The Super Piggy Bank That Couldn’t Go Wrong
It’s Friday desk clearing time for this blogger. “Southern California home sales plunged in July and show little signs of rebounding. The pain is especially acute for brokers, who depend on a commissions. ‘There are a lot of hurting agents right now,’ said South Bay agent Leo Nordine, who said his volumes have been roughly flat this year. ‘There are too many agents and not enough sales.’”
“‘Dick Beeson, principal managing broker of Re/Max Professionals in Tacoma, said the market is healthy. And more inventory would come online and help further balance the market if lenders would bring their bank-owned and distressed properties to market faster, Beeson said. Lenders are well aware that home values are improving, so they are waiting to ‘maximize every property,’ he said.”
“Foreclosure filings in Meriden, Wallingford and Southington have increased since the peak of the financial crisis. If foreclosures are increasing this long after the start of the financial crisis, homeowners may have continued to make mortgage payments through the recession but ‘finally ran out of steam or a means to do so,’ said Robert Porter, chairman of Quinnipiac University’s finance department. Larry Madow, a Wallingford real estate agent, said he is having a harder time selling foreclosed properties because they’re often ’sitting vacant for a few years,’ causing deterioration.”
“In New Jersey, state court records show 31,500 new foreclosures cases have been filed as of Aug. 1, on track to be at least the third-highest annual total in state history. Sheriff’s sales have hit a four-year peak, and bank repossessions almost doubled in May. There have been shocks to the housing market before, said James Hughes, dean of the Edward J. Bloustein School of Policy and Public Planning at Rutgers. But this downturn has dovetailed with a change in attitudes as well as fortunes. ‘Up until the Great Recession, housing was the super piggy bank, the investment that couldn’t go wrong,’ Hughes said. ‘Now people know it can.’”
“At a glitzy show stall for a new residential development in Hong Kong, property agents re promoting the latest trend in the overcrowded city — high-end ‘micro-flats’ which still come with an eye-watering price tag. some of the newly built studio flats measure as little as 16 square meters (177 square feet) and are on sale for HK$1.5 million — almost US$200,000. ‘I’m 33 years old and I really need my own place,’ says Single entrepreneur Mike Ko. ‘The market is too expensive, so buying a studio flat is a good first step to home ownership,’ he said.”
“Agents are selling the pint-sized flats on the basis that the market boom will only continue. ‘You want to buy now because prices will just go up,’ said one agent at the new Mont Vert development in the suburban neighborhood of Tai Po. ‘You are saving, in a sense.’”
“The rental market has returned to pre-boom prices, with the downturn finally taking effect. ‘Many investors were given high rental appraisal prices and can no longer find tenants,’ said Angie Wallwork, the office manager of 360 Property Management Mackay. ‘Not all landlords are rich investors, the majority are ordinary people trying to get ahead,’ she said. Many owners of vacant property weren’t local and there were some who ‘haven’t even seen their houses,’ Mrs Wallwork said.”
“The glut of vacant homes across China owned by small investors has fueled a cottage industry: companies that help owners rent their homes for short-term stays. Wang Xiyuan said he has no plans to buy more property, preferring instead to focus on managing what he already owns: three apartments in Beijing and two in Changzhou. ‘Buying investment homes in hopes of flipping them for profit? That era is over,’ he said. ‘The villa has been empty till now, but I’m considering putting it up for short-term rentals if there is demand,’ said Mr. Wang.”
“More than one in five homes in Chinese cities is vacant, according to a survey. If China’s property market sees a sharp price decline, panicked investors of these empty units could rush to sell, said Li Gan, the professor who oversaw the survey, ‘and this could potentially trigger a housing-market collapse.’”
“A report recently disclosed that in May and June of this year, Hangzhou City of Zhejiang Province, Wuxi City of Jiangsu Province, Ningde City of Fujian Province, Xinyi City of Jiangsu Province and others are all experiencing defaults on personal mortgage loans. Xie Zuoshi, a Professor of Economics and International Trade School of Zhejiang University of Finance says, ‘Why did this happen? This must be due to prices falling more than the down payment. Or the value of the house now is lower than the returned loan payment to the bank in the future.’”
“Mr. Yang, Heye Real Estate Brokers Company, Zunyi City of Guizhou Province: ‘House prices fell too much now. It is impossible for the government not to save. Government is certainly able to produce some liberal policies to promote house transactions. If no one buys, then the economy is of course paralyzed.’”
“Xie Zuoshi: ‘Relaxing the restriction order or abandoning the restriction order cannot stop the falling housing prices. So what’s the aim for me to buy a property? I buy a house in the hopes that the value increases in the future. If the house prices are expected to fall, then I do not buy. If I do not buy, what sort of use is there in relaxing the purchase order, I would have had no intention to buy.’”
“In an interview with London-based Central Banking Journal last week, Reserve Bank governor Raghuram Rajan had warned of a global crisis arising from an asset price crash due to the cheap money policy followed by most countries in the developed world. ‘We are taking a greater chance of having another crash at a time when the world is less capable of bearing the cost,’ Rajan warned. ‘Instead of the political system taking action, reforming the economy, etc, as industrial countries also need reforms, they are relying on the monetary authorities to provide whatever boost that was required. I thought this was dangerous because monetary authorities across the world are boosting asset prices rather than real activity.’”
“Janet Yellen and other central bankers ignore the intricate mechanisms that balance supply and demand; they want to force people to demand more. They have no interest in discovering prices; they want to impose their own prices and they could care less what Mr. Market has to say. They believe they can improve the markets, control them, whip them into shape and force them to do their bidding.”
“‘No need to lift rates to curb risk, says Yellen’ is how the Financial Times reported her position last week. Someone must have told her that prices of houses, art, bonds, stocks and other assets are all getting closer to bubbledom.”
“Some lose their money because they are stupid. Some run into a ditch because they aren’t paying attention… or because they are paying too much attention. Some are too cautious. Others are too reckless. Some are arrogant. Some are ruined by timidity. Others by pride. Whatever your weakness, Mr. Market will find it. He will encourage you to dig yourself in deeper and deeper… Then he will fill the hole!”
Nevada Housing Demand Plunges Through Great Recession Floor And Sinks To September 2001 Low
http://files.zillowstatic.com/research/public/State/State_Turnover_AllHomes.csv
http://picpaste.com/pics/4572090f3a5060ba17fe367e197a1e01.1408066435.png
That first link does not work.
sure it does.
It’s a file.
I should add that I have no need for Microsoft Office, so perhaps you could actually do something with the file (Picpaste) for those of us who don’t waste money on expensive software, or download knock-offs.
Collapsing housing demand angers you.
Not angry, just thought I’d let you know that not everyone uses Microsoft Office. But go ahead and carry on with your straw man BS.
Remember…. a housing recovery is falling housing prices to dramatically lower and more affordable levels by definition.
“It’s a file.”
A *.csv file is abbreviated, Comma Separated Values.
A text editor can usually open them. The first line is often a Field or Title name(s), and the second line through nnn… are data values, numbers or text. MS Office tries to import them into an Excel file by default.
I use open office works just a good
https://www.openoffice.org/
Oh… I thought .csv was an acronym for cratering sinking volume.
Google docs can probably read it too. That would actually be the best place to share it.
‘There are a lot of hurting agents right now,’
Make sure they record their pain with their fancy-schmancy smart phones so they can play it back next time they think real estate is the place to be.
Time to unload that Jag lease and kill the iphone contract. Bummer.
“If China’s property market sees a sharp price decline, panicked investors of these empty units could rush to sell…”
It’s the Ponzi version of Musical Chairs.
“It’s the Ponzi version of Musical Chairs.”
Musical chairs without the liquidity.
It’s not as if you can call up a realtor and tell him “sell” as you could do if you were trying to unload something such as stocks.
The sale of most things is an event; The sale of real estate is a process.
Who needs liquidity when you have home equity and guaranteed price appreciation?
“Southern California home sales plunged in July and show little signs of rebounding. The pain is especially acute for brokers, who depend on a commissions. ‘There are a lot of hurting agents right now,’ said South Bay agent Leo Nordine, who said his volumes have been roughly flat this year. ‘There are too many agents and not enough sales.’”
These realtor pukes need to get off their lazy butts and hustle up some marks and bring them to me.
“There are a lot of hurting agents right now.”
Good! Pit them against each other. The ones with the best hustle wins the commission.
I, of course, also get to enjoy a win, but I get to enjoy a win without doing all the work.
This is why …
You cannot lose with the stuff I use.
Bahahahahahahahahahahahahahahahahahahahahaha
Coffee is for closers, only.
“‘Lenders are well aware that home values are improving, so they are waiting to ‘maximize every property,’ he said.”
Check out this logic: The prices are improving thus the values are improving.
Prices are determined by strangers thus, with this sort of logic, these same strangers determine the value of what one owns.
If these strangers vote to increase prices of the comps then the value of what you own increases. If these strangers vote to decrease the prices of the comps then the value of what you own decreases.
With this sort of thinking your property has no internal value of its own (it has no intrinsic value, as Buffett would say) instead its value is determined by the whims and actions of strangers.
This sort of thinking is a bit crazy, is it not? But, crazy or not, this is the sort of thinking that drives the real estate market.
These strangers are not only the prospective buyers, but also the folks who decide on how much money they are willing to lend out to people with shoddy credit histories.
The looser the lending standards set by strangers, the higher the value of what one owns becomes.
“‘Many investors were given high rental appraisal prices and can no longer find tenants.’”
Bahahahahahahahahahahahahahahahahahaha
If you are a seller and you get to pick and choose among appraisers in your search for an appraiser that will represent an appraisal that is best for you, does anyone here on this message board think you will have trouble finding one?
(Here’s a clue that may help you reach a conclusion: The appraisers who come in with high appraisals get lots of work; The the ones who come in with low appraisals get to starve.)
You have to wonder if these “Investors” will ever learn. What’s that? Appraisals aren’t working out? You mean just like last time? I am stunned.
BTW, you are the best Mr. Banker. Hilarious comments.
MAI=”Made As Instructed”
MAI=”Made As Instructed” ??
You can make assumptions that they are manipulated appraisals but the is “no question” that they are the best educated and supervised appraisers in the industry…Just take a look at some of the residential appraisers running around…Here is a Q & A I had with a appraiser on a property that I own a number of months ago;
Q; So, scdave, how old is the roof.. ??
A; It is 32 years old…
Q; So, the roof has never been replaced ??
A; No, but it does not need to be replaced…It is a concrete tile roof and basically will outlive the structure…
Q; So, what your telling me is the roof has not been replaced ??
A; Crickets…I did not know how to respond…
Whether manipulated or not, appraisals are founded on appraisers who have little to zero experience in specifying materials, designing structures or procuring and assembling those materials into a structure. Just ask an “appraiser” for a bid estimate or take-off for any work. They’ll look at you with a deer in the headlights look.
The appraisal business is founded on fantasy and BS just like Realtor.
Appraisals end up being precisely the price in the purchase contract far too often to be seen as purely independent (they are influenced by the agreed transaction price). That said, they do frequently includes lots of market information that can be useful.
For that reason, when we evaluate transactions, we do not require an appraisal, but if there is one, we will review for market data.
cue up HA
eo Nordine, who said his volumes have been roughly flat this year
serious question _the cash in 30 days etc re buyers
do they offer 10% or 20% off assessed value or ???
Interesting how these “hot” markets with a shortage of houses can go cold so quickly. Maybe there was never a shortage after all?
‘Millennials and college students are part of the drag on the Phoenix area’s now sluggish housing market. Instead, it’s retirees and baby boomers nearing retirement who are the bright spots in home sales, according to Stephanie Gonzalez, president of Green Street Real Estate Inc.’
‘Gonzalez said submarkets that appeal to older home buyers such as north Scottsdale, Sun City, Sun City West and the far southeast Valley are faring better than older, infill and urban neighborhoods favored by younger buyers such as central Phoenix and Tempe.’
“Those are more buyers’ markets right now,” Gonzalez said.’
‘Increasing inventory, more competition and a smaller buyer pool. That continues to sum up the market. According to the Arizona Regional MLS, July property sales in the 85044, 85045 and 85048 ZIP codes were 137 sales, down 17.5 percent from 166 in July 2013. The median sales price was $273,000, down 5.6 percent from $289,250 in July of 2013.’
‘July’s inventory increased 4.3 percent to 505 and up 48.1 percent from 341 in July of last year. When compared with 2012 and 2013, this is the highest level of inventory we have seen on the market.’
‘If you are thinking of putting your home on the market for sale, be sure to price it competitively, remove all the clutter and stage it to look inviting. These are the properties that beat out the competition and get sold first.’
Seems like the “shortage” may have been a false perception created by the flood of loanable funds into U.S. housing markets nationwide through the FHA, Fannie Mae, Freddie Mac, USDA, etc etc etc to keep housing prices at an elevated level through the duration of the Great Recession.
A poster gave us this from Las Vegas yesterday:
‘I don’t know what it is, but the number of sellers calling my office last week was off the charts – I mean a total record that dwarfs anything I have seen in probably 2 years. Sellers have been banking on increasing price appreciation (and maybe actively waiting it out) and for some reason the homeowner must have gotten the memo that buyers are backing off, the market is changing direction, and they are jumping in to take advantage of the price increases from the past 2 years before it could possibly roll back.’
‘Houston’s tight supply of housing continued to loosen in July, inching up for the third straight month, according to data from the Houston Realtors Association.’
How can this be?
‘Britain’s house-price boom threatens to turn into a property crash within months, warn industry experts, as a key survery is set to reveal there are now more sellers that buyers.’
‘Sellers are looking to cash in on high prices, creating a glut of homes for sale. Buyers, meanwhile, are said to be wary of paying huge prices for London properties in particular.’
The Houston MSA is building about 3k new single family homes per month.
For perspective, that’s about the same number of single family homes built per month in the ENTIRE state of California.
Their “tight supply” inevitably would cease to be so tight when building this much.
Makes no sense considering the 2 million excess empty houses in TX.
‘Twas me. In my little neighborhood in Vegas, new listing very close by - $225K for a house built in 1978. No pictures yet. Dying to see if it too has the original kitchen and appliances like the one listed three weeks ago for $200K (now pending.) I’m shocked our LL hasn’t listed our rental yet. He’s an accidental LL, and he always gave me the impression he just doesn’t want to deal with it (hence, PM.)
There was an obscene number of empty houses in Vegas as measured by units where power has been shut off. I think the number was something like 50k homes…A TON of vacant homes. Eventually their existence will be felt somehow.
I liked this comment on the article in the LV Review Journal Wednesday - Notices of default jump 128 percent in Nevada
I hadn’t heard about the 45K water meters disengaged (the 50K without power is mentioned often.)
All is (not) well. Something’s got to give.
Why would you need power (AC), or water in the desert? I’m sure those homes are full of nice cool folks sipping iced tea.
Can’t say for certain, but this certainly suggests a market in capitulation, as prices have been driven up (again) to levels where buyers are scarce, and investors who only bought for the sake of short-term price appreciation have their eyes trained on the exit door.
The interesting question is whether the Fed will intervene again to prop up prices, as they did in early 2012. They seem to prefer rewarding the investor / ownership society class and punishing the young, many of whom cannot afford to start families because of a combination of low-paying jobs, high student debt loads, and unaffordable entry-level housing prices. The Fed’s housing price reflation program certainly didn’t work out very well for the under-30 set.
and they are jumping in to take advantage of the price increases from the past 2 years before it could possibly roll back.’ ??
The deserve what they get…It wasn’t enough that they possibly could have made a little money with the market coming back…NNNNNNN000000000…They wanted to get every last dollar…Greed killed the Pig…
Maybe everybody finally read the stories regarding Lke Meade being gone soon?
‘The Second Housing Bubble You Didn’t Even Know You Were Afraid of’
Ben:
The EOD described in the article you link to seems to me to be a warning of an impending hurricane brewing and awaiting landfall. Near 500 bill in amortized loans starting at the 10 year mark which would be in 2015 to 2017 with 15 year duration just sounds ominous. Where in a declining economy are people gonna come up with the scratch to manage this additional debt? It sure ain’t gonna be their house for heaven’s sake. I agree with what many other posters are saying that the Fed has no choice but to keep interest rates low for forever due to this storm. Man o man did Greenspan and his ilk blow it big time. Me thinks this is becoming a multi-generational issue and possibly the last nail in the coffin of a severely indebted nation.
At least Greenspan’s Fed raised rates eventually. It always interests me that thing we used to take for granted are ignored today. For instance, it was at one time said the Fed doesn’t set long term rates, the market does. No one mentions that any more. It’s a sign of how colossal the interventions have been. And these decisions have mis-priced risk. The junk bond market is issuing record amounts of debt at insane rates, and some companies won’t be able to pay that back. What’s the interest rate on a defaulted bond? Does it even matter at that point?
‘There’s no doubt that the U.S. economy has recovered from the Great Recession, reclaiming the 8.7 million jobs that were lost. But apparently they aren’t the same jobs because the average annual wage for new jobs is 23% less than the average annual wage of jobs lost during the recession, according to a new report from the U.S. Conference of Mayors.’
“We’re stuck in a kind of trap where we see a slowly accelerating economic recovery, but on the wage side it is basically still flat except for those top earners,” says Tyler Cowen, economics professor at George Mason University, referring to the top 20% of earners whose wages are rising.’
‘Cowen tells Yahoo Finance that slow wage growth will likely continue. “If you look at the typical American wage, it was as high in the year 2000 as it is today. That’s about 14 years of stagnation,” he notes. “In my view it is quite possible we will be seeing another 14 years of exactly that same pattern.”
And high house prices solves what? What is the benefit of higher asset prices if the wages we use to buy them have fallen so much?
(BTW, here’s a great example of dishonesty in public discourse: “There’s no doubt that the U.S. economy has recovered from the Great Recession…But apparently they aren’t the same jobs because the average annual wage for new jobs is 23% less than the average annual wage of jobs lost during the recession.” Yeah Yahoo, there’s “no doubt”.)
Hmmm…..no retirement for me I am guessing!!
http://blogs.wsj.com/economics/2014/08/14/the-truth-about-retirement-for-baby-boomers/
“What’s the interest rate on a defaulted bond?”
There is a very short term rate of -100%.
“What’s the interest rate on a defaulted bond?”
I’ll sell you some with an almost infinite yield!!
Debtors Gulag.
Remember, ALWAYS pay of debt during good times. Or better yet just use cash next time. Unfortunately, there won’t be a next time.
The light at the end of the tunnel is an approaching freight train…
‘As Vancouver and Toronto grapple with tight vacancy rates and high homeownership costs, data released August 8 shows 6.9% of condo investors maintain vacant units. The CMHC surveyed more than 42,000 households in Toronto and Vancouver, and found 17.1% of owners are considered condo investors — people who possess both a primary residence and a secondary unit.’
“All these kinds of things gives you a sense of the skin the game that these investors have, what their intentions are with their unit and gives you insight into these particular investors,” said CMHC chief economist Bob Dugan.’
‘What the CMHC survey did not include was figures on foreign investors. Dugan said he hopes they can provide that information in the future, but he admitted the data is hard the collect. Dugan said the CMHC came up with an estimate of 4-5% foreign investors, but they were not confident about the data since investors could have gone through property managers or law firms to purchase their units.’
‘The survey also found 8.4% of local condo investors anticipate selling off their secondary condo within two years, while 54.4% of Vancouver investors plan to hold on to their unit at least five more years.’
‘The most striking difference between Vancouver and Toronto is how much investors expect their secondary unit to increase in value. In Toronto, more than half of investors (56.1%) anticipate the value of their secondary units to go up in the next year.’
‘But in Vancouver, just 36.6% of condo investors expect to see an increase in their units’ values. More than half (53.2%) of investors said they purchased their secondary condo unit to generate rental income.’
‘An article published by the NASDAQ Stock Market calls Yuma one of the communities hit hardest by the mortgage crisis, where foreclosures make up 20.4 percent of all homes sold. But some local real estate agents say they aren’t buying those numbers.’
“We do have a lot of foreclosures currently, but the number is down from the past several years,” said real estate agent Michael Hall. “Anybody who bought a home between 2004 and 2010 is probably ‘under water,’ but that does not mean they are in foreclosure.”
‘He said foreclosures will not cease in Yuma until the prices have increased to above what people paid for their homes.’
‘He said foreclosures will not cease in Yuma until the prices have increased to above what people paid for their homes.’
It looks like more foreclosures need to happen, then.
‘Data from the U.S. Census Bureau shows that Hutchinson’s housing starts are lagging well behind a number of other Kansas cities, including some much smaller than Hutchinson.’
‘Anticipating a need for hundreds of new homes as more soldiers came to nearby Fort Riley, Junction City rolled the dice with developers a decade ago. Dave Yearout, the current planning and zoning director, said developers were encouraged to open entire subdivisions at once, rather than in phases. The city issued bonds to finance streets, curbs and gutters and water and sewer lines, but someone in the city also waived a requirement that developers provide a letter of credit guaranteeing payment of 30 percent of the costs.’
‘Yearout said there was a “massive overbuild” and when enough buyers didn’t materialize, developers couldn’t sell lots and they couldn’t make special assessment payments. “Developers went belly up and left the city holding the bag,” Yearout said. “Those bond payments still have to be made.”
‘To pay off the debt, city voters approved a 1 percent increase in the local sales tax. They’re still paying it. “Today, we have no bonding capacity,” Yearout said. “We have no ability to borrow money. For five and half years, we’ve had no new subdivisions platted. But we’ve got 900 vacant lots.”
‘Over the past two years, he said, 941 properties, almost all vacant lots in new subdivisions, have gone to the annual sheriff’s tax sale. “We’re sitting here with a lot of lots with improvements, growing weeds,” Yearout said.’
“More than one in five homes in Chinese cities is vacant, according to a survey. If China’s property market sees a sharp price decline, panicked investors of these empty units could rush to sell, said Li Gan, the professor who oversaw the survey, ‘and this could potentially trigger a housing-market collapse.’”
The vacancy problem is almost as bad over there as in California!
don’t get offended,but gay areas seem to be hot
they start to group then pack them in
small area victoria park,fl for example
That’s twice in a week you’ve made that comment.
‘Some home buyers say that they’ve noticed the market cool somewhat. Trey Denton, a 31-year-old metals broker in Newburgh, Ind., bought an investment property for about $175,000 at the end of June, which he plans to list for sale this Friday. He said that he hopes to sell the home before the winter and that he feels there’s an increased sense of urgency to sell so he won’t have to wait until the spring home-buying season.’
“There’s definitely a risk with waiting,” Mr. Denton said. “With interest rates looking to creep up next year, the market could fall.”
He bought a house in June and he’s already selling? LMAO.
“He bought a house in June and he’s already selling? LMAO.”
+1 What were his closing costs in June?
‘We have seen a drop in the number of overall transactions from last year in all of metro Atlanta, with home sales down 5 percent in all of North Fulton. Forsyth County, by contrast, saw a 25 percent drop in the number of sales for the first half of this year.’
‘While sales transactions are down equally in both areas, inventory levels are up but not equally. Inventory levels on the west side are up over 17 percent while they only rose 8 percent on the east side.’
‘In all of North Fulton, housing inventory is up over 12 percent from last year.’
‘With inventory up and sales down it begs the question — why. Are sellers asking too much? Are properties in poor condition? Are buyers pulling back because of the economy or interest rates? Maybe the answer is all of the above.’
Same thing in the parts of So Cal that I’m watching — SD and LA Counties. Inventory up, sales down, prices up somewhat. Market looks like it’s stalled a bit, except for the decently-priced, well-maintained, desirable houses…those still go very quickly, and for top dollar.
“Market looks like it’s stalled a bit, except for the decently-priced, well-maintained, desirable houses…those still go very quickly, and for top dollar.”
+1 Prices have barely dropped in the nice areas.
Same thing here…
‘Increases in home prices across much of the New York suburbs over the past year persuaded many homeowners it was finally time to put up for-sale signs. But the shock of those higher prices also began to make buyers more cautious, brokers say. The apparent result: Sales across the region fell from last year’s strong pace, and prices have stopped climbing.’
‘John McCann put his sprawling home in Cresskill, N.J., on the market for $2.68 million in mid-May. “This was something we would not have considered a year ago because the value to sell wasn’t there,” he said.’
‘A slow economy and an associated exodus west are having a profound impact on regional housing starts, says Canada Mortgage and Housing Corp.’
‘Paul Pettipas, CEO with the Nova Scotia Home Builders’ Association, said out-migration, a slow economy and restrictive mortgage rules for first-time buyers are all having an impact on housing starts. “It’s almost a perfect storm.”
‘A senior analyst with Canada Mortgage and Housing Corporation says the housing market in this province is reaching unprecedented levels. Chris Janes of CMHC says it is without a doubt a buyer’s market with close to 3,000 houses up for sale in the metropolitan St. John’s area.’
‘Janes says there are currently 580 new homes and new builds underway, with a total of 2,900 homes listed for sale. That number, according to Janes, has grown by leaps and bounds since this time last year. With a 12.1% increase in listings since this time last year, Janes says it is a buyer’s market and if the trend continues, it would reach record levels by the fall.’
More from the China Post article below. I think my office, which is modest, is almost as big as some of these units.
_____________________________/
I’m 33 years old and I really need my own place,” says Ko. “Studios are good enough. They’re quite hip and cool as well.”
Ko currently lives with his parents in public housing and has been saving to buy, but says that current price tags mean he can only afford tiny properties.
“The market is too expensive, so buying a studio flat is a good first step to home ownership,” he said.
Agents are selling the pint-sized flats on the basis that the market boom will only continue.
“You want to buy now because prices will just go up,” said one agent at the new Mont Vert development in the suburban neighborhood of Tai Po.
“You are saving, in a sense.”
Mont Vert boasts a clubhouse, sea views and surrounding greenery — but at 16 square meters, its smallest units are only three times larger than cells in Hong Kong’s most populous prison.
‘Starting Aug. 16, a new rule imposed by Federal National Mortgage Association will make it more difficult for would-be home buyers who have had a short sale in the past to buy a home.’
‘Fannie Mae, will extend its mandated waiting period to qualify for a conventional home loan after a short sale from two years to four years. Fannie Mae announced the rule about “significant derogatory credit events” in July. These events include bankruptcies, foreclosures and short sales.’
‘The rule does make exceptions for those who can prove that a short sale occurred because of extenuating circumstances, said Denver mortgage lender Andy Jorgensen.’
‘Some local real estate brokers are worried that the change could slow down the red-hot residential real estate market in the Denver area. “There are already a boatload of safeguards since last time,” said Dan Polimino, broker with Keller Williams Luxury Homes, referring to new regulations for mortgage insurance and lending and appraisal standards that have been put in place to avoid the same pitfalls that led to the housing crash in 2008.’
“The last thing the real estate market needs is more regulation,” Polimino said.’
‘Perth is facing an impending apartment glut, as a cooling economy and subdued population growth threaten to overload the market with unwanted stock. Property analysts expect the former boom town, which has previously experienced housing shortages, to face a potential over-supply as early as next year following the completion of a series of multi-residential developments.’
‘Stewart Darby, executive manager research of the Real Estate Institute of Western Australia said there was an emerging risk of excess stock.’
“The risk of oversupply in the foreseeable future by 2015-16 is a real possibility as new supply is completed but demand, particularly for rental stock, is falling as population growth slows,” Mr Darby said.’
‘RP Data senior research analyst Cameron Kusher said a combination of new apartments, a slowdown in the resources sector and buying preference for houses could suppress inner-city apartment rents.’
“In time the market will evolve but there just doesn’t seem to be a high demand for apartments in Perth,” Mr Kusher said.’
‘Figures provided by RP Data show that rents have dropped in the inner-city suburb of Perth from a median of $640 a week in May 2013 to $575 in May 2014.’
Perth is awesome, but it’s so geographically isolated and tied to mining that you have to wonder what’s going to happen once China stops building a new unoccupied city every week.
Or when China decides to take Australia’s land and resources rather than pay for them.
https://www.youtube.com/watch?v=9KaX0F8GojI
“Some lose their money because they are stupid. Some run into a ditch because they aren’t paying attention… or because they are paying too much attention. Some are too cautious. Others are too reckless. Some are arrogant. Some are ruined by timidity. Others by pride. Whatever your weakness, Mr. Market will find it. He will encourage you to dig yourself in deeper and deeper… Then he will fill the hole!”
Don’t get stucco under shovels full of dirt!
‘Almost 40 percent of homes sold for more than list price between April and June in King and Snohomish counties, an indicator that bidding wars are pitting buyers against each other. Sellers fan the flames of competition with several tactics: They list homes at prices on the lower end of a perceived range, set a deadline to review multiple offers, and encourage buyers to waive all contingencies in their offer.’
‘Agents say the spring’s frenzied market and double-digit appreciation reminds them of the housing bubble years in 2006 and 2007. “You have people making decisions under duress rather than being thoughtful about it,” said Erik Noyd, a real-estate broker at CB Bain in Redmond.’
Never fish the trout streams on opening day.
Never drive at rush hour.
Never buy in the midst of a frenzy.
Well said, Blue Skye.
Or, the converse: “Buy straw hats in the winter.”
‘If you live on the east side of Menifee, you may have noticed that the flies aren’t quite as bad this summer. Neither is the smell of cow pastures on the early morning breeze. Take a drive down Briggs Road to Old Newport Road and you’ll see why. The cows are gone — and they’re not coming back.’
‘Since the middle of June, when all the livestock was sold at auction, the Abacherli family has officially been out of the dairy business. According to Kim Abacherli, her father Ron decided to retire, putting an end to a business that has been in the Swiss family for four generations.’
‘”My dad had two daughters, no sons,” Kim Abacherli said. “There are no boys coming up in the next generation. I’ve been working here for two years and I can’t handle any of this any more. My sister is less interested in the business than I am.”
‘Kim gestured toward a housing development a few hundred yards to the west, where construction has begun on an extension of The Lakes community. “The market is up this year and my dad just decided it was the right time to sell and retire. It was just really good timing, especially with those houses coming in.”
‘For many mortgage professionals, it seems that historically low interest rates have been the new normal for a period that seems like forever. But will there be new troubles for the housing market should rates finally begin to significantly uptick?’
‘Joan Terry McMullin, a private banker at the Alpharetta, Ga.-based office of Wells Fargo Home Mortgage, stated that any notion of a rate increase seems illogical at this time.’
“I don’t know how rates can go up,” McMullin commented. “It is the only silver bullet the Fed has to prevent housing from sending us into a depression–not a recession, a depression. I think we’re in a world of hurt, and we’re going to be in it a long, long time.”
Ben - as you quote here: “At least Greenspan’s Fed raised rates eventually. It always interests me that thing we used to take for granted are ignored today. For instance, it was at one time said the Fed doesn’t set long term rates, the market does. No one mentions that any more. It’s a sign of how colossal the interventions have been. And these decisions have mis-priced risk. The junk bond market is issuing record amounts of debt at insane rates, and some companies won’t be able to pay that back. What’s the interest rate on a defaulted bond? Does it even matter at that point?”
I go back to my original question from earlier today - Does the Fed have no option but to keep ZIRP going to infinity? From my perch it seems they have no choice as they have painted themselves and by default all of us into a corner with no way out but down. Invest in what these days - an overblown equities market, real estate, gold, art - on an on - the prices of all these ‘assets’ are just so distorted with no over riding governer on the market except the FED. Yikes! Utter centralized economy if there ever was one.
In all, this is utter epic fail on the part of the Fed and other CB’s that have no idea of the ‘unintended consequences’ of their actions as this ZIRP policy and printing to infinity has to my knowledge never been tried before. There are consequences to every action.
And given this, the anecdote for the day - There is a commercial here in Chicago run on WLS - the local talk station, that advertises a guy who adverts to know that things are different and touts to know about investing in today’s markets. As the advert says: “the investment strategies used by your parents no longer apply today.”
I just shudder at that bit of genius. What makes the rules that my parents lived by different today? When you have more going out than coming in (govt., personal debt, banks, the FED etc) eventually it leads to bankruptcy. We are in all certain terms bankrupt at many levels in this nation and there seems to be nothing governing the market system but chaos and a bunch of guess work and sometimes big risk that was not evident in the past, acknowledge by your mention of market distortions.
Is there anyone out there who sees a way out of this morass? Cause if there is I would sure like to know.
Happy Weekend.
‘Does the Fed have no option but to keep ZIRP going to infinity?’
If one knew the answer to that great riches could be had. I gave up trying to figure out what the Fed is going to do about the same time I came to understand what it is that they do. They are in a pickle, and they know it.
‘After a nearly uninterrupted five-year rally in stocks and bonds, some investors seem to be getting nervous. On July 31, the Dow Jones industrial average dropped 317 points, wiping out the year’s gains. Last week, junk bond funds experienced record withdrawals and junk bond interest rates spiked.’
‘“There’s no real precedent for ending anything of this magnitude,” said Jeremy Stein, who left the Fed’s Board of Governors at the end of May to return to Harvard’s economics department, where I caught up with him last month on the day of the Dow’s big drop. As the Fed feels its way, he said, investors may have to prepare for greater volatility.’
‘This week, former Treasury Secretary Robert Rubin and Martin Feldstein, a former chairman of the Council of Economic Advisers and a Harvard professor, sounded similar themes in an op-ed article in The Wall Street Journal, warning that the Fed-induced low rates “have led to reaching for yield in many ways and in very large magnitudes.” They added, “The risk of excesses and the consequent instability have increased substantially.”
‘Ms. Yellen is hardly alone in worrying that some asset prices are at unsustainable levels, especially in parts of the bond market. The activist investor Carl Icahn weighed in this week on Tumblr, saying, “Yellen’s comments suggest, and I agree, that we are in an asset bubble.”
‘After a brief spike last year after the Fed announced that it would taper its bond purchases, interest rates have fallen this year — the opposite of what many economists and investors expected. (Bond prices fall as interest rates rise, and vice versa.)’
“You can only explain about 20 percent of the variability in asset prices based on fundamentals,” Mr. Stein said. “We don’t understand the other 80 percent. All the Fed can hope to do is to be slow and deliberate” and communicate its intentions.’
Almost 5 year rally in stocks and bonds, at a time when earned income has plunged. I’ll tell you where the 80% came from Mr Stein - thin air. That might be where it goes away to.
“From air you came and to air you will return” - Zephenia 5:14
‘High-yield bond funds have seen mass outflows in recent weeks as investors begin to take the threat of higher interest rates and a winding down of monetary stimulus more seriously. Now asset managers are wondering whether the sector is merely witnessing a “natural correction” or if it is time to cut and run.’
‘High-yield junk bond funds saw their biggest outflow ever in dollar terms, according to Bank of America Merrill Lynch. The sector, including exchange-traded funds, experienced $7.1 billion in outflows in the week ending August 6, meaning the net figure for flow year to date is now firmly in negative territory, and the year’s gains have been all but wiped out, according to Thomson Reuters Lipper data.’
‘Head of macro credit research at RBS, Alberto Gallo said the four weeks of consecutive outflows have come after five years of inflows. This means that, even after the heavy selling, the market has little liquidity and the “exit door is now very small”. Asset managers polled by BofA ML in the bank’s most recent fund manager survey also said U.S. high-yield is now viewed as the most “crowded trade” even after all the outflows.’
We’re nearing the time when it will make sense to trade AAA corporate and Treasury bonds for junk. Not their yet, but getting closer with each wave of junk bond market capitulation.
AAA Corporate and Treasure bonds are effectively JUNK, as well. They’ll default - just as ALL DEBT WILL……..
I beg to differ. So long as the Fed’s printing press is in good working order, Treasurys need never default.
It always amuses me how long it takes our thought leaders to acknowledge the obvious, even in their timid, hesitant, and watered-down way. Are they really leading, or are they following?
This is what I’ve often wondered. Are they genuinely as stupid as they sound, or are they being deliberately deceitful?
If they truly couldn’t foresee where their manipulations would take us, God help us all…we’re in for a world of hurt. I just have such a hard time believing that they couldn’t see what was so very obvious to those of us who’ve been watching their antics all along.
‘The latest survey by Bank Indonesia (BI) has found that property prices in major cities in eastern Indonesia have shown an upward trajectory because of the stronger purchasing power of its citizens and a rise in housing investments.’
‘However, the central bank shrugged off concerns of a potential bubble in the housing sectors in Manado and Makassar, arguing that the growth of property prices was healthy, a reflection of a stronger purchasing power among citizens.’
“Those seeing a steep rise in prices were the big houses,” Hendy Sulistiowaty, BI executive director for statistics, told a press briefing on Wednesday. “It’s good, as it shows that rich people are now growing in numbers in the eastern part of Indonesia.”
‘BI Deputy Governor Halim Alamsyah once warned that prices of houses 70 square meters in size and larger had a tendency to “bubble” as their costs were “no longer rational”.
Boy, this is a doozie:
‘The big money for landlords lies in property in fast-appreciating real-estate markets with high property values. The city rated as the most profitable market for landlords over a six-year period is SanJose, Calif. ($8,927 a month profit and $107,122 per year). San Francisco is No. 2 ($6,078 a month and $72,939 per year.) ‘
“We have depressed and delayed home ownership attainment among younger adults,” says Stuart Gabriel, director of UCLA’s Richard S. Ziman Center for Real Estate. These households have more challenges in the job market and high student loan burdens, he says. “Home ownership is a leap of faith. If you don’t believe there’ll be significant appreciation, there’s no reason to buy,” Gabriel adds.’
Was there ever another time in history when people bought houses with the expectation that prices would continue to rise and make them rich? Until this bubble, I’d never even heard of such a thing.
It’s even more bizarre than that. When I was studying RE at college in the 80’s, we had some commercial developers come in and show us how they decided whether to build, say a strip mall. They were very clear that appreciation was never a factor. And this was during the Texas bubble!
Further, when did house prices become a focus of central bank policy (much less TV reality shows)? It’s absolutely nuts what’s going on, and 99% of the people have no idea house prices used to hardly even be discussed.
Yeah, it makes absolutely NO SENSE. How could civilization even survive with shelter prices outpacing earnings every year? Even a 3rd grader could do the math and see it is unsustainable. Why is nobody asking Janet Yellen this? This is absolutely insane.
HA gets ripped on a lot here but he’s trying to demonstrate that houses have an intrinsic value and that we are pricing them at many multiples of that. In a true free market, prices would be significantly lower. We are caught up in an epic bubble era that didn’t end in 2008.
I saw a comment above along the lines of there being no precedent to unwinding this sort of thing. That is incorrect as there is nothing new under the sun. A nice big war will correct all of this. At some point capital flows will be directed towards a global war effort and mortgage applications will be the last thing on everyone’s mind.
Go east young man.
It doesn’t matter what you’re trying to demonstrate, when you use gross exaggeration and lies you lose credibility. For somebody with a handle of “Realtors Are Liars” to resort to bald-faced lies is almost comical. Instead of answering to the untruths, he turns to straw man arguments, ridicule, character assassination, etc.
I think the years of his personal attacks on Oxide, Polly, Eleanor, etc. finally got old for me. I really enjoy these ladies’ posts, even if I don’t always agree with them. Seems he’s run them, and countless others away.
you’re enraged.
I miss TxChick. But glad AZslim still pops up now & then!
(btw, hows the summer weather this year, slim? Bike riding much?)
You think it might have anything to do with the massive underfunded liabilities of state and local governments, that depend mainly on property tax revenue? I can imagine the FEDs thinking, “we can blow this bubble to save them, bail them out, or let them fold” What would you do?
Do not agree on the appreciation bit but strongly agree on the fundamentals…when I bought in 1997 the monthly outlay after the tax deduction was roughly equal to rent AND the value of the lot plus the cost to build a house of the same size added up more or less to the purchase price…did not buy hoping for appreciation (though it happened and I profited by selling in 2007 thanks to this blog and others), did it because the numbers made sense, I had a steady job, and it was affordable. Tried to buy again in 2011/2012 when the fundamentals made sense again but it was hopeless competing with flippers and specuvestors….have been on the sidelines since then and it will be fascinating watching Bubble 2.0 shake out.
This Rajan guy is NUTS! He is totally gonna get fired for saying all that.
Who will fire Rajan? He is Gov of Reserve Bank of India and India will not fire him as they got him after lot of efforts from Chicago Booth School of Business.
Former World Bank economist who warned a crash was coming in 2005. He’s waving a red flag at risk to his own reputation and the US media has hardly noticed. But if Krugman talks about using phoney space aliens to boost the economy, front page New York Times, and it’ll get picked up by hundreds of papers.
Chinese power consumption plunges - a telltale sign of an economic downturn.
http://www.zerohedge.com/news/2014-08-15/chinese-power-consumption-crashes-lowest-growth-16-months-tumbles-10-shanghai-much-2
Curious take Raymond. I believe you need to re-read the article.
Power consumption is actually up.
It is the rate of growth that is lower that the previous year.
Made an offer on a sinkhole home in Tampa. owner can’t even be bothered to reply “no”. She absolutely refuses to communicate with our (or her) realtors. There are some whacky folks out there!
What does one do with a sinkhole home?
All houses are instantly in a crater after a sale at current asking prices.
I’m unclear on why some people push rental properties as a can’t-lose proposition. The former governor of Virginia had losing rental properties and got in trouble in part because of loans he solicited from wealthy businessmen to support those properties.
Rental properties are a business like any other. It’s kind of like saying restauranting is a can’t-lose business because everyone has to eat.
Corruption trial: Prosecution paints picture of McDonnells on financial ropes
By The Associated Press, Jeff Goldberg
August 11, 2014 - 09:47 am
Updated: August 12, 2014 - 01:02 am
via WJLA ABC 7
Even before McDonnell received the loans from Williams, he borrowed $150,000 from two others to help bail out his struggling vacation rental properties, McDonnell’s former brother-in law testified.
http://www.wjla.com/articles/2014/08/bob-mcdonnell-former-va-governor-maureen-mcdonnell-corruption-trial-enters-third-week-goverment-witn.html
‘Not all landlords are rich investors, the majority are ordinary people trying to get ahead,’ she said.
God DAMN I’m so effin’ tired of that shit. Nobody has the right to profit. But the Housing Industrial Complex has conned Americans into thinking they’re all investment mavens. Stocks, gold, houses, rare coins, comic books… everything has turned into an investment avenue so that some desperate Silent Gen or Boomer Gen MONSTER can keep getting oil-glut riches in an oil-peaked world.
Around here, rents are stickier than superglue on your fingers. Properties are being snapped up by these oldsters who expect the rest of us to keep funneling our cash to them. I may have gotten out of the game (bought a place at absolute auction in 2008, for less than $20/sf (twenty dollars, no missing zero)), but I’m watching a lot of the middle class continue to suffer at the hands of delusional landlords. Lots and lots of properties sit vacant (my urban area is in the top four places in the USA for total vacancies) and yet these f#ckers keep insisting on rents that are 2-3 times higher than equity and wages should have determined by now.
Aaagh! Sorry, I saw that sentence Ben posted and I just had to vent.
“Properties are being snapped up”
That’s Diane Swonk 2005/2006. It’s 2014 and housing demand is at 20 year lows.
Which word in “around here” was too hard to understand?
A lot of properties around here are vacant but can’t be had (i.e. they’re not on the market) or can’t be had for a rational price. There’s no shortage of rental spaces, but landlords won’t drop their prices. We do have fairly low property taxes, which is a factor in not punishing those who sit on properties.
What is it you don’t understand about collapsing demand?
AROUND HERE, demand for our comparatively ultra-cheap housing ($20/sf or less) is strong. They are snapped up, then sat on. Demand for cheaper housing in White areas ($40-60/sf) is still quite strong. Those are gone in days too, but more of those end up inhabited. Sure, the supply is being parceled out, but the masses don’t realize that. I do, and you do, but that hardly matters when people continue to buy.
This is actually how a market is supposed to work, sorta: When the price gets low enough that you can afford to buy, THEN YOU BUY. What continues to worry me is how many of these are being bought by landlords and flippers. These guys are still paying this stupid game, but they have the money to play it.
“Here” is a big country.
Don’t feed the troll.
You’re enraged..
Denver, CO Housing Demand Turns Negative; Craters To 2008 Levels
http://picpaste.com/pics/84f23f26fd2ab702a510a38cf0975c66.1408303240.png
http://files.zillowstatic.com/research/public/Metro/Metro_Turnover_AllHomes.csv
Chinese officials dumping luxury homes amid crackdown.
http://www.marketwatch.com/story/china-officials-dump-luxury-homes-amid-crackdown-2014-08-17?link=MW_latest_news
Read “Days of the French Revolution”.
Kareem Abdul-Jabbar has put everything in play….
http://time.com/3132635/ferguson-coming-race-war-class-warfare
The hedge funds pushed the Sell Button in Brooklyn this week. Busy setting up docs all weekend to dump to the Chinese. Or any idiot. Fingers crossed that we can liquidate and get paid before the markets blow. Anyone want to buy a pile of bricks sand and lipstick townhouse for 2.8 million? Ready to be burned down when Sharpton wants the riots to start.
inventory has tripled vs last year in my hood-s of central soviet 22151