From Continuous Increase To Inevitably Fall
It’s Friday desk clearing time for this blogger. “April was another month of double-digit jumps in home prices in Salinas – or if you are a young couple looking to buy a slice of the American Dream, you’d might see it as soaring costs. ‘Everybody I’ve talked to said they are extremely busy and things are moving,’ said Sandy Haney, Monterey County Association of Realtor’s executive director. ‘Cash buyers are edging out those who would opt to putting down a 5 percent down payment.’”
“These cash-in-hand buyers are actually investors, Haney said, and many of them are off-shore, particularly from China. Technically, a Chinese citizen cannot take more than $50,000 out of the country. But Haney said they ‘have a way’ of getting more money into Hong Kong, where it is saved until the day they can jump on a plane with plenty of cash on hand.”
“More than half of U.S. adults have had to cut back elsewhere to cover their rent or mortgage, according to a new survey. Additionally, about 7 in 10 of those surveyed said they believed we’re still in the midst of the housing crisis, with 19 percent saying the worst is yet to come. Only 1 in 4 say the crisis is ‘pretty much over.’ ‘For most Americans, the housing crisis is hardly a thing of the past,’ said Geoffrey Garin, president of Hart Research Associates, which conducted the survey. ‘There is a lot of reporting about the notion that America is in a housing-led recovery. That’s certainly not how Americans see things.’”
“Jennifer and Nick Denig’s Hanover Township home had been on the market for more than a year before it finally sold, at a loss of about $30,000. The couple bought the home in June 2007 for $115,000. The Denigs sold their home in April for $88,900, knowing full well it would never sell for the original price in today’s real estate market. ‘It probably wouldn’t have taken this long if we had listed at this price (originally),’ Denig said.”
“In the Lower Hudson Valley, one of the most affluent regions of the country, where one in five homes costs a million dollars, there are thousands of homeowners still struggling to pay their mortgages, often facing foreclosure. LaDonna Thompson Hutchins, a 30-year Manhattan postal worker, lives in a two-family house in Mount Vernon that her grandmother and mother bought in 1978; both have since died. With mounting medical bills and personal stress, Hutchins missed some mortgage payments. Now she owes $210,000, mostly in late fees and attorney costs and is working with a counselor to reduce the payments and get back on track. The balance on her mortgage is $466,000.”
“‘It’s my mistake. I refinanced a couple of times and fell behind,’ Hutchins said.”
“Foreclosure is hitting most socio-economic groups and most neighborhoods, said Peter Spino Jr., a White Plains-based lawyer who represents homeowers. ‘We are seeing recurring spikes in the (foreclosure) numbers,’ he said. ‘And it is climbing the economic ladder. The wealthy, who were able to stave off (legal action) because they had resources, have had those resources depleted.’”
“About 800,000 borrowers who remain enrolled in HAMP will see their rates gradually rise starting this year, eventually increasing payments by more than $1,000 a month in some cases, according to the special inspector general for the Troubled Asset Relief Program. In the Fort Hood, Texas, region, a quarter of a percent drop in home prices from December through February increased the number of underwater loans there by 20 percent, said Kostya Gradushy, Black Knight’s manager of loan data and customer analytics. A 0.02 percent price decline in the area around Little Rock, Arkansas in February resulted in a nearly 12 percent increase in underwater borrowers.”
“Even if borrowers are not technically underwater, those who have very little equity in their homes will most likely have to bring cash to the table if they decide to sell their homes just to cover the commissions of the real estate agents involved in the deal, Gradushy said. ‘So even if your house is worth exactly what you owe on your mortgage, you are still technically underwater,’ Gradushy said.”
“After five years of house price increases, Ecuador’s property market is now slowing, partly due to an oversupply of residential properties. There were more than 30 large condominium projects under construction in Cuenca during the first half of 2013, a slowdown from the 40 to 45 projects seen in 2011. In addition, fewer building permits were issued in 2013 compared to the previous year, according to the Cuenca Chamber of Construction. There has also been a decline in mortgage loans. ‘We are beginning to see an oversupply of housing for middle- and upper-middle-class buyers,’ said Roberto Vega, general manager of Smart Research in Quito. ‘We are seeing this in the more active markets, such as Quito, Guayaquil and Cuenca.’”
“Sales of Beijing’s second-hand housing stock declined 9.02% from April and and hit a new low since 2009. Prices fell by 5.55% compared to April. More concerning is that the inventory of commercial housing reached 77,058 units at the end of May, an increase of nearly 22,000 units in three months. NTD special economic commentator Jiesen Ma said China’s property market trend has changed from continuous increase in the past decade. The consensus is that prices will inevitably fall. Jiesen Ma: ‘Signs of price, sales and all aspects show that the turning point has arrived. Prices will fall in some areas. In fact, prices in certain areas already plummeted sharply.’”
“The Bank of England’s new risk watchdog, which this month will consider what to do about Britain’s surging housing market, cannot be expected to eliminate the risk of asset price bubbles, a senior policymaker said. ‘We are not responsible for house prices. We are responsible for financial stability,’ said Richard Sharp, a former banker of 23 years at Goldman Sachs.”
“The economy may be in recovery mode, but it would probably be doing better if the government would just get out of the way, according to the University of North Florida’s Local Economic Indicators Project, or LEIP. ‘Most pundits are blaming the GDP numbers on the perverse weather in the first quarter virtually everywhere, and we agree to an extent, but the investment numbers are troubling and they continue to tell us that the Federal Reserve policy oriented towards maintenance of very low interest rates is stifling recovery,’ the organization’s newsletter said.”
“The national economy is recovering, ‘but the hindrance on economic growth at this point is corporate and non-corporate investment expansion that is being deterred by interest rate policy at the Fed that motivates firms to focus more on their investment portfolios predicated on huge holdings of cash rather than producing products and services and selling to consumers and other businesses,’ the newsletter said. ‘The license that the Great Recession has granted Keynesian oriented governments to grow themselves will plague worldwide economic growth for decades to come, despite the ingenuity and entrepreneurial spirit throughout the world to countermand it,’ it said.”
“If you cling to tradition, the recovery in the US housing market should be great news for consumers. Right now, however, it just doesn’t look as if even a slightly healthier US housing market is of much help to the overall economy. Indeed, there’s an argument that rising home prices could end up being a drag on the economy.”
“It could be that the housing market, and the mortgage market, are still in a kind of wacky no man’s land in the aftermath of the once-in-a-lifetime crash of 2007/2008. The fate of mortgage giants Fannie Mae and Freddie Mac remains unknown; the securitization market hasn’t revived; the banks still haven’t developed solid new approaches to real estate lending.”
“But for now, relying on real estate to somehow jumpstart the entire American economy and return it to growth mode sounds like little more than wishful thinking.”
Foreclosure starts in Massachusetts jumped sharply in April, the increase largely the result of a backlog created by new regulations taking effect, the Warren Group said Thursday.
“Lenders filed 740 petitions to foreclose in April compared with 327 filings in April 2013,” a rise of 126 percent, said the Warren Group, a Boston firm that tracks local real estate data. “April also marked the highest number of petitions filed so far this year.”
“There is no need to sound the alarm for another crash in the real estate market,” Warren Group chief executive Timothy M. Warren Jr. said in a statement.
Of course not…
Poking around the default documents indicate a large number of the defaults involve HAMP modifications. As Ben’s post above indicates the chickens are coming home to roost.
http://www.bostonglobe.com/business/2014/06/05/massachusetts-foreclosure-starts-jump-sharply-april-warren-group-says/V4L1JnhBoZnNdHmBZPnNAP/story.html
Why homeowners who got mortgage help may still end up losing their homes
Housing experts warned that many of these borrowers may not be much more financially stable now than they were when they initially turned to the government for help. The initiative was based on the assumption that the economy would bounce back more quickly, undoing the damage wrought by plunging home prices and high unemployment. But the average household income has been flat for all but the highest earners since the program launched in 2009.
I love how real estate stooges dismiss re-defaults as a problem from the past, as if increased inventory won’t affect the market. Seeing it here in the Bay State, home of the candy crapping codfish… where real estate never goes down.
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/06/02/why-homeowners-who-got-mortgage-help-may-still-end-up-losing-their-homes/?wprss=rss_business
“Housing experts warned that many of these borrowers may not be much more financially stable now than they were when they initially turned to the government for help.”
Nobody on K street or Wall street gives a fugg’n chit about these spendthrift underwater borrowers. It’s all about the rankings on the debt held by the major investors.
Upscale Towns, Falling Prices
After some torrid increases, home prices are taking a hit this spring in some upscale suburbs and urban neighborhoods across Greater Boston.
The elite top of the market, such as the Lincolns and the Cohassets, are doing just fine.
That is, with the exception of Cambridge, where sales of single- family homes are off 30 percent so far this year, while prices are down more than 20 percent, according to The Warren Group, publisher of Banker & Tradesman.
Rather, it’s that larger tier of affluent towns where signs of trouble are starting to pop up
http://www.boston.com/realestate/news/blogs/renow/2014/06/upscale_towns_f.html?comments=all#comment-26439287
The shock is always funny to me. People really think it will never end.
‘Just take Medfield. Curt Schilling recently slashed the price of his seven bedroom, 26 acre spread to $2.5 million - a cut of $500,000 - after years of on-and-off attempts to find a buyer.’
‘But right now the one-time Red Sox star is chasing the market down, with the median home price in Medfield having fallen more than 5 percent this spring.’
Look at the comments; ‘no it’s not, look at Zillow!’
‘no it’s not, look at Zillow!’
Zillow is apparently very ill-suited to tracking prices in a declining market. My impression is that they average recent sale prices (comps) to estimate value in a particular area. If sales dry up because area market values fall, then the most recent comps are no longer representative of market value, are they?
Saw a property recently that had two values on Zillow, one at $340k, the other at $420k. They were both wrong as the property was under contract at $470k
nice story bro
The buyer was seriously wrong.
Hard to believe that anyone would even bother to look at Zillow, much less use it as a resource.
Zillow is a joke. Always has been, always will be.
Want reality? Go to the city or county clerk’s office.
Or you can go to Zillow and access the tax records with a single click.
Housing markert continues to be a stand off. Sellers want to be bailed out of their underwater properties, buyers want to buy at 4% rates, but are still fearful of real eastate.
Houses that are priced right are taking the beating, they are in the catch 22 so uncertainty prevails, and that is the problem.
There is no standoff. Prices have been bid up to levels where there are no buyers.
“Houses that are priced right are taking the beating,…”
What does this mean? Doesn’t ‘priced right’ mean that there is a buyer who is willing to purchase it — i.e., it is priced to current market value? How does this entail a beating?
Based on who’s market value? Zillow? The foreclosure down the street? This is not markert value, this is a investor wanting to steal a property, sellers are holding out and they should.
That’s right. Hang onto that shanty because nobody else wants it.
There is no law against living on in denial forever after the market value of your home drops.
In my nabe, I’m seeing pent-up demand for structurally sound but cosmetically trashed houses which have been HGTV cleaned up.
Where they are getting the money, I don’t know.
Of course you do Junkie.
‘Mortgage rates fell last week, and in an unusual convergence, so did applications for refinances and home purchase loans. Applications to refinance a loan fell a seasonally adjusted 3 percent on the week, and are down nearly 57 percent on the year, according to the mortgage bankers survey. Applications to purchase a home-a closely watched indicator of the housing recovery-fell 4 percent on the week and are 17 percent below year-ago volumes. This does not bode well for home sales as the market moves from the traditionally robust spring season to the slower summer months.’
“The lack of movement on mortgage applications even with a significant drop in rates confirms what we have seen for much of the past five years. Namely, that lower rates alone are not enough to generate home purchase activity,” said Guy Cecala of Inside Mortgage Finance.’
‘Mortgage rates fell last week, and in an unusual convergence, so did applications for refinances and home purchase loans. … This does not bode well for home sales as the market moves from the traditionally robust spring season to the slower summer months.’
Everything is falling at the same time…time to loosen the lending spigot to fix it?
What if they throw another party, but this time no one shows up?
I would like to believe they wouldn’t, but one flaw of mine is over estimating the intelligence of people.
It’s a sign you possess above-average intelligence.
‘The month of May saw more houses and condos up for sale in the Puget Sound region compared to May 2013, but competition remained high among buyers. House prices also rose in Pierce County by 9 percent and Snohomish County by 7 percent. The median housing price in Kitsap County decreased by more than 4 percent to $230,000.’
‘In the four counties, a total of nearly 12,800 houses and condos were for sale in May, an increase of 15.7 percent from the same month a year ago. “We are experiencing more multiple offers than I have experienced in my 35 years of practicing real estate in this marketplace,” said Mike Gain, the president and CEO of Berkshire Hathaway HomeServices Northwest Real Estate. “We desperately need good quality inventory.”
‘Houses and condos for sale in Snohomish increased by 43 percent compared to a year ago.’
This is the title of the last link:
‘The haunted house delusion of great wealth from real estate’
‘The stubborn idea that a high-priced house equals wealth doesn’t stack up in the new world of rentals, where your home doesn’t help the economy’
This was interesting:
‘The theory runs something like this: for any homebuyer, their home becomes their main asset. And when our assets increases in value, we are wealthier – more importantly, we feel wealthier. And we’re more confident; we behave as if that wealth is real and not just on paper, willing to spend more of our other income.’
‘Theoretically we feel under less pressure to squirrel away more of our income if our home is increasing in value more rapidly than our savings might. All of that spending adds up and spills over into the economy.’
‘In fact, housing is not a moneymaker. Sufi calculates each dollar of new housing wealth may generate only a penny of extra spending. There are reasons for that.’
‘Firstly, homebuilders aren’t rushing out to build in response to the rise in prices by building more houses. Then, as most of us know by now, you can’t treat your home like an ATM machine any longer, even if you felt inclined to do so.’
‘Tougher mortgage lending standards mean that banks want better reasons to refinance a house. They don’t want to keep refinancing homes just in order to let their owners pull out some of the cash.’
‘As prices rise, banks prefer that increased value create a cushion of safety for both the bank and the homeowner. It’s pure self-interest on the part of the banks, of course, but it’s also good news for homeowners.’
‘Borrowing more against your home than you have to against the value of your home, simply because it’s possible, makes no more sense than borrowing against your retirement funds.’
These people at the Fed must really be scratching their head. They think, “we put a nice wheel in the cage, but they won’t get on it and run.”
“Borrowing more against your home than you have to against the value of your home, simply because it’s possible, makes no more sense than borrowing against your retirement funds.”
Well, it makes good sense to me.
They work, I get to kick back.
‘The ECB has lowered its refinancing rate to 0.15%, its marginal rate to 0.4% and the deposit rate to -0.1%. Negative interest sounds like a big deal, but there are hardly any bank deposits left with the ECB, so despite the giamt novelty made out of it, this is just a paper measure. They took all these “bold steps” ostensibly because Draghi et al find inflation rates too low. But how would lowering interest rates fix that? Wouldn’t it be better to raise them, wouldn’t that be more inflationary (in the inflation equals rising prices sense)? It seems obvious it would, but that would kill the housing sector, among other things, and we want to keep people tied in to their mortgages, don’t we?’
‘The entire interest rate circus happens because the overriding “philosophy” amongst economists and politicians is that banks are more important than people. the idea is that if banks are doing well, that will automatically trickle up/down to the people. But why wouldn’t the opposite be true? If policies were aimed at making sure people as as well off and – economically – protected as they can be, wouldn’t that trickle down/up to banks? If stocks are up, then the economy must be good. If banks make solid profits, the economy must be good. And people are nowhere in sight, they’re an afterthought as best.’
‘In the eyes of Draghi and Yellen and all the clowns who think like they do, our economies exist of banks and investors, not of you and me. But we are 70% or so of those economies, even if we can’t keep up with the demand they tell us their theories tell them we should be exhibiting. We clearly don’t have our priorities in order; we instead let others set them for us, but they’re not ours. The sooner we acknowledge this, the more damage to the lives and well-being of our children and grandchildren we can prevent from being unloaded upon them.’
‘But we need to start doing that like about now. We need to realize that there is very little left that is being decided for us that actually benefits us, and that there are a million things being concocted that are only dragging us down ever further. Mario Draghi and Janet Yellen and Washington and Brussels are not trying to make this world a better or happier place for us, but for their banker friends. That is what I take away from Draghi’s performance today, from the whole financial world circus around it, and most of all from the silence in the real world as that circus put on its show. Will we really only react when we have nothing left at all? It’s starting to look that way. And you won’t have anyone to blame anyone but yourself.’
‘The entire interest rate circus happens because the overriding “philosophy” amongst economists and politicians is that banks are more important than people.’
Makes sense, as banks pay economists and politicians handsomely for their services.
“The theory runs something like this: for any homebuyer, their home becomes their main asset. And when our assets increases in value, we are wealthier – more importantly, we feel wealthier. And we’re more confident; we behave as if that wealth is real and not just on paper, willing to spend more of our other income.”
“And when our assets increases in value, we are wealthier.”
Translation: When our assets increase in PRICE, we are wealthier.
And we are wealthier because total strangers - those buyers and sellers who determine just what the price should be - are the ones who make us wealthier. And these total strangers who perform the magic usually do this by using borrowed money. And if the borrowing dries up then the wealth somehow disappears, as in poof.
‘This bubble dynamic needs nothing more than a supply of greater fools willing to pay substantially more for assets that haven’t changed qualitatively or quantitatively, and our expectation that the supply of greater fools is endless. Alas, the number of people willing and able to borrow immense sums to buy more houses eventually falls below the number needed to sustain the bubble, and the bubble promptly implodes.’
‘The Federal Reserve responded to the bubble collapse with unprecedented intervention to prop up housing values: the Fed dropped short-term interest rates to near-zero (i.e. ZIRP, zero-interest rate policy) and bought roughly $2 trillion of mortgage-backed securities in two waves. (That’s about 20% of the entire U.S. mortgage market.)’
‘The home price index is now roughly 130% above its pre-bubble levels.’
‘Not unsurprisingly, the housing market responded to the end of the Fed’s first wave of mortgage buying by tanking. The Fed quickly launched a second monumental wave of mortgage purchases, and this corresponded to a renewed surge in housing prices.’
‘The Fed’s unprecedented interventions pushed mortgage rates lower by almost 3% at the bottom, and housing prices rose by about 20%.’
‘That’s called diminishing returns: The Fed has pulled out all the stops in its support of housing (as have the Federal housing agencies such as FHA), yet housing managed only a weak 20% expansion on the back of this extraordinary, multi-trillion-dollar manipulation (oops, I mean intervention).’
‘The Fed’s policies of unlimited liquidity and zero-interest rates have generated an unintended consequence: the super-wealthy financiers closest to the Fed’s money spigot can borrow money to buy housing at absurdly low rates, while regular home buyers have been largely frozen out of the market as a result of 1) bidding wars with all-cash investors desperate for yield in a zero-rate environment and 2) banks that have tightened lending standards as rates have plummeted and risk has finally been priced into the housing market.’
‘(Recall that virtually the entire mortgage market is Federally backed/subsidized; in effect, the mortgage market in the U.S. has been fully socialized, with taxpayers on the hook for all the debt guaranteed by Federal agencies.)’
‘The echo bubble is entirely driven by all-cash purchases by investors desperately seeking some sort of yield in a Fed-engineered low-yield economy via rental housing. Investors driven to extremes by the Fed’s interevention are the greater fools, and the supply of these greater fools is finally diminishing. Once the pool of greater fools evaporates, the echo bubble will burst, just like the initial bubble burst.’
‘Meanwhile, back in the real world where mortgages are serviced by earned income (wages and salaries), the ratio of mortgage debt to wages/salaries is still roughly double historical ratios.’
‘The whole echo bubble is based on unsustainable extremes of interest rates, central-planning intervention and investor fantasies that the supply of greater fools will never decline.’
“These cash-in-hand buyers are actually investors, Haney said, and many of them are off-shore, particularly from China. Technically, a Chinese citizen cannot take more than $50,000 out of the country. But Haney said they ‘have a way’ of getting more money into Hong Kong, where it is saved until the day they can jump on a plane with plenty of cash on hand.”
I have a feeling this episode is going to be historically important with regard to a large exodus of Chinese citizens with capital from Communist China over a short time period.
They have a way of getting briefcases of cash out of the country, all right. It’s called paying a bribe. But Ms. Haney is getting a commission from these “investors” so it’s all good.
Just because corrupt foreign officials have money doesn’t mean we should be eager to sell our neighborhoods to them.
If we can overcharge them, why not? Eventually we’ll get to buy them back at a much lower price.
It’s not like these corrupt foreign dudes are actually going to move into our neighborrhoods.
The problem is, who can say when eventually will be? When we’re broke? When we’re dead? Our government is totally committed to making sure that someday slowly turns to never, as the Tanya Tucker song goes.
just hit par in 22151 w inventory double last year
=party over
Is that inside or outside the Beltway? And how far from Oxide’s hood?
22151 -1 mile outside beltway
N VA
NoVa experienced huge growth with defense and security contractors. MD is more fuddy duddy nuts and bolts. The difference in character is reflected in house prices.
MD is dangerous-lived there and high tailed to N VA
nirvanna, if you don’t commute
“…fuddy duddy nuts and bolts.”
CA is fuddy duddy nuts and fruits.
“A 0.02 percent price decline in the area around Little Rock, Arkansas in February resulted in a nearly 12 percent increase in underwater borrowers.”
Millions upon millions living at the bloody edge.
‘So even if your house is worth exactly what you owe on your mortgage, you are still technically underwater,’
According to Zillow, this is the situation our landlords find themselves in, a decade after their investment purchase. And we know the Zestimates run high. So it looks like landlordship is in their likely plans for the foreseeable future.
I would re-phrase:
‘Unless your house is worth at least 10% more than you owe on your mortgage, you are absolutely underwater.’
Last time I checked, realtors don’t yet work for free, and closing costs haven’t been legislated out of existence…
why do people pay 5-6% - they must have zero marketing skills
“But for now, relying on real estate to somehow jumpstart the entire American economy and return it to growth mode sounds like little more than wishful thinking.”
It’s really much worse, as it sounds like little more than yesterday’s wishful thinking.
And from that same paragraph: “Indeed, there’s an argument that rising home prices could end up being a drag on the economy.”
_______________________/
If more of your income goes to servicing a mortgage, then that money won’t be spent on goods and services. Same thing with student loans and consumer debt. That’s more than “an argument.” It’s a fact. Is one purpose of higher education to unlearn it?
Rising house prices are in fact a drag on the economy.
Rising house prices mean higher costs of living. Higher costs of living mean higher wages demanded by workers. Higher wage demands mean companies are less competitive in a global marketplace.
Want the jobs to come back? Remove all price supports and let housing prices fall to their true market values, as a good start.
I don’t see Western workers successfully demanding higher wages. Not with the levels of unemployment and underemployment here and in Europe, with Japan fading, and with technology everywhere killing off more jobs than are created. I’ve read that Chinese workers want more money, but I can’t imagine a real labor shortage ever arising in a country that populous.
What central banks are doing is inflating prices while wages remain largely suppressed. But I do agree that letting housing prices fall to true market values will be an economic benefit and might even lead to job creation in something other than building more houses.
You’re both right.
Romney proposed it, but then he wimped out. And lost my vote in the process.
I would suggest “over-priced” homes are a drain on the economy. Paying higher prices for a home means you will have less disposable income that could be used to stimulate the eeconomy. I also think this “wealth effect” created by rising home prices is total nonsense.
Yep. The ‘wealth effect’ from housing is entirely based on leverage. Housing assets are just the convenient conduit to funnel it all through, and nothing more.
‘More than half of U.S. adults have had to cut back elsewhere to cover their rent or mortgage, according to a new survey. The John D. And Catherine T. MacArthur Foundation found that 52 percent of adults had made trade-offs. Of those:
- 21 percent took a second job or worked more hours
- 19 percent stopped saving for retirement
- 16 percent accumulated credit card debt
- 14 percent cut back of health care
- 12 percent cut back on healthy food
- 6 percent moved to a neighborhood they considered less safe
- 3 percent moved to a neighborhood schools are not as good.
A nation of slaves, under God, indivisible, with debt and hopelessness for all.
That’s odd; getting a mortgage to buy a house to avoid the rent doesn’t even make the list!
Why is it again that the Fed leadership believes pouring money down the real estate rat hole in order to jack up home prices to bubble levels is beneficial to the economy?
“The Bank of England’s new risk watchdog, which this month will consider what to do about Britain’s surging housing market, cannot be expected to eliminate the risk of asset price bubbles, a senior policymaker said. ‘We are not responsible for house prices. We are responsible for financial stability,’ said Richard Sharp, a former banker of 23 years at Goldman Sachs.”
_______________________________/
Putting someone from Goldman in charge of a central bank’s “new risk watchdog”? That’s a joke, right? Go ahead, let the fox watch the henhouse. He’s turned over a new leaf! No wonder democratic governments are losing legitimacy.
Given that central banks worldwide are reflating or inflating housing bubbles as a matter of policy, his statement is hideously disingenuous. But he wasn’t hired to tell the truth.
‘We are not responsible for house prices. We are responsible for financial stability,’
Gollum is fine with fixing gold, oil and aluminum prices but not houses?
Go figure…
Goddamn liars and cowards everywhere.
On Macau:
“When a real estate bubble enters an advanced phase before bursting, prices go up even when sales are going down. But this does not mean the bubble will burst soon,” economist Albano Martins told Business Daily, in explaining the latest data from the housing market. According to the Portuguese news agency Lusa, in the first quarter of the year the number of house sales dropped 41.9 percent to 2,906 housing units. Nevertheless, prices increased by 24.5 percent in the same period compared to the first four months of last year. “The closer the bursting point of the market is, the more people will pay to join it,” he added.’
“As prices increase, less people are interested in entering the real estate market. Many only do it during a phase such as this occurring in Macau because they have no other option,” Mr. Martins explained. The present situation in the real estate market is similar to the one from 1994 to 2003. “In that time, prices went up to a point that in 2003 there were almost no transactions in the housing market,” he recalls. “The low point of the market was only inverted when the gaming industry was liberalised and more people, that were going to work in casinos, entered the market and were willing to buy houses,” the economist recalled.’
‘Mr Martins, however, does not anticipate a drop in the price of housing any time soon, saying, “House owners will not drop the price of houses unless they have no option. Otherwise, they will lose money,” he stated.’
Right, a second collapse just like the first one after a second boom just like the first one would be unpossible!
‘Denver’s red-hot housing market is beginning to cool, with home appreciation slowing relative to this time last year, according to RealtyTrac. But home values in Jefferson and Weld counties reached new highs, making them two of seven counties in the U.S. that logged peak median prices in April.’
‘Annual home appreciation in Denver dropped to 6 percent in April, the lowest rate since April 2012 and down from 16 percent in April 2013.’
‘In Denver, the median was $265,000, up from $259,000 in April 2013, and a 96 percent increase over the low of $135,000 hit in February 2009, according to RealtyTrac.’
‘Equity gains are slowing in Douglas and Boulder counties. Douglas County hit a peak median of $325,000 in July and dropped $3,000 in April. In Boulder County, the median dropped $13,000 from a $344,000 peak hit in July.’
As I posted here before, this isn’t the island of Manhattan or San Francisco peninsula. There is only one partial geographic boundary to metro Denver (yes, people commute from Evergreen, Conifer, et cetera), and hundreds of square miles of empty land in the other three directions.
There are jobs in the oil & gas biz, IT, telecom, government that could support some of the higher-end housing, but other than that, Denver is back-office flyover in terms of jobs.
The new jobs held by marijuana plant trimmers will not support $265,000 median house prices.
Yes, there is net in-migration, but no economic fundamentals to support the extent of this echo bubble’s re-inflation.
‘will not support $265,000 median house prices’
Flagstaff’s median is higher and we don’t even have pot trimming jobs.
“The new jobs held by marijuana plant trimmers will not support $265,000 median house prices.”
They will if they can get the bankers high enough.
+1 too funny
There are jobs in the oil & gas biz, IT, telecom, government that could support some of the higher-end housing, but other than that, Denver is back-office flyover in terms of jobs.
So true. The local media gets all excited when a call center announces it will open with the promise of 500 $12/hr jobs.
We get that here too. An Amazon warehouse is being built in this area, but most of those jobs, while not minimum wage, aren’t going to allow for more than subsistence living. And I suspect the workers will be replaced by drones and robots very shortly, so it’s wrong to expect more than a minimal economic boost.
Maybe the robots will buy houses.
Denver real estate has never been for the faint of heart. I invested in a condo near Coors field 06′ a so called can’t miss, well I got out 1year later small (profit )when everybody said stay in, I would have lost my shirt on that property.
“It’s my mistake”…..wow….you never really see those words spoken anymore….
“the once-in-a-lifetime crash of 2007/2008.”
Really? “Once-in-a-lifetime”?? Is that what people actually believe?
It _would_ have been a once-in-a-lifetime crash—if the Fed had not actively and intentionally short-circuited the learning that should have resulted.
Instead, we’ll have a twice-in-a-decade crash, and I’m sure that the same refrain ofd “no one could have seen it coming” will be trotted out.
“the once-in-a-lifetime crash of 2007/2008.”
Really? “Once-in-a-lifetime”?? Is that what people actually believe?
Maybe they’re expecting a dramatic reduction in life expectancy?
OT UBER- can’t you just run a ppc ad and craigslist ad and uber yourself out?
Let’s play your game folks, house prices crash to 50% or more. You all are giddy, you steal a home today. 10 years from now another boom and of course you all feel sorry so you don’t raise your price so the next guy can afford a house??
Sellers hold on, these folks just want to steal your home,let them sleep in the park or rent a trailer.
Fraudster,
Historically housing prices fall.
If that is the case then historically I should be broke Einstein?
You’re just a possum out on a limb.
With 25 million excess empty and defaulted houses, they’re going to be holding out for a long time Fraudster.
‘these folks just want to steal your home’
I’ve bought distressed houses. I drive a hard bargain, and show no mercy to the sellers. It’s what makes the difference between a so-so return and a good one. It’s just business, and the asset managers aren’t too attached to the places anyway. I agree that you don’t want me to be your only potential buyer.
‘you all feel sorry so you don’t raise your price so the next guy can afford a house’
I don’t have a problem with anyone getting the most they can for what they want to sell. A car, a house, whatever. This blog isn’t about buying and selling houses. It’s about the housing bubble. All you see and read about housing here is intended to be a reflection of some aspect of that. Of course, psychology plays a big role. Ultimately, this is an economic phenomenon. There are no hissy fits in economics. And there’s no sympathy for greedy gamblers either. If you make an ass out of yourself, we’ll all have a good laugh at your expense. Then we’ll lowball you into tears. Can’t say you haven’t been warned.
Wealth of Americans at a all time high, many have 401k cash out coming at well over 1 million dollars and pensions of $7,000 plus Social Secuity and I ‘ m giving my property away think again.
With housing demand at 19 year lows and falling, nobody is interested in your depreciating shack.
Wealth of Americans at a all time high
That is simply hor$e$hit.
My 401ks and IRAs total recently passed $900,000.
And no, none of it is going to be used to buy any house. Or condo.
You seem plenty fixated on would-be buyers who want to ’steal your home.’ I’m sorry to hear about your gambling losses, but characterizing anyone who is generous enough to take your overvalued crap shack out of your hands for good money as a ‘thief’ is a little over the top, no?