were blocked on Sina Weibo, according to Freeweibo.com, a site that publishes microblog messages that the censors have deleted.’
‘This highlights two big things that the government is freaked out about: housing prices and the income gap.’
I recommend watching “A Touch of Sin,” the movie banned in China that we discussed here a couple of weeks ago. After the first 20 minutes, you can see why the authorities are nervous.
‘Said Nagib clutches his neck in a choking gesture to describe what it takes to provide a home for his family. A typical day starts at 8am at his first job as an accountant at Cairo University. By 3pm, he is weaving his motorcycle through the capital’s heavy traffic to a second job serving tea at the downtown offices of a company that makes documentary films.’
‘Mr Nagib, 47, usually returns home after midnight to a wife and three children who are already fast asleep in the cramped quarters of their flat. “I’m killing myself to pay for this place,” he said, sitting in the two-bedroom home that costs him about US$77 (Dh283) a month to rent – about half the income from his two jobs. “I hardly see my wife and kids because my life is work, work, work.”
‘Mr Nagib’s exhausting routine is not uncommon in a country with a long-standing housing crisis.’
‘Aymen Sami, who heads Jones Lang LaSalle’s Cairo office, warned that policymakers and developers should avoid the mistakes of previous government-led projects launched over the past three decades in areas outside urban centres. These failed to attract low-income residents in part because of a lack of affordable transportation and acceptable infrastructure.’
‘In a number of those places, developers eventually turned what was intended to be housing for lower-income people into gated communities for the wealthy.’
“What is needed for addressing the low-income housing gap? You need something that’s sustainable and you need to understand their lifestyle, focusing from the bottom up, not the top the down,” said Mr Sami.’
‘Kenyan property developers say skyrocketing interest rates for mortgages are slowing down real estate development, putting a wrench in the government’s target of building 200,000 new housing units in Nairobi annually.’
‘Caroline Kariuki, managing director of The Mortgage Company, an independent mortgage brokering firm servicing East Africa, said affordable financing is key to the growth of the Kenyan economy because cheap lending rates would create an appetite among middle-class Kenyans to purchase residential properties, which would lead to a boom in real estate property market.’
“In periods of low interest rates, more houses are often built as demand rises and development companies are able to borrow money at a cheaper rate to finance the construction,” she said. “The sales of homes also rise as more consumers are able to take out a low-cost loan.”
HELL-LOCKS are back
Helocs, and home-equity loans jumped 8% in the first quarter from a year earlier, industry
Based on the fake “comps” there is now equity to borrow!
Boy you got me going tonight, I really want to watch the Heat-Pacer game but your statements border on ridiculous.
Are you saying public housing records on a sale of property are rigged so you the buyer never know the real comp of closed sale.
Who is deliberately lying now?
You. You’ve been lying and hiding here for some time now.
I like hiding here, this way I can expose and keep check on folks like you who don’t understand the fine art of buying and selling. Anybody can make statements, I like the phrase, walk the walk, talk the talk, have you ever done that in your life?
“The fine are of lying.”
Nice admission you liar.
Am I just imagining this, or was there a point in the past when HELOCs had to be tied to some kind of home improvement that was expected to permanently increase the value of the structure?
Borrowing to buy cars and pay for vacations was an artifact of the Housing Bubble, at least to my recollection.
‘The golf courses and beaches of Los Cabos are luring Americans who are able to get home-equity loans to buy in Mexico as U.S. housing prices rise. Buyers, mostly from California, are purchasing condominiums, villas and estates ranging from $200,000 to more than $7 million following a plunge in prices, according to Deloitte & Touche LLP.’
“‘What I really wanted to do was take advantage of the market,’ said Joy Gipson of Lake County, California, who this year financed a 1,600 square-foot Los Cabos condo with a home-equity loan. ‘Real estate is starting to revive and I didn’t want to get priced out again.’”
‘The 31 percent gain in U.S. home prices since January 2012 has given property owners more equity. That’s made it easier for them to get home equity lines of credit, or Helocs, for as much as $500,000. American buyers in Mexico are benefiting from the decline in the costs of credit lines, which have adjustable rates tied to the prime rate.’
‘Gipson, 57, a marketer for the public transit program in Santa Rosa, California, bought her two-bedroom, two-bathroom condo in Los Cabos as a place to possibly retire. The $193,000 home is a six-minute walk to the beach. Gipson said the addition of more elite golf courses in Los Cabos will make it even more appealing to Americans. ‘It’s going to turn into San Diego South,’ she said. ‘I leveraged the equity in my house and spent my savings.’”
http://thehousingbubbleblog.com/?p=8406
Its magic. Magical thinking. Did you wish upon a star today? And the ruby slippers? Where is Tinkerbell?
I want a bushel basket of twenties and fifties.
‘I leveraged the equity in my house and spent my savings.’”
Babe, your so 2005! Leverage is a poor man’s term for “wealth”. Any form of memory is so elusive in our culture these days.
“…I leveraged the equity in my house and spent my savings.’”
_
Actually Gipson might be on to something. Upon retirement, mail keys to US house to foolish lender and go live south of the border mortgage free, live off pension.
_
American bagholders/taxpayers pick up tab in future TARP 2.0…
It paid for other things too, back then. Private-school tuition and football season tickets.
And how’d that work out for them?
BTW, Miami housing is falling into a free all.
‘U.S. house price rises will likely slow further over the next two years, curbed by tight lending standards, slow wage growth and a lack of first time buyers, a Reuters poll found. The analysts polled did not expect any major pickup in housing market activity, with annual rises in house prices gradually coming down through to 2016.’
“It is improving slowly, which is good. It should be measured. We don’t want to go back to stupid money,” Mark Goldman, a real estate expert at San Diego State University in California said, referring to the eve of the Great Recession when subprime lending was rampant and home prices sky-rocketed.’
“improving slowly”
At what point did the rate of housing price inflation become the commonly-accepted metric for a healthy market?
” lack of first time buyers”
Seems we’ve eaten all our young, and there’s nothing left.
It paid for other things too, back then. Private-school tuition and football season tickets.
And a boob job for the wifey!
I don’t have firsthand knowledge of that happening, but it would not surprise me at all. Same thing for Lasik, boats, grand pianos, platinum jewelry, and other expensive things where you wondered how so many people possibly could have afforded them. The answer was, many of them couldn’t.
No, Prof, I think you’re right. HELOCs were for major repairs, or major renovations, like a new kitchen or addition.
If you needed the cash for something else, you had to do a “second mortgage” cash-out refinance and start the 30-year clock again. In the 80’s a family friend did that to send his precious princess to a private college, and it was spoken about only in whispers over the back fence.
I’m happy to report that my immediate family members (at least on my side) are all nearly or completely free of mortgage debt. And none of them are inclined to engage in the “HELOC myself underwater” shenanigans which sink so many American households’ finances.
“…(at least on my side)…”
Hehe, careful buddy, you’re walking on thin ice.
“HELOCs were for major repairs…”
Maybe in theory early on, but not in practice. You could tell the banker it was for a car and they didn’t bat an eyelash.
“Colorado Springs-area home sales and prices decline in April”
http://gazette.com/colorado-springs-area-home-sales-and-prices-decline-in-april/article/1519502
Get what you can get for your house today because it’s going to be much less tomorrow for many years to come.
“Home values in region tumble, analysis shows”
http://articles.philly.com/2014-05-29/business/50152662_1_real-estate-agents-patrick-newport-price-growth
Why are prices falling? Because they’re grossly inflated 250%+ higher than long term trend.
“Economics professor and real estate expert Michel Mouillart sees few options left for the sector short of allowing smaller deposit payments than the 20-25 percent usually required.”
I take it that France doesn’t have an FHA offering 3.5% downpayment loans?
They might, but it’s probably only available to a small pool of buyers.
Financialization of, and speculation in, basic necessities. A good thing or a bad thing? If it’s a bad thing, is allowing it just another trickle-up policy?
‘Zombie’ properties. Housing advocates say a zombie property is generally defined as one that is in foreclosure but hasn’t been resolved for more than three years. ‘These things keep rotting in our neighborhoods,’ says Art Dahlberg, commissioner of the city’s Department of Neighborhood Services. ‘I say to banks, ‘Help us understand why you don’t take responsibility for the property.
Think about this - the house somehow represents something of value. Zombie forclosures indicate it’s not the physical component of a house that’s important (this part is unused), but rather the financial constructs associated with it - the debt and its derivatives. And these financial components only retain their value due to central bank and government manipulations.
‘And if you do not foreclose, why do you start the process at all?’
They have to. They are being paid to send out the NOD’s, go through certain motions. Otherwise they could be sued. A lot of the initial action is done by loan servicers, not the MBS owners. But actually taking the house back and selling it is something they’ve been allowed to get around. The regulators have given them a pass on holding REO’s, the government is handing them free money. Nothing is being marked to market, so it looks painless. But somebody is taking a loss. Is it your 401K? Your grandma’s? Read this Wisconsin article; they’re letting houses deteriorate completely. How can that not be a loss to someone?
Ben Jones: Read this Wisconsin article; they’re letting houses deteriorate completely. How can that not be a loss to someone?
The government is insuring the whole thing and the central bank is buying government and mortgage debt. Classic privatize the profits, socialize the losses. Fortunately, the average CEO pay is now above 10 million dollars. So there’s one silver lining. But the losses are being felt through <a href=”http://bpp.mit.edu/usa/”debauched currency and government debt. Losses are being shouldered by current and future taxpayers and those who use the dollar.
It’s the biggest theft in history and everyone in the white house and congress are accomplices.
debauched currency and government debt.
“Im focused on the California job market because its so bad.”-Joe Lavornia, Deutsche Bank, May 30 2014, WBBR
Cratering housing demand, millions of excess empty and defaulted housing units, raging unemployment……. Anything else?
Resale prices of completed non-landed private homes continued to fall last month, the Singapore Residential Price Index flash estimates showed
non-landed private homes? Is that supposed to sound better than saying “apartment” or “flat”?
A perversion of British speak for a productive estate, I believe.
‘We can hardly achieve good sales without slashing prices to a larger extent as the market lacks confidence in the property market. If government hinders us from cutting prices freely, our days will be harder,’ a person in charge of the marketing department of a listed developer said’
Maybe the Chicoms can get out that magic wand that makes their “capitalism” work so well?
That University of Arizona prof better watch it. Brent White, a UA law prof who wrote Underwater House, has been all but silent since the release of his book.
I can’t help thinking that White’s book was an embarrassment to the UA PTB. And to the UA’s donors. (Who are very heavily involved in the REIC,)
Hehe, to be underwater in the desert.