The Coyote Has Left The Cliff
It’s Friday desk clearing time for this blogger. “The median price paid for a Bay Area home that closed in August was $607,000. That was down 1.6 percent from July, according to CoreLogic DataQuick. In San Francisco alone, the median price paid for a home continued dropping from its all-time high of $1 million set in June. It was $991,000 in July and $940,000 in August. The number of homes sold slid again last month ‘as potential buyers continued to struggle with constrained supply, tricky mortgage availability and affordability issues,’ DataQuick reported.”
“The theme of this year’s George Mason University summit was ‘Housing Hangover: Recession Ripple Persists in 2014: Jobs, Confidence, Mortgages (+ Aspirin) Fuel Recovery.’ David Versal, senior research associate at the George Mason University Center for Regional Analysis, echoed his callout from last year, that since 2010 government spending cuts have decimated the Washington D.C. metro area. ‘We lost over $11 billion in federal procurement,’ he said, ‘This is on top of the 20,000 jobs we’ve removed.’ One true gainer in jobs over the same period, he said, has been hospitality — specifically restaurant jobs.”
“‘Ask yourselves as Realtors: Are people buying $6-7-800,000 houses in this region people who work in restaurants? Unless they own the restaurant probably not,’ said Versal.”
“Chinese investors’ global hunt for prime real estate is helping drive Vancouver home prices to record highs. The latest wave of Chinese money, linked in part to Beijing’s anti-graft crackdown, is flowing into luxury hot spots. ‘In the last year there’s been the corruption crackdown in China and a lot of people have seen their wealth evaporate over there because of that,’ said Dan Scarrow, a VP at MacDonald Realty. ‘So they want to put it somewhere they perceive as safe.’”
“London property is hotter than ever, with Asian investors - especially those from Singapore and Hong Kong - and increasingly confident British buyers snapping up units, consultants say. ‘It’s almost like a commodity that people buy and sell… Investors here like London as it’s a tested and proven market,’ said Ms Doris Tan, head of international residential properties at JLL.”
“Most Malaysian property developers are claiming a slowdown in sales after Putrajaya introduced cooling measures to rein in spiralling house prices, with pessimism expected to continue to next year. 85 per cent of 152 developers admitted to experiencing a drop in sales. According to Rehda president Datuk Seri Fateh Iskandar Mohamed Mansor, consumer financing is a ‘major obstacle’ for the developers as 53 per cent of developers complained of problems with their buyers getting their loans approved. ‘Realistically, prices of houses cannot go down,’ said Fateh.”
“Some local governments in China have included many areas that should not be part of the shantytown refurbishment projects and blindly proceeded with construction in their cities. Data showed that 4.25 million units of housing have been reported nationwide with regards to the refurbishment projects in 2014 so far, which is 2.7 times higher than the number planned by the central government. Developers have benefited from such projects, as they think the local governments are saving the housing market.”
“‘The local governments and developers are being very aggressive as they think of it is an opportunity to stimulate the real estate market,’ said Wang Yi, an economist in Hunan.”
“The foreclosure process started on nearly 4,500 homes in New Jersey last month, an increase of 115 percent from August 2013. Scheduled foreclosure auctions saw a 71 percent increase during the same time frame, to the highest level since July 2010. Daniel Boddy, a real estate agent at Century 21 Frick Realtors in Galloway, said he’s noticed a jump in foreclosure activity throughout the area recently. ‘Not necessarily just in Atlantic City, but in our area in general they are up a lot higher than they were last year,’ he said.”
“Boddy also attributed the increase in foreclosures to an easing of a logjam of cases, in part caused by a freeze on foreclosures by major mortgage firms, and the state’s lengthy foreclosure process. ‘It’s not something that is just starting to happen because of casino closings,’ Boddy said. But, he said, ‘those aren’t going to help.’”
“Marion County saw its share of the August wave of new foreclosures to hit Florida. Florida’s August pre-foreclosures jumped 74 percent jump compared with July 2014. About 80 percent of Florida’s foreclosures today are due to mortgages established before the housing crisis, said Daren Blomquist, VP at RealtyTrac. ‘That tells me this (pre foreclosure wave) is from the last housing crisis and not a new housing crisis,’ he told the Star-Banner.”
“The big question for the Santa Fe residential real estate market is not how many homes are on the market now, but how many will be on the market in the future? It’s known as shadow inventory. By some estimates, values in New Mexico are still 20 percent below pre-bubble levels. ‘Recently some industry analysts have expressed concern about the size of the shadow inventory that remains,’ writes Alan Ball, an associate broker at Keller Williams Realty Santa Fe. ‘Shadow inventory is not a small humorous anecdote or analogy. It is a huge weight on our shoulders, on our market health.’”
“Speaking after iron ore plunged to a five-year low, the federal government’s former top resources forecaster, Quentin Grafton, said the Chinese economy looked like it was ‘unravelling.’ He said falling prices for coal and iron ore, a slump in business investment, an overpriced housing market and high dollar had placed the Reserve Bank of Australia ‘between a rock and a hard place.’ ‘Put all those things together and it could be a difficult ride for us,’ he said. ‘This isn’t about doom and gloom – it’s about looking at the risks and numbers. There’s a clear and present danger.’”
“Researchers at Texas A&M University estimate China has a residential vacancy rate approaching 20 per cent and there could be as many as 48 million empty apartments across the country after years of over-building. Independent senator Nick Xenophon urged MPs to educate themselves about the national income story. ‘We are in denial and we’ve become a sideshow,’ he said. ‘I don’t want Australia to be the Argentina of the 21st Century.’”
“House prices are soaring, real incomes are sliding and property has become our fastest growing industry. Can anyone spot a problem? The typical Sydney house price climbed from $666,900 to $740,000. You don’t have to be particularly bright to work out what’s going to happen next. But it doesn’t happen straight away. when we see house prices rising we act as if we have seen a sign that they are going to keep rising. Even as the drivers turn against house prices (real incomes are falling) we keep buying because others are buying in the expectation they will keep climbing.”
“It can keep happening for quite a while, all the more so if interest rates are at long-term lows and look like they will stay there. Like Wile E. Coyote, the cartoon character who chases Road Runner and runs off the edge of a cliff, our legs keep moving suspended in mid air until we look down, realise there’s nothing there and fall. The main sphere in which we are taking on risk is the one in which we should not. We’re betting on ‘already inflated’ house prices rising further. As long as others keep piling on it’ll keep happening. But the coyote has left the cliff.”
‘Southern California’s housing market chilled out in August with sales sinking to a four-year low for the month while the median price rose to a post-recession high, CoreLogic DataQuick reported Thursday. Last month, sales in the five-county region fell 18.5 percent from 23,057 a year ago to 18,796, the company said.’
‘Sales also fell 8 percent from July. On average, sales have risen 4 percent between July and August since 1988, when CoreLogic DataQuick began tracking the market.’
‘Sales have now fallen on a year-over-year basis for 11 consecutive months. Sales during August have ranged from a low of 16,379 in 1992 to a high of 39,562 in 2003. Last month’s total was 28.2 percent below the August average of 26,169 sales.’
‘CoreLogic DataQuick analyst Andrew LePage believes the market is in a morphing phase. “There was certainly pressure on home values this summer, but some of that jump in the August median sale price appears to reflect a shift in market mix. A slightly higher share of sales occurred in the more expensive coastal markets, and that can nudge up the median. he said.”
‘The higher prices are not the only thing holding the market back. LePage said that some people trying to buy a home struggle to qualify for a loan or are still trying to shake off the financial impact of the Great Recession. Meanwhile, potential sellers are holding out for more price appreciation.’
‘Updating the monthly home foreclosure situation, the Riverside-San Bernardino area was fourth highest among the nation’s largest metropolitan areas during August.’
‘RealtyTrac’s Daren Blomquist says higher foreclosures go beyond the Inland Empire. “We haven’t seen the numbers return to normal in California. It’s still higher than normal. We think there are still some lingering foreclosures that are left over from the housing crisis.”
Do ya think? With 80% of the activity in Florida (the highest state in the country by far) being old defaults, you think it’s left over foreclosures?
Here’s a tip for the media out there. It takes 30 days to foreclose. Anything more is BS.
Priceless. They’re still tap dancing around the 25 million excess empty and defaulted houses.
It takes 30 days to foreclose. Anything more is BS.
…with that BS being the FASB mark-to-fantasy accounting.
I remember a comment on another news article: if the FB has equity in the house, the bank will foreclose the moment FB misses a payment. Yup: adding the PITI paid, the downpayment, and the house itself, foreclosing realizes a gain. But if you’re underwater, foreclosing would realize a loss. Cheaper to keep the asset on the books as peak market value and treat the squatting FB as a maintenance service.
Sounds like an algorithm any college sophomore could write.
‘A total of 51,192 U.S. properties were scheduled for foreclosure auction during the month, down 1 percent from the previous month — but up 1 percent from a year ago. That’s the first annual increase in scheduled foreclosure auctions following 44 consecutive months of annual decreases.’
‘The annual increase in foreclosure auctions is the first since the “robo-signing” controversy rocked the biggest U.S. lenders in late 2010, Blomquist said. This “indicates mortgage servicers are finally adjusting to the new paradigms for proper foreclosure that have been implemented in many states, whether by legislation or litigation or both,” he said.’
‘Scheduled foreclosure auctions increased from a year ago in 24 states, including Colorado (up 160 percent), Oregon (up 117 percent), Connecticut (up 81 percent), New York (up 81 percent), Oklahoma (up 72 percent), New Jersey (up 71 percent), Illinois (up 25 percent), South Carolina (up 21 percent) and Maryland (up 17 percent).’
‘More than 55,000 U.S. properties started the foreclosure process in August, up 12 percent from previous month and flat from year ago. It was the second consecutive month where U.S. foreclosure starts have increased on a month-over-month basis.’
‘A total of 6,468 Florida properties started the foreclosure process in August, a 74 percent jump from the previous month and up 24 percent from a year ago, the first year-over-year increase in foreclosure starts after 17 consecutive months of year-over-year decreases.’
A troubling new trend, they say in this article. New? With these foreclosures being many years old? You know, if someone rigs a stock arrangement, they can go to jail. Here we have the government actively aiding one of the biggest price and market manipulations in history, and everybody sits around and acts like it wasn’t going on in plain view. If you played along with this crap, you’ve been had.
Everyone that bought since 2009 has been had that way.
” If you played along with this crap, you’ve been had”
A painful irreversible lesson for many.
What’s telling is not how much different states increased their foreclosure activity, but how long they have until they’ve cleared the distressed inventory.
Non-current loan rates for the states noted:
Colorado (up 160 percent): 3.8% - Non-judicial state. I wonder why the spike? Any changes in the laws there?
Oregon (up 117 percent): 5.6% - Spike is related to ULTRA low foreclosure activity a year ago from stupid laws that essentially stopped processing for a while. Non-judicial in name only.
Connecticut (up 81 percent): 9.1% - Judicial state finally getting their act together…plenty of distress to go
New York (up 81 percent): 10.8% - Judicial state finally getting their act together…plenty of distress to go
Oklahoma (up 72 percent): 8.1% - Judicial state finally getting their act together…plenty of distress to go
New Jersey (up 71 percent): 12.4% - Judicial state finally getting their act together…plenty of distress to go
Illinois (up 25 percent): 8.2% - Judicial state finally getting their act together…plenty of distress to go
South Carolina (up 21 percent): 8.4% - Judicial state finally getting their act together…plenty of distress to go
Maryland (up 17 percent): 8.9% - Judicial state finally getting their act together…plenty of distress to go
This explains CO:
““The swell in foreclosure filings is likely fallout from pending litigation between the Colorado Attorney General and two of the biggest foreclosure law firms in the state,” said Daren Blomquist, vice president at RealtyTrac. “The litigation has led to transfers of many foreclosure cases to new law firms, who in many cases are re-filing the cases from scratch.
“Foreclosure activity has been artificially low in Colorado since the spring of 2013, when the state attorney general first started issuing subpoenas investigating the two foreclosure law firms,” Blomquist noted. “In the 12 months ending in February 2013, Colorado averaged more than 3,200 foreclosure filings a month. Since then the average has been about 1,300 foreclosure filings a month, but the August numbers indicate there are some deferred cases finally hitting the foreclosure pipeline.””
That million dollar median in SF should assures that many more foreclosures are on the way.
“That million dollar median in SF should assures that many more foreclosures are on the way.”
Per Trulia, the median home price in SF was over $800k during the bubble–way higher than other places…did that “assure” a high foreclosure rate in SF during the crash?
Nope.
With more cash buyers and less crazy finance this time around, the next downturn will have even fewer foreclosures…despite the higher median.
Yes it did. And Marin, and all the other gods-country dumps. People can’t afford $1 million out there. I’ve seen it. Run down row-houses. Dirty, broke-ass losers everywhere you look. And the WHINE! Boy do Californians whine when they get foreclosed. I’ve saved a few thousand of their sob stories on my servers for you.
Rental Watch:
What’s telling is not how much different states increased their foreclosure activity, but how long they have until they’ve cleared the distressed inventory.
Stats on Nevada?
R. Fraud struggles with the truth too. It gets in the way of his wallet.
What’s telling is not how much different states increased their foreclosure activity
Personally, I think it’s more interesting how MANY of them have increased their rate—all right around the same time…
‘Canada does not track foreign property buyers, but analysis of city assessment data carried out by a leading urban planner and made available to Reuters helped identify Vancouver’s hottest neighborhoods. Interviews with realtors active in those areas confirmed the perception that Chinese buyers were largely behind the latest rally.’
‘Andy Yan of Bing Thom Architects found that values for detached homes in the C$2-5 million range have risen by 49 percent since 2009, making it the fastest growing segment in Vancouver’s housing market. Home values in a handful of luxury enclaves in Vancouver’s west climbed more than 50 percent over that period, driving city-wide values up more than 35 percent.’
‘Realtors are saying that more than half of buyers in prime markets are mainland Chinese.’
“My market, the luxury real estate market, is primarily Asian buyers - mostly from mainland China,” said realtor Malcolm Hasman, a partner at Angell Hasman and Associates. Hasman said Asian buyers accounted for roughly 90 percent of sales of properties costing C$5 million(4.57 million US dollar) and more.’
‘The influx is also having a trickledown effect as people sell out in prime locations and move to other neighborhoods driving up prices and widening the gap between housing costs and the condition of the local economy.’
“We are in this unprecedented situation right now in terms of housing prices and how quickly they’ve escalated. They’ve become completely disconnected from local incomes,” said Geoff Meggs, a Vancouver city councillor.’
‘That raises fears of brain drain and concerns about the markets excessive reliance on foreign money. “I think Vancouver faces challenges a number of cities are facing in the world,” said Yan. “And that is what does one do in this new environment of global capital and money flows.”
And then you have that guy tying Vancouver prices to a Chinese crackdown on corruption, in what I imagine is a neutral, non-judgmental tone of voice. Yeah, they’re criminals, but it is what it is. Is the Canadian government really that helpless and impotent to influence events? Does anyone have the courage to refuse looted money? Or do asset prices now depend on it?
Like the money launderers running all over Miami, buying condo’s. “Oh, we don’t know what’s going on!” Give me a break. They know where I am every minute I have a cell phone on. They know who I call and where they are. There are sophisticate programs analyzing entire networks of individuals all over the world. If I go into my bank and draw out some cash, they ask me what I’m gonna do with it. But somehow, “we don’t know how many Chinese are walking around Vancouver with a couple million bucks in tow.”
Is the Canadian government really that helpless and impotent to influence events? Does anyone have the courage to refuse looted money? Or do asset prices now depend on it?
Desperate times call for desperate measures.
It’ll work great … until it doesn’t.But I suppose that for the fleeing Chicoms losing some of their investment is better than facing a firing squad.
‘Medium and long-term loans have been accounting for a larger proportion of credit issued in China this year due to policies aimed at supporting infrastructure construction and shantytown renovation projects.’
‘Despite the central government’s efforts to rein in bank lending, there has been no apparent decline in shadow lending. Assets under management by securities companies ballooned by 1.6 trillion yuan ($260 billion) in the first half of this year, adding to the total of 3.3 trillion yuan reported at the end of 2013.’
‘With debts mounting, policymakers have begun to take measures to hedge against systematic and regional financial risks. Local governments have been reaching out to financially strapped large companies to offer aid in an attempt to head off defaults. This, however, is only a short-term solution. The local governments don’t have enough money to continue the bailouts indefinitely. So far, there has not been any major shadow credit default reported in China. But if more adverse effects of a weakening property market surface and local government finances continue to worsen, a sense of anxiety may sweep through the market once again in 2015.’
‘Baltimore-area prices for all housing types drop for first time in 3 years. The price decline came as the number of homes on the market continued to increase, RBI said in its monthly report. There are 24 percent more homes on the market than at this time last year.’
‘With fewer investors chasing foreclosures, there were 5,291 closings in the Twin Cities last month, a 7.3 percent decline compared with last year. Inventory increased 8.7 percent 18,205 home from last year, the sixth month of year-over-year inventory gains.’
‘Residential construction in the Regina area took a sharp nosedive in August, with 121 total housing starts, a nearly 70 per cent decline from 390 total starts during the same month last year, Canada Mortgage and Housing Corp. (CMHC) said.’
“The currently elevated level of inventory of newly completed and unoccupied condominiums, and units under construction, supports CMHC’s view that condominium starts will likely see a declining trend over the coming months as developers and builders seek to limit risks of over-building,” CMHC chief economist Bob Dugan said.;
‘New Jersey’s foreclosure-filing rate skyrocketed in August, by 115 percent over the same month in 2013, pushing the state into the Top Five, RealtyTrac said Mike Lentz of Keller Williams Realty in Sewell. “With the long processing time to complete a foreclosure in New Jersey, I see this increase in bank-owned properties as a result of issues that were occurring three-plus years ago,’ said.’
‘Although local foreclosure filings have hit pre-recession levels, Chicago activists working on the ground to help struggling homeowners say many communities, particularly low-wealth and majority minority neighborhoods, continue to grapple with the effects of the housing crisis. ‘
‘In the city’s Austin neighborhood, for example, “We see more and more homes that are boarded up and abandoned than we have seen in the past,” said West Side organizer Elce Redmond with the South Austin Coalition Community Council. “One week the place is fine. The next week it’s boarded up. I’ve seen a lot of that.”
‘Willie Fleming, co-founder of the Chicago Anti-Eviction Campaign, said foreclosure filings in the Chicagoland area have plummeted for a number of reasons. One of them is the 2012 national mortgage settlement, which provided opportunities for certain distressed borrowers to renegotiate loans with the country’s five major mortgage servicers — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial.’
‘The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, also launched a Streamlined Modification Initiative last year meant to help delinquent homeowners avoid foreclosure.’
“It’s not like the market’s recovering,” Fleming said when asked about the new Woodstock Institute data. “More people got access to negotiations or modifications. There’s no guarantees, but they got access to go back and talk to the bank. Some it worked for, some it didn’t,” he said. “But when you walk around the community, the blight is still here.”
‘Both Fleming and Redmond stopped short of saying the banks have done a better job negotiating with troubled homeowners in recent years. “People cannot get the banks to really assist them in working out a deal,” Redmond said. “That’s one of the big issues that we’re running into.”
‘And some of the homeowners who are negotiating under a “temporary foreclosure moratorium” with the banks will eventually “be put out of their homes,” Fleming explained. “It’s not that (the banks are) not going to act,” he said. “It’s going to happen. It’s just a matter of when.”
“Ask yourself as Realtors”
And a Realtor will tell you that those busboy and dishwasher restaurant workers need $800,000 starter homes
What he doesn’t say is that those 100k/year fools couldn’t afford the 800k houses either.
Everyone in the housing industry who receives a large, upfront lump-sum payment, will never care HOW they get that huge paycheck.
Never.
(Tainted money from china?! Nazi gold in safe deposit boxes?! Blood diamonds !? Feign wide-eyed ignorance.)
Now if you’ll just kindly sign here. And here. And there.
I’ve always been amused & disgused at the long line of outstretched hands grubbing for their instant share of the take at the closing process . . and the buyer must finance them all for 30 years.
It’s sickening to see all the phony plastered smiles as another bottomless wallet known as the buyer is led to the closing table.
All the vultures . . . errr “people” are just so gosh-darned helpful, happy & eager to witness that signature on the dotted line!
Same thing buying a car at a dealer.
“Ask yourself as Realtors”
realtors are liars
$1 million set in June. It was $991,000 in July and $940,000 in August.
HA will have wood HA
Where are the buyers at either price?
Hint: Housing demand is at 20 year lows.
‘London home sellers, who have dominated the market for five years amid a dearth of inventory and robust demand, are losing clout to buyers. The swing began in April, when the Financial Conduct Authority introduced homebuyer affordability checks. The proportion of sales where sellers got their asking price declined to 96.4 percent in the six months through August, from 98.8 percent in February, nearing the 94 percent mark that indicates falling prices, according to Hometrack.’
‘Asking prices fell by about 6 percent in August, the largest of three consecutive drops. There was a 10 percent increase in homes put up for sale and a similar decline in buyers during August compared with a year earlier.’
‘When Harriet Hill began looking for a London home six months ago, open houses drew two dozen or more hopeful buyers. Fierce bidding wars were common. That’s all changed. “If you saw a place that you liked you had to go for it — there wasn’t even time to go back for a second viewing,” said Hill, a 29-year-old charity worker. “There’s been a sudden swing of power towards the buyer. I can take my time.”
‘During the buying frenzy, even brokers didn’t like the large group viewings, Hill, the homebuyer, said. “You’d have people pointing out cracks in the wall before loudly claiming they wouldn’t want to live there” to throw competing buyers off, Hill said. “Then on their way out they’d quietly make an offer. It was really mental.”
““Researchers at Texas A&M University estimate China has a residential vacancy rate approaching 20 per cent and there could be as many as 48 million empty apartments across the country after years of over-building…”
That doesn’t square with reports that enough housing has been built for twice the population, unless every family member and pet owns a flat that is not considered “vacant”.
The report you’re referring to was put out by a CP media arm. Texas A&M will tell you $500k houses in Houston are perfectly normal. In any case, 48 million units is a lot.
A year or so ago, I posted a report from a Chinese utility company saying there were 3 million unused units in Beijing alone. And that’s a busy, crowded city. A few weeks ago, I posted a western guy mentioning the dark towers at night. What’s out there in the ghost cities?
And more are going up:
‘Data showed that 4.25 million units of housing have been reported nationwide with regards to the refurbishment projects in 2014 so far, which is 2.7 times higher than the number planned by the central government’
In any case, 48 million units is a lot.
At four occupants per dwelling that’s about 200 million people.
A year or so ago, I posted a report from a Chinese utility company saying there were 3 million unused units in Beijing alone.
Again, at 4 occupants per unit that’s 12 million people. That’s about half of Beijing’s population.
A very dark miracle.
It’s been clear for years that China is building housing and infrastructure for reasons that have nothing to do with the practical intent of those things. And the culture is so opaque that the West largely goes along without seriously questioning it.
How quiet must those ghost cities be? This is the way the world ends: not with a bang, but with a whimper.
How many doors did A&M knock on in China? I’d bet none. It’s all estimates and guesses. Vacancy is just a symptom of a mania. What matters is, are there enough houses sitting empty to crash their economy? Will prices, either empty or not, collapse? And Australia and New Zealand and Singapore, etc. You throw in India and Indonesia; how much of the worlds population is one housing crash away from economic depression?
“In San Francisco alone, the median price paid for a home continued dropping from its all-time high of $1 million set in June. It was $991,000 in July and $940,000 in August.”
Two month rate of decline = ($940,000 / $1,000,000 - 1) X 100% = -6%.
Annualized rate of decline =
(($940,000 / $1,000,000)^(12/2) - 1) X 100% = -31%.
It’s great to see SF prices returning to normalcy so quickly!
Agree, S.F is my home town and waaay too much money is ruining the place, though I don’t know if it will ever be affordable for people with a middle class income again…it was prior to the 1980’s. I’m now an hour north, prices are relatively much lower but still much too high currently to make buying sensible for me but am hoping that will change when (not if) Bubble 2.0 pops.
Anyway am wondering if there will be another wave of specuvestors and flippers after the crash, they made buying a place dang near impossible for me in 2011/2012…if prices drop back to 2008-2011 levels I might give buying a shot again but do NOT want to waste my time trying to compete with those *%$#@& locusts again.
‘affordable for people with a middle class income again’
I’ve never seen so many homeless people as in SF. It may be expensive, but most of the people I saw looked lower than middle class. Rental watch has that bubble view of things. I’ve explained it about Texas growing up. It was the sh*t, and we were the sh*t because we lived in the greatest place in the world. I have to go back there week after next. Every time I recall those days I wonder, how did we ever think this place was so special? It was all the money and the mania that did it. Do you think people in SF are rich? The town I grew up in had the highest per-capita number of millionaires in the US - until the bust, of course.
“I’ve never seen so many homeless people as in SF.”
Ever been to Berkeley? Or how about that area of LA which is basically a ginormous homeless camp within a city?
“It may be expensive, but most of the people I saw looked lower than middle class.”
Those homeless folks are pretty much out of the housing market by definition, right?
Bulletin U.S. stock indexes inching lower at Friday open
Foreclosures are back — are they coming to your city?
Published: Sept 11, 2014 12:02 a.m. ET
By Catey Hill
Reporter
The number of homes scheduled for foreclosure auction is rising — reversing a years-long trend.
According to data released Thursday by RealtyTrac, more than 51,000 properties were scheduled for foreclosure auction in August 2014. That makes this the first annual increase in scheduled foreclosures since the robo-signing controversy tainted the mortgage industry back in 2010, says Daren Blomquist, vice president of RealtyTrac.
Scheduled foreclosure auctions increased in roughly half of all U.S. states, with Colorado (up 116%), Oregon (up 117%), Connecticut (up 81%), New York (up 81%) and Oklahoma (up 72%) leading the way. Blomquist says there are different reasons for upticks in foreclosure auctions in each state, but that the overarching reason is likely that banks are now processing distressed homes that have remained on their books for years. (There was a lot of pressure to deal with troubled homeowners fairly in the wake of the mortgage crisis, so many banks let homeowners who weren’t fully paying their bills stay in their homes for a long time.) “Banks are pushing these foreclosures through now,” he says.
Certain cities (six of the nation’s 20 largest metro areas, to be exact) are also seeing increased foreclosure activity for a variety of reasons. The uptick in activity in the Washington, D.C. area is largely due to higher levels of foreclosures in its suburbs in Maryland, and the New York area increase may be because it (and New Jersey) have the longest foreclosure process in the U.S., says Blomquist.
…
“….It’s Friday desk clearing time for this blogger. “The median price paid for a Bay Area home that closed in August was $607,000. That was down 1.6 percent from July, according to CoreLogic DataQuick…”
Ben, you seem to have left out a few words in your paste and quote…..”…but up 12.4% from last August.” I guess that’s not important to you, but it is a bit misconceiving! Here is the whole sentence so your readers can have the proper context.
The median price paid for a Bay Area home that closed in August was $607,000. That was down 1.6 percent from July but up 12.4 percent from last August, according to CoreLogic DataQuick.
’so your readers can have the proper context’
I’m pretty sure the readers here know what prices have been doing in San Francisco the past two years.
You know, I probably read 300 articles to put this post together. Oh gosh, what about the articles I didn’t include! Think of all the quotes that I didn’t include! How can anybody know what’s going on in the world if they don’t have all the facts?
Or, maybe people can think for themselves and see the bay area is going down hard.
San Francisco is interesting. It almost reached peak bubble price insanity in the sucker’s rally, just not quite. Now it has 75% to drop to reach just the pre 2000 level of stupidity.
Debt clouds the vision.
J. Fraud has a problem with the blog owner. J. Fraud has a problem with the truth in general.
The ebola spreads:
‘The Portland-area housing market cooled in August as home sales fell and home-price gains slowed. Last August, prices had increased nearly 15 percent year-over-year.’
‘Those huge home-price gains were seen by some economists and other market-watchers as an overreaction, and in some cases a statistical exaggeration because of the influence of foreclosed homes. Now they’re watching to see if home prices settle into a more sustainable level of increase.’
‘The lack of homes to sell — especially homes in good condition — has contributed to the slow sales.’
‘And despite the recent run-up in home prices, current homeowners have been slow to bring more homes to market. Some are underwater on their mortgage or don’t have enough equity in their home to sell without losing money in the transaction. More unlikely to sell because they recently refinanced.’
I hope they didn’t take too much cash out! Funny though. A few months ago the low inventory was why prices were skyrocketing and sales were up. Now low inventory is causing the opposite.
A few months ago the low inventory was why prices were skyrocketing and sales were up. Now low inventory is causing the opposite.
GREAT point, Ben!
“The coyote has left the cliff”
And the ‘pool of first time homebuyers’ have run off with the safety net.
‘American Homes 4 Rent, one of a new breed of Wall Street-backed landlord, won over investors with bonds that let it use their money to boost its profits for twice as long as the rest of the industry. By bundling loans on such properties into bonds of varying risks — a process known as securitization — the institutional landlords are recouping much of the cash they put up buying and improving homes, and getting a chance to earn higher returns on the capital still invested.’
‘American Homes spent $701 million on the almost 4,500 houses valued by brokers at $750 million that backed its offering, according to Kroll Bond Rating Agency, which graded the notes as high as AAA. The bonds pay 4.4 percent on average.’
‘If issuers can’t repay the bonds when due, a replacement manager takes over and may sell properties in bulk or one-by-one. Fitch differs with Moody’s and Kroll on repayment depending on foreclosures, Chambers said. Issuers will probably find refinancing difficult because of the large amount of debt relative to the cash generated by the property pools, he said.’
“Would you make a loan that you knew couldn’t be refinanced, and as a rating agency, would you rate it?” he said. “Highly rated investment-grade bonds shouldn’t be predicated on a repayment limited to foreclosure. There should be a plan A.”
“In the highly unlikely event of default, particularly given the current economic outlook, loans would be extended and reworked,” Denise Dunckel, a spokeswoman for Invitation Homes, said in an e-mail. The replacement managers “would be highly inclined to avoid fire sales of the assets and instead keep the homes operating as is to maintain the income.”
‘American Homes 4 Rent, one of a new breed of Wall Street-backed landlord, won over investors with bonds that let it use their money to boost its profits for twice as long as the rest of the industry. By bundling loans on such properties into bonds of varying risks — a process known as securitization — the institutional landlords are recouping much of the cash they put up buying and improving homes, and getting a chance to earn higher returns on the capital still invested.’
I’m guessing a lot of these Homes4Rent bonds buyers are going to wish they had stuck with plain vanilla U.S. Treasury Bonds before this is over.
$488 million loan on $701 million costs? 70% loan to cost. Sounds reasonable. However, I watched them overpay for the homes in their zeal to assemble a portfolio.
$750 million in value? The houses have appreciated 7%? Whose metric is this? Real estate transaction costs are substantial. Regardless of some appreciation, this is a break even deal today on costs. Maybe the cash flow will exceed the debt service…..or maybe not.
‘Shadow inventory is not a small humorous anecdote or analogy. It is a huge weight on our shoulders, on our market health.’
That was a real estate agent talking to the media? How long before they revoke his license and run him out the business?
Forget the banking system. If the real estate industry on its own would follow this agent’s lead, embrace the simple truth he observes, along with the inevitable short-term consequences that would follow, this whole stinking mess would pass and we could all get back to business.
When underwriters are looking closely at utilities bills you know they don’t want to loan. They want a slam dunk mortgage and most folks have something in their financial background, this along with a uncertain buyer and suspect economy, going forward looks very shaky.