Assume Every House Has A Motivated Seller
The San Francisco Bay Guardian reports from California. “Two Realtor groups have dumped nearly $600,000 into the campaign against Prop. G, the tax on flipping properties to discourage real estate speculation and evictions in San Francisco. Sara Shortt, exeuctive director of the Housing Rights Committee of San Francisco and a strong support of Prop. G, told us the huge donations indicate what’s really driving opposition to the measure. ‘Make no mistake: the polished No on G mailer you receive spouting lies such as ‘G will hurt homeowners’ is coming directly from the mouths of the Realtors, the very people who have the most to gain by continuing to allow for evictions and flipping of apartments,’ Shortt told the Guardian. ‘These are the same people who are making windfall profits by evicting low income tenants in San Francisco and wreaking havoc on our neighborhoods.’”
The Stockton Record. “A sense of reality and potential completeness permeated the complex Saturday as River Islands held its official grand opening. Three home builders — Van Dael Homes of Riverside, Brookfield Residential Properties Inc. of Canada and DeNova Homes of Concord are building homes in the $350,000 to $500,000 range. Hundreds of would-be homeowners turned out to look at the model homes and consider River Islands as a place to relocate. Many of those in attendance were from the Bay Area, harkening back to the days of waves of new commuters ‘living over here and working over there’ in search of affordable housing.”
“Even as a Great Depression held this huge housing development in limbo the past decade plus, Susan Dell’Osso and her family had been committed, engaged community members who believed their dream eventually would come true. ‘I feel proud of the type of development we have,’ she said. ‘We’re building a community, not just houses.’”
The Los Angeles Times. “If you’re renting out rooms through Airbnb or similar websites in Los Angeles, you could soon get an online warning urging you to collect and pay city taxes aimed at hotels. Malibu lawmakers decided to crack down on such rentals earlier this year, voting to issue subpoenas to dozens of websites to make sure taxes were being collected for short-term leases. In San Francisco, critics have complained that such rentals are whittling down the housing supply. Los Angeles Councilman Mike Bonin said that similar worries have arisen in Venice, where owners are ‘buying entire apartment buildings, evicting everyone … and making it all Airbnb,’ he said.”
The Desert Sun. “When Ulrike Maria beds down in her Palm Springs vacation home, she only sleeps on top of the bed, not in it. The reason Maria refuses to crawl into her Palm Springs bed is because she’s hardly the only one using it. Like many second home-owners in Palm Springs and other parts of the Coachella Valley, she rents the home out to vacationers. ‘Even though I know it’s all clean, I just personally don’t do it. I just make a bed on top of my bed,’ said Maria, who lives full-time in Los Angeles. ‘Many times’ Maria has thought about no longer renting the home. But because she and her husband are not able to come out as often as they would like, the home would often sit empty. And she admits, the rental income is an obvious incentive. ‘The money helps.’”
“Homeowners, however, should still expect to replace items like towels and silverware on a regular basis. ‘I think little problems all homeowners experience is the constant missing of the towels,’ said Maria. ‘Replacing of items — the pots and pans — because nobody takes care of them.’ Other small items like a hairdryer tend to ‘disappear’ over time. ‘And people spill everything,’ she remarked. Despite these inconveniences, Maria is thankful. ‘We’ve been really lucky. The pool guy told me, ‘we never found the TV or a chair in the pool.’ And I’m like, really? People do that?’”
Voice of San Diego. “San Diego’s not facing a business exodus as much as it is a people exodus – and the same trend holds for California. The county and the state have long experienced overall population growth. But fewer people from other states are moving here and millions of Californians have moved elsewhere. San Diego County lost more than 30,000 working-age adults from 2008 to 2013 despite a year-over-year net gain in the population during that period, according to a recent National University System Institute for Policy Research review of state Department of Finance data.”
“National University economist Kelly Cunningham found that nearly all who bailed on San Diego were Gen-Xers between 35 and 49 years old, a trend that hints at some deeper reasons for relocations. Job moves could’ve driven some of those departures but the region’s increasingly hourglass economy – with fewer middle-class jobs and steep housing prices – likely played a more pivotal role. Economist Jed Kolko emphasized that relocations were more common when and where home prices were highest compared with other regions out of state.”
The Los Angeles Register. “As the Orange County real estate pendulum swings, it is now a buyer’s market. There are more houses for sale, more seller price drops, and a longer number of days sellers have to have their houses on the market. Now that contingencies are back in fashion, be proud of yours! Make offers even more boldly if your house is actually in escrow. Have your buyers removed every single one of their numerous contingencies? That’s the new definition of noncontingent. Be as bold as you can be.”
“Ask to have the walls, carpets, wood floors and windows professionally cleaned. Ask to have your homeowners association dues paid for six months or more. Ask for that Hawaiian vacation you’ve been dreaming about. Who knows? The sellers may have a time share they’d be happy to lend you. Ask for it. Whatever it is. They can only say yes or no. You’re good with that, right?”
“Even if the flowery description of the house doesn’t mention how motivated the sellers really are, in this market, assume that each and every house you see either online or in person has a truly motivated seller behind it. Don’t ever be afraid to start with what you may think is a ridiculously low offer. If you’ve gone through a couple of rounds of counteroffers and been a Ninja Negotiator on price and terms, and you’re not quite ecstatic with the deal, don’t be afraid to walk away.”
“Letting the sellers’ last-ditch effort die on the negotiation table might work in your favor. You may be surprised when they ask you to reconsider a few days later. And they may be much closer to the number you’re looking for than you may have expected.”
“Housing speculation driving working folks out
Of all places one would think Santa Cruz would lead the way in affordable housing. I used to live in Santa Cruz and could afford a decent house working one job, while my wife stayed at home with our kids. Please stop the rampant speculation which is driving working folks out.
They made this town — let’s let them live here.”
J W, Half Moon Bay
Would it be more it be more damaging to the FED if they lost control of the stock and bond market now or to continue on the same path of printing money to keep stocks high and rates low and allowing asset bubbles to build which could eventually bankrupt a lot of people?
‘Pimco’s Paul McCulley believes the Federal Reserve has a direct desire to pump up the U.S. stock market, even if it won’t acknowledge so explicitly. Fed officials rarely mention stock prices in their public remarks, but McCulley thinks there’s plenty of conversations behind the scenes, where central bankers are hoping that the soaring stock market eventually pays dividends to the much slower-moving economy.’
‘In his latest monthly missive to investors, the firm’s managing director and chief economist explains the strategy and its uncomfortable ramifications: “It is not a tasteful choice for the Fed at all. It reeks with social injustice. But it also happens to be the only viable choice: Use all available powers, with whatever-it-takes abandon, to reflate prices that are amenable to going up: long-term bonds and stocks.”
I bet this guy gets paid a lot to speak BS all day long.
Let’s think about this for a minute:
‘I used to live in Santa Cruz and could afford a decent house working one job, while my wife stayed at home with our kids.’
Was that so terrible a time? Consider how much has been taken from us.
This could turn into a pretty long discussion, Ben. The question is, “who” took this from us? I’m pretty sure I could guess how each poster would answer that.
The who doesn’t matter that much at this point. We’ve moved along from a time that one man could work, and his wife could stay with the kids. I’d bet this very house in Santa Cruz is now half a million or more. The exact same house. And two people can work their entire lives and struggle to pay it off.
Think about the lower quality of life. All the mornings getting up to go to work. How much interest will be paid on that half a mil? The taxes. Forget about the who; that’s how we are divided. It’s the system that’s betrayed us. If we could agree to that one basic idea, we’d be miles closer to getting our lives back.
Spot on Ben….And this long term trend is having consequences I am quite sure were unintended…Much lower household formation…Contracting childbirth…
We need jobs…Long term jobs…We need jobs in area’s that have affordable housing….
No Dave. We need to end the housing and realtor fraud in areas that have jobs.
It’s the system that’s betrayed us.
Everything is too big and too complex. The system is out of control and uncontrollable. But those who have benefitted will not give up this thing that has benefitted them so much. The pimps pushing the housing heroin, AGAIN, show this. Those at the top want this, most of the public who own houses and vote want this. Oxide wants this. No offense to her, but she and other owners who bought in do not want any correction. They are vested.
I do not see change through grassroots solutions as possible any more. It seems we are all tiny, tiny ants in a massive ant colony stretching a thousand miles. Absent disaster or massive crisis I don’t think anything will change how business is done.
Absent disaster or massive crisis I don’t think anything will change how business is done ??
Tesla is building their plant outside of Reno…6500 people + household easily gets to 10,000…That will have huge primary & secondary effects on that area across the board…
Our priorities in this country are all F@#%^*-up…We need a;
The New Deal was a series of domestic programs enacted in the United States between 1933 and 1936, and a few that came later. They included both laws passed by Congress as well as presidential executive orders during the first term (1933–37) of President Franklin D. Roosevelt. The programs were in response to the Great Depression, and focused on what historians call the “3 Rs”: Relief, Recovery, and Reform. That is Relief for the unemployed and poor; Recovery of the economy to normal levels; and Reform of the financial system to prevent a repeat depression.[1]
The New Deal produced a political realignment, making the Democratic Party the majority (as well as the party that held the White House for seven out of nine Presidential terms from 1933 to 1969), with its base in liberal ideas, the white South, traditional Democrats, big city machines, and the newly empowered labor unions and ethnic minorities. The Republicans were split, with conservatives opposing the entire New Deal as an enemy of business and growth
No offense to her, but she and other owners who bought in do not want any correction. They are vested.
Sadly, this is true. I am a hostage to the system. But I was even more of a hostage as a renter. Already, I can no longer afford the rent on the townhome that I left not three years ago. And it would not have been long before I would have trouble renting a one-bed apartment. For me, buying was almost an necessity. And so what if the “value” of my house craaaaaters? The payments on it would still be less than those rents.
Aren’t we all hostages to the system? Wall Street has pretty well set it up that we are dependent on them for a comfortable retirement. A flesh-wound to Wall Street is the death-blow to Main Street. Remember when credit froze in 2008? It was the small businesses, dependent on short-term credit to manage cash flow, who suffered the most. And 401K. Almost everyone is vested in this high stock market, and doesn’t want a correction. Even some of HBB are beginning to believe that sitting on the sidelines with cash is futile in the face of the PTB at the G8 who can remain irrational longer than we can stay solvent.
” The payments on it would still be less than those rents.”
You’re changing your story again Donk.
Your most recent version was that your bare mortgage is more than your rent but you got more square footage now.
What is it? And what did you pay total in price per square foot?
Check your math on the Reno Tesla plant creating 6500 new jobs. 10% of that is more likely. Manufacturing now is highly automated, where one worker supervises 15-20 machines operating.
“Tesla is building their plant outside of Reno…6500 people + household easily gets to 10,000…That will have huge primary & secondary effects on that area across the board…”
This is wildly optimistic. And what are they all talking about, now? Housing prices are going to SOAR because of Tesla!
“Sadly, this is true. I am a hostage to the system.”
No, sweetheart, you’re a speculator. But I like you as a commenter anyway.
The self-serving con of economic neo-liberalism (aka crony capitalism) has eroded human values.
http://www.theguardian.com/commentisfree/2014/aug/05/neoliberalism-mental-health-rich-poverty-economy
We’ve moved along from a time that one man could work, and his wife could stay with the kids.
Well, that was then and this is now.
In 1945 the United States basically had the only functioning economy in the world. We had lots of land, lots of food, and not too many people, relatively (certainly relative to Asia.)
Prospects for children born in 2014 in Asia, Africa, and Latin America are better than they were in 1945.
Prospects for women and African-Americans in 2014 are better than they were in 1945.
That’s not to say that the current system, where labor’s production accretes into fewer and fewer hands across the globe, is defensible or wise.
The standard of living enjoyed by (predominantly white male) Americans after WWII was an anomaly and was due to empire, which everyone protests today because today we have to do more killing because the empire is weaker.
The Fed doesn’t print money, that’s an urban myth. The Fed buys bonds and mortgages with bank reserves. These transactions do not increase the volume of money in circulation.
These transactions do not increase the volume of money in circulation ??
But they decrease the cost of borrowing money which is their intent…
“But they decrease the cost of borrowing money which is their intent…”
Which simply results in collapsing demand as a result of massively inflated prices.
‘with bank reserves’
‘In essence, Mr. Bernanke takes the position that the Fed, through the creation of fiat currency, can always avoid deflation…Mr. Bernanke continues:
“The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”
“… money is injected into the economy through asset purchases by the Federal Reserve. To stimulate aggregate spending when short-term interest rates have reached zero, the Fed must expand the scale of its asset purchases or, possibly, expand the menu of assets that it buys.”
“… the government could increase spending on current goods and services or even acquire existing real or financial assets. If the Treasury issued debt to purchase private assets and the Fed then purchased an equal amount of Treasury debt with newly created money, the whole operation would be the economic equivalent of direct open-market operations in private assets.”
There’s just one problem with your statement that they use reserves. Are you suggesting they had $4 trillion laying around?
Here’s what Mr. Bernanke wrote in 2010: ” Although asset purchases are relatively unfamiliar as a tool of monetary policy, some concerns about this approach are overstated. Critics have, for example, worried that it will lead to excessive increases in the money supply and ultimately to significant increases in inflation. Our earlier use of [QE] had little effect on the amount of currency in circulation or on other broad measures of the money supply, such as bank deposits. Nor did it result in higher inflation.”
The excess reserves are electronically created by the Fed out of thin air. But these transactions are internal to the Fed banking system and do not add to the public currency in circulation.
“There’s just one problem with your statement that they use reserves. Are you suggesting they had $4 trillion laying around?”
Exactly.
Follow the dollars.
Let’s say the Fed has a balance sheet of $x.
Through QE, the Fed buys $85B of loans from banks in a MONTH. The banks now have $85B of cash (created by the Fed out of thin air), and the Fed’s balance sheet is now $85B +x in size.
HOWEVER, the banks (for all sorts of reasons) simply took that $85B, and deposited it back at the Fed as excess reserves.
While the Fed’s actions didn’t result in the money entering circulation, they did create the money out of thin air by virtue of the QE. AND while they may be able to influence what happens to that money through interest rate policy, they no longer have control of what happens to that $85B.
The Fed did this to the tune of $4 Trillion.
The question is when will that money comes out to play in the economy?
Will it come out slowly enough to NOT cause problems? Or will it come out quickly?
The Fed’s problem is that they will have a hard time shrinking their balance sheet on their own timeline in a rising rate environment. So, if the money “comes out to play” faster than they think, how do they shrink money supply?
Sell the bonds they bought through QE at a loss and deal with the ramifications of a Fed that has a negative net worth (recapitalize the Fed from its owner banks?)? Likely.
Let the bonds naturally mature (and keep their fingers out of the economy)? Doubtful.
Correct.
Correct to scdave
They made this town — let’s let them live here.”
In a real economy this would work itself out.
in a Government controlled economy were low income homes are built for favored persons, Banks are bailed out, senior owners people pay a fraction of property taxes, and loans are allowed to be bailed on .. who knows ??
Its like a game with different rules for different players
‘A signal of weakness in the housing market is flashing yellow. When you compare the number of home sales (which are highly seasonal) with those from the same month a year earlier, this key measure has declined in San Diego County for nine consecutive months through June — with five at double-digit rates.’
Later today, I’m going to visit with a friend who moved from Tucson to San Diego. She’s been selling real estate over there. Or she was. I haven’t heard her talk about housing in quite some time.
She has said that she wants to get more work in her old field (high-tech PR). And she’d love to come back to Tucson so she can be with her son.
‘Lehman Brothers Holdings Inc. continues to sell prime California land left over from its ill-fated partnership with SunCal during the boom years.’
‘The failed investment bank is listing for sale the Pacifica San Juan project in San Juan Capistrano, Calif., a 318-lot subdivision that is one of the last large undeveloped tracts in Orange County.’
‘Earlier this year, Lehman sold SunCal’s former 308-lot Marblehead subdivision in San Clemente to Taylor Morrison Home Corp. and a partner for $205 million. It also sold a 167-acre redevelopment site in Oakland known as the Oak Knoll project back to SunCal for an undisclosed price. Lehman estimates that it has roughly $4 billion of real estate still to sell.’
Let the crow be served with relish:
‘Blackstone Group LP has already taken public its biggest U.S. real estate investment from the property market’s boom. Now it’s planning to sell shares in two companies created in the wake of the crash.’
‘The world’s biggest private-equity real estate firm yesterday filed a confidential notice for an initial public offering of IndCor Properties Inc., an industrial landlord it began building in 2010 by accumulating warehouses. Blackstone also is planning an IPO as soon as next year for Invitation Homes LP, the owner of more than 45,000 rental homes that began in 2012, according to a person familiar with the matter.’
‘“Someone like Blackstone is almost always trying to raise a new fund,” Erik Gordon, a business and law professor at the University of Michigan, said in a telephone interview. “You have to show success and the way you show success so you can keep raising money is by selling an investment at a high price in a high market or you go public.”
‘Top money managers including Blackstone President Tony James are warning of excesses from central bank stimulus and preparing their firms for what may follow recent market highs.’
“We clearly have an overvalued debt market,” James said today. “We have an equity market that’s well above median value. Equity markets are overvalued by historical standards.”
They’ll never sell, we were told. They’re in it for the long haul! Yeah, 2 years.
“They’ll never sell, we were told.”
Never sell… what? The houses? It look like Blackstone isn’t selling the actual houses. They are selling stock shares in their SFH management company which generates revenue from rental streams and/or collecting fees from selling rental-backed securities up the food chain.
Will they ever the sell the houses? Of course they will! They will sell the moment that price appreciation is more profitable than managing the houses as rental/RBS. Is waiting for appreciation the “long haul?” I don’t know. It will depend on the whether the renters can afford a 5% rent increase each year (they can’t), or how many other companies get into the competition (not many more, not now), or how fast they release the houses to market.
The last one is tricky. If they sell too slowly, the market could crash back to 2011 prices before they realize peak gains. If they sell too quickly, they could flood the market with supply and precipate such a crash themselves. Either way, I wouldn’t touch these IPO’s with a 10-foot pole.
‘Blackstone isn’t selling the actual houses’
Before the IPO, who owns the houses? The day after, who owns the houses? This isn’t rocket surgery.
It is for Space Donkeys.
And I guess by this reasoning, the house I live in is owned by the taxpayers who backstop Fannie Mae who bought the mortgage from the bank who offered the mortgage to me.
What is incorrect about this statement? Do you own the property free and clear?
You’re moving the goalposts, Ben.
On HBB, “selling” a house generally meant going to a closing table, transferring ownership 100%, realizing the appreciation by selling the house for more than the (mortgages + fees), and pocketing the appreciation as cash or check. That’s the whole point of investing in a house.* And anyone who said “they’ll never sell the houses” was obviously using the term in that context.
Now you’re telling me that Blackstone will “sell” the houses to their shareholders via an IPO. So how will they realize the appreciation? How will they transfer ownershp? Who will pocket the cash or check? (Cash or check, mind you, not some line item on a balance sheet.) In all of my posts, IPO and other shenangians is NOT what I meant by “sell.”
And I guess by this reasoning, the house I live in is owned by the taxpayers who backstop Fannie Mae who bought the mortgage from the bank who offered the mortgage to me.
[geeze, it's like the folk song "this is the house that jack built."
]
————-
*please note I said “investing” in a house. If you live in the house you bought, you get a place to live as well as the benefit of appreciation (if any).
Donk,
As we’ve already discussed here, Blackstone overpaid by multiples. There weren’t even any other interested parties and they overpaid no differently than you.
There is no “appreciation” on depreciating assets like houses. It’s all expense, all loss.
Now you’re telling me that Blackstone will “sell” the houses to their shareholders via an IPO. So how will they realize the appreciation? How will they transfer ownershp? Who will pocket the cash or check? ‘
Same way any company does all the venture capitalists sold to mutual funds after the IPO gave a market value to company.
I wonder what the market value will be? The housing bubble wasn’t that long ago buyers should be wiser now ?
Might Flop.
The “are they selling/aren’t they selling” arguments overlook an important point. Whatever these funds and LLCs are doing with their existing assets, they’re not buying any more.
And neither are the ‘conventional’ buyers. Mortgage purchase applications down 12% YOY again this week. Sales are down virtually everywhere.
‘The pool of first time home buyers’ has left the scene. And they probably won’t be back for a full decade, until after this nonsense finally sorts itself out. We may be 8-9 years into the worst of this, but there’s still a long way to go.
how many Norwegian towns or equivalent stupid buyers are left to buy this stuff?
Maybe the FED will buy the IPO
Invitation Homes owns the homes prior to the IPO.
Invitation Homes owns the homes after the IPO.
Blackstone owns Invitation Homes immediately before the IPO.
Blackstone and the public own Invitation Homes immediately after the IPO (I’ve never seen an IPO when all shares are sold).
‘Invitation Homes owns the homes’
Technically IH is the property manager. I don’t think they own a single house. From what I’ve read, the houses are held by many LLC’s. Likely curtains of LLC’s. But the houses need this property manager, so why not throw it in.
So what if Blackstone ends up with a few shares of the IPO? Why are they doing this? Cash for the houses, at a time when they can say the houses are worth more than they paid. Run for the hills boys, the rats are leaving the ship.
Blackstone would not own the homes directly. They would own the homes through a subsidiary entity (which may or may not also be the property manager).
On the day before the IPO, all homes (or entities that own the homes) will need to be owned by one entity.
The point is that the HOMES are not being sold, but that a portion of the entity that owns the homes is being sold.
You say it’s a distinction without a difference. I disagree. There is a big difference between selling a portion of an entity that owns 45k rental homes, and kicking out 40k+ tenants, and marketing 45k homes to individual homeowners.
In the first case, they are getting even deeper into the strategy of owning rental homes (there are massive costs to going public that you would only pay if you intended the entity to exist as a landlord for the foreseeable future).
In the second case, they have determined that the strategy of owning a pool of rental homes is not a good way to own real estate, and they should exit the strategy in it’s entirety.
At the end of the day, Blackstone needs an exit (their funds are not evergreen like many hedge funds, but ultimately sell the real estate to return cash to their investors). The IPO exit should be no surprise.
“They will sell the moment that price appreciation is more profitable than managing the houses as rental/RBS.”
I think that point has already arrived, and they’re acting accordingly, aren’t they? Sure, they’re not being ’sold’ yet, as in back on the MLS. But how long before the new bagholders figure out that they’re losing money?
Sure, they’re not being ’sold’ yet,”
They are being sold in one big lot unless the deal fails to get enough money.
If the IPO fails then maybe they will have to sell one by one a sure way to lose money with Realtor fees , flooding the market with shi$$y rentals , no buyers with enough money, jobs, etc.
this IPO should be interesting. Maybe the Chinese will buy it
AMH went public at $16. Now they are at $18. The public is getting more comfortable with the strategy.
‘The public is getting more comfortable with the strategy’
They are pretty comfortable with really dumb PE ratios all over the place. Complacent, almost.
P/E: N/A
EPS: -0.32
Div & Yield: 0.20 (1.10%)
And these are the good times.
Here’s Invitation Homes for rent in Atlanta, GA:
“320 Homes near Atlanta, GA”
http://invitationhomes.com/
It’s a REIT.
It’s a REIT with residential real estate (which depreciates over a faster timeframe).
It’s a REIT that incorporates component depreciation (which accelerates deprecation further).
EPS is impacted due to depreciation.
Their FFO is $0.15 per share and rising as they lease-up the portfolio.
I don’t own AMH, nor would I buy it, but the numbers aren’t as bad as you imply.
As bad as I imply? I’ve been saying this whole institutional investor thing is lipstick on the other end of the pig all along. Anybody that puckered up for a smooch is going to be surprised.
They’re hoping to sell shares in something that collects rents? Uh-oh. On SFRs? Good luck with that.
On SFRs? Good luck with that.’
Its the end of single family homes. Corporate owners will let these homes depreciate to powder and cheap dense apartments will be built in their place. Probably using section 8 to get big government money to bail out their loses. After all they all went to school together ..
It’s worse than that Slim. HBB posted an article that some of these companies built 5% annual rent increases into their profit models. You might be able to swing that in DC or Austin, but not anywhere else. But that’s what happens when you get a bunch of stock traders to manage a physical asset of any kind. I wonder if any of them ever saw a barrell of actual crude oil.
It doesn’t work in either place considering rental rates are falling in both locations.
then they better start selling
Exactly. You better have cash because you’re going to need it. If you’re holding onto depreciating assets, you’re going to regret it.
‘Total mortgage application volume fell 7.2 percent last week from the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association (MBA). The weekly index is now at its lowest level since December of 2000.’
‘The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.27 percent from 4.25 percent, the first increase in four weeks, according to the MBA. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000), however, decreased to 4.15 percent from 4.22 percent.’
‘Applications to refinance mortgages decreased 11 percent from the previous week, seasonally adjusted, to the lowest level since November 2008. Applications to purchase a home fell 3 percent from one week earlier, to the lowest level since February 2014. Purchase applications are now 12 percent below where they were one year ago.’
‘The purchase application numbers are particularly troubling, as all-cash buyers move out of the housing market, leaving mortgage-dependent buyers to pick up the slack. Fall is usually the season where first-time home buyers are most active, but this cohort has had the most trouble participating in the housing recovery, due to tighter credit and weak job and wage growth. Even government-insured loans, which offer lower down payments, are seeing far lower application volumes, down 18 percent from a year ago.’
Collapsing housing demand. And it’s going to continue to collapse until prices fall to long term trend line which is at roughly early 1990s level.
…and then… THEN!
It’s going to rocket down from there and plow into the very EARTH upon which these real estate asset stand, resulting in a fierce cataclysm that shall consume ALL!
Doom! Dooom to all! DOOOOOOM!
It’s gonna be bad enough. No reason to gild the lily.
All those “Savvy” investors that bought in the last couple years..how’z that investment grade concrete feeling now?
And this via our friend Doug Short - uh oh - housing cratering!
http://www.advisorperspectives.com/dshort/guest/Craig-Eyermann-140910-Home-Sale-Prices.php
never seen a backwards loop graph- that ’s kewl
Encino, CA Housing Prices Crater 30% YoY; Inventory Billows 36% As Demand Collapses Statewide
http://www.movoto.com/encino-ca/market-trends/
Speaking of housing bubbles and lower quality of life above, has anyone seen this article?
SFGate: Duboce Triangle Neighborhood Getting Scary With Violence and Drugs
http://www.sfgate.com/bayarea/nevius/article/Duboce-Triangle-neighborhood-getting-scary-with-5706948.php#photo-6764035
Welcome to life in a in a lovely neighborhood of well-maintained $1-3million Victorians, in a city with a medium home price of $1mil:
“We have had people shooting up on our steps. There’s an increase in trash, needles, bottles and used condoms left on the sidewalks and streets.”
“One day I came home from work about 5:30 and there was a guy on the sidewalk, in broad daylight, shooting up. My 6-year-old said, ‘Why did that guy have a needle in his arm?’ ”
Ian McCauley… says one man took up residence on their front steps and was so persistent that they jokingly referred to him as “the tenant.” “He would be down there all the time,” McCauley said. “My wife would come out and see him masturbating.” Thinking that it would help if they cleared out some of the vegetation around the steps, McCauley says they “hit the neighborhood trifecta: a hypodermic needle, a vodka bottle and a crack pipe.”
Wait. You mean sky-high home prices don’t led to a better quality of life for everyone? Well this changes everything…
That whole area is pretty crappy looking. The houses all look old and beat up. Maybe they are nicer inside, but they sure don’t look like a million bucks.
There are some streets near there that turn into hoboville at night, with old vans, RVS and tents. The sewage arrangements are… medevial.