We’re Going To See The Market Tested
The Associated Press reports on Washington. “Savvy Seattle-area real estate agents have gained an advantage by paying attention to the growing connections between China and Washington state. ‘I’m so glad my mother made me study Chinese,’ laughed property broker Janie Lee, after showing a client from Beijing a $4 million home in the suburb of Medina. ‘I’ve been using it a lot.’”
“Part of the reason for the current increase of Chinese buyers is investment. ‘Chinese currency it’s still a soft currency,’ which is subject to rapid value fluctuations, said Jonathan Zhang, who teaches business at the University of Washington. Purchasing a home in the U.S. ‘is a good way to preserve wealth,’ he added. ‘When you have sudden prosperity, you get excited, you spend it,’ Zhang said. ‘At the same time, you think about how you’re going to preserve it for the future, because it’s not that clear this boom is going to continue.’”
The Boston Globe in Massachusetts. “Looking to buy a home or condo? Interest rates are likely to remain low, while home and condo prices are at least slowing down from their furious, double-digit growth over the past few years, real estate brokers say. If you are in the market for some deluxe digs, you may just hit the jackpot in 2015. Hundreds of trendy and expensive new apartments are poised to open in the new Ink Block project in the South End. It’s just the latest in thousands of new luxury apartments that have opened in downtown Boston over the past few years, with several thousand more on the way.”
“There is already talk of a surplus of luxury apartments, as developers and landlords resort to gimmicks like free rent for the first few months and gift cards to fill empty pads. Look for ever more creative concessions, and maybe even some outright rent cuts, as the number of luxury rentals steadily grows. Developers may also start to convert some of their empty units to condos, helping ease a shortage there, notes David Crowley, director of sales and marketing at Raveis Marketing Group.”
The St. Louis Post Dispatch. “Seven years after the great housing bust, could St. Louis be headed for a glut in upscale apartments? It’s possible, say some real estate players. After a long dry spell, St. Louis is seeing an uptick in construction of multifamily buildings, both condos and apartments, as well as rehabs of existing apartment buildings. ‘There’s a lot of new construction on the drawing boards. It’s kind of unprecedented,’ said Kirk Mills, president of Mills Properties, which owns or manages more than 9,000 apartments around St. Louis. ‘We’re going to see the top of the market tested over the next few years. There will be some people who really get in trouble,’ he added.”
The Arizona Republic. “Metro Phoenix’s home building slump continued in November. In November, 803 new houses sold across the Valley. That’s down 12 percent from a year ago. Builders have been offering deals including no payments for a year and discounts of 10 to 20 percent on houses already built as they try to sell inventory before the end of the year. The slump in construction employment also worsened in November, with the industry losing another 900 jobs. Over the past 12 months, Arizona has lost 4,300 jobs.”
The Oregonian. “A telling chart from the Federal Housing Finance Agency shows that Oregon has fared better than its neighbors in avoiding the biggest problems stemming from the overheating of the housing market and its subsequent collapse. The Fannie Mae profile shows Oregon has 1,336 properties counted as REO — Real estate owned by lenders. But there’s a troubling bulge in the python: 5,330 Oregon properties, or 1.9 percent of all home loans counted, are considered ’seriously delinquent.’ The FHFA defines this as cases in which borrowers are 90 or more days behind in their payments.”
The Springfield News-Sun in Ohio. “Homeownership took a hit in every state in the nation and every county in the Southwest Ohio region in the past decade and in many areas actually accelerated after the Great Recession, a Springfield News-Sun analysis has found. Part of the reason for that the homeownership rate has not turned around, Montgomery County Clerk of Courts Greg Brush, is that the foreclosure process can take two to three years before a property is cleared to a new owner. If it clears. ‘If you would have said in ‘06 when I came in that there are going to be houses that go to (foreclosure) sale that nobody buys, we would have thought you were nuts,’ Brush said. ‘A couple years later, there are a lot of things out there that don’t sell. Then they just sit out there and languish.’”
“Because sub-prime or risky loans were such a large part of new mortgages in the years leading up to 2008, Harnish said, ‘those were the people who got washed away first.’ ‘Last in, first out, so to speak,’ he said. ‘That was part of the decline in the percentage of homeownership. And that really continues to percolate today. Although the volume has dropped somewhat, we still have foreclosures in the pipeline.’”
The Tampa Bay Times in Florida. “At 79, Joseph Oates knows he can’t wait forever to get mortgage help. But he’s beginning to feel like he might have to. In September 2013, the retired railroad worker applied to Florida’s Hardest Hit Fund for a program that would pay down his mortgage by up to $50,000. Finally, last week, Oates got approval from state underwriters. But his application now goes to his bank for review, which could take another six weeks. And he still doesn’t know how much relief he’ll get. ‘Once again, I’m in limbo,’ said Oates.”
“Oates, who worked miscellaneous jobs after retiring from CSX in the mid 1980s, owes $137,000 on his house, which is valued at $82,563. ‘I was hoping to get a $50,000 reduction in my loan because I’m way under water, I’ve been living here almost 20 years, and I’ve always been up to date’ on payments, he said.”
‘Homes sales plummeted in the Central Valley during November as prices continued to tick up, straining affordability for many. According to a new report from the California Association of Realtors, homes sales in Fresno County fell 20.9 percent from October to November and 3.7 percent compared to November 2013.’
‘The median price of a home in the county stood at $200,000 in November, down just 0.3 percent from the prior month but up 3.6 percent compared to $193,020 a year ago.’
“The declining sales-to-list price ratio suggests that mismatched expectations of home prices between sellers and buyers still exist in most markets, except for the Bay Area, where there’s a dearth of homes for sale,” said 2015 C.A.R. President Chris Kutzkey. “Prospective buyers facing affordability constraints recognize the slowing housing market and are looking for deals, while many sellers are still reluctant to adjust their listing prices to reflect the moderation of price gains in recent months.”
He’s saying, lower your prices you greedy bastards or we’re going to starve.
‘Statewide home sales remain subdued in November as year ends’
Getting kinda ugly when you look at the tables at the end of this.
You cannot say you were not warned to sell fraud shills.
I never owned any Fraud Shills……so I can’t sell them! If I ever comecacross any, I’ll be sure to let you know!
Ugly? Thats what the central valley is all about, scenically, economically, and culturally. If you’re not a farmer, there is no reason to be there. Anything else should be done in Nevada where there’s no state income tax.
Given how broke the country is, it’s amazing to read about how many developers are putting their beans in the high-end luxury rental market, even in decidedly low-end towns like St . Louis. Is there a risk they’ll run out of rich people before all these units under construction are occupied?
It’s a function of the mania. They pay so much for the land the only project that pencils out is top end. Some one asked years ago, are there any new condos that aren’t “luxury”?
People constantly forget that the bubble is not in the houses, but the land itself. With a skybox, you don’t even get any land.
I was checking the mls, and there’s a manufactured home asking $222,000 on less than 1/4 acre. That’s as high as 2005.
skybox” BAHhhhhhhhhh full of air and a HOA
Same with luxury hotels - there are a ton of top-line hotels being built around the world. Meanwhile, businesspeople who travel are renting rooms in strangers’ apartments on airbnb because that’s all their company will pay for. Who exactly is going to stay in all these Park Hyatts and Four Seasons?
Income inequality is showing up in many different ways. You’re either flying your own Lear or taking Uber.
Speaking of Lear, I wonder what ex-GS fixer is up to. Is the economic uptick helping him?
I have a friend who manages one of the overpriced “luxury” clapboard apartments in Downtown LA.
They start at $2k a month for a 550 sqft studio apartment overlooking hobos and train tracks.
1 bedroom, 2 bedrooms - you’re looking at north of $3k! They’re ok apartments - but they’re pretty average run of the mill - nothing spectacular or luxurious.
I make decent money for a mid 30s professional, but still couldn’t even afford to shell out that kind of money. So who is renting these units?
1. USC-tards - parents with more money than sense put their kids up in this building as well as foreign students from wealthy families
2. Scammers. They get in there, don’t pay rent and with California’s overly tenant-friendly laws can eek out living the unit for a few months…then it’s off to the next building
3. Those employed in the “world’s oldest profession”
4. A few professionals who actually make a good living and want the hipness of living Downtown or work in Downtown.
So what will likely happen is with the cheap construction, the building will start to deteriorate. As #2 and #3 take hold, the building becomes unattractive for #1 and #4 and they’ll move on to somewhere else newer.
I saw this happen in a building another friend lived in over on the Miracle Mile (Wilshre/La Brea area). It was initially a beautiful looking brand new building. Within three years you could already see the cosmetic deterioration (dirty carpets, paint chipping, water leaks) and the riff-raff quotient showing up more and more. He moved.
Is mortgage debt discharged in death if the estate can’t cover it? If so, my crystal ball shows lots of underwater estates gaining a windfsll upon the owner’s death in the coming years.
No windfall - it means the estates will be wiped out.
So no baby boomer inheritance wealth effect for their children.
Unless you distribute it before you get sick………my parents gave us money for a number of years but it was deposited in our ira accounts so we never touched the money..
But suppose a Boomer decided to live as high as possible on the home equity hog while walking this earth, including a great deal of generosity to the kids (e.g. down payment assistance loans, full payment of college tuition, what not), while meanwhile using the negative equity position of the mortgage serve as a sort of bad debt repository to offset lavish spending.
In this scenario, wouldn’t the Boomer family win in proportion to however far underwater the mortgage went before discharge in death?
I’m going to run this one by some attorneys.
It sounds remarkably like what Jeff Skilling and Andrew Fastow did.
Yeah I was going to mention the similarity to Enron.
I’m going to run this one by some attorneys.
Please report back; I’ve wondered this as well.
I believe that if intent could be proven, that this strategy might well represent fraud. But we’ve seen how much clearly-obvious fraud has been ignored in this country in the past half-dozen years. Without any glaring proof of such, it would be relatively indistinguishable from a doting parent who is simply not financially responsible in their own affairs.
Of course, it would also require significant trust in your kids; there is also some risk that they might not choose to lavish the care on your in your dotage that you might have hoped.
Only if the dead person purchased that type of insurance while they were alive.
Is mortgage debt discharged in death if the estate can’t cover it?
Yes, it is, except that the debt is still secured by the property; in other words, only the underwater portion could be discharged.
But who could possibly be pursued for any remaining debt (other than a still-living spouse), unless there was a co-signer?
‘An Ocean County, New Jersey, man was indicted today for his role in a large-scale mortgage fraud scheme that caused millions of dollars in losses, U.S. Attorney Paul J. Fishman announced.’
‘Joseph DiValli, 45, of Jackson, New Jersey, was charged in a seven-count indictment with one count of conspiracy to commit wire fraud and six counts of wire fraud, all of which caused losses of at least $2 million. DiValli was originally charged by complaint on Jan. 24, 2013, with one count of conspiracy to commit wire fraud.’
‘According to documents filed in this case and statements made in court: From as early as March 2011, DiValli, a loan officer at a mortgage bank, allegedly engaged in a large-scale mortgage fraud conspiracy. He provided fraudulent documents to financial institutions in connection with mortgage loan applications on behalf of “straw buyers” to induce those financial institutions to fund mortgage loans. Relying upon those false documents, financial institutions funded mortgage loans. DiValli then profited illegally by receiving money from a conspirator.’
‘DiValli is also charged with wire fraud involving a modification of a loan on his personal residence. From as early as March 2011, DiValli caused a loan officer at a mortgage brokerage company to send payroll ledgers and earnings statements from DiValli’s employer that falsely understated his earnings in order to fraudulently secure the modification.’
The mischaracterized ‘housing recovery’ since 2011 is founded entirely on fraud, subprime and misrepresentation by the financial media.
A ‘housing recovery’ is falling prices to dramatically lower and more affordable levels by definition.
I agree. Rampant fraud is the only reason prices ever went back up. The entire world’s economy is based upon fraud.
Sounds like 2005 all over again…
‘“Savvy Seattle-area real estate agents have gained an advantage by paying attention to the growing connections between China and Washington state.’
And less attention to the growing losses on housing in Seattle?
Seattle, WA Sale Prices Plummet 13% YoY As The Housing Decline Resumes
http://www.zillow.com/seattle-wa-98109/home-values/
Have you ever considered how noisy that signal is? Just look at the chart.
If you did YoY last month, it looked like things are going up-up-up! (Even though you’ve been saying that they are cratering for the past year or so…)
It makes far more sense to use something like Case-Shiller to make informed comparisons (based on price-pairs, so there are no issues with mix-shift; based on a rolling average, to smooth out the noise).
And falling prices showing up in every state in the country isn’t noise. It’s reality.
I believe the Case-Shiller, which is finally showing MoM declines in the 10-, 20-, and national indexes as of the Nov report. But it shows nothing remotely like what you’ve been claiming.
HA is noise. Just noise. Nothing but noise. No one confuses his posts with reality.
FraudKing is back.
How goes the losses Jingle_Fraud?
From the Phoenix article:
Builders have been offering deals including no payments for a year and discounts of 10 to 20 percent on houses already built as they try to sell inventory before the end of the year.
And yet they are still STARTING new developments. I drive by them every day. Tons of used houses on the market. They can’t unload new homes without huge discounts and they are still starting more. Keep yer powder dry.
It’s never asked, what of those who bought 6 months ago and put 5% down? Oh, they’re screwed! We’ll read about it soon enough.
Anyone that pays multiples of construction costs (lot, labor materials and profit) for a 20+ year old depreciating asset is screwed from the outset, even if prices weren’t falling.
It’s already a full chorus of braying and hee-hawing because they know they’re screwed.
The LOT PRICE is the problem, not the construction price.
Doesn’t matter where you hide the fraud.
That’s the thing, you can’t justify the price when you look at the materials and labor. It’s in the eye-popping land “valuation.” It’s a joke.
Nor can you justify the prices when you look at the worthless dirt.
“It’s never asked, what of those who bought 6 months ago and put 5% down?”
This would make an excellent story for a reporter to dig into, except … he’d have to get the story past a bought-and-paid-for editor.
During the real estate mania of eight or ten years ago a newspaper reader could read in the L.A. Times just how crazy real estate prices were in Orange County, and at the same time the Orange County Register would report on just how Crazy the real estate market was in L.A., but neither the L.A. Times nor the Orange County Register would bad-mouth their home markets, neither would report on just how crazy their home markets were.
Twain: “If you don’t read the newspaper, you’re uninformed. If you read the newspaper, you’re mis-informed.”
“And yet they are still STARTING new developments. I drive by them every day…”
Its like I explain to my sons when they asked how people could possibly be so foolish;
‘Son, what does a Builder do?’
‘Well dad, I guess that they build buildings’
‘Absolutely correct! What else do they do?’
‘Ummmm, nothing?’
‘Absolutely correct! If they are not building, then they are bankrupt and they will continue building until they are bankrupt- even when it is a horrible business strategy. Because building is all they do.’
And because the Fed, Fannie, Freddie and other gubmint agencies have massively subsidized housing in recent years, we have more of these builders building buildings than fundamentals would support.
Exactly. Builders gonna build, pigmen gonna pig…
soviets gonna get pensions for life–u forgot that part
10 to 20 percent discounts? Those are numbers department stores use, not homebuilders in a healthy market. I wonder if they’ll start accepting Kohl’s coupons?
Even worse, builders almost never discount the actual price. Tradtionally they offer upgrades. Prevent a $10K price drop by adding a $5000 fireplace.
^lol
The stupid do seem to fall for it; have you forgotten already the flat-screens, cars, and other promotional items that accompanied 2008/9?
I hope they build even more.
They’re also tearing some down. Welcome to bizarro world.
‘The Boston Globe in Massachusetts. “Looking to buy a home or condo? Interest rates are likely to remain low, while home and condo prices are at least slowing down from their furious, double-digit growth over the past few years, real estate brokers say. If you are in the market for some deluxe digs, you may just hit the jackpot in 2015.’
And with housing prices recovering to dramatically lower and more affordable levels across Massachusetts, the jackpot just keeps enlarging.
Massachusetts Sale Prices Plunge 9% YoY Statewide; Boston Metro Sale Prices Crater 17%
http://www.zillow.com/ma/home-values/
‘The St. Louis Post Dispatch. “Seven years after the great housing bust, could St. Louis be headed for a glut in upscale apartments? It’s possible, say some real estate players.’
With demand plunging to 20 year lows nationally, it’s not just possible, it’s the natural outcome.
Saint Louis, MO Housing Demand Collapses 24% YoY
http://files.zillowstatic.com/research/public/Metro/Metro_Turnover_AllHomes.csv
Cause everyone wants to relocate near Ferguson, MO
“Hands up, don’t shoot!”
The ideal motto to attract new residents to a mid-west suburban town.
The Arizona Republic. “Metro Phoenix’s home building slump continued in November. In November, 803 new houses sold across the Valley. That’s down 12 percent from a year ago. Builders have been offering deals including no payments for a year and discounts of 10 to 20 percent on houses already built as they try to sell inventory before the end of the year.
Contractors see collapsing demand and slash to dump inventory while those who bought a house in the last 15 years are chained to a radioactive boat anchor.
Get slashing those prices folks.
Phoenix, AZ Housing Demand Plummets 18% YoY As Inventory Skyrockets
http://files.zillowstatic.com/research/public/Metro/Metro_Turnover_AllHomes.csv
But there’s a troubling bulge in the python: 5,330 Oregon properties, or 1.9 percent of all home loans counted, are considered ’seriously delinquent.’ The FHFA defines this as cases in which borrowers are 90 or more days behind in their payments.”
And that’s only what they’re admitting to and doesn’t include the millions of defaulted houses held back by state imposed and voluntary foreclosure moratoriums nationally.
1.9% is small. The number is likely much larger.
When moral hazard surrounds you why should one be up to date on their mortgage if they don’t “feel” like it.
“Oates, who worked miscellaneous jobs after retiring from CSX in the mid 1980s, owes $137,000 on his house, which is valued at $82,563. ‘I was hoping to get a $50,000 reduction in my loan because I’m way under water, I’ve been living here almost 20 years, and I’ve always been up to date’ on payments, he said.”
Liar.
What is it about the entire housing sector that compels all its’ participants to become pathological liars?
What did he do with the cash-out refi money?
+1.
He withdrew cash from the housing ATM, spent it, and now wants the resulting debt canceled.
The shocking thing is that this passes for victimhood today…
The question is: Who exactly is buying his story? I don’t know of anyone.
The house was another income stream for him in retirement.
If this guy is “up to date” on payments, then why does he qualify for Hardest Hit at all?
What’s even worse — but not shocking — is that this the this fraudball got past the state Hardest Hit requirements. And with the moratorium on 1099-ing forgiven debt, that’s $50K for free!
[possible explanation: A few months ago HBB posted an article describing that Florida was having trouble doling out its Hardest Hit money. Probably because all the applications were fraudballs like this bloke and therefore not eligible. So they're lowering their standards.
]
A friend in Long Beach, California purchased his home for $865,000 refinanced it with Wells for $2.5 mil, stopped making payments and Wells modified it to $1.5 mil.
Not a bad living.
refinanced it with Wells for $2.5 mil, stopped making payments and Wells modified it to $1.5 mil.
Holy Moly!!! That guy literally got a million bucks for doing nothing!?!
I sure hope that is a joke. What moron brags about that?
My next door neighbor paid $385,000 refinanced for $1.5. Stopped making payments for 2 years. Had a Porche, Range Rover, 40 ft rv with toy trailer, stripped the place and even took the front door and of course a boob job and face lift.
She would look at me with disdain for working and driving a Lexus.
I sometimes regret not following along.
Yeah, that’s hard to watch—but still doesn’t compare to a $1M principal reduction!!
“a $1M principal reduction!!”
Here’s the irony, he’s still living the bubble. He’ll pay $3million more than me for housing over the next 30 years, if he stays on that road, if he is a real example. No doubt he got some nice toys with the refi.
This reminds me of those stories that start off, “one time, at band camp..” Sure, we all know that all you have to do is stop making payments on a house and money rains from the sky.
Pimping shut down. Thank you.
How does relating an interesting anecdote constitute pimping? In any bubble, there are a small number of big winners, and a HUGE number of losers.
The fact that the vast majority of FBs are truly FBs doesn’t rule out the possibility that someone got a large principal reduction along the way somewhere. It’s still interesting.
Of course, the other way of looking at it is that he bought an $865K house for $1.5M. No winner there, in spite of the large principal reduction.
I’ve worked in the foreclosure business since 2008. Remember it was not that long ago that lenders were being attacked for not paying to cut the grass. Now we’re supposed to believe that banks are handing out a million bucks like candy? How much does it cost to file a notice of default? How much for an eviction? Change the locks, trash-out. Less than a thousand all together. Oh, but sure, we’ll let you stay Mr Bigshot. Do you think the loan servicers don’t know about the toys in your garage? What so you think those guys with the cameras were taking pictures of every two weeks?
And the guy in the article is moaning because he can’t get a 50k loan mod that is already paid for in a settlement!
‘I was hoping to get a $50,000 reduction in my loan because I’m way under water, I’ve been living here almost 20 years, and I’ve always been up to date’ on payments, he said.”
Glad you brought that guy up, Ben.
He clearly doesn’t understand that loan mods are intended to get people who _aren’t_ paying to start paying again.
If he has been current the entire time, why should the bank believe that he needs a loan mod?
“What is it about the entire housing sector that compels all its’ participants to become pathological liars?”
Good question! I think it is about the debt. Large long term debt for an unproductive speculative asset is fundamentally immoral. Once you start down that path, consuming or shilling, other things are pretty much expected to follow.
Mule + boat anchor= Debt donkey
http://ecx.images-amazon.com/images/I/41ZVecpo-OL._SY300_.jpg
Is the donkey outside looking in, or inside looking out? It’s hard to say.
Or which is wearing what. I think the donkey is wearing an anchor.
ooooooph…….
S.S. Underwater.
And Janie will get 1.5% commission, $60,000 just for selling a used house. Wanna bet that money will get pissed away?
How do you say “lap dance” in Chinese?
The word needs to get out that sales and prices are down in Phoenix. I know a guy who is buying a house in the ghetto right now because he thinks he will otherwise be priced out forever.
He doesn’t sound like someone you want to associate with. He’s about as sharp as a bowling ball.
realtors are liars
job reports? Stock report?
Crater and crater