September 29, 2014

The Sky Is Not The Limit

Bloomberg reports on New York. ‘Sales at One57, the ultra-luxury Manhattan condominium tower that set off a high-end residential construction boom, have slowed to a trickle amid competition from newer properties reaching the market. ‘This is not a normal pace,’ president of New York-based appraiser Miller Samuel Inc., said in an interview. ‘This building had many price increases when it was the only building out there, so maybe they overdid it. In other words, the sky is not the limit.’”

The Virginia Connection. “Many Potomac homes — particularly those selling for more than a million dollars — are remaining on the market for months without so much as an offer — or maybe even a buyer gracing their doors. Some sellers are scared, confused and concerned, wondering why their homes are not selling and trying to decipher what they need to do to make their home more attractive to buyers. Realtors Alison Ross Tompkins cites sellers who ‘came out of the gate earlier this year, and thought this was the year to sell. They put their homes on the market and were overly optimistic, thinking that prices had rebounded. They priced their home too high and as sellers flooded the market, the supply of housing went up – and as the supply increased, the prices went down.’”

The Orlando Sentinel in Florida. “Florida has long led the nation for attracting the greatest share of homebuyers from other regions of the world. Statewide, Canadian buyers commanded 32 percent of the international market. But looking ahead, Canadians’ interest in the Sunshine State may wane now that foreclosure bargains have started to disappear and prices have begun to stabilize. Matthew White, broker associate Sloane Realty LLC of Lake Mary, said he has represented a number of Canadian investors and sees some of them selling properties they purchased during the downturn.”

“‘Those buyers are looking for the kind of prices we had a year ago or two years ago. And those prices don’t exist anymore,’ he said.”

The Las Vegas Sun In Nevada. “Las Vegas homebuilders are stuck in the doldrums as buyers continue to shy away from hefty price tags, according to Las Vegas-based Home Builders Research. President Dennis Smith attributed the decline in permits to processing delays. At least some local builders have slashed prices recently, offered buyers more perks and boosted agents’ sales commissions, so they’d steer clients to construction sites. Brokers, meanwhile, have told Smith that plenty of people are looking at homes but not biting, indicating ‘a healthy dose of price resistance,’ he said.”

The St Louis Post Dispatch in Missouri. “St. Louis real estate agents were hoping for a summer revival in sales and prices, and for a while it appeared as though they might get it. They didn’t. Russ Nolting, CEO at Keller Williams Realty, noticed another phenomenon: Despite the lack of homes on the market, more listings are expiring with no sale, and homes are selling significantly below the original asking price. Nolting suspects those homes were priced too high to begin with. Agents aren’t trying hard enough to dissuade sellers who want to an unrealistic price, he said.”

“‘The desperation of agents to get the listing is causing them to side with the seller rather than side with the data,’ he said.”

The Fresno Bee in California. “A couple years of fast-rising home prices and sales in Fresno and other California cities is showing signs of slowing down and hitting a plateau in 2015, said Leslie Appleton-Young, chief economist for the California Association of Realtors. The overall issue is jobs, Appleton-Young said at a reception at the Fresno Convention & Entertainment Center with members of the Fresno Association of Realtors. ‘If you were to ask me what is the one key variable for kind of gauging the strength of the market going forward, I would say it’s jobs and job creation,’ she said.”

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Comment by Whac-A-Bubble™
2014-09-29 04:43:09

The Echo Bubble is hissing rather loudly heading into the holiday season.

Comment by Ben Jones
2014-09-29 05:12:37

Yeah, Canadians trying to sell their Florida houses so soon? It’s like they were really speculating on higher prices all along.

Comment by Whac-A-Bubble™
2014-09-29 07:15:30

This development was predicted here early and often.

Comment by Prime_Is_Contained
2014-09-29 08:18:25

But I thought those snow geese were in for the long haul!?!

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Comment by Housing Analyst
2014-09-29 04:48:13

‘If you were to ask me’

Well Lester, nobody is asking because you’ve proven over and over that anything you say is complete bull $ hit.

Comment by Ben Jones
2014-09-29 04:54:59

‘What Newtown Board of Realtors President Cyndy DaSilva finds interesting, and of some slight concern, is that while towns such as Monroe and Ridgefield have shown increases in average selling prices for single family homes in the first six months of each year since 2012, Newtown has seen a dip. In 2012, the average selling price of a home in Newtown stood at $427,064; in 2013, that number was $404,282; and in the first six months of 2014, the average selling price was down to $382,739.’

‘Ms DaSilva said that a “good amount” of houses listed in Newtown, in every price range, are short sales.’

‘Selling a home in Newtown is challenging but far from impossible, despite the increased inventory. A single family home in Newtown, with an average listing price of $527,781 currently, can expect to be on the market just over four months. Sellers are cautioned, though, that they should be prepared to drop the initial asking price before the property sells. Realtors will list at the higher end of a realistic price for a home, “But if it is not moving in three or four weeks, we will suggest a reduction in price,” Ms DaSilva said, of about $10,000, to start.’

‘Sellers must realize that today’s savvy buyer knows what is selling and at what price. “We’re still adjusting here to what prices really are. There are still people hanging on to the idea of the high value of their homes, but the market has gone down since 2006,” she said.’

Comment by Puggs
2014-09-29 08:58:44

“savvy buyer” LOL. What, they just woke up and now know how to use County Property Records sites and Zillow?!?!!?

ANYBODY, who buys now or the last two years is CLEARLY NOT a savvy buyer.

Comment by Ben Jones
2014-09-29 04:57:38

This should speed foreclosures up:

‘Nevada’s highest court has upheld a law that lets homeowners associations foreclose on houses ahead of mortgage lenders, even if HOAs are owed a fraction of what’s owed to banks. HOAs can sell the homes at auction but by law can only collect what they’re owed, plus collection fees, Cogburn said. The balance of the sales proceeds would go to other creditors or, if the house is paid off, to the homeowner.’

‘That’s assuming it sells, though. Banks can try to collect from the borrower but have no collateral — the house — if they come up empty-handed. “They’re just getting wiped out,” Cogburn said.’

Comment by Blue Skye
2014-09-29 06:13:52

That and bigger escrow requirements.

Comment by iftheshoefits
2014-09-29 07:47:47

I think that option would be a two-edged sword for the HOA, Ben. Wouldn’t an HOA be even less likely than a bank to drop the sale price to the going market value? We’ve all seen how the banking industry has strung this out to keep prices propped up. How many members of an HOA are going to agree to be the cause of a new foreclosure comp right in their backyard, even if it really is in their best interest?

I’d love to be a fly on the wall in those HOA meetings where the asking prices were being discussed, though.

Comment by Ben Jones
2014-09-29 08:17:33

‘Wouldn’t an HOA be even less likely than a bank to drop the sale price’

It would be a question of who forecloses first. Lenders are going to be pressured to act instead of sitting on a defaulted loan, because at any time the HOA could pull the rug out from under them. (If they aren’t making the mortgage payment, they most likely aren’t paying the HOA either.)

Comment by Prime_Is_Contained
2014-09-29 20:05:15

Lenders are going to be pressured to act instead of sitting on a defaulted loan

Another possibility is that the lender might be incented to pay the HOA dues on behalf of the loanowner—ya know, like they apparently keep the property taxes current even when they aren’t receiving payments.

My understanding is that they generally DO pay property taxes, but don’t pay the HOA; this could change that, if there is a risk that HOA might force their hand by pushing the foreclosure forward.

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Comment by Prime_Is_Contained
2014-09-29 20:07:32

I’d love to be a fly on the wall in those HOA meetings where the asking prices were being discussed, though.

The HOA wouldn’t be in a position to set an “asking price”; they don’t get to market the property unless they buy it.

If they were to initiate the foreclosure process, in most areas that means a courthouse auction. The HOA would only be likely to bid what they are owed, and the bank should be expected to outbid them by a wide margin.

Comment by Tarara Boomdea
2014-09-29 10:51:39

The mortgage people/agents who host a local (Vegas) radio RE show were shocked at the ruling and were speculating about the ramifications for lending in the state.

One lien buyer they knew of bought an $800K foreclosure for $6K.

Comment by Prime_Is_Contained
2014-09-29 20:08:46

One lien buyer they knew of bought an $800K foreclosure for $6K.

I call BS; they may have bought the lien, but if they put through a foreclosure, the bank should still be expected to outbid them. The lien buyer would only get paid the amount of the lien out of the foreclosure sale proceeds.

Comment by Ben Jones
2014-09-29 20:33:36

‘out of the foreclosure sale proceeds’

The court ruling, as I understand it is, the HOA foreclosure wipes out the lender as a second.

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Comment by Tarara Boomdea
2014-09-29 20:57:58

Yep. They were amazed that the banks never did anything to prevent this. They knew it could happen but apparently didn’t believe it would.

Comment by Prime_Is_Contained
2014-09-30 08:21:02

The court ruling, as I understand it is, the HOA foreclosure wipes out the lender as a second.

That’s not how it works, Ben. The HOA would be first in line to receive funds, but the bank would be right behind them.

Now if $6K was the highest bid, then something interesting did happen, in that the bank didn’t bid enough to claim the collateral. That would be a huge mistake on their part.

Comment by Tarara Boomdea
2014-10-02 09:57:34

It’s a few days later and this morning’s local RE show is discussing the HOA ruling again. It was a $885K loan that was extinguished for the $6K lien. That’s just one place.

Comment by Guillotine Renovator
2014-09-29 11:54:03

The amount of shadow inventory in Nevada is absolutely MASSIVE.

Comment by Ben Jones
2014-09-29 05:08:29

‘Nearly a third of homeowners 65 and older had a mortgage in 2011, up from 22% in 2001, according to an analysis from the Consumer Financial Protection Bureau. Baby boomers bought homes later in life, and with smaller down payments, than previous generations, said Stacy Canan, deputy assistant director of the consumer bureau’s Office for Older Americans. Many also refinanced during the housing bubble and used cash from their equity withdraws to pay off other debt, take vacations or put children through college.’

‘Surging home prices and low interest rates made that possible.’

‘When Tom Greco bought his four-bedroom home three decades ago, he assumed he’d pay off the mortgage before retirement — just as his parents did. Things didn’t work out that way. Instead, his $4,500 monthly mortgage payments — a consequence of several equity withdraws over the years — became a financial drag. “It’s pretty hard to retire with that,” the Irvine attorney, 66, said.’

‘The Orange County attorney, said he took a “shortsighted view.” Enticed by dropping interest rates, he refinanced his Irvine home four times. He then used the money from the cash-out refinancings to pay down credit card debt and finance home renovations, including a pool he himself designed. “A foolish move,” he said of the refinancing, but one that many others, including friends, did as well.’

‘Jacqueline Murphy retired in March, thinking her pension and Social Security, coupled with a part-time job, would allow her to live comfortably and cover mortgage payments on the Bronx town home she bought for $375,000 during the housing bubble.’

‘But the 63-year-old hasn’t yet found a part-time gig, and a large chunk of her income is going to the $2,200-a-month mortgage. So she’s cutting back. She keeps the lights off as much as possible, has cut back on gardening to reduce the water bill, and sometimes gets help from family to buy groceries.’

“I thought retirement was going to be wonderful,” she said. “Now that I am retired, I am sorry that I did. I am focused on how I am going to make it to next week, how am I going to make it to the next mortgage payment, and I am constantly worried.”

Comment by Housing Analyst
2014-09-29 05:15:27


Those debt payments are stunning at any age. They’re simply the end result of overpaying 200% for a depreciating asset like a house. These people will never recover and there are tens of millions more just like them.

Comment by Blue Skye
2014-09-29 06:19:15

It’s an illness, needing houses more than freedom.

If you have to borrow money at interest for 30 years to buy something, you can’t afford it.

Comment by iftheshoefits
2014-09-29 08:41:00

Or maybe they’re not the result of overpaying, but having taken on a 30-year debt obligation in the first place.

Blue, I’ll take your observation one step further - probably a few can in fact “afford” the house with a 30-year note, but they’ll still never pay it off. No one stays put that long anymore, ever. At least not until we die.

Comment by Mr. Banker
2014-09-29 06:05:38

Step 1: Dumb ‘em down.

Step 2: Prosper.

Comment by Mr. Banker
2014-09-29 06:13:41

“In five years, he hopes to have paid down the condo loan enough to get a reverse mortgage that will allow him to only take on cases that interest him.”

Bahahahahahahaha … the learning curve for this guy does not exist.

Comment by Housing Analyst
2014-09-29 07:09:31

He’s on the lemming curve.

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Comment by Bubbabear
2014-09-29 10:13:52

Bahahahahahahaha ….Bottabang Bottaboom!

Comment by Whac-A-Bubble™
2014-09-29 07:21:28

“…she bought for $375,000 during the housing bubble.

But the 63-year-old hasn’t yet found a part-time gig, and a large chunk of her income is going to the $2,200-a-month mortgage.”

Something about those figures don’t align. Either she missed the opportunity to refinance into generation-low mortgage rates, or else she levered up from $375K, as $2,200-a-month is enough to finance a much larger principle balance at recent interest rate levels.

Comment by oxide
2014-09-29 14:17:02

Not really. According to Zillow, in Bronx, NY, even with today’s low interest rates

4% down
~4% interest
PITI = $2266/month

In 2006 she could have rolled in some closing costs too.

But she was a real dummy if she counted on paying for retirement with a part time job. Is she gonna ride the subway to her part time job when she’s 85? :roll:

Comment by Housing Analyst
2014-09-29 19:11:10


retirement means not working.

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Comment by Cracker Bob
2014-09-29 09:08:00

I wonder what the percentage of 65+ people are homeowners vs. renting. At that age you should not have a mortgage or rent payment. Unless, it is on an old-fashioned Florida retirement trailer shack. Old people need to live cheap.

Comment by taxpayers
2014-09-29 10:26:42

how about in the 1960’s
5%? 0 ?

Comment by Ben Jones
2014-09-29 05:36:52

‘El Paso realtor and businessman Scott Kesner was installed as chairman of the Texas Association of Realtors two weeks ago. Kesner sat down with El Paso Inc. and talked about the association’s priorities, how the El Paso housing market has gone soft, the Zillow issue and why rising student debt is a problem that needs to be addressed now.’

‘Q: How does the El Paso real estate market compare to others in Texas or the state in general?’

‘We have a very unique housing market. Statewide they’re probably looking at a two- or three-month supply of housing. In El Paso, it’s around eight months. We recently broke it down by ZIP codes. It was really surprising. We only found one below eight months in El Paso.’

‘We have a slower housing market, and we also have a slower rental market than the state as a whole. I did a search today and just in East El Paso there are 456 houses available for rent.’

‘Q: Typically, soldiers are assigned to a post for three years, which means those soldiers who bought homes when Fort Bliss was growing have now mostly been reassigned. To sell their homes, those soldiers may have to compete with the homebuilders they bought their homes from, so many are just renting them out for now.’

‘Yeah. You are right on. We have a large inventory of homes in the sales market, but we also have a large inventory of rental homes. Remember when Fort Bliss really started growing and we were told a number of years ago that there wasn’t enough housing? Housing symposiums were held. Well, I don’t know. It is going to be an interesting next couple of years.’

Comment by Housing Analyst
2014-09-29 05:42:43

“The zillow issue”? Is he whining about the institutional thievery getting exposed and busted up?

Comment by Whac-A-Bubble™
2014-09-29 07:25:59

Q: People can now go to websites like Zillow and see all kinds of information about homes in their area including a home value “Zestimate.” The national realtors association has pushed back. Realtors say the information is not always accurate and the sites “steal” leads only to sell them back to real estate agents.

It is a huge issue. Our position is that we need to be perfectly clear where the information came from and how accurate the information is and what was the source of the information.

Zillow and Trulia are marketing companies. They advertise real estate. We just need to make sure the public realizes that we don’t just sell houses; we’re their advocates. We are advocating on behalf of homeowners for private property rights and the other things we have talked about.

Texas is a non-disclosure state, so when Zillow reports a sales price it is only an estimate. That’s why they call it a “Zestimate.”

Comment by iftheshoefits
2014-09-29 08:11:32

Hey, let them spend all their energy fighting the insidious Zestimates, which are all but useless at this point. Well, useless for at least for a few more years, until their algorithms are based on enough cumulative input data to make them more reflective of actual market conditions.

If anything about publicly accessible on-line listing information is affecting buyer’s behaviors, it’s probably the property history data. You know, that table that shows how sellers have been trying to sell for years in a price range with no luck. Very hard to talk around that type of real world pricing evidence.

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Comment by Ben Jones
2014-09-29 05:40:13

‘Existing home sales in the Chicago area fell more than 13 percent in August, the biggest monthly year-over-year decline since June 2011. The report from the Illinois Association of Realtors came as little surprise to real estate agents who’ve seen their business wither as of late. A slowing economy and a harsh winter tripped up the market’s momentum earlier in the year, and there are about two months left to sell properties before the local housing market battens down the hatches and readies itself for the doldrums of the holidays and winter.’

‘Though sales volume has failed to beat its year-ago comparisons every month this year, August’s 13.3 percent decline is the largest of the year and second only to a 17.4 percent decline in June 2011.’

‘Likewise, within the city of Chicago, year-over-year home sales fell by 15.3 percent, to 2,414 homes sold, also the largest loss recorded since June 2011. Chicago condo sales fell almost 17 percent.’

“I’m not feeling bullish about price increases, but I do feel stability,” said Mike Thomas, an @properties agent. “For us, 2013 felt like much more of a normal cycle. This year, the winter was so brutal that the first quarter was not as busy. I expected the rest of the year to pick up, and it hasn’t.”

Comment by Housing Analyst
2014-09-29 05:46:26

“I expected the rest of the year to pick up, and it hasn’t.”

That was your sense of entitlement speaking to you.

Comment by rj chicago
2014-09-29 08:02:11

One big issue that the cabal of realtors here in Chicago FAIL to recognize with lackluster sales is Mayor Rahm is threatening to raise property taxes in order to reduce the pension liability looming over the city like an ax on wood.
Property taxes here are some of the highest in the nation and threatened to increase as I write this.

Comment by taxpayers
2014-09-29 10:48:11

hungary-port-argn-poland stole everyone’s 401k
spain and itlay are next
only gov workers can retire

got ammo?

Comment by jane
2014-09-29 05:46:08

In a pretentious, benighted and stagnant backwater, that tax burden indicates execrable management and a welfare mentality amongst the lavishly paid and overstaffed town offices. Plus the crushing burden of the teacher’s union in CT; the 4:1 administrator to student-facing ratio; and their respective stratospheric salaries. In the face of disengaged students producing mediocre results - not surprising, given the depths of ignorance displayed by the instructors.

Nasty, catty, vindictive teachers who go at their jobs with resentment and entitlement front and center.

They’ve got all kinds of excuses. However, ten years ago not a sone had ever heard of an IB program, and they could not have cared less. The general thinking was “if we don’t do it already, it is not worth doing”.

A person who sinks real cash into the circling toilet that is CT deserves what he gets. That is to say - once you get there, how on earth are you ever going to get out?

Comment by Housing Analyst
2014-09-29 05:52:31

You just described CT perfectly. At least Fairfield County.

Comment by jane
2014-09-29 07:43:30

How do they do it? Bluntly, by borrowing long to fund operating expenses, salaries and overhead. With a crushing tax burden. By not setting aside enough for fixed obligations (e.g., ‘kicking the can down the road’). By deferring infrastructure replacement and maintenance. Sort of like the pouty trophy wife taking out home equity loans to go clothing and shoe shopping.

Why don’t the remaining rational citizens revolt? They’re on the wrong side of the aisle at every level of government.

Govt gets away with it by ensuring that they legislate welfare for a comfortable majority of the state. This locks in the power to legislate whatever the h*ll it wants. They buy votes through welfare. Welfare is either through direct transfer payments, municipal and state jobs, or other “public service” jobs. By ensuring a loud and shrill population of realt-whores, “public servant” whores, teachr-whores, and union whores. These bellow incessantly that every incremental regulation is because “it’s for the children”. CT voters don’t care - it’s other peoples’ money, doncha know. Fundamentally, filthy Chicago-style politics.

Interesting factoid: CT has one third the number of people that Virginia has, and twice the number of lawyers. Needless to say, every judge in every level of the judiciary makes sure to drag out cases so as to ensure the maximum number of billing hours for their backroom comrades. There is no probate system in the world (well, at least the world that has laws) as corrupt as CT’s. Crony judges will extend probate over a period of years to ensure the same outcome - that their bill-by-the-hour cronies can milk the estate to the max for fees. It is not unknown for the estate to be liquidated entirely in order to satisfy probate lawyer fees. This circumstance is particularly noted when the decedent had a nice piece of recreational property.

With so many underemployed lawyers out ambulance chasing, there lots and lots of new regulations every year, all carrying hefty penalties and fines. As we all know, most underemployed lawyers become judges and politicians, and for the same reason - the opportunity to collect baksheesh outright, or to trade favors with their cronies as a backup.

The insidious pattern: every incremental regulation spawns a new department that needs to be staffed with several dozen resentful minorities. The departments that are fee-producing are particularly coveted. Where there are fees, there is opportunity for graft.

CT is the only state in the union which has an unbroken half-century record of indictments against governers, mayors and heads of public service agencies. When I left, three mayors were in the federal pen.

The state is the FedGov in microcosm, except that every single agency head is an Eric Holder.

I watched, aghast, as this was happening, not believing that it was all accepted as perfectly normal and upright. So much so that the citizens - whichever ones are left that can read English - simply assign themselves the status of superiority. “It’s delusional here” is somehow corrupted into “it’s better here since we are soooo special”.

For somebody who started out as a research scientist, this cultural imperative to ignore facts or distort them on a daily basis prompted a gag reflex several times a day. It is actually tough to maintain a rational core.

Comment by cactus
2014-09-29 08:53:01

And I thought Poway CA was bad

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Comment by Shillow
2014-09-29 06:20:58

Plus the crushing burden of the teacher’s union in CT; the 4:1 administrator to student-facing ratio

4 to 1 ? And not even administrator to teacher, it’s to “teacher facing”. How can they afford that?

Comment by iftheshoefits
2014-09-29 08:01:05

Have you ever looked at the property tax bills on CT listings? Into the five figures, as I recall.

Comment by taxpayers
2014-09-29 10:49:25

muni unions are much deadlier than al-Kadies

Comment by iftheshoefits
2014-09-29 07:32:02

“…trying to decipher what they need to do to make their home more attractive to buyers.”

It’s like the idea of lowering the price is such an impenetrable mystery, something requiring secret enlightenment to understand…

Comment by iftheshoefits
2014-09-29 07:35:38

“…more listings are expiring with no sale, and homes are selling significantly below the original asking price. Nolting suspects those homes were priced too high to begin with.”

There, Mr. Nolting has deciphered the code!

Comment by Housing Analyst
2014-09-29 07:51:36

Just what I expect from a guy named Mr. Nothing.

Comment by Puggs
2014-09-29 09:01:45

Brokers, meanwhile, have told Smith that plenty of people are looking at homes but not biting, indicating ‘a healthy dose of price resistance,’ he said.”

So, all you need is a healthy dose of price reductions. But be careful, you may face pitchforks and protest by those who bought from you just a mere 12 months ago. “NOT FAIR!!!!”

Comment by taxpayers
2014-09-29 10:29:02

student debt- do something” = make taxpayers pick up the tab

Comment by taxpayers
2014-09-29 16:13:51

is ft bragg hiring ?
The median home value in Fayetteville is $109,700. Fayetteville home values have gone up 0.1% over the past year and Zillow predicts they will rise 5.2% within the next year.

Comment by Housing Analyst
2014-09-29 19:13:55

Interesting considering sale prices fell 7% YoY in Fayetteville.

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