It’s As If Someone Had Flicked A Light Switch
It’s Friday desk clearing time for this blogger. “Panelists answered the following: Do you feel positive about the direction of the national housing market? Richard Place: ‘If you own a house you have to feel positive about the trend. One of the reasons you buy a house is to make money off the investment. It’s a no-brainer.’
“Marty Richman: ‘No, I believe that many local and regional bubbles still exist. California housing costs, in general, are way out of line with income. The state has a financial interest in inflated housing prices – that is why they did nothing about the last bubble until it burst.’”
“Did you hear that pop? Listen closely, there it goes again. According to my analysis of MLS data, Boston’s rental inventory last July 15 was 843 units. This July 15, 1,349 apartments are available for rent, up 60 percent. Pop. The Brookline rental inventory last July 15 was 126 units. Yesterday, 168 units. Pop. The South End rental inventory one year ago was 67 units. Now, 118. Adam Mundt, leasing manager at Metro Realty in Brookline, told me, ‘It’s gonna be interesting come August to see what’s left and what desperate landlords start doing to move their inventory.’ Pop, pop, pop, pop, pop…”
“Where did all the billionaires go? After a year of frenzied sales in 2013, high-end condo deals have slowed at several luxe buildings, including One57 on W. 57th St. supply has finally started catching up with demand. Right now, 43 Manhattan units are listed at more than $40 million — a 48% increase from last year and a 126% increase from two years ago, according to StreetEasy. Some said a slowdown in sales may not be the worst thing if it means the market is leveling out from the dizzying heights it reached last year. ‘The last time people went out there and lit their hair on fire to buy apartments,’ said broker Jason Haber of Warburg Realty, ‘we had the biggest crash in a generation.’”
“According to Neuse Rinver Regional MLS figures, 518 homes have been sold in Craven County, down more than 20 percent from the first half of 2013. The Shackelford Report shows there is an 11.4-month inventory of homes on the market. Of them, 6.7 months of availability is in new construction inventory, something that implies slower home construction and fewer jobs. An abundance of foreclosed homes on the market is also contributing.”
“‘I’ve been in business 50 years and the bubble has burst,’ said Whit Morgan of New Bern Real Estate. ‘A lot of retirees want to come to New Bern,’ he said, ‘but the ones from up north who want to come here cannot sell their homes there so they can’t buy here.’”
“A glut of condos in Montreal have fostered ideal conditions for a housing market slump. Marie-Michele Rousseau-Clair put her condo in Rosemont on the market two months ago in preparation for a move to Trois-Rivières. She’s worried because it still hasn’t sold. ‘I’ve had about seven or eight visits. I’ll be really concerned if I don’t have any visitors or calls,’ she said.”
“Remax real-estate agent Mike Abatzidis said there are simply too many condos on the market. ‘I had a condo downtown — it was really hard to sell because they were building brand new condos. A lot of buyers will just say, ‘I want a brand new condo renovated the way I want,’ Abatzidis said.”
“The luxury market in central London was the first to show signs that the city’s residential housing may be cooling. The slowdown in price gains and the prospect of realizing profit tied up in London homes could tempt wealthy foreigners to head elsewhere, economists say. Asking prices for London properties declined for a second month in July as more homes were offered for sale, according to Rightmove. The decline was led by three districts, prices in each fell by an average of almost 4 percent in the month. ‘It’s as if someone had flicked a light switch,’ Johnny Morris, head of research at Hamptons, said.”
“Developers sold just 482 condominium units - excluding executive condominiums - last month, a 73.3 per cent drop from June last year, according to the Urban Redevelopment Authority. Savills Singapore research head Alan Cheong noticed that buyers are holding back on purchasing new homes because of ‘all the talk in the market that prices are going to come down.’ But developers have held firm and the launch prices are, in fact, higher than last year’s. ‘Buyers are asking the wrong people for their views on the real estate market,’ added Mr Cheong.”
“Buyers prefer to purchase affordable smaller units, leaving larger units unsold and ‘creating dead pools in the market,’ said Mr Cheong. ‘With the cooling measures, serial real estate buyers would rather spend their money elsewhere, even though they can afford it,’ he added.”
“Ridgefield Town Clerk Barbara Serfilippi reports 14 foreclosures had been filed with her office as of Monday, July 21 — more than in all of 2013. The 14 foreclosures are more than last year, just one less the year before, and not far from the highs found research finance board Chairman Dave Ulmer — 19 in 2011, and 18 in 2010. ‘Some of 2014 we believe to be ‘catch-up’ as banks were stopped from overdoing it in the last couple years,’ he said.”
“Ms. Serfilippi expects more foreclosures are coming. ‘There’s a new law that before they file a lis pendens or a foreclosure, the firm has to file a foreclosure registration,’ she said. ‘Thirty-eight foreclosure registrations from Jan. 1 to July 21,’ she said. ‘There’s 38. And some of these were foreclosed, but there’s still others out there that are pending. I think what’s happened is there were a lot of these pending since 2008, and finally some of the banks are coming out and finally foreclosing on the property. They had so many in pre-foreclosure, and now the banks are finally getting down to it.’”
“The long-term solution to Jackson Hole’s workforce housing shortage needs to involve a dedicated source of revenue, housing experts say. The ideas for solutions come during a summer in which, by many accounts, the housing market is exceptionally tight in Jackson Hole. People are camping or living out of their cars. Businesses are short of staff. The master planning document sets a community goal of housing 65 percent of the workforce locally.”
“But the 65 percent goal won’t be possible by just adding density to town, according to a real estate agent who spoke at a special meeting on housing. ‘We can’t build our way out of this,’ said Brett McPeak, an owner and broker with RE/MAX Obsidian Real Estate. ‘Something needs to change. In 2012 a townhouse on Redmond Street was on sale for $200 per square foot. In 2014 a townhouse just next door was on sale for $400 per square foot. What’s available is ’somebody’s beat up hand-me-down or something brand new with a large price tag on it,’ McPeak said. ‘We seem to be at a sort of an endgame with the housing stock that’s available.’”
“A shot across the Fed’s bow from Simon Johnson, former IMF chief economist and bank critic, on the surface looks to be a good bit of news. Johnson, in a recent Project Syndicate article, warns that the notoriously cloistered central bank is overly confident about its political position. His warning is clear: the Fed is more powerful than ever despite having been wretchedly incompetent in the runup to the crisis. The result is a flaccid economy, bubbles in many financial assets and destabilizing hot money flows sloshing through developing economies.”
“In other words, the Fed has become ‘independent’ in the worst possible way. It shirked its oversight duties prior to the crisis and now it thumbs its nose at performing tasks clearly and explicitly assigned to it under Dodd Frank. So if we were to have Audit the Fed implemented in its original version or have other right-left initiatives to bring a central bank that can’t shoot straight to heel, that would be a welcome development. The disconcerting part, as Johnson indicates, is that the Fed appears to think that it is invulnerable.”
I’m traveling by plane starting this morning: moderation will be delayed at times. I should get home Sunday, so that will be the extent of it.
It’s getting to an interesting time with this bubble. Big changes are happening often and fast.
‘An “asset bubble” may be developing in farmland prices which have risen now for 12 straight years, Rabobank Food and Agribusiness Research and Advisory (FAR) group warns in a report.’
‘The report - Land Values 2014: At the Tipping Point - says farmland values rose in recent years because of low interest rates, high commodity prices, and limited availability of real estate for sale. However, commodity prices have fallen sharply. in some case approaching four-year lows, and interest rates are beginning to work their way up.’
‘According to USDA and Rabobank data, Indiana, Illinois, Iowa, Minnesota, North Dakota, South Dakota, Nebraska, and Kansas all reported increases of more than 100 percent between 2005 and 2013. South Dakota and North Dakota all showed increases of more than 218 percent, and Nebraska showed the biggest increase, a 242 percent jump.’
“…may be developing…”
Already noted on the HBB many years ago…
“‘An “asset bubble” may be developing in farmland prices which have risen now for 12 straight years..”
“Already noted on the HBB many years ago…”
With an emphasis on many. What’s so hilarious about the statement is that they state a bubble “may be developing” when prices are at the absolute pinnacle, a dozen years in the making. Talk about a day late and a dollar short. Do these same reporters post decade old obituaries, too?
…emphasis on “may.”
Did farmland prices similarly bubble during the run up to the Great Depression in the 1920s?
Keep in mind the rising interest rates first chase out the long bond holders to the exits. Then they chase out the stock traders. They sell off and buy other assets, but they look for undervalued assets outside of bonds and stocks or they just stay in cash until they find undervalued assets.
“It’s getting to an interesting time with this bubble. Big changes are happening often and fast.”
Yeauuuuuuup!
And the public is oblivious to it. watching the peaks blow off and the subsequent demand collapse is much like watching individual nasdaq stock volumes plunge and wondering which one is going to peak and plunge next.
The public is going to be paying attention soon. I have a feeling that the next collapse is going to bring political and social changes a lot more significant than the last one did. The only “change” that 2008 wrought was an utter determination by leadership in both democratic and authoritarian countries to return to 2006, regardless of the costs it might entail.
“Johnson, in a recent Project Syndicate article, warns that the notoriously cloistered central bank is overly confident about its political position. ”
Not overly confident, just confident; After all that has been said and done the blatant fact remains: Bankers rule.
“His warning is clear: the Fed is more powerful than ever despite having been wretchedly incompetent in the runup to the crisis. The result is a flaccid economy, bubbles in many financial assets and destabilizing hot money flows sloshing through developing economies.”
And the bad news is …?
“In other words, the Fed has become ‘independent’ in the worst possible way.”
Yep. Worst for some, best for others. Bankers rule, you know.
“It shirked its oversight duties prior to the crisis and now it thumbs its nose at performing tasks clearly and explicitly assigned to it under Dodd Frank. So if we were to have Audit the Fed implemented in its original version or have other right-left initiatives to bring a central bank that can’t shoot straight to heel, that would be a welcome development.”
“The disconcerting part, as Johnson indicates, is that the Fed appears to think that it is invulnerable.”
Yeah? Well that is because it is.
Go Janet.
Bahahahahahahahahahahahahahahahahahahahahahahahaha
‘Buyers are asking the wrong people for their views on the real estate market,’
In my view, this is the point when greater fools are about to get stucco.
Buyers need to talk to people such as Amy. Amy knows just exactly what to say in order to get ‘er done.
It is poetic justice to see home prices double over two years in Jackson Hole, site of the Fed’s annual conclave.
‘By now it’s a water cooler conversation cliche that there are four pages of jobs listed in the Jackson Hole Daily classified ads and a total of four ads for available rentals.’
‘Ali Cohane always heard that it’s good practice to do every job at her business. She just never imagined that might happen because she is the only one available to do much of the work.’
‘Cohane and her husband Kevin own and run Persephone Bakery and its accompanying cafe just off the Town Square. This summer the couple also fills in for the delivery drivers, pastry cooks and dishwashers they just can’t seem to hire. “We don’t know what to do,” Cohane said. “We can’t survive with the way things have been.”
‘The couple has lost 30 percent of their staff in the past two months, she said, and she has no doubt what is causing the problem — whether it’s potential employees not responding to ads, employees quitting dishwashing jobs to take more lucrative construction work or employees getting as far as an in-person interview and having to decline a final job offer.’
“It’s housing,” she said. “Absolutely, it’s housing. We can’t afford to pay enough for our employees to automatically afford housing.”
“We don’t know what to do,”
Simple answer, provide housing for your employees or jack your prices up to the moon.
Which equates to go out of business. That’s the problem with bubble real estate prices- business no longer pencils out. So, you’re left with outrageous real estate prices and little business activity, something which will take a looooong time to recover from.
Once businesses leave a community, they don’t just spring right back up. There is a lasting impact upon the citizens, and a once-bitten, twice-shy attitude becomes pervasive, and persists for quite some time. People become so fearful and skeptical that they almost mock anyone considering opening a business. And they become very tight with their money, too, uncertain if the hard times will ever end. This real estate bubble, in my opinion, has done far more damage to entrepreneurship and job creation than anything else over the past two decades.
Also, in the long run, when businesses leave a community like that, in turn it makes the community less attractive to live, and be just full of way overpriced stucco boxes to buy just to get away from brown skinned people.
In my young adult life I lived in a town of 28,000 people for eleven years and the nearest larger city was about 90 miles away. When the newspaper dining section lists McDonald’s as a place to dine, you know you are in podunk.
In the larger realm in California, the news this year that gave the socialists nightmares was when Toyota announced they are moving the national headquarters from Torrance to Texas. It was not because they couldn’t find employees, but it was because the nanny state made the cost of doing business too expensive for Toyota.
You will see a lot more of this. There is a limit to high house prices and the price of government regulations.
“Simple answer, provide housing for your employees…”
And go ahead and add a company store, too. I think I’ve read this somewhere before… Grapes of Wrath 2000’s.
plenty of big outlying industrial plants had to do that..it wasn’t the worst thing in the world.
The game Monopoly was specifically created to teach people what happens when the land becomes monopolized. She thought if the kids learned it at a young age they would know what NOT to do later on. For some reason this lesson has not been learned even though everyone knows what happens at the end of the game. There are actually two lessons though. Lesson number one is that most all of the players lose everything. Lesson number two is that even the winner loses because he no longer has anyone to ride his railroads or rent his properties. A friend of mine told me when they were kids they would just print up more money so that no one had to stop playing, but that only stopped the tears for a while…
“It’s housing,” she said. “Absolutely, it’s housing. We can’t afford to pay enough for our employees to automatically afford housing.”
This is Jackson Hole? I’d be camping or living down by the river in a van and bank-rolling the earnings. Sounds like some eager beaver type college kids could have a summer out there working and making a go of it. Here, this is the ball and chain of owning stuff. Even a disillusioned cubicle worker can not try such an adventure. They have too much stuff and the pay would probably not cover their overhead back in cubicle land.
‘For those looking to buy a house in Delhi or the National Capital Region (comprising Noida, Greater Noida, Gurgaon and Ghaziabad), a good deal might be around the corner. Property prices in some pockets in Delhi and the NCR have fallen by over 20 per cent year-on-year.’
‘Property prices have fallen because a combination of sluggish economic growth, high inflation and high interest rates have impacted consumer spending. Developers are saddled with high debt and inventory levels forcing them to cut prices in some markets.’
‘French President Francois Hollande’s government may have made a housing slump worse, pushing the construction market to its lowest in more than 15 years. The rout stems from a law this year that seeks to make housing more affordable by capping rents in expensive neighborhoods…the law also boosted the number of documents that must be provided by sellers, leading to a decline in home sales and longer transaction times. While the government is now adjusting the rules, the damage is done.’
‘The construction slump, exacerbated by prices near all-time highs in the Paris area and the country’s record jobless claims are curbing sales of building material and electrical equipment.’
Near all time highs in prices and a 15 year low in construction? Hmm, sounds a little out of whack.
Can’t blame this one on King Louis XVI.
‘A rise in Qatar’s real estate prices is no reason for investors to panic as it is unlikely to shake the country’s economy, a Gulf Times report said. Citing data from the Samba Financial Group, the report revealed that “strong market fundamentals” like population growth and project spending point to sustained economic growth.’
‘The report said that Qatar real estate average prices have bounced by 129.4 per cent in March following dismal growth in June 2009. It also noted that the prices “now stand 9% above its pre-recession peak.”
‘A number of small developers - the kind that by sheer weight of numbers dominate China’s vast property sector - are set to report big drops in earnings or even losses as the industry grapples with tight credit, sluggish sales and excess supply.’
‘China Overseas Grand Oceans (COGO) was the first mainland developer off the block on Thursday, when it reported a 31 percent drop in first-half net profit and flagged a gloomy industry outlook due to high inventories and tight credit.’
“Currently, real user demand in third-tier cities is limited,” said company chairman Hao Jian Min, who is also the chairman and chief executive officer of state-backed China Overseas Land & Investment Ltd (COLI). COLI owns about 40 percent of COGO. “Because of excess supply, together with buyers’ wait-and-see approach, even if prices were adjusted somewhat, it wouldn’t drive good sales,” he said at an earnings briefing, adding that limited bank credit remained a problem for the industry.’
‘He said COGO had slowed some developments in the first half to avoid inventory pile-up.’
‘Greenland Hong Kong and Jingrui Holdings Ltd - two other smaller players expected to report in August - have said they will incur a first-half net profit fall and a loss, respectively, due to a drop in the number of properties completed and delivered.’
‘If you want to buy a medium-sized house in Macau, be ready: you need to work 15 years to get it. And don’t wait for a year or two: you’ll risk having to keep your job for 20 more years to buy the same place.’
‘The IMF estimates that a household in Macau needs to work 15 years to buy a 70 square metre home today. That’s five years more than what was needed in 2012 (10 years) and three times more than in 2009, the IMF revealed.’
‘Unable to pay her mortgage, Manoli Herrera turned over her flat to the bank and moved into one of six abandoned buildings occupied by other jobless families in Sanlucar de Barrameda, a seaside town on Spain’s southern coast.’
“I did not want my two children to experience the violence of an eviction. They have already gone through so much,” she said as her children played in the courtyard of the occupied building.’
‘Twenty struggling families, many with children, moved into the building on June 30. Several days later another 60 families moved into five nearby buildings. The six new buildings belong to a real estate developer that went bankrupt and disappeared.’
‘A message written on a white bedsheet that hangs from the courtyard of one of the occupied reads: “Everyone has the right to a home. Fighting for a home.”
Forward, Free Shit Army! Comrade Pelosi and the DNC will see to the redistribution of the wealth for their loyal voters.
‘One of the reasons you buy a house is to make money off the investment. It’s a no-brainer.’
It may be a reason but should not be your primary reason. In fact, houses are a poor investment and should be considered a place to hang your hat - no more. It can be a great savings vehicle if prices are stable. The run-up in prices we have seen on and off over the last 30 yrs in particular has been demographically and credit expansion driven - the death of sound money. This will not continue any longer (cannot be forced anymore either) and we will certainly not see an identical increase in RE prices over the next 30 yrs - demogrpahics do not support it and credit expansion has hit the wall (interest rates cannot reasonably go much lower). Do you truly believe your $500,000 home will be worth $5 million in 40 yrs and that a $100,000/yr job will pay $1 million/yr by then. BTW try purchasing that $5 mil home with a $1mil salary. Not going to happen. Exponents are a b-tch when they run away from oneanother aren’t they. Think about property taxes at that price ($5 mil) and what your pension will resonably pay you and increase by each year in retirement. Best case scenario is prices will remain stable for the next generation - but IMO they are more likely to deflate. BTW deflation is a good thing as it increases your buying power if you are a prudent saver - a lost skill (it is a skill - a disciplined one at that). If you live on debt (as most seem to do) then deflation is not what you want thus the insane attempts by CBs to fight deflation at all costs - costs which financially damage the prudent and conservative savers who actually live within their means. For all you naysayers, all I can say is; keep dreamin. RD
‘One of the reasons you buy a house is to make money off the investment. It’s a no-brainer.’
This gets to the root of the problem, and the main driver of the bubble. Housing morphed from shelter into a get rich quick scheme.
The only thing, I might add, that’s more dangerous than turning your shelter into a high-stakes gambling item, is doing so with your food. Unfortunately, it is already happening in the commodities arena. If Wall St., backed by the Fed, can manage to blow a massive bubble in commodities unlike anything ever seen before, we could witness the world’s largest ever starvation event due to the inability of the masses to afford food. The billionaires will sip champagne from the comforts of their massive yachts, and laugh about their stranglehold upon the human race.
Thank you. I expect food and water to become financialized at some future date. When that happens, I also expect no change in the tone of the Fed’s quarterly pronouncements, or in the propaganda to which we are exposed.
Well, speaking of guillotine renovation, hunger was a driving force behind the French Revolution.
Mass starvation while piles of food rot, and subsequent revolution will be the end game of capitalism. Just nature’s way of weeding out flawed ideologies.
Will socialism rise to take its turn, or will it be another dark age of chaos and feudalism? Such wonders the future has in store.
stocks and home price inflation have become a substitute for real economic growth.
Crater Taters in your feed bag.
upside down?
I believe you. You got screwed by a realtor like all the other suckers.
u lost it all didnt you? Figures You have to come here to vent your anger after losing it all flipping homes.
I’d be angry too. Walk away from that depreciating shack. Free yourself. Millions of others have.
B R O K E
Then get your head out of of the CraterTater bag and do something about it. There is hope for you.
F R A U D
You overpaid by 250% for that shack and you thought you got a bargain.
Why is that?
Millennials find Denver housing unaffordable:
http://www.denverpost.com/business/ci_26260787/denver-is-among-least-affordable-home-markets-millennial
“Disgusting 3 Bedroom Basement Apartment For Rent:
I have tenants moving out of a 3 bedroom basement apartment in August, the apartment is for rent September 1st. This apartment has not been maintained or cared for in any way whatsoever, and is quite frankly disgusting. I don’t know how anyone could possibly live in this much filth; however, after 5 years in the rental business I know that MANY people do. So instead of me investing a bunch of money into this unit and then running the risk of renting to someone who’s going to destroy it again, I’m looking to rent to someone who lives a similar lifestyle as my current tenants…”
http://www.kijiji.ca/v-3-bedroom-apartments-condos/fredericton/disgusting-3-bedroom-apt-for-rent-utilities-included/1008335219?enableSearchNavigationFlag=true
enraged