A Point We Haven’t Started From Before
It’s Friday desk clearing time for this blogger. “Sure, home prices are rising across Greater Boston, but when it comes to really big gains, some suburbs and city neighborhoods are in a league of their own. To the north of Boston, Middleton is hard to beat, with prices up nearly 50 percent, hovering around $637,000, the Warren Group finds. Still, what goes up will come down at some point. There are signs sellers may be starting to overprice their homes, notes Matt Hanson, a Redfin agent who works with buyers in Woburn and other north of Boston areas. ‘The listing agents are pricing the properties higher,’ Hanson said. ‘It has gotten to the point where it is all the market can bear.’”
“A new forecast predicts that Southwest Florida’s single-family home prices will continue to inflate over the next three years into bubble territory. Local Market Monito’s president Ingo Winzer called the Naples-Marco Island metro area’s sizzling price increases justified because prices had fallen so far from their 2006 peaks, he now characterizes them as ‘worrisome.’ ‘It’s starting to look like a new bubble is building,’ he said. ‘The market is no longer underpriced.’”
“Seeing a growing disconnect between what they want and what they can afford, many buyers are starting to sit on the sidelines, said Naples real estate agent Dona Schrim. ‘I think the market is coming to a point where prices may not be able to be sustained,’ she said.”
“Homeowners across Southern California are getting hit with a fresh wave of foreclosures. KNX 1070’s Ed Mertz reports industry analysts say there’s been a 30 percent jump in foreclosures from August to September in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties. Tens of thousands of properties across the Southland that were purchased before 2008 were delayed being foreclosed on due to the California Homeowners Bill of Rights, which was enacted in Jan. 2013, said RealtyTrac VP Darren Bloomquist.
“‘We’re looking at three to four thousand a month,’ he said. ‘That could take close to a year to clear that backlog.’”
“Colorado was one of several states where homes scheduled for foreclosure auction spiked in the third quarter of 2014, with the 2,919 homes set for auction, up 50 percent from 1,941 in the second quarter, and up 48 percent from 1,968 in the third quarter of 2013, RealtyTrac said. Scheduled foreclosure auctions also spiked year-over-year in North Carolina and Oregon, both up 85 percent; New Jersey, up 66 percent; Oklahoma, up 58 percent; New York, up 57 percent; and Connecticut up 51 percent.”
“Blomquist said the increased foreclosure activity ‘is not the result of underlying economic or housing market problems. The bad news is that Colorado’s housing market may have looked better than it actually was over the past 12 months because of these artificially held back foreclosure actions.’”
“One out of every 292 Atlantic County homes was in the foreclosure process in August, making the area’s foreclosure rate second-worst in the nation, according to RealtyTrac. ‘Our data shows the average foreclosure process in New Jersey is over 1,000 days, so I would say it’s probably too early (to reflect casino closings),’ said Daren Blomquist.”
“With a glut of foreclosed properties hitting the market, the trend could have dire ramifications for local real estate values, said Carlo Losco, president of Balsley Losco Real Estate in Northfield. ‘I think people need to pay attention and make some realistic choices,’ Losco said. ‘If they wait, all the figures could line up against them and decrease value. Or are they going to do the best they can now before all these issues come into play?’”
“Iskandar Malaysia (IM) has come under heavy fire in recent weeks from analysts, valuers and the media for the apparent free fall of the property market here. They claim developers who were eager to make their presence felt in IM early this year are now beating a retreat because prices have slumped to an untenable level. This scary prognosis is naturally turning away prospective investors.”
“Even giant China players with enormous capital at their disposal have not been spared, with reports suggesting that they may also be in trouble as they had been ‘over confident’ about prospects in IM and are now reeling with disbelief as they had become ‘over exposed.’”
“China does not have large independent labor unions, yet the world’s second-largest economy has witnessed an increasing number of worker strikes over the past year. According to an Oct. 14 report from the Hong Kong-based watchdog group China Labour Bulletin (CLB), the number of strikes and worker protests in the third quarter of 2014 was double the number of labor actions recorded in the same period last year.”
“Notable is the uptick in strikes led by construction workers, from just four demonstrations last summer to 55 this summer. Amid a slumping housing market, new home prices in August tumbled in 68 of 70 Chinese cities monitored by the government. As the CLB report explains, ‘Developers are saddled with declining sales, weaker credit availability, and continued pressure from local governments to buy land. In these situations, it is the construction workers who are always the last to be paid.’”
“Taiwan’s Ministry of Finance has asked eight state-owned banks to provide details on outstanding loans to Chinese companies as fears grow of defaults involving privately owned firms on the mainland. Taiwan’s banks are among Asia’s largest lenders of syndicated loans and have lent heavily to private and state-owned Chinese companies in recent years. The MoF move comes on the heels of similar action of the Hong Kong Monetary Authority, which stepped up its scrutiny of banks under its jurisdiction this year after their exposure to Chinese onshore companies soared in 2013.”
“The ministry also sought information on the terms and conditions of security and repayments on the loans, bankers said. ‘We are afraid there will be a ripple effect of loan defaults for Chinese companies. We are even cautious of lending to Chinese state-owned companies,’ said a banker at a state-owned Taiwanese bank.”
“Stakeholders in the housing sector opine that it is not wise for estate developers to construct houses and lock them up until buyers offer them the exorbitant amount of money they require for rents or sales of such houses. They argue that if the owners of such houses were a bit flexible with their terms, the high cost of rent would have been reduced in Abuja. Unarguably, many of the private housing estates in the FCT have remained unoccupied years after they have been completed by their owners.”
“‘What private estate developers are doing is to create a class problem in the FCT where only the wealthy can own and live in descent homes. I foresee a crash in the estate market, especially in the FCT, because the income of most Nigerians is not enough to enable them to purchase these houses,’ said Mr Emma Akeem, a resident of the FCT.”
“The global financial markets are dangerously stretched and may unwind with shock force as liquidity dries up, the Bank of International Settlements has warned. Guy Debelle, head of the BIS’s market committee, said investors have become far too complacent, wrongly believing that central banks can protect them, many staking bets that are bound to ‘blow up’ as the first sign of stress.”
“In a speech in Sydney, Mr Debelle said: ‘The sell-off, particularly in fixed income, could be relatively violent when it comes. There are a number of investors buying assets on the presumption of a level of liquidity which is not there. This is not evident when positions are being put on, but will become readily apparent when investors attempt to exit their positions. The exits tend to get jammed unexpectedly and rapidly.’”
“Mr Debelle, who is also chief of financial markets at Australia’s Reserve Bank, said any sell-off could be amplified because nominal interest rates are already zero across most of the industrial world. ‘That is a point we haven’t started from before. There are undoubtedly positions out there which are dependent on (close to) zero funding costs. When funding costs are no longer close to zero, these positions will blow up,’ he said.”
“Homeowners across Southern California are getting hit with a fresh wave of foreclosures. KNX 1070’s Ed Mertz reports industry analysts say there’s been a 30 percent jump in foreclosures”
Told you so 18 months ago. Now that the ministry of truth is forced to start being honest about the numbers, I’ll tell you it’s far more than “tens of thousands”. They’re understating it by orders of magnitude.
The prices declines have resumed and the correction is gaining speed once again. Look out below.
‘In Inland Southern California, the number of scheduled auctions – 1,066 – jumped 25 percent in the third quarter from the second quarter, for instance. “It’s something to keep an eye on,” Blomquist said, adding: “We’re seeing some evidence it may come out in fits and starts, rather than one huge flood.”
‘Even as the lenders continue to clean house of lingering delinquent loans, RealtyTrac reports show the foreclosure activity is still predominantly focused on clearing paper from the housing crisis debacle.’
‘Seventy-seven percent of all loans in distress in the Inland market were originated in 2008 or before, Blomquist said.’
What’s important to remember here; prices haven’t gone up 3 or 5% a year since 2008. They have skyrocketed. There isn’t any more ability to pay these new loans now than there was then.
As far as numbers. Rental Watch is fond of telling us, “the California market is SO BIG! It’s huge, you can’t even imagine.” Yeah, so what’s the chance any “flood” is only a few thousand houses?
Half of the California market is flippers anyway,once they can no longer flip for a profit, even with all of the massive fraud, and the real demand is shown prices sink like a stone. It’s already started.
Shills here are fond of saying how the big drop cannot happen again because so few are overextended on liar loans like before therefore there won’t be a flood of foreclosure inventory. But most of that foreclosure inventory from before was bought up by flippers and “investors” so it’s all coming back on the market, or enough of it to drop prices right back down to where the organic non-speculative demand lies.
“…where the organic non-speculative demand lies.”
Manias do not end that way, just settling gently down to something normal. There is an excess built up that will come crashing down and the momentum will carry it past the “organic” station without hesitation. That’s why you need to buckle up.
No, the point I would have made is that this is part of digesting the pig that’s in the python. What you should be looking for as a warning is an increase in new delinquencies. That isn’t happening yet.
You’re back pedaling cherry picker.
‘That isn’t happening yet’
If you’re until something that’s bound to happen, happens, you’ll find me way ahead of you.
Exactly. It’s like someone going to the doctor and getting a diagnosis of terminal cancer, only to tell the doctor he’s a liar because “I’m not dead!”
http://www.marketwatch.com/story/10-states-were-foreclosures-are-soaring-2014-10-16
Oh my, I thought North Carolina was god’s country?
‘Seventy-seven percent of all loans in distress in the Inland market were originated in 2008 or before, Blomquist said.’
Precisely. Bubble era loans. Look at Property Radar. They show that the bulk of filings are coming from loans originated BEFORE 2008.
“What’s important to remember here; prices haven’t gone up 3 or 5% a year since 2008. They have skyrocketed. There isn’t any more ability to pay these new loans now than there was then.”
Check your history.
Per Zillow, the median home value in Riverside County in January 2008 was $348k. By December it had fallen to $258k. Today, we are at $302k.
If you measure from January 2008, values are down.
If you measure from December 2008, values are up 2.7% annually (from December 2008 to October 2014).
Per Zillow, the median home value in San Bernardino County in January 2008 was $321k. In December it had fallen to $258k. Today, we are at $262k.
If you measure from January 2008, values are down.
If you measure from December 2008, values are roughly flat.
INLAND California prices have NOT moved the same as as in Orange County, LA, or SD counties.
What were they in 2000? Or 1996?
You are right about OC, LA, SD and the bay area. They’ll get hammered a lot harder.
What’s relevant about the time period is that prices cause foreclosures. Like night follows the day.
Forgot; 23% are probably newer than 2008.
You can’t talk sense to Rental Watch, because that would mean he would have to acknowledge his incredible shrinking wealth, and that’s just NOT going to happen.
And I DO keep re-posting this for a reason, so that the ‘carriers’ of this mania will not be able to say that they coudn’t have known, weren’t warned or were in uncharted territory.
“…Although only a few observers have noted the vested interest in error that accompanies speculative euphoria, it is, nonetheless, an extremely plausible phenomenon. Those involved with the speculation are experiencing an increase in wealth–getting rich or being further enriched. No one wishes to believe that this is fortuitous or undeserved; all wish to think that it is the result of their own superior insight or intuition. The very increase in values thus captures the thoughts and minds of those being rewarded. Speculation buys up, in a very practical way, the intelligence of those involved.
This is particularly true of the first group noted above–those who are convinced that values are going up permanently and indefinitely. But the errors of vanity of those who think they will beat the speculative game are also thus reinforced. As long as they are in, they have a strong pecuniary commitment to belief in the unique personal intelligence that tells them there will be yet more. ..Strongly reinforcing the vested interest in euphoria is the condemnation that the reputable public and financial opinion directs at those who express doubt or dissent. It is said that they are unable, because of defective imagination or other mental inadequacy, to grasp the new and rewarding circumstances that sustain and secure the increase in values…”
-John Kenneth Galbraith
A Short History of Financial Euphoria
Thanks for the sanity injection B&CG
Thanks for the sanity injection B&CG
+1
http://www.dailynews.com/business/20141017/california-foreclosures-near-a-9-year-low
‘Most of the loans going into default are still from the 2005-07 period.’
Ah, but now we are seeing them compare into 2008, with the other 23% most likely after that. Moving the goal posts? By 2008 I was already in the foreclosure biz.
‘On primary mortgages, California homeowners were a median 12.5 months behind on their payments when the lender filed the default notice.’
Weren’t you telling us that California is a fast foreclosure state? Makes it kinda difficult to know what the pipeline really is, especially with this bill of rights thing. And HAMP/HARP. It doesn’t matter; all I need to know about future foreclosures is the median price.
See article above regarding NODs being filed…the headline is misleading (NODs are way down, not foreclosures).
The pig already in the python.
Ben, the toxic combination causing the massive amount of foreclosures from bubble-era loans was stupid underwriting combined with high home prices.
As I’ve said before, and will say again, home prices have reached a level consistent with another peak. However, home starts have not, and loan underwriting has not reached stupid proportions.
Will there be another period of falling home prices?
Absolutely.
Is it right around the corner?
Not in my opinion.
Will prices go up and up and up from here?
Probably not. Flattish to low single digits is my guess.
It’ll take a few years to get to the next correction, and it will probably be prompted by the next recession–not collapsing under its own weight like the last go round.
You can be in delinquent without having an NOD filed.
Non-current loans per Black Knight (still hate the name) track both–ANY stage of delinquency or foreclosure.
Of course there will be foreclosures post 2008. There were foreclosures pre-2000 too.
You frequently don’t post links I provide to “Housingwire” but here is a quote from the article on that website regarding default rates:
“To put this into perspective, NoDs peaked in first-quarter 2009 at 135,431, while the low was 12,417 NoDs in third-quarter 2004. The NoD statistics go back to 1992.”
In other words, the roughly 17k NODs filed is WAY below the worst of it, and close to a historic low.
And yes, I acknowledge that 12.5 months is ridiculously long and could mask shadow inventory.
However, the non-current loan rate from BK would not support the view that there is NOT massive shadow inventory in CA as there is in FL and elsewhere.
I guess we’ll find out. I think the next major housing correction will be post 2016, and between now and then home prices won’t see the same increases that they did from 2011-2013 (nowhere close).
It’s good to know “Housing Wire” hosts articles written by fraudsters. Thanks for the tip. Aside from that, if you bought a house from 2009-current, you paid 2004-2006 prices.
Housing prices have yet to bottom and the bottom is a long way down. That’s a painful reality for you R._Fraud.
It seems Rental Watch is arguing that because prices are not at the top of last bubble levels that there will be no surge in foreclosures.
Basically, these almost bubble top prices are affordable.
Thanks to better underwriting we have more stable owners. These new owners are richer and can withstand falling prices by sitting and waiting.
Or am I putting words into his mouth?
“Or am I putting words into his mouth?”
Did you somehow miss the news that Fannie Mae and Freddie Mac are about to reloosen the credit spigots?
‘These new owners are richer and can withstand falling prices’
Rich people were the first to walk away from their loans a few years back.
“Rich people were the first to walk away from their loans a few years back.”
And for this reason, it is crucial to make sure that real estate prices keep going up, so that nobody ever again faces the incentive to walk away from their mortgage.
“Rich people were the first to walk away from their loans a few years back.”
+1 That’s why they’re rich, and when the RE party’s next punch bowl is rolled-out the rich will be first in line ready to play the game. Joe Sixpack will have to stand back and watch because he was chivalrous, draining his 401k account, etc., trying to hang-on. The rich are rich because they “get it.”
California foreclosures can’t increase, as RW has assured us over and again that it’s unpossible.
Lol. And its great to be debt free in ghe midfle of the OC and have tons o cash! Got popcorn?
I had someone arguing with me angrily last week about housing. He’s a real estate agent. What I find amusing is that he argued with me about housing right before the last crash too.
I was right and he was wrong. He lost his toys, his house, his wife and his business. Yet here he is just 5 years later annoying me with the same talking points that he used last time.
For you guys that were here before the last bust you know that we have seen this before. Year over year sales drops then month over month. Mortgage apps decline, inventory increases as median prices continue to increase fueled by the occasional million dollar home sale.
Finally the median drops, just like it did at the end of this Summer in most of the markets, and then things begin to get interesting.
I’d wager that the housing market cheerleaders that are entertaining us today will have soggy, tear stained pom-poms by the end of next year.
“What I find amusing is that he argued with me about housing right before the last crash too.”
Sounds like this Realtor™’s arguments are a great leading indicator of an incipient real estate crash.
“I’d wager that the housing market cheerleaders that are entertaining us today will have soggy, tear stained pom-poms by the end of next year.”
Does your prediction take into consideration the announcement out of the GSEs of an expansion of mortgage lending to peops with weak credit?
I have to admit that the timing of this announcement may work out well for my family, as we will be selling my parent’s home next year in a nabe where most families are on the weak end of the credit spectrum.
” expansion of mortgage lending to peops with weak credit?”
Current prices guarantee default regardless of credit profile.
I may be wrong in my assessment. However, I am finding that even the most deadbeat of my friends and family no longer have a thirst for easy credit or house mortgage debt.
Mel Watt and his Banker buddies be damned.
“Current prices guarantee default regardless of credit profile.”
That may eventually prove to be true, but I believe the near term objective is to kick the Echo Bubble ball into the air for long enough for the Permanent Democratic Supermajority to get another president into the WH in 2016.
After that, another foreclosure crisis would play well into Democratic politician’s ongoing need to rescue the downtrodden from the financial abyss, while also further enriching the banking establishment.
I’ve had arguments too with RE cheerleaders before the first RE crash. There was the one from a colleague disgusted with me because I was in my 40s and had no real estate - “A man in his 40s should own a house” - and then the other from some ex-cocaine-using marine - turned software contractor who had condos in Biscayne Bay, acreage in Iowa and always ripping me about buying T bills and savings bonds and gold while real estate was how to “get rich.”
Arguing with realtors about housing is a waste of time. Did you actually think he’d be rational?
‘China may have has many as 50 ‘ghost towns’ on its hands if the country continues to roll out more unnecessary housing and development projects, according to a new list compiled by the Beijing-based China Investment Network.’
‘While there is no official definition of what constitutes a ghost town, the entries on the “Mainland China ‘Ghost Town’ Index Rankings 2014″ are all towns or cities that have less than or only slightly above 5,000 people per square kilometer of land and seem unlikely to attract new residents anytime soon.’
‘China’s National Development and Reform Commission released a report in April this year which found that 90% of prefecture-level cities in the country are planning new urban development projects, and in some of these cities the size of the new areas are up to seven or eight times that of their existing urban districts.’
‘From 2008 to 2012, the total area of all official Chinese cities increased by 9,700 square kilometers, equal to 50 new cities the size of Wenzhou, a prefecture-level city in southeastern Zhejiang province. The total population of urban districts in China however, only rose by 35 million during the same period, far less than the 97 million required to meet the national standard density ratio.’
‘China’s weakest developers are getting weaker as Agile Property Holdings Ltd. became the latest company to struggle with debt repayments.’
‘The number of publicly traded real estate firms with liabilities exceeding equity jumped to 133 out of 334, from 57 in 2007, Bloomberg-compiled data show. Notes of Guangzhou-based Agile were the worst dollar bonds in the industry in Asia in the past month losing 136 percent in annualized terms, after its chairman was confined by prosecutors and it tried to extend loan maturities. The yield premium on China property debt has risen 44 basis points since Sept. 30, the most in emerging Asia after Indonesia, according to Bank of America Merrill Lynch indexes.’
‘Standard & Poor’s cut its rating on Agile deeper into junk territory yesterday to BB- from BB, citing the rights-issue cancellation and chairman’s detention. The company’s $700 million of 8.25 percent perpetual notes, sold to investors at par in January 2013, traded at 68 cents on the dollar yesterday, BNP Paribas SA prices on Bloomberg show. They touched 67.5 cents on Oct. 10, a record low.’
‘The fallout from Agile has dragged down other offshore dollar-denominated Chinese property bonds. The 8.25 percent 2019 notes of KWG Property Holdings Ltd. fell to 93.7 cents on the dollar, the lowest since issuance in July, according to Composite Bloomberg Bond Trader prices. Guangzhou R&F Properties Co.’s 8.5 percent 2019 bonds sank to 95.1, a seven-month low, according to CBBT prices.’
‘Among all the companies rated by Moody’s, Renhe Commercial Holdings Co. has the highest default risks, according to Tsang. The developer of underground shopping centers didn’t add to its existing 22 shopping centers in the first six months of the year due to heightened competition, according to its interim report.’
‘The builder has $300 million of bonds due in May 2015. The notes have slumped to 83.6 cents on the dollar according to data compiled by Bloomberg. The yield on the notes jumped 476 basis points this month to 48.19 percent, the highest since May, according to data compiled by Bloomberg.’
‘A person who answered the phone yesterday after business hours at Renhe said no one was immediately available to comment. “Based on the company’s current liquidity, it’s difficult for them to fully repay the maturing bonds,” Tsang said.’
I’ll be the first to venture a guess that Chinese investors are among the most numerous owners of California ghost town real estate. It just has to be so.
‘Vietnam businesses continue to shut down, suspend operations’
‘The Business Registration Department at the Ministry of Investment and Planning listed 48,330 businesses as dissolving or suspending operations in the first nine months of this year, up 13.8 percent year on year, according to news website Thoi Bao Kinh Te Saigon (Saigon Times).’
‘Those businesses had a combined registered capital of VND408,146 billion (US$19.26 billion)–including VND55.4 trillion ($2.61 billion) from those which completed dissolution procedures or had been definitively eliminated from the economy.’
‘The finance ministry gave a darker picture by announcing that more than 70,000 businesses had dissolved, gone bankrupt or ceased operating during the first nine months of the year. Only around 53,000 new businesses opened during that period, the ministries said, noting that the figure was down 8.7 percent from the same period last year.’
‘The situation has grown even more worrisome of late. Figures from the investment ministry showed a 16.3 percent drop in the number of new businesses and 32.7 percent decline in the total value of capital registered between the second and third quarters.’
“Tens of thousands of properties across the Southland that were purchased before 2008 were delayed being foreclosed on due to the California Homeowners Bill of Rights, which was enacted in Jan. 2013, said RealtyTrac VP Darren Bloomquist.”
“Homeowners Bill of Rights” = Banker’s Holding Pattern
‘KUALA LUMPUR: Adam Mukhlis has had it. The 34-year-old does not want to think about buying a house in the near future. He would rather live with his parents-in-law. Five years ago, he bought an apartment unit in Kajang for RM140,000. His loan tenure was 20 years with a monthly repayment of RM900.’
‘He was unable to settle his monthly dues on time due to unstable finances. Eventually his property was auctioned off. “Don’t buy a house when you have only started working because you don’t know how long you can keep at it. It doesn’t matter if you are single or with a family, life in the city is challenging for all. The salary may be higher, but so are the needs,” was Adam’s advice.’
‘Perhaps there are many in the same boat, but the young should not despair. What they need is to be less choosy about the kind of property they want to own and practice good financial management. This is the view of Rohaniah Noor, a real estate consultant with Rina Properties. “Many young graduates earn between RM1,500 and RM3,000 a month. It is not difficult to buy a house on that salary if they are money wise,” she said to Bernama.’
‘From Rohaniah’s observation, the main problem among the young was their mindsets. “They want to live large too quickly. They want the latest gadgets, to eat out often at fast food joints and fancy restaurants and spend without a proper budget. At the end of the month there would not be enough to save. It is difficult to put down the deposit for a house without savings,” she said.’
‘The young were also inclined to buy a car first with a monthly instalment exceeding 30 to 40 per cent of their salary, she said. “And then we have credit card debts. These other high financial commitments are what makes it difficult for them to get a housing loan.” she added.’
‘While the oil and gas industry grows on the eastern plains of Weld County, its workers are snatching up housing in and around Greeley. And builders, the few local ones left from the Great Recession, are starting to count on the steady stream of industry workers buying up new homes.’
“It’s exciting to see what it’s doing for people who weren’t making the money they are now,” said Robbie Miner of the first-time homebuyers he’s been able to put into a Baessler Home.’
‘Miner sells exclusively Baessler Homes for Sears Real Estate and reports that so far this year, 75 percent of their clients in new homes are tied to the oil and gas industry. The company will end this year having built 90 units, and owner Jamie Baessler expects to build 115 next year. “This will be the fourth year in a row of a record for us,” Baessler said. “We squeaked out our biggest year ever in ’11, and ’12, ’13, ’14 continued to build on that. So ’15 will be another 30 percent growth.”
‘The September median sales price in the Greeley/Evans area was at $195,250, down slightly from a July peak of $206,500, said Chalice Springfield, CEO and managing partner of Sears. Just three years ago, the median price in Greeley was $130,000 after hitting a previous all time high in 2005 of $169,500, she said. “We’ve had 10 to 20 percent gains every month,” Springfield said. “Our 5 percent gain in September was the lowest, but it’s still good.”
“I’ve been in the market for 30 years, and the market has never been like this,” said Jim Dech, owner/broker of Coldwell Banker Plains Real Estate. “There are multiple offers, values are going up rapidly and rentals are out of site now. Economists are saying we probably have five years of good growth now the way the economy is rebounding.”
‘While summer is the traditional hot selling season, sales have only cooled slightly since, the agents agree. “It’s only slowed a little bit,” Dech said. “We have a large pool of buyers, and sellers are holding on because values are going up. Toward the end of the year, I think it’ll keep going, depending on how severe the winter is. People are building all over.”
‘All agree the momentum will continue next year.’
‘But prices are only bound to go up as builders work through lots bought at more reasonable prices. Lot prices are expected to go up immensely. “The next batch of lots will be developed lots (and they’ll sell for) not less than $65,000, so we’re looking at 50 to 75 percent increase on land alone,” Miner said.’
“‘All agree the momentum will continue next year.’” Regardless of falling oil prices?
Our friends live in Fort Collins no offer on their 4,000 ft. house in 4 months and two price reductions, Greely has a hot market (?) ever been to Greely I have, if you want to get caught in a housing trap buy there, I suggest rent, make some quick money in your job, then run away as fast as possiable.
Greeley was “hot” because houses were 135K and there were new oil jobs. Now houses are 200K and the oil jobs might go away.
Greeley is different from its neighbors: Loveland and Fort Collins, both of which are much more “white bread” than Greeley.
Ft. Collins has been trying really hard to become Boulder Jr.; but unlike Boulder it hasn’t been able to create the same jobs base. The place looks far more prosperous than it actually is. I’ve also noticed that tech jobs at the Fort pay 10-20% less than comparable jobs pay in Denver.
Excellent take Colorado, many Ca. Residents bought Fort Collins 2005 to 2007, many either took a loss or are still there wondering if they will ever break even.
Ft Collins-Loveland you are right, they tried hard to make it a Boulder county it never panned out.
Greeley = Cow smell = Monfort
Ft. Collins is what we used to call Ft. Fun back in the college days.
Colorado in a bubble - will pop eventually and as noted here on HBB - the last one holding the bag will be sh..ing in their pants.
“Our friends live in Fort Collins no offer on their 4,000 ft. house in 4 months and two price reductions…”
Former boss’ two sons took their Seattle-Tacoma equity gains to Colorado Springs back in 2007, and left it behind when the job market spit ‘em both out. I remember their pride with that equity as if they were fugg’n geniuses. Then crater. The silence was deafening.
wonder how many paid off their student loans with those gains…….bet not many
It’s best to ride out your student loan debt at a low rate of payments, as it is ultimately forgivable.
A few options for student loan forgiveness
Dear Liz: I have a rather ugly student loan predicament. You mentioned “the possibility of forgiveness” in a recent column. I feel very strongly that I am deserving (if I dare use that word) of partial or full forgiveness of my undergraduate loans, although the loans from my graduate studies sting quite a bit too. I am not sure whom to contact to tell my story. Do I ask my lender, or do I contact the federal government education department? I get beyond frustrated talking to my lender, as they have employees who can only read from a script and can never help with particular issues.
Answer: You don’t win federal student loan forgiveness with an effective sob story. You get it by volunteering, working in a high-need area or following the relatively new rules for erasing remaining balances after many years of on-time payments. You also can get your federal (but not necessarily private) loans discharged if you’re totally and permanently disabled, you die or your school closes before you get your degree.
…
ben, you lived through the texas oil bubble and bust back in the day?
it’s no different here. greeley = crater
Gas was selling yesterday for $3.219 at the local CostCo — a level not seen around here for years.
Gas
$3.02 in Costco here in Las Vegas - come on $2+.
Business
Oil
Low oil price means high anxiety for Opec as US flexes its muscles
Motorists, airlines and industry are enjoying low energy costs, the US is relishing its reduced reliance on the Middle East – and Opec is wondering how to reassert its authority
Terry Macalister
The Observer, Saturday 18 October 2014
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As many know on this site I’ m a believer in homeownership but I also didn’t make money in my life by being blind to a problem.
The recent so called good news that housing rose again in Sept. and that the recovery is slow but steady? In my travels and actually making a study of trends and what may hppen going forward, I frankly see no recovery.
Homes new and resale are lingerling in most cases many months, loans are difficult to obtain, buyers are scared of another bubble, wages are very flat, builders are not reducing prices, sellers grossly underwater want to be bailed out.
Most RE agents continue to encourage over priced property to be listed hoping to convince sellers to drastically reduce once they get the listing.
All this is confusing and smoke and mirrors for the most part, the fundamentals of buying and selling arevout the window, desperation is driving decisions this is a recipe for another disaster in housing market.
Prices are falling my friend. Get over it. Worse yet housing demand is at 20 year lows and falling.
I absolutely agree, it’s funny to see prices listed as if its Monopoly money. I think there are sellers that are just testing the waters and see if there a greater fool to buy their shack. They don’t necessary need to move but if someone willing to pay double the price, sure why not. I see listings in my area listing at 800k when a few months ago they bought for 655k. I also do see serious sellers that price the property right and sells in 7 days.
Define “priced right”.
It’s reasonable compared to the rest of the homes selling in the neighborhood. About 280 per sqft for 2000 sqft home
You’re dreaming considering we’re profitable building at $55/sq ft.
And if it’s priced $280/sq, it’s not selling. Ever.
I don’t agree with you very much HA, but I will admit that demand is at a historic low, folks rather watch a snail cross the street then look at new or reale homes.
whether you agree with me or not has no bearing on the data.
Stick with the data.and remember houses never pay you back. They take money from your wallet every day you own them.
‘Mr Debelle, who is also chief of financial markets at Australia’s Reserve Bank, said any sell-off could be amplified because nominal interest rates are already zero across most of the industrial world.’
A point I’ve made. At least Greenspan raised rates. At least Greenspan warned people house prices were getting too high. The BIS warned of the bubbles way back and they’ve been warning again. Yet Yellen and company have had their foot on the gas to this day.
” in the FCT, because the income of most Nigerians is not enough to enable them to purchase these houses…”
$1000 a month rent in a place where middle class family income is $500 a month.
You might just have a bubble.
This one is for HA:
‘A wannabe Playboy model and a male associate were arrested by federal agents after flying into a California airport from Las Vegas in a private plane loaded with a massive cache of Ecstasy pills and powder, according to court records.’
‘Boseley, who has worked as a real estate agent in Vancouver, is a tattoo enthusiast who once posed for a series of naked photos during a Playboy open call. Her Facebook page is filled with assorted affirmations and musings, like “Don’t judge someone because they sin differently than you.” In her last update, on October 3, Boseley reposted a graphic announcing, “Yes, I’m crazy. No, you can’t have some.”
Drug trafficking, pimping, theft. Realtors seem to be involved in one or more of these activities.
A new forecast predicts that Southwest Florida’s single-family home prices will continue to inflate over the next three years into bubble territory.
what county in FL has declining inventory ?
none that I can see.
Further…. what county is inflating? The data shows falling prices in more and more areas.
This is a bit perplexing, Austrian Economist Robert Wenzel at Economic Policy Journal is saying that with apartments leading September’s housing-starts, this Winter may be the best time to buy a house to live in. Competition will be low, the sellers a bit desperate, and most importantly, with currently low interest rates and what he says is a long-term perspective of spiraling inflation, any house bought now would be what he calls, a bargain. I didn’t expect to see him take that outlook.
Not in the US. Remember… current asking prices of resale housing is 300% higher than long term trend and 2x construction costs (lot, labor, materials and profit).
Housing prices have a long way to fall.
” spiraling inflation”
Australia has something quite different than that on deck. The resource bubble is rather over.
“Mr Debelle, who is also chief of financial markets at Australia’s Reserve Bank, said any sell-off could be amplified because nominal interest rates are already zero across most of the industrial world. ‘That is a point we haven’t started from before. There are undoubtedly positions out there which are dependent on (close to) zero funding costs. When funding costs are no longer close to zero, these positions will blow up,’ he said.”
Home prices in the US at current levels are in particular dependent on zero funding costs.
Heres a good one. OMG I guess the wet/watered done pavement makes it worth over 1million more after it was bought for 200k. LOve the fresh squares of grass. Can we say greed flipper at its finest.
http://www.zillow.com/homedetails/2470-Walnut-Ave-Venice-CA-90291/20448936_zpid/
WOW! you definitely win, that beats by far the most outrageous flips I’ve ever seen…$200K might work in coastal Calif…but $1.45 MILLION???
Help is on the way!
U.S. News
Mortgage Giants Set to Loosen Lending
Fannie, Freddie Near Deal to Lift Limits; Concerns Persist
Fannie Mae and Freddie Mac have recouped billions of dollars in penalties from lenders over charges of bad loans. Associated Press
By Joe Light
Updated Oct. 17, 2014 6:56 p.m. ET
Fannie Mae , Freddie Mac and mortgage lenders are nearing an agreement that could lower barriers and restrictions on borrowers with weak credit, a move that would expand access to home loans amid the sluggish housing recovery.
The move by the mortgage-finance giants and their regulator, the Federal Housing Finance Agency, would help lenders protect themselves from claims of making bad loans, according to people familiar with the matter.
Fannie and Freddie are also considering programs that would make it easier for lenders to offer mortgages with down payments of as little as 3% for some borrowers, the people said. That would be a reversal for the loan giants. The moves could be announced as soon as this coming week.
Regulators and White House officials have struggled to expand access to mortgages, which have been hard for some borrowers to get since the financial crisis despite a sharp rise in home prices. But the likely moves by Fannie and Freddie could provide kindling for critics who worry about repeating some of the mistakes that led to the housing boom and bust.
The agreements wouldn’t end the debate over the future of Fannie and Freddie, which were taken over by the government near the height of the crisis in 2008. Earlier this year, a bipartisan Senate plan to replace Fannie and Freddie as part of a broader housing-finance overhaul stalled.
The latest moves underscore just how much the government is relying on Fannie and Freddie to help increase the supply of credit. Steps to reduce down-payment standards would further signal a turn away from previous efforts to shrink the influence of the two mortgage giants.
The potential agreement “would allow credit to flow more freely to lower- and middle-income households,” said Mark Zandi, chief economist at Moody’s Analytics. “That’s vital to getting the housing recovery moving forward.”
But Mark Calabria, director of financial-regulation studies at the libertarian Cato Institute, said: “This is the sort of thing that gets people underwater. Three percent [down payments] can disappear and become zero real quick.”
While Fannie and Freddie don’t make loans, they buy them from lenders, package the loans into securities and then give guarantees to make investors whole if borrowers don’t repay.
Fannie and Freddie have recouped tens of billions of dollars in penalties from lenders in recent years over claims that the lenders made underwriting mistakes on loans they sold to the mortgage giants during the run-up to the housing crash. Lenders have blamed those penalties, in which lenders were required to buy back mortgages, for prompting lenders to make loans only to borrowers with near-pristine credit.
In previous years, Fannie’s and Freddie’s regulator had tried to shrink their outsize role in the mortgage market. However, under new director Mel Watt, who took office in January, the FHFA has turned to expanding mortgage access, partly to ensure that tight credit doesn’t stifle the housing recovery.
The FHFA has made several previous attempts to ease lenders’ concerns. Beginning in 2013, the agency said lenders wouldn’t have to buy back most loans where the borrower didn’t miss any payments for three years. In May, the FHFA said borrowers could miss two nonconsecutive payments within three years.
In both cases, the FHFA exempted some mistakes such as fraud. But without clear definitions of what mistakes met that threshold, lenders said they remained wary of expanding mortgage access.
The new agreement would clarify which mistakes should constitute fraud, giving greater confidence to lenders that they won’t be penalized many years after a loan is made. Still, lenders and regulators must reach an accord on what to do if they disagree on some problems, which could involve using a third-party arbiter to resolve disputes.
Mr. Watt is scheduled to speak at a Mortgage Bankers Association conference on Monday.
“Assuming Director Watt announces some new framework to give better clarity for lenders to extend credit to more qualified families, this will be a good step forward for the housing market,” David Stevens, the trade group’s president, said in a statement.
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Why would you want to entice people with weak credit to buy houses at the Echo Bubble peak? Isn’t this likely to lead to financial ruin of more lower- and middle-income American families?
I suppose since not everybody was financially ruined by the Great Recession, why not throw a few more under the bus.
3 percent down is all it will cost those with weak credik to get into a house.
Economy
Mortgages could become easier to get under changes being mulled by regulator
Regulator overseeing giants Fannie and Freddie wants to bring more buyers into housing market. (Keith Srakocic/AP)
By Dina ElBoghdady October 17 at 8:25 PM
The regulator that oversees Fannie Mae and Freddie Mac is considering policy changes that aim to make credit more readily available to potential home buyers, many of whom have been shut out of the market by the stiff lending requirements put in place in the aftermath of the housing bust.
The Federal Housing Finance Agency is discussing whether the two mortgage giants should lower their down-payment requirements from 5 percent to 3 percent in some cases, according to people familiar with the matter who asked not to be named because they were not authorized to speak about it. Freddie scrapped the 3 percent minimum a few years ago, and D.C.-based Fannie did the same more recently.
The boost in down payments was part of a broader initiative to shrink the government’s role in the mortgage market — a push that the FHFA abandoned after Mel Watt took over as its leader this year. Watt has said his agency no longer plans to have the government-controlled companies retreat from the housing market, asserting that Fannie and Freddie must help keep home loans flowing to the public.
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Would a Republican or a Democrat as the next guy in the WH be more likely to end the government’s role in mortgage lending? I may base my vote accordingly (but doubt that either party is up to the task…).
My guess is that they wouldn’t.
Market mayhem: What’s driving the global economic breakdown
Nathan VanderKlippe, Joanna Slater, Brian Milner and Nicolas Van Praet
The Globe and Mail
Published Friday, Oct. 17 2014, 6:21 PM EDT
Last updated Friday, Oct. 17 2014, 7:32 PM EDT
Cracks are showing in the global economy. Financial markets gyrated wildly this week, as investors took stock of the latest indicators and realized all is not well in the world.
Ever since the financial crisis, the global economy has never operated at full throttle, but there have been several notable bright spots. Now some of those are starting to lose their lustre.
In China, a sudden drop in steel demand is just the latest sign of a broader slowdown that is sending ripple effects around the world. In Germany, a sharp pullback in exports is raising fears that the nation can no longer be counted on as Europe’s economic engine. From Brazil to Russia, emerging markets have failed to live up to expectations that they would provide the next wave of global growth. Here at home, the energy-fuelled Canadian economy is sure to feel the chill of sinking oil prices, but as the loonie tumbles in tandem, exporters are hoping for a better competitive footing in global commerce.
A key wild card is the U.S. economy, which has shown vigour this year. The question is whether that strength can last as other global heavyweights increasingly look tired.
For a country whose growth has seemed invincible, it was a number just short of heart-stopping. A few weeks ago, the China Iron and Steel Association reported that domestic demand was no longer rising, as it has in an uninterrupted streak since 2000. It was, instead, falling. In the first eight months of 2014, steel consumption shrank 0.3 per cent.
For investors, miners and even foreign governments whose revenues depend heavily on its demand, China has become the land of eternal economic sunshine. But nearly 40 years after it began to open to the rest of the world, it is increasingly beset by shadows.
Officially, there is little to worry about. Government statistics show growth not far off a 7.5-per-cent gross domestic product increase target for this year. And come December, chances are “they will say, ‘oh guess what? We just made 7.5 through a series of fortunate circumstances’ – like our ability to manipulate data,” said a sarcastic Victor Shih, an associate professor at the University of California at San Diego who has for years raised alarms about the country’s economy.
“At the end of the day, you have to rely on more objective data. And if steel and electricity consumption are both falling, it really suggests the Chinese economy is doing a lot weaker than what the official numbers suggest.”
In August, Chinese power consumption contracted 1.6 per cent; it was up again 2.7 per cent in September, but still far off the roaring double-digit increase of times as recent as 2013. Housing prices across the country are sinking, back-pedalling 2 per cent month to month in some major cities. Both new construction starts and home sales volumes are down roughly 11 per cent this year. Governments have scrambled to get people buying again – reducing transaction fees, cutting rates, even banning publication of negative statistics in some cities. But the price decreases have only accelerated.
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BEN!!!!!
This is what is going on in Denver these days. A f…king lottery for land. Albeit in a nice area - but still a friggin lottery for the ‘privilege’ of building in the future - THIS IS UTTER INSANITY!!!!
It is gonna blow folks - see this message that came in on my email this morning…..
Exciting news! We are officially ready to start selling lots in phase II!
We will be hosting a lottery next Saturday October 25th at 9:00AM for lot’s 43, 42 and 63 (Lot map can be viewed at http://www.cardelhomes.com ). Details of the lottery and pricing information to follow next week.
‘Fannie Mae, Freddie Mac and private mortgage lenders are nearing an agreement that may lower restrictions on borrowers with poor credit, in an effort to boost lending amid a tepid housing recovery, according to published reports.’
‘The two mortgage giants are considering programs that would make it easier for lenders to offer mortgages with down payments of as little as 3% for some borrowers.’
‘The changes, which could be announced this week, would help banks protect themselves from future claims of making bad loans, the published reports said.’
Same as it ever was. Run out of buyers, lower standards. Get the poorer people in at the top. Yet more proof that this a government and central bank bubble. They own it completely.
“They own it completely.”
This.
“They own it completely.”
Wouldn’t that require them owning responsibility for all the low-income households that have been and remain to be financially ruined thanks to ‘affordable housing’ programs?
‘Worker paychecks flat since 1979′
‘Fri, Oct 17, 2014′
What have house prices done since 1979? The housing bubble is bigger than most think.
That sure puts my career into perspective, as 1979 is before I entered the workforce. I can recall back in 1979 feeling depressed about employment prospects, and in retrospect, perhaps my pessimism was justified, even though I have actually worked in some capacity, almost all full-time, in every year since 1980.
even though I have actually worked in some capacity, almost all full-time, in every year since 1980.
With something better than a flat paycheck, one would hope?
Too bad that the moderator with painted hair wouldn’t STFU and let the young lady talk.
“The global financial markets are dangerously stretched and may unwind with shock force as liquidity dries up, the Bank of International Settlements has warned. Guy Debelle, head of the BIS’s market committee, said investors have become far too complacent, wrongly believing that central banks can protect them, many staking bets that are bound to ‘blow up’ as the first sign of stress.”
So far all the evidence I have seen suggests central bankers stand ready to protect investors at the first sign of stress.
Is there any available evidence to the contrary?