December 21, 2014

For Real Estate, The Winter Is Coming

It’s Friday desk clearing time for this blogger. “Orlando is primed to see an exodus of investors who bought thousands of houses in the area during the downturn, according to RealtyTrac. Winter Park real-estate agent David Welch has helped cash investors purchase Orlando-area houses in recent years. He said that so far, few have started to sell off their assets, but that prospect looms large. ‘It was great having them come in and grab these things, but at some point they’re going to want to divest themselves,’ Welch said. The investors aren’t likely to collaborate on how they sell off their properties, so it’s uncertain how the market will be affected, Welch added.”

“Wielding the biggest clout among the investor-owners are four institutional hedge funds: Colony American Homes, Blackstone, American Homes 4 Rent and Progress Residential. Holding more than 700 houses in the metro area, those companies have a strong stake in Orlando’s continued housing recovery. ‘I think it’s going to have a chilling effect on any housing market,’ said Daren Blomquist, vice president of RealtyTrac. ‘They are purchasing fewer properties. Demand is weakening, and supply will increase. In the best case, it will be more of a balanced market, but it could turn quickly to a buyers’ market.’”

“A Scottsdale investor has bought 106 metro Phoenix rental houses for $16.8 million, or about $158,255 a home. Scottsdale-based Pacific Rim Properties purchased the houses from a Denver group called Wymont. The deal is one of the biggest sales of a rental-home portfolio since the investor home-buying spree of 2010-12. Of the 106 houses sold, 101 currently are leased. Most of the homes were built in 2004 and have four bedrooms. The purchase price-per-house is about $50,000 less than metro Phoenix’s current median home price.”

“Investing in Valley houses and other markets hit hardest by the housing crash was a big Wall Street play during the downturn. Real estate market watchers are tracking what investors do with their many Valley rentals houses because if too many try to sell at the same time, it could push down home prices again.”

“Kevin Maloney has been a prominent real estate developer in New York for decades. Maloney himself is surprisingly pessimistic about the luxury condo market — at least for someone who is investing millions in it. ‘Citywide, when you get into apartments above $25 million, the air gets very thin very quickly,’ he said. ‘At any one time there are maybe a half dozen people in the city looking for a $50 million plus apartment, and there’s now probably 60-70 of those apartments on the market. There’s going to be some downward pressure at the very high end.’”

“Extell’s tower One57 has only sold one unit in the third quarter — a pace at which it would take the building six years to sell out. Sales at Harry Macklowe’s 432 Park Avenue have reportedly also slowed. With several more condo towers set to hit the market in the coming years, some observers already predict a crisis. ‘If real estate was a publicly traded company and I could short its stock, I would very happily short 57th Street,’ Stonehenge Partners’ CEO Ofer Yardeni said recently. ‘The market there has stopped. It hasn’t just declined five percent or 10 percent. It’s just stopped.’”

“Local and national economists have given upbeat projections about the economy for next year, but with housing activity down, ‘it is hard to feel warm and fuzzy about the 2015 housing market in Las Vegas,’ Home Builders Research President Dennis Smith said in the report. Sales have plunged this year as would-be buyers, saddled with credit woes, flat wages and sticker shock, can’t pay developers’ high listing prices. Moreover, despite ‘what some press releases suggest,’ the resale market has also been slumping, Smith wrote.”

“Real estate agents are describing Las Vegas as a buyer’s market, and listings of previously owned homes no longer get multiple offers or bidding wars, according to Smith. Sales incentives are common, as buyers’ agents get follow-up calls from sellers’ agents asking what the sellers can do to help get acceptable offers. The resale business is slowing as investors, faced with fewer bargains, pull back from Las Vegas.”

“Saskatchewan will see a slight decline in home sales in 2015, thanks to a large supply of listings on the resale market and slowing demand, according to the latest forecast from the Canadian Real Estate Association (CREA). Consumer confidence and job growth in the Prairies may come under downward pressure depending on how far oil and non-energy commodity prices decline and on how long they remain low. ‘The effect of lower oil prices on Canada’s housing markets is something of a wild card at the moment,’ said Gregory Klump, CREA’s chief economist.”

“Some UAE developers are taking a closer look at their off-plan sales to see the level of their exposures to overseas buyers, and especially to those from Russia or one of the CIS states. For instance, with their currency in a free fall against the dollar, Russian buyers with exposure in Dubai’s real estate will have to use up more of their roubles to stick to their dollar/dirham commitments. In summer, just when the Russia-Ukraine strife was heating up, there was reportedly a Ukranian buyer who decided to forego the down payment he had made on a premium off-plan purchase made in Dubai.”

“‘The currency volatility will mean less reliance on overseas buyers, especially from those markets where they are at a disadvantage because of a strong dollar,’ said Anand Lakhiani, Director at Indigo Properties.”

“Wealthy Russian homebuyers are vanishing from London after driving a wave of foreign investment that lifted property prices to records. Only the oligarchs persist. The number of Russians registered through Christie’s International Real Estate to buy homes in the city dropped by 70 percent in a year, said Giles Hannah, the broker’s senior VP. Russian buyers have been ‘eliminated virtually overnight,’ said Andrew Langton, chairman of luxury-property broker Aylesford International Estate Agents. ‘The sanctions are really beginning to bite on expensive property in London, on top of all of the tax which the government introduced in the autumn budget. It’s killed the golden goose.’”

“Slumping prices of the nation’s key exports of coal and iron ore have hit government revenues, with Australian Treasurer Joe Hockey announcing that the federal budget would not be in surplus until the end of the decade. ‘In the last six months unforeseen events have hit the Australian economy. In particular, we are now witnessing the largest fall in the terms of trade since records began in 1959,’ Hockey said in a statement.”

“The message for policymakers was clear: the party is over. ‘Broadly speaking, the balance of risks facing the Australian economy contains more substantial downside than upside uncertainties. External risks, chiefly from commodity markets, combined with speculative activity in the housing sector and uncertainties in the responsiveness of non-resource sectors, could conspire to generate a period of weak macroeconomic activity,’ the OECD said.”

“In Dongguan, a sprawling factory city, one real estate developer has cut prices by 15 percent, offered $1,600 worth of free appliances to move apartments. In Hangzhou, families that paid in advance for new apartments have occupied a stalled, half-finished complex. And in Changsha, a bustling river town where developers built a forest of fancy towers, a third of the modern office space is empty and families are mulling whether to buy in a weakening housing market or wait. For real estate, ‘the winter has not come yet, but it is coming,’ said Hu Yifan, the chief economist for Haitong Securities international division.”

“About $34 million in retail spending are lost annually due to a lack of economic development within a half mile radius of Danville Regional Medical Center. Danville City Council members learned this hard fact and more from a presentation on Danville’s housing market by Virginia-based CZB consultants. ‘It worked for 60 years that unless you screw it up they will come. That is true on the coasts and a handful of markets,’ said Charles Buki, of CBZ. That is no longer true for about 70 percent of the housing market, he added, including Danville. The main issue is that the housing market has excess supply. ‘Every place in America is struggling with this,’ he said.”

“Falling gas prices are a good thing, but falling home prices are not. Here in Houston it is real concern. Realtor Lauren Taylor says as oil prices fall, home sellers are worried about their investment. ‘I think that when the amount of people moving goes down a lot more than it is now, that’s when I have a concern,’ Taylor said.”

“Ted C. Jones is the Chief Economist Stuart Title. He says Houston added more than 120,000 jobs in 2014 and those people fueled the housing boom. The forecast for 2015’s job growth is not as strong. ‘The good news is for prospective buyers out there, you may look at a home and decide three hours later to offer a contract on it and it may not have multiple offers like they have in the past,’ Jones said.”

RSS feed


Comment by Mr. Banker
2014-12-19 05:55:15

“Slumping prices of the nation’s key exports of coal and iron ore have hit government revenues, with Australian Treasurer Joe Hockey announcing that the federal budget would not be in surplus until the end of the decade.”

“… federal budget would not be in surplus until the end of the decade.”

Bahahahahaha … Australia can plays kick-the-can just as well as … just as well as everybody else.

‘In the last six months unforeseen events have hit the Australian economy.”

Bahahahaha … “unforeseen events” … bahahahahahaha … these “unforeseen events” should have been apparent to a … apparent to a twelve-year old paperboy!

“In particular, we are now witnessing the largest fall in the terms of trade since records began in 1959,’ Hockey said in a statement.”

Bahahahaha … perhaps this is because EVERYBODY IS BROKE!

Everybody borrowed like fools and spent like fools and world trade boomed as a result and it was decided by fools that this would go on forever - FOREVER! - and world trade would boom forever - FOREVER! - but something happened on the way to forever and this something-that-happened sounds a lot like and smells a lot like a debt-powered - a DEBT POWERED - global economy HITTING A WALL!

And when a debt-powered economy, whether it if a personal economy, a family’s economy, a state’s economy, a country’s economy or, in this case, the global economy - THE F@CKIN’ GLOBAL ECONOMY! - hits the wall then A WHOLE LOT OF PEOPLE GET SCREWED.

Except bankers, bankers will not get screwed; Bankers will do alright, especially those bankers who have convinced numerous fools to anoint them with the status of “TOO BIG TO FAIL”.


I have seen the future … and it works! At least it works for me.


Comment by Whac-A-Bubble™
2014-12-19 07:01:32

Bankers gonna inflate till ordinary peops can’t afford nothin’

Comment by Mr. Banker
2014-12-19 07:09:46

Bankers gonna inflate till ordinary peops can’t afford nothin’

That’s Plan A.

After “ordinary peops can’t afford nothin’” then it’s time for Plan B.

(So, what’s Plan B? Bahahahahaha … stay tuned, you are about to find out.)


Comment by Mr. Banker
2014-12-19 07:14:26

Here’s a couple of hints that have to do with Plan and Plan B, the hint comes in two parts:

Part 1: Dumb them down.

Part 2: Prosper.

(Comments wont nest below this level)
Comment by Whac-A-Bubble™
2014-12-20 00:47:41

Plan B: Foreclose

Plan C:

Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.

– Andrew W. Mellon

(Comments wont nest below this level)
Comment by Mr. Banker
2014-12-19 05:58:53

“It’s Friday desk clearing time for this blogger …”

My favorite day, the day when jokes write themselves.

Bahahahaha … I should do stand up. I wouldn’t have to make stuff up, all I would have to do is stand before an audience and recite the news.

Comment by Lemming with an innertube
2014-12-19 06:32:13

you kill me.

Comment by Ben Jones
2014-12-19 07:30:21

‘The billionaire behind shopping mall developer Dalian Wanda said China’s era of rapid urbanisation will end within a decade, so he is speeding up his company’s shift towards tourism and entertainment after a US$3.7 billion (S$4.83 billion) initial public offering.’

‘Mr Wang Jianlin became China’s fourth-richest man in part by following the migration of 300 million people into cities. His Dalian Wanda Commercial Properties, which debuts on the Hong Kong Stock Exchange next Tuesday, owns 159 Wanda Plaza shopping centres across 109 Chinese cities, including 88 projects under construction.’

‘A 27 per cent drop in first-half 2014 revenue illustrates why Dalian Wanda is keen to change course now. The company blamed fewer project completions and lower selling prices, a symptom of China’s weakening property market.’

“This path (of rapid expansion) cannot be sustained,” Mr Wang said. “China’s land resources, China’s fiscal resources and China’s markets won’t be able to support it.”

Comment by Jingle Male
2014-12-20 05:13:47

Fourth richest…..159 shopping centers….of which 88 are under construction.

Gee, not much of a risk profile there (bankrupt, just does not know itv yet).

The bigger they come the harder they fall.

Comment by Ben Jones
2014-12-19 07:31:35

‘While prices on entry-level homes may be a bit daunting in other markets, Atlanta is ideal for first-time homebuyers. The average sales price in Atlanta, which was $259,557 in November, buys anything from an Intown condo to even new construction in the suburbs.’

‘The lack of inventory, fueled largely by investors snatching up distressed inventory, eased in 2014 as consumer confidence rose and more homeowners put their properties on the market. The number of homes for sale in Atlanta rose 12.6 percent between November 2013 and last month, which appears to be slowing the buying and selling process. It’s good news for buyers, who don’t feel the pressure to act as quickly as they did last year, resulting in fewer bidding wars and multiple offers. Which brings me to my next point…’

‘Inventory has a direct impact on prices. It’s a simple matter of supply and demand: when demand is high but supply is low, prices rise, as we saw in 2013 and early 2014. But when the supply starts rising and demand is steady, things generally even out. While prices have risen significantly over the past two years in Atlanta, from an average sales price of $197,000 in November 2012 to $259,000 last month, don’t assume this trend will continue.’

‘Prices fell 4.8 percent in Atlanta from July through November, which was a higher seasonal drop than we saw with last year’s 1 percent decline.’

‘While we’ve moved to a more balanced buyer/seller market, many homeowners still think we’re in a seller’s market and are being a bit overzealous on their prices. Like little kids on Christmas Eve, visions of bidding wars are dancing in their heads. But homes that are not priced appropriately are not selling, despite the buyer demand. There’s too much competition and too many “comps” (comparable properties nearby that have sold) to show what buyers are willing to pay. We’re also seeing appraisal issues when properties are priced too high.’

Comment by Ben Jones
2014-12-19 07:33:08

‘The most talked about subject in Johor over the past year must surely be the “property market”. It is rather awkward for Johoreans to be drawn into this “property talk” because only not too long ago we used to mock our cousins across the Causeway for their near obsession with dwelling places and abodes.’

‘Every time you meet a Singaporean, the conversation inevitably would switch to how the islanders are desperately yearning to “upgrade” from the republic’s Housing Development Board (HDB) flats to condominium living.’

‘Visiting our homes in Johor, they would turn green with envy as they scan the sheer space of our houses and the supposedly “incredibly cheap” prices we paid to own these landed properties.’

‘Of course, with so much land at our disposal here, we never really fancied high-rise condominium living with all the so-called luxury amenities that come with it. But the trend is somewhat changing now due in part to the irresistible influence from Singapore … what with the daily bombardment of Singapore TV advertising of new condo launches.’

‘The JB property sector, as we knew it before, has seen an unprecedented transformation within a relatively short time. The style, grandeur, sophistication and speed of these foreign companies has literally shaken the local market … to the extent that local developers are now in a daze and still not sure what had hit them.’

‘But now comes the headache. According to Mentri Besar Datuk Seri Mohamed Khaled Nordin, too many condos are now chasing too few buyers. Consequently, the state government has decided to put a freeze on new approvals.’

‘It seems some 86,000 units of up-market apartments have been approved for construction, although Johor only needs about 26,000 units to satisfy demand.’

‘This is a sector heavily regulated by the state and federal governments, with a thousand-and-one fees, dues and charges levied on developers at every stage of the tedious and protracted project approval process.’

‘But the bottom line is that the government makes good money from this industry, which is why the local authorities saw no reason to check, monitor, stagger or even regulate the number of condo units coming into the market.’

‘Like a conveyor belt endlessly churning out goods in a factory, they kept giving their stamp of approval for serviced apartments and condos, with no fear of the consequences of a glut.’

‘Only now have they come to their senses. But instead of taking responsibility for this sorry state of affairs, they are putting the blame on the so-called “greedy” developers.’

Comment by Ben Jones
2014-12-19 07:35:08

Singapore must be a weird place:

‘HDB resale prices hit a 40-month low last month, according to data compiled by SRX Property. In May 2013, one month before the government introduced Total Debt Servicing Ratio (TDSR), National Development Minister Khaw Boon Wan told participants at an Our Singapore Conversation dialogue on housing, “If housing prices keep rising, it won’t be good. If we can maintain them or even lower them by a few per cent, for example 5 per cent, that’s good. When I came into MND, that was my target.”

“HDB prices have declined more than that of private resale flats because the government has been able to change both supply and demand in the HDB market whereas it has only changed demand on the private resale side,” said Jeremy Lee, Chief Technology officer of SRX Property.’

“From this year to 2016, MND expects 6,000 HDB upgraders to take the keys to their BTO flats each year. This number is twice that of last year. The upgraders must sell their existing HDB flats within six months of getting their BTO keys. The net result is that there is more supply in the HDB resale market. More supply puts downward pressure on prices,” explained Mr Lee.’

“There is a second way BTOs impact prices of HDBs. The government decoupled BTO pricing from the resale market resulting in lower BTO prices. As such, the BTO policy accomplishes two things. It introduces more units at below market price. This causes the price decline in the HDB resale market to outpace that of the private resale market.”

“HDBs are becoming more affordable thanks to the cooling measures and the increase in supply. A large percentage of Built-to-Order flats will be coming into the market, which will cause resale flats to have a downward pressure on their pricing,” said Tim Seow, associate marketing director of GPS, “Furthermore, the very low interest rate means it is historically inexpensive for you to finance your home.”

“Take advantage of the cooling measures to negotiate a discount, recognising that in the long run it is in everyone’s interest for your home to appreciate and give you good returns,” he added.’

Comment by Ben Jones
2014-12-19 07:36:38

A few pictures tell thousands of words:

‘When prices in the Outer-Mission appreciate 32% year-over-year, you know San Francisco real estate has had a banner year. The home above is what you can get now for the new median list price there ($749K). 2424 Alemany is a 3 bed, 2 bath, 1,470 sq. ft. home listing at $749K.’

‘But when prices surge in what used to be “affordable territory,” what does this mean to the overall stability and sustainability of real estate? This past year has been a boom year in San Francisco’s real estate, leading some people to wonder if we aren’t headed for another bust. Do we have the makings of another bubble?’

Comment by Shillow
2014-12-19 07:47:00

Beanie babies.

Comment by snake charmer
2014-12-19 08:59:04

“Some people” wonder. Yes, they do. But they don’t matter, because the mere possibility of an unearned windfall is enough to overwhelm any fact. My own paper this week had a story on surging home equity loans. Nothing could go wrong there! If all it took was corrupt political leadership and a modest investment in propaganda to for Americans to ignore the lessons of the recent past, what will we believe in next?

We are a foolish people and we will get what we deserve.

Comment by Ben Jones
2014-12-19 09:10:53

‘A young, married couple attempted to take over an estate valued over $1 million in Keystone Heights, according to the Clay County Sheriff’s Office. Authorities say the couple, Justin and Jenna Dean, removed and replaced the locks and moved into the home.’

‘The couple filed forged documents and a bogus quit claim deed on the foreclosed property, CCSO reported. Investigators discovered their crime when the bank sold the mansion and 200 plus acres of land lawfully to another couple. “They were upset because they were coming for a closing and then they had to come meet with us,” said Clay County deputy Steven Dugger.’

‘Investigators say the couple boasted about their million dollar home on Facebook and that helped investigators build their case. “There were pictures of them in the pool on social media,” said Dugger. “The only furniture in the house was a pool table.”

Comment by Ben Jones
2014-12-19 07:38:13

‘But if the Fed reducing leverage at banks stabilizes the financial system without deterring the economy, why are other regulators so adamant on increasing leverage for homeowners? After all, that’s the practical effect of mortgage giants Fannie Mae and Freddie Mac giving the green light to homeowners to borrow $97 for every $100 used to purchase a home.’

‘The Federal Housing Finance Agency says that qualifying loans must be fixed-rate mortgages, strongly underwritten to ensure ability to pay. “These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices,” said Mel Watt, director of the FHFA. However, buyers with credit scores as low as 620 can be eligible for the program.’

‘Contrary to some housing advocates’ claims, lowering down-payment requirements does increase risk of default. Dean Baker confirmed this by looking at the advocates’ own studies. A Center for Responsible Lending report shows that default rates on loans with down payments between 3 percent and 10 percent are 45 percent higher than loans with higher down payments. A “fresher” analysis from the Urban Institute showed a similar discrepancy, which the study masked by comparing default rates between 3 and 5 percent. If you do a more legitimate comparison, you find that low down payments are far more likely to default. And these are the studies from advocates!’

‘The bigger fear is that, once you open up the credit box, you won’t be able to stop yourself. Maybe it starts by targeting specific “responsible” borrowers, but there’s always someone on the other side of that line who could be brought in by pushing the envelope a little more. This underwriting drift put us in the predicament we saw during the housing bubble’s implosion.’

‘As Kevin Drum points out, excessive leverage was the main driver of the financial crisis. When it comes to banks, regulators and experts seem to understand that. But when it comes to homeowners, they ignore that lesson, even though leverage on consumers is no less dangerous, and possibly even more so, than leverage on financial institutions. In fact, overleveraging homeowners with debts they cannot afford will unquestionably backfire on banks over time.’

‘Underwriting standards have eased for just about every financial product except mortgages, and the government, wanting to reverse housing market sluggishness, wants to push mortgages over the edge as well. That drive for short-term economic gain simply generates unavoidable risk. We would justly decry the abandonment of bank leverage rules; the same rules should apply to protect homeowners.’

Comment by rj chicago
2014-12-19 09:46:38

Mark Hanson recent review….worth a read and has the red lights blinking big time on the housing control panel…

Comment by Puggs
2014-12-19 10:21:54

It’s as if they are trying everything they can to “take this sucker down”.

Comment by Whac-A-Bubble™
2014-12-20 00:53:28

Before they take any suckers down, they first have to set them up, with 97% LTV loans!

Next up:
- Foreclosure crisis
- Underwater borrowers clamoring to be rescued
- Bailouts
- More Democratic votes

Comment by Ben Jones
2014-12-19 07:40:17

‘The average rental apartment vacancy in Regina was at three per cent in October 2014, up from 1.8 per cent in October 2013 according to a report from the Canada Mortgage and Housing Corporation (CMHC).’

‘David McIlveen is the director of community development with Boardwalk Rental Properties. He has certainly noticed a shift in the rental market, and with higher vacancy rates, the cost of renting is no longer going up.’

“Now vacancy rates are plus-three per cent and rental rates effectively are starting to come down a little bit and the way they are coming down is through incentives,” he explained. “For instance, at Boardwalk (for) most of our buildings, we have incentives.”

‘Some of the buildings offer $100 dollars off the cost of rent for a one-year lease. A few buildings offer one month of free rent. “That definitely is an indication that the market has shifted,” he said. “If you go back to 2012 you’d probably be looking at vacancy rates that were below equilibrium and so that meant rental rates were going to be going up. As vacancy rates stayed low they kept climbing and it’s been that way for at least a few years for sure.”

‘Overall the rental apartment vacancy rate in Saskatchewan’s urban centres was 4.1 per cent in October 2014, up from three per cent in October 2013.’

‘There was one city that saw its vacancy rate jump — Estevan. Among the lowest rates in the province the previous year at 1.8 per cent, Estevan’s vacancy rate jumped to 12.5 per cent in October 2014. The city also had the one of the highest rents with an average two-bedroom apartment going for $1,240 per month.’

‘Estevan Mayor Roy Ludwig said developers are finally catching up with demand. “We have two or three different developers in town working hard and it is starting to bear fruit,” Ludwig said. “I think we are in a little bit of a lull and it has allowed the developers to catch up and now we have some extra product on the market. For a time there it was insane,” he said, adding a number of motels have also been recently built.’

“Oil companies would book rooms and pay for them just so they would have the availability and sometimes not even have them filled. It is nice to see we have some more availability.”

‘Rob Denys, Estevan’s land development officer, said there is a lot more product on the market. “The last two years in terms of multi-family development has been pretty significant,” Denys said.’

Comment by Ben Jones
2014-12-19 09:07:48

Some areas of Dubai luxury condos down as much as 30%. It’s a meltdown.

Comment by Blue Skye
2014-12-19 10:40:08

“It’s a meltdown”

I suspect it is contagious.

Comment by rj chicago
2014-12-19 09:31:23

Hi Ben:
This hot off the press here in Chicago via Crain’s Chicago Business related to investors buying up home to rent…..
Merry Christmas and thank you for this blog - it helps me alot and has kept me from home purchase this year and most likely helped me to avoid a catastrophe.

Comment by Puggs
2014-12-19 10:31:12

Check the photo gallery on the left of that article. Whoa boy, Harry Carey reincarnated as a realtor. Drunk and hitting on women…that seems about right…

Comment by Puggs
2014-12-19 11:06:42

I meant no disrespect for the deceased. I was in no way implying Harry Caray was ever drunk or hit on women.

Comment by snake charmer
2014-12-19 12:16:50

Within a day of the dedication of his statue outside of Wrigley Field, someone placed a can of beer in its hand.

(Comments wont nest below this level)
Comment by Bubbabear
2014-12-19 09:39:28

Peak housing

What people are suffering from is a lack of a medium-term memory, as what’s happening today happened in 2007/08; “Peak Housing”.

Comment by Housing Analyst
2014-12-19 11:17:56

What happened to his comments section?

Comment by Ben Jones
2014-12-19 11:42:20

Managing a comments system is incredibly time consuming.

Comment by rj chicago
2014-12-19 14:41:45

I was wondering about that as well. Used to love the back and forth between Hanson and the realtor crowd.

Comment by In Colorado
2014-12-19 09:57:17

“Orlando is primed to see an exodus of investors who bought thousands of houses in the area during the downturn, according to RealtyTrac. Winter Park real-estate agent David Welch has helped cash investors purchase Orlando-area houses in recent years. He said that so far, few have started to sell off their assets, but that prospect looms large. ‘It was great having them come in and grab these things, but at some point they’re going to want to divest themselves,’ Welch said. The investors aren’t likely to collaborate on how they sell off their properties, so it’s uncertain how the market will be affected, Welch added.”

Who exactly will buy those houses? $10/hr theme park workers?

Comment by Housing Analyst
2014-12-19 11:15:39

Very likely as price declines accelerate.

Remember….A ‘housing recovery’ is falling housing prices to dramatically lower levels by definition.

Comment by In Colorado
2014-12-20 16:26:10

That assuming they’ll still have jobs.

Comment by Housing Analyst
2014-12-20 17:40:53

Why wouldn’t they?

(Comments wont nest below this level)
Comment by taxpayers
2014-12-19 11:20:06

any positive markets left? I bet the smug has even left Austin.

Comment by Housing Analyst
2014-12-19 11:35:02

“Apartment Vacancies Rise”

Rising vacancies, falling rental rates, exploding housing supply, falling housing prices.

Comment by Housing Analyst
2014-12-19 12:53:18

Bellingham, WA Rental Rates Plummet 12% YoY

Comment by Al
2014-12-19 21:30:46


The median home value in Bellingham is $283,600. Bellingham home values have gone up 4.4% over the past year and Zillow predicts they will rise 1.4% within the next year. The median list price per square foot in Bellingham is $188, which is higher than the Bellingham Metro average of $165. The median price of homes currently listed in Bellingham is $299,000 while the median price of homes that sold is $272,100. The median rent price in Bellingham is $1,054, which is lower than the Bellingham Metro median of $1,100.

Comment by Housing Analyst
2014-12-19 21:54:53

Nobody cares what “values” are. Especially when prices are falling.

Dump that rotting shack if you can find a buyer for a fraction of what you got in it.

Comment by taxpayers
2014-12-20 07:48:38

1100rent x120(pre greenspin)= normal house price of $132,000

Comment by scdave
2014-12-20 09:48:47

I lived in Bellingham for awhile…Nice area…

Comment by Housing Analyst
2014-12-20 10:04:30

I know.

(Comments wont nest below this level)
Comment by Housing Analyst
2014-12-19 13:10:24

Queens County New York City Sale Prices Crater 11% YoY

Comment by Housing Analyst
2014-12-20 08:03:53

“Las Vegas,’ Home Builders Research President Dennis Smith said in the report. Sales have plunged this year as would-be buyers,”

Las Vegas, NV Sale Prices Crater 11% YoY; Collapse 29% QoQ As Price Declines Spread

Comment by Shillow
2014-12-20 15:06:48

29 % QoQ!!!!!! Yowza here we go.

Comment by Whac-A-Bubble™
2014-12-20 15:35:32

What goes up in Vegas goes down in Vegas.

I’ll look forward to waving at all the underwater houses as we drive through tomorrow afternoon.

Comment by Housing Analyst
2014-12-20 08:13:56

‘Orlando is primed to see an exodus of investors who bought thousands of houses in the area during the downturn, according to RealtyTrac. Winter Park real-estate agent David Welch has helped cash investors purchase Orlando-area houses in recent years.’

Orlando, FL Housing Demand Plummets 17% YoY; Inventory Skyrockets

Comment by Ben Jones
2014-12-20 08:33:14

Why do posters insist that no construction is going on in California, and especially San Francisco?

Here’s one title:

35 Dolores Now Unofficially Selling One-Bedrooms for $800K

Comment by Housing Analyst
2014-12-20 08:37:57

It’s all speculation at this point considering how little housing demand there is in CA.

Comment by Ben Jones
2014-12-20 09:38:44

‘Bay Area home sales plummeted last month to their lowest level for the month of November since 2008, largely the result of falling inventories and a calendar quirk, according to CoreLogic DataQuick. The incredible shrinking supply of homes on the market is creating a vicious cycle in which would-be sellers are reluctant to list their homes because they are afraid they won’t be able to buy another one.’

‘In San Francisco, some people who are leaving their current homes are renting them out instead of selling them. This too is keeping a lid on supply, said Patrick Carlisle, a vice president with Paragon Real Estate Group. “Rents are so high, and interest rates on loans are so low,” that if people can afford to buy a new home without selling the old one, renting it out “is a good investment,” he said.’

Let me get this straight; now they have two loans. What could possibly go wrong?

And this:

‘Carlisle noted that several new condo developments in San Francisco began taking advance orders for units in September and October. These units won’t be recorded as sold until they are completed months from now. But they probably sopped up a considerable amount of buyer demand and contributed to the sharp decline in sales.’

I read articles all the time about crazy levels of construction in the bay area. And LA too. How could posters here deny that many thousands of California sky boxes are on the way? And of course, a boom attributable to Yellen bucks and Chinese money laundering could never go poof, like it has in the oil field.

Comment by scdave
2014-12-20 10:04:14

I read articles all the time about crazy levels of construction in the bay area ??

Yep…Read my post below after one of your earlier posts…I have never seen anything like it…It even exceeds the boom of 1988-1990…Its clear this one is fueled by low interest rates, demand and a heathy degree forward speculation…

Is easy to ask yourself, why would you build that 500,000 square foot building with no tenant but they do it…Obvious next question is well I guess they may lose their a$$…Well, there is no way of knowing who owns most and how they are financed but I do know about a few of them and they are held in hands that are so strong that these buildings could stay vacant for many years and it would not have much negative effect on the company…A couple of names are Sabrato & Irvine Company…They are both here in a very big way…

(Comments wont nest below this level)
Comment by scdave
2014-12-20 09:54:02

Oh hell Ben, there is construction going on all over the valley…High rise stuff in places I had never seen before…Driving the #101 through Redwood City to the west there were four cranes in the air…

On a smaller scale, on the El Camino Real, from South San Francisco all the way down to San Jose, redevelopment is occurring everywhere…Densities are in the 50 unit per acre range….Apartments and lots on 55 and over rental communities…Its a Billionaires playground right now…George Marcus of Marcus & Millichap is a big player in it right now along with the Irvine company and others…

Comment by Ben Jones
2014-12-20 10:02:37

I’m saying this because we have a few posters who are often saying there is no construction, or it’s way too low. I don’t focus on the building as much because of time constraints, but one only has to look; Seattle, SF, LA, Miami, New York. All over Canada, Australia, Dubai, China. There are residential towers going up in downtown Phoenix this very minute.

The bust in Tokyo proved there is no shortage of land anywhere. And if prices stay high enough, long enough, somebody will build.

Comment by scdave
2014-12-20 10:17:46

Yeah…No shortage of construction here as my posts above suggest…Lots of dynamics at work starting with the fuel…Lots of money looking for a place to park…That in itself usually leads to speculative bubble…

I will share a recent story that I heard by a door supplier that I know…Had a guy walk in his office…Sit down and introduce himself and said; “I want to buy your building…I need to relocate from Mt. View and I want to be here close to other vendors that I use…”Building is not for sale says my friend”…”Would you sell if I gave you 3.5 mil”…A few days later, friend says yes…Got more than double what he paid for it just two years ago…

Seems that this buyer, relocating from Mt. View, got the offer he could not refuse on his property from ?? Its a easy guess really….Goggle…They are buying up as much around their campus as they can at incredible prices…Prices so high that the owners just say, well hell, for that price I am out-a-here…

Sounds like La-La-Land I know but it is Reality…At least as of this morning…Who knows about this afternoon or after that…

(Comments wont nest below this level)
Comment by tresho
2014-12-20 13:53:29

”Would you sell if I gave you 3.5 mil”
No, only at $3.5 billion, or 10 semi trucks full of gold bricks.

Comment by Ben Jones
2014-12-20 12:30:12

‘Evgeny Gavrilenkov, the chief economist at the investment banking arm of Russia’s largest lender Sberbank CIB, has warned that actions taken by the Russian authorities to bail out Russia’s troubled banking sector could cause a “full-scale banking crisis”.

“If the Central Bank of Russia continues to provide refinancing in exchange for non-marketable securities that banks can generate in almost unlimited amounts, the system will gradually ramp up to full-scale banking crisis,” Gavrilenkov said.’

‘That is, the emergency measures undertaken by the central bank to pump liquidity into the country’s banking system in order to prevent widespread defaults could end up coming back to bite it. In essence he thinks that banks may prove unable to pay back loans from the central bank with interest rates now set at 17% and the collateral that they pledge in exchange for it may not be of sufficient quality to cover the losses.’

‘He pointed the finger for the plight of the ruble, which has fallen over 40% this year, squarely at the central bank and the Russian Finance Ministry for “pumping the economy with additional liquidity”. In remarks that could be interpreted as highly critical of the government, he also said the unprecedented injections of liquidity had “coincided with a significant increase budget expenditures”.

‘In a note on Thursday Morgan Stanley warned that Russian banks are a major area of concern: ” In addition to margin pressures driven by CBR interest rate hikes, risk of corporate default poses an immediate threat to banks’ earnings, in our view. Cost of risk has increased significantly in corporate portfolios over the past nine months and appears likely to accelerate from here.”

‘These worries have already led to a significant easing of standards by the central bank. On Thursday it announced that banks would no longer have to mark their assets to market and could use the average exchange rate from the previous quarter to assess how much foreign capital they require to cover foreign-currency denominated debt repayments. In essence, the central bank is allowing the banking sector to indulge in a bit of balance sheet fiction during a time of stress.’

Comment by Whac-A-Bubble™
2014-12-20 12:46:02

‘That is, the emergency measures undertaken by the central bank to pump liquidity into the country’s banking system in order to prevent widespread defaults could end up coming back to bite it. In essence he thinks that banks may prove unable to pay back loans from the central bank with interest rates now set at 17% and the collateral that they pledge in exchange for it may not be of sufficient quality to cover the losses.’

If it worked in America, why not in Russia?

Comment by scdave
2014-12-21 09:21:38

Russia’s troubled banking sector could cause a “full-scale banking crisis” ??

A nuclear armed country that could be imploading due partly because of western sanctions with a narcissistic former KGB leader as President…

How this plays out is anyones guess….

Comment by Housing Analyst
2014-12-21 09:41:41

Remember…. Falling prices of all items is positively bullish and good for the economy.

Comment by Combotechie
2014-12-20 17:19:52

“Real Estate, the Winter Is Coming”

And when it comes in some places this is what you’ll get (3 minute video):

(I love living in Southern California.)

Comment by scdave
2014-12-21 09:28:23

good one combo…Pretty helpless feeling sliding down those hills…

Comment by Housing Analyst
2014-12-20 19:00:43

“You’d have to have rocks in your head to buy a house at these massively inflated prices.”

The fact that prices are falling again makes it doubly stupid.

Comment by Ben Jones
2014-12-21 07:36:05

“Irresponsible” levels of output by producers from outside the OPEC oil cartel is among the main causes of the slump in prices, the United Arab Emirates energy minister charged Sunday.’

“One of the main causes is irresponsible production by some producers from outside the organisation, some of whom are newcomers,” Suhail al-Mazrouei told an energy forum in Abu Dhabi.’

‘Mazrouei said the sharp drop in prices will impose a “major economic burden” on oil producing countries, insisting nonetheless that OPEC’s decision last month to maintain output levels was “correct.”

“OPEC’s decision, which aims to provide the market with time to rebalance, is correct, strategic and useful to the global economy,” he said at the forum organised by the Organisation of Arab Petroleum Exporting Countries.’

‘The OPEC decision will “lead to stability in oil prices,” he said.’–finance.html

Comment by scdave
2014-12-21 09:33:15

‘The OPEC decision will “lead to stability in oil prices,” he said.’ ??

I wonder if we will see any clamoring from the new congress for approval of Keystone in the face of these new oil prices…I wonder if Canada will back off in its desire to do it…

Comment by Housing Analyst
2014-12-21 17:15:10


Comment by Tarara Boomdea
2014-12-21 21:00:52

“Winter is Coming” on April 5th (for Game of Thrones fans).

Name (required)
E-mail (required - never shown publicly)
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post