Investors Who’d Buy Anything, Figuring Values Would Rise
A report from Crain’s New York. “In November, a buyer made Jerry Gottesman an offer not even someone who prides himself on holding onto real estate through booms and busts could refuse: an $800 million bid for a parking lot by the High Line that he bought in the early 1980s for roughly $2.4 million. Last week, three large residential development sites were put up for sale with asking prices of $1,000 or more per buildable square foot—a 50% premium above the value of dirt in Manhattan just a year ago.”
“Manhattan condo builders, who are driving the land boom, would have to sell at nosebleed prices to recoup their investment. A 1,000-square-foot apartment, for instance, would have to fetch $3 million or more to break even. Builders would have to sell units for even more just to make a ‘basic return,’ said Michael Shvo, a developer with a handful of luxury projects in Manhattan. Compounding the risk, more than 6,000 condo units are in the pipeline for 2015, with more to come. ‘It takes three years to bring a project up out of the ground,’ said Mr. Shvo. ‘Development is a futures business. You’re buying for the future, and you have to believe that the numbers will go up, especially if you’re paying $1,000 a foot.’”
From CNBC. “After a scorching four years, the luxury real-estate market may be cooling off. Sales of homes for $1 million or more fell 20 percent in the fourth quarter compared with those in the third quarter and posted their worst year-on-year growth since 2011, according to the CNBC Luxury Real-Estate Report, conducted by Redfin. Sales of homes priced at $5 million or more were also weak, falling 10 percent in the quarter. ‘We’re seeing sales of luxury homes continue to taper,’ said Nela Richardson, chief economist at Redfin. ‘The top of the market is losing steam.’”
“The most expensive home deal in the fourth quarter was the $70 million sale of the 23,000-square-foot ultra-modern home in Beverly Hills, California, sold to the founder of the Minecraft video game. The house, built on spec was listed for $85 million. Among the biggest discounts in the quarter was the $5 million sale of a waterfront property in Newport, Rhode Island, that had once been listed for $12.9 million. A property in Santa Paula, California, listed for $6.34 million ended up selling for $3.5 million.”
From Forbes on Colorado. “Peace Ranch, the 600-acre spread near Aspen, Colo., surrounded by national forest, closed last week for $17.15 million, according to broker Joshua Saslove of Douglas Elliman Joshua & Col, who had the listing. It had initially been listed for $49.5 million. Sellers Tom and Molly Bedell bought the ranch for $12.5 million in 2003. Last year Tom Bedell told Forbes he put some $30 million into the ranch, adding roads, reclaiming creeks, building horse facilities, and remodeling and building new housing.”
Vegas Inc in Nevada. “When the market hit bottom in early 2012, single-family homes sold for a median $118,000 and, within that, bank-owned homes for $100,000. A year and a half later, the overall median had soared to $180,000 and bank-owned homes to almost $173,000, according to data from the Greater Las Vegas Association of Realtors’ listing service. Last month, the overall median was $204,000, but bank-owned homes went for $155,500, down 24 percent from the market at large, GLVAR data show.”
“After the economy crashed, foreclosures swept through the valley and most borrowers were left underwater. With rock-bottom prices everywhere, though, even busted, abandoned homes found buyers — often investors who’d buy anything, figuring values would rise. ‘The hedge funds didn’t care,’ said broker Thomas Blanchard, owner of 1st Realty Group. ‘They were buying a piece of the market.’”
My Suncoast in Florida. “Foreclosures on the Suncoast have hit an 8-year low. But while the foreclosure decline is notable, Susan Phelps, a realtor at Berkshire Hathaway says the story isn’t all good because there are still hundreds of foreclosed properties that have yet to hit the market. ‘The ghost properties are those properties that are in paperwork limbo. The banks doesn’t exactly know how to clear the title and so they sit in neighborhoods deteriorating and vacant, causing problems and affecting property values,’ said Phelps. And despite the recent turn in the market, Florida still leads the nation in foreclosures.”
The Chicago Sun Times in Illinois. “The length of time it takes for foreclosures to clear the market is growing, with the Chicago area posting among the longest foreclosure processes in the country — nearly 2 1/2 years. ‘We’re seeing approximately a two-year process, longer, if a homeowner is contesting it,’ says Robin Coffey, assistant deputy director at Neighborhood Housing Services of Chicago, a nonprofit community redevelopment group. ‘The biggest issue with this long foreclosure timeframe is these zombie properties sitting abandoned and in distressed conditions, making it difficult for any type of recovery in the low- to moderate-income neighborhoods we operate in,’ she says.”
The Philadelphia Inquirer in Pennsylvania. “Despite the national decline in filings in 2014, portions of the housing market in the eight-county Philadelphia region are still mired in foreclosures, short sales, and bank repossessions, the RealtyTrac data show. Bank-owned homes and foreclosures ‘have declined in our area,” said Val Nunnenkamp of Berkshire Hathaway Home Services Fox & Roach Realtors, in Marlton - to about 18 percent of the for-sale inventory from 30 percent. Nunnenkamp added that ‘there are still numerous abandoned homes that have not come to the market yet, which could increase the percentage.’”
“These are ‘zombie houses’ - more than 6,100 in the eight-county region - vacated by borrowers at the start of never-completed foreclosure proceedings. Andrew Frank of Long & Foster Real Estate, who handles distressed sales in Montgomery and Bucks Counties as well as in the city, said he has ‘yet to see a decline nor hear about a decline.’ ‘The litigation process actually seems like it is getting longer in Pennsylvania, Frank said, adding that he has had some properties for two to three years before an official eviction.”
“If prospective home buyers are looking at properties as a result of the filings, that’s where things are different, said Chris Nelson of Re/Max Services, in Collegeville. ‘We all know that banks are now selling notes, auctioning homes, and every other creative thing we can think of’ to get them off their balance sheets, Nelson said.”
The Long Island Exchange in New York. “Long Island homeowners and advocates gathered at the home of New York Communities for Change member Charles Pollydore, a homeowner from Hempstead on the brink of homelessness. While Governor Cuomo announced yesterday his plans to give $1.5 billion from the larger $5 billion surplus to upstate cities, he has been silent about using the money from banks settlement to help the victims of fraudulent mortgages. ‘The Governor is elected to serve and protect all New Yorkers,’ Pollydore said. ‘So why is he giving our money away to Wall Street bankers, who caused this whole mess in the first place? Who gets to bail me out in my time of need?’”
The New England Center for Investigative Journalism. “An examination of hundreds of court documents in Massachusetts and interviews nationwide with scores of former homeowners, housing advocates, and attorneys about private mortgage insurance found that consumer have scant control over whether their insurance company will demand money from them after a foreclosure. Nationwide, the number of people at risk of being pursued for a mortgage deficiency by insurers or lenders runs into the hundreds of thousands. The companies that dominate the insurance business covered 977,000 loans in 2013 alone, representing about 12 percent of new home mortgages nationally, according to Inside Mortgage Finance.”
“Most of these borrowers, they say, had no idea they could be dunned for more money after they lost their homes. For some, the debts were so much larger than their annual salaries that they couldn’t fathom making payments. Leslie and Edward Simpkins lost their Maryland home in 2010 after Edward, 47, was laid off from his $48,000-a-year union job as a painter. He now earns only $15,000 a year working part time. Leslie Simpkins, a 38-year-old homemaker with three young children, said the couple was shocked to hear from Mortgage Guaranty that they owed $120,000 for losses on the home they purchased in 2007 for $245,000. They attempted to settle with the company’s attorney but were unable to pay even $30,000.”
“They moved into her mother-in-law’s house and now worry Mortgage Guaranty will put a lien on that home because their relative co-signed for the couple’s original home. ‘We owe the money. We just don’t have it,’ she said. ‘Talk about lack of sleep, talk of lack of sanity.’”
“Investors Who’d Buy Anything, Figuring Values Would Rise”
And now they’re falling….. ooooof.
Was that covered in the State of the Union Address?
A reader posted this in the comments yesterday:
‘NEW YORK, Jan 16 (IFR) - Investors including US mortgage giant Fannie Mae holding decade-old residential mortgage bonds are fretting over potentially huge losses on securities where delayed foreclosures could lead to complete write-offs on defaulted loans.’
‘Analysts are struggling to estimate the size of resulting losses in the US$820bn of private label RMBS sold before the financial crisis, and investors are just waking up to how big a problem it could become.’
‘Fannie Mae’s general counsel held a conference call just before the Christmas holidays - all of its retained law firms were required to participate - to ask how the government-run mortgage agency could alleviate such losses, a person with knowledge of the call told IFR.’
“[Fannie Mae's] general counsel asked: ‘How bad is it?’” the person said, adding that one of the lawyers on the call answered: “We can’t even begin to tell you - there are so many loans.”
They are just sitting around, these lawyers. “Did you hear about the trillion in loans we forgot to foreclose?” “NO! How bad is it?”
Mel didn’t know? The ‘foam the runway for the banks’ guy, he didn’t know? Heck I bet even Elisabeth Warren remembers. She was in the room, according to the book.
Let’s revisit the ugly mess that are Fannie and Freddie. (Lurking reporters take note).
In late 2004, the Dept of Justice opened a criminal investigation of unnamed executives at Fannie Mae. This investigation disappears. In the spring of 2005, I post reports that back door arraignments are being made to place the GSE’s into conservator-ship. Keep in mind; prices hadn’t even started falling much.
Soon after, Fannie then Freddie can’t produce financial statements. Inexplicably, the SEC doesn’t delist them and they are allowed to continue to issue AAA bonds. It is reported that they have many hundreds of off-shore special purpose entities, like Enron had, except many more than Enron. We never find out who the counter-parties to these entities are. Actually, we never find out anything about anything, as they are taken into conservator-ship and “bailed-out”. And keep operating!
Funny thing about this bail-out; these two companies had balance sheets of $5 trillion. But the bail-out was only $190 billion. They could have got that much from the couches in the lobby. And they went under before house prices fell? The government, which was supposed to be providing oversight, covered everything up.
There’s nothing fishy here.
emps there can retire at 55 w pension and hc
it’s a country club
‘‘We all know that banks are now selling notes, auctioning homes, and every other creative thing we can think of’ to get them off their balance sheets, Nelson said.”’
Sitting on 25 million excess empty houses doesn’t seem to make much sense now does it?
“Calgary Housing Resales Drop in December Along With Oil Prices”
http://blogs.wsj.com/canadarealtime/2015/01/08/calgary-housing-resales-drop-in-december-along-with-oil-prices/
‘resales in Calgary dropped 7.5% year-over-year in December, and new listings jumped 42% from a year earlier’
How many of these degenerate gamblers HELOC’ed out and put 3% down on a house in the US?
Answer: We’re gonna find out in a hurry in 2015.
crater….
“Canadian Canadian house sales cool off as sinking oil prices take toll”
http://www.thestar.com/business/2015/01/15/canadian-house-sales-cool-off-as-sinking-oil-prices-take-toll.html
‘declines of about 25 per cent in Calgary and Edmonton as plunging oil prices hit Western housing markets,’
The savings at the pump doesn’t mean much when you don’t have a job.
But it means alot to 350 million others.
The worst thing about losing bubble jobs is that they were ever created in the first place. Malinvestment shouldn’t be perpetuated at any cost.
This gets to a very important point; Keynesian’s don’t believe in mal-investment. To them, digging a hole and filling it in is damn smart. And probably all central bankers claim to be Keynesian. (My personal theory is they just believe in keeping power and money by any charade they can pull out of their ass).
So basically, the global banking system is being run by a bunch of greedy idiots pretending to carry out some discredited, ancient fairy tale.
Building roads and bridges isn’t busy work, as long as they actually need to be built, and from my experience, there are plenty of roads that could use a rebuild. But if the money is going to be loaned out to to people to buy homes they can’t afford, or build weapons systems that don’t work, then it’s essentially being flushed down the toilet.
Hold on a minute here. These people hold out this theory very steadfastly. It’s not blurry or a little of this or that. They state with a straight face that public borrowing and spending on anything can boost the economy out of any slump. If it doesn’t work (and it never does), they’ll just say you didn’t borrow enough. When the leading fool tells us to pretend space aliens are out to get us, you have to at least consider he means what he’s saying.
see the EU for results, or Japan
Or all the many ghost cities in China
“In Toronto, prices have turned negative – something most people in the business considered impossible. The average detached 416 house is down 4.2% from a year ago. At $859,672, it is $100,000, or 11%, cheaper than it was in April, nine months ago. Over the entire GTA, listings this month have swollen by 17.8%.
The realtors are in denial.”
http://beforeitsnews.com/economy/2015/01/the-awakening-2-2692740.html
That link started 3 videos playing in my browser at the same time. Here’s the original link:
http://www.greaterfool.ca/2015/01/18/the-awakening/
‘Jeff is a lifelong Albertan, oilman, living in Calgary. He found that occupied listings, as opposed to new-builds and reno-flips done on spec, account for just 26% of the houses for sale. “We are going to see over the next few months who buckles first,” he says. “ Three-quarters of the listings are held by builders who will have margin compression from lower selling prices on one side and their one-year bullet loans (full principal + interest) coming due on the other.”
Man oh man that’s some article right there.
Who was it the other day that posted her personal observations here? Rosie was her name? That article is exactly what she said.
Exit quickly and get ahead of the herd….
“Traders Sell Canadian Assets As The Oil Bust Spreads”
http://www.theglobeandmail.com/globe-investor/investment-ideas/traders-sell-canadian-assets-as-the-oil-bust-spreads/article22466680/
“Bank of America is telling investors to take bearish bets against Canadian bank stocks”
Canadian banks holding a few trillion worth of risky mortgages where the collateral is worth 20% of the face value isn’t a place I’d park my cash.
“Home Prices Fallin Calgary As Real Estate Chill Deepens”
http://globalnews.ca/news/1781133/home-prices-fall-in-calgary-as-correction-begins/
One word: Oil
The top 3 oil production states in the US(TX, CA, ND) are looking down the same barrel. And that barrel is full of cheap crude oil.
“California Oil Driller Hit Hard By Tumbling Prices”
http://www.reuters.com/article/2015/01/14/oil-prices-california-kemp-idUSL6N0UT1XI20150114
Exit. Now.
“Oil driller laying off 700 in California”
http://fuelfix.com/blog/2015/01/02/oil-driller-laying-off-700-in-california/
Has Apple announced their first round of layoffs yet?
I thought it only mattered in North Dakota and evil Texas.
gov workers will keep their jobs- you’ll pay
Someone has to chart the misery.
California Housing Demand Plummets 13% YoY; Inventory Billows
http://files.zillowstatic.com/research/public/State/State_Turnover_AllHomes.csv
“Oil Sands Producer Defaults on Canada Pension Fund Debt”
http://www.wsj.com/articles/oil-sands-producer-defaults-on-debt-to-canadas-biggest-pension-fund-1420497327
Pension funds and REIT’s are neck deep in oil debt. Look out.
Debt slaves …
Step 1: Dumb ‘em down.
Step 2: Prosper.
“… the couple was shocked to hear from Mortgage Guaranty that they owed $120,000 for losses on the home they purchased in 2007 for $245,000. They attempted to settle with the company’s attorney but were unable to pay even $30,000.”
“They moved into her mother-in-law’s house and now worry Mortgage Guaranty will put a lien on that home because their relative co-signed for the couple’s original home. ‘We owe the money. We just don’t have it,’ she said. ‘Talk about lack of sleep, talk of lack of sanity.’”
“You can’t lose with the stuff I use.” - Rev Ike
Proverbs 22: 7 = God’s Plan.
Ramsey 5:7 “Debt is Dumb”
“So why is he giving our money away to Wall Street bankers, who caused this whole mess in the first place? Who gets to bail me out in my time of need? The Governor should give homeowners back what was taken from us and not just our homes, but our lives.”
From whom is the Governor supposed to take that money?
Wall Street? They blew the proceeds, and are heading for a fall. Just like those who did cash out refis and HELOCs did with the proceeds.
Bahahahahahahahahahahahahaha …
Have any of you ignorant pukes who frequent this message board ever questioned just why banks should get bailed out, and just why if a bank gets robbed that the FBI automatically get involved, or why the Secret Service gets involved in investigating credit card fraud? Anyone?
Bahahahaha … taxpayers pay and bankers get to coast.
God’s Plan.
Bahahahahahahahahahahahahahahahahahahahahahahahahaha.
If somebody robs you does the FBI investigate the Crime? If somebody cheats you does the Secret Service get involved?
No? Well they do that for me, and I suppose that makes me a bit special.
God’s Plan.
Bahahahahahahaha .. if you own a store in Mayberry and it get robbed then Barney Fife will arrive on the scene. But if you own a bank in Mayberry and it gets robbed then it is Lou Erskin who arrives on the scene.
And nobody seems to question why this should be so.
Bahahahahahahaha … dumb ‘em down, and prosper.
Everyone gets to enjoy equal protection under the law, but apparently some of us are more equal than others.
Bahahahahahahahahahahahahahahahahahahahaha
The best way to rob a bank is to own one!
Can anybody who grasps the legal concept comment on why there are laws on the books to limit the time banks have to process foreclosures and get the homes back on the market?
They are not allowed to own real estare long term. Short holding periods were designed to 1) prevent “loan to own” strategies and 2) get a true mark to market valuation upon disposition.
Investopedia Special Offer
Will Plunging Oil Prices Crash The Stock Market?
When oil crashed in 2008 all hell was breaking loose. Lehman Brothers went up in smoke and stocks were in a nosedive.
Oil has once again crashed -50% in only 6 months but equities haven’t followed - at least not yet! Will stocks hold up going forward?
…
There’s a whole lot of rubber checks bouncing around and they’re gaining speed.
Keep your hardhat on.
‘We’re just coming out of a long, deep recession. How has it changed the way you handle your money? Can it be prevented from happening again? Do you feel secure in our economy now?’
‘Will Nuessle — What happened then is still happening. We never came out of the recession. Everything is being propped up by the Federal Reserve, which prints money to go get us into more debt. The banks are still doing all kinds of risky derivatives and getting backed by the Federal Reserve. Even the shale oil (pipeline) is being backed by lots of debt. It’s sick. Taxpayers cover all the debt banks run up and they’re too big to fail.’
“Taxpayers cover all the debt banks run up and they’re too big to fail.”
This is quite remarkable, no?
It took us a long tine to get here, but here we are.
Bahahahahahahahahahahahahahahaahhahahahahaha
I love the smell of despair in the morning. It smell like … victory!
‘China’s plan to rejuvenate its economy through vibrant equity trades is a smart but risky move due to the poor economic situation at home and abroad, according to Shanghai’s China Business News.’
‘Housing prices in 100 cities in the country posted their eighth monthly loss in December, while Shenzhen-based developer Kaisa Group began 2015 with a default that may lead to its bankruptcy.’
‘China’s population between the ages of 25 and 49 — the prospective home buyers — is expected to peak in 2015, while its labor force began shrinking in 2012. The two factors may cause the country to see a housing market downturn that could last up to two years, the newspaper said.’
‘Based on earlier experiences of development in the economy and the stock markets of Japan and Taiwan, China is likely to see a bubble form as a result of the exuberant stock investors in the market, the newspaper cautioned.’
Check out the photo:
‘Investors at a trading house in Hefei, Anhui province, Jan. 5.’
Does that not look like a scene from a casino?
The link might not be working properly.
“China is likely to see a bubble form…”
This is polite speak for “the massive bubble may burst spectacularly at any time”.
I fixed it. Thanks for letting me know.
‘IMF chief Christine Lagarde on Monday warned of “consequences” if European countries try to renegotiate their debts, ahead of Greek elections which an anti-austerity party is tipped to win.’
“Collective endeavours are welcome but at the same time a debt is a debt and it is a contract,” the International Monetary Fund’s Lagarde told the Irish Times during a visit to Dublin. “Defaulting, restructuring, changing the terms has consequences on the signature and the confidence in the signature,” she said.’
Now Christine, who’s being naive?
As crude oil prices continue slipping, pink slips are mounting in the oil patch.
The latest: oilfield services provider Baker Hughes, which said Tuesday it plans to lay off about 7,000 employees - or about 11% of its workforce - in the wake of a nearly 60% drop in the price of crude oil.
Reposting from yesterday:
‘For China’s shipyards, the oil rig market that was supposed to be a blessing is in danger of becoming a curse. As crude prices slide, oil producers are slashing new project spending. With a near 40 percent slice of a global market worth tens of billions of dollars, Chinese rig builders that offered juicy financing terms and discounts to leapfrog Asian rivals in recent years are now the most exposed to a slowdown.’
‘Chinese yards are scheduled to supply 37 new ‘jackup’ rigs - used in shallow-water exploration - this year, according to Nomura research, none of which has contracted customers to date. The most widely used drilling platforms, a jackup rig typically carries a price tag of around $200 million.’
“We’re having a big headache because there are no orders,” said an official at a large state-backed Chinese shipyard, speaking condition of anonymity. He cited a lack of rig order enquiries for the year 2016 and beyond.’
‘Earlier this month, COSCO Corp, one of China’s biggest shipyards, said it has decided to terminate building an offshore platform known as Octabuoy after failing to find buyers.’
‘China became the world’s biggest offshore drilling rig builder after rapid expansion led by the likes of state-backed yards China Merchants Heavy Industry, Dalian Shipbuilding, a unit of China Shipbuilding Industry Corp , and Shanghai Waigaoqiao, a subsidiary of China CSSC Holdings Ltd’
‘But their jackup rig market share gains from traditional powerhouses in Singapore came at a financial cost. “The Chinese yards are the main culprit (of speculative rig buildup)…Even if crude oil prices are to recover as expected, we expect new-build jackup rig orders to be subdued in 2015″ with considerable inventory of already made rigs available, Nomura analyst Wee Lee Chong said in a report earlier this month.’
Here’s an idea for the idiots…. Build 37 more of these $200 million monstrosities.
You watch. That’s exactly what theyll do.
‘With rock-bottom prices everywhere, though, even busted, abandoned homes found buyers — often investors who’d buy anything, figuring values would rise. ‘The hedge funds didn’t care,’ said broker Thomas Blanchard, owner of 1st Realty Group.’
‘A year and a half later, the overall median had soared to $180,000 and bank-owned homes to almost $173,000…Last month, the overall median was $204,000, but bank-owned homes went for $155,500, down 24 percent from the market at large’
And oldie but goodie:
‘May 29, 2013′
‘Hedge fund manager Bruce Rose was among the first investors to coax institutional money into the mom and pop business of single-family home rentals, raising $450 million last year from Oaktree Capital Group LLC.’
‘Now, with house prices climbing at the fastest pace in seven years and investors swamping the rental market, Rose says it no longer makes sense to be a buyer.’
“We just don’t see the returns there that are adequate to incentivize us to continue to invest,” Rose, 55, chief executive officer of Carrington Holding Co. LLC, said in an interview at his Aliso Viejo, California office. “There’s a lot of — bluntly — stupid money that jumped into the trade without any infrastructure, without any real capabilities and a kind of build-it-as-you-go mentality that we think is somewhat irresponsible.”
Thanks Bawney Frank and thanks ahead of time Obama!!!
http://www.aei.org/events/hidden-plain-sight-really-caused-worlds-worst-financial-crisis-happen/
By the way - Zandi’s comments demonstrate how far out of touch he is with this whole issue - what a f…ing idiot this guy is and how he has eny credibility left is just amazing to me. Another Obama shill this guy.
eny = any
sorry
peeps in chighetto are friendly
I always wonder what they have to be happy about
Oil Craters To 46.13; Down $2.56
http://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic
Cheap housing for everyone!
‘China’s 3D-Printed Housing on the Rise. Literally’
http://www.core77.com/blog/architecture/chinas_3d-printed_housing_on_the_rise_literally_28172.asp
‘WinSun claims this method of buildings saves “60% on materials, 70% on time and 80% on labor” and is quieter than conventional construction to boot.’