February 22, 2015

The Boom Has Created The Conditions For A Bust

It’s Friday desk clearing time for this blogger. “RealtyTrac reported a marked increase in foreclosures locally and statewide in January compared to both a month and year earlier. That sparked blow-back from the local real estate industry and other housing market trackers, including Arizona State University economist Michael Orr. Blomquist talked to the Phoenix Business Journal about the Arizona blow-back and why RealtyTrac’s numbers differ from local sources. He said RealtyTrac compiles data not just from recorded foreclosures but also auction houses and other vendors dealing with home loan defaults. He said there were increases in Arizona foreclosure activity on that front. ‘They would have it before it was recorded,’ Blomquist said.”

“He also said some mortgage industry insiders are seeing more defaults related to second mortgages that may have been interest-only for several years but resetting with larger principal payments. ‘We are confident in it,’ Blomquist said of the foreclosure numbers.”

“The city’s latest idea for breathing life into ‘dead’ properties: Ask a judge to force them to auction. St. Petersburg is banking that it has standing with the court thanks to about $4 million in unpaid assessments and liens on the properties, with individual properties’ tallies often higher than the properties’ worth. As the city slowly shed its foreclosed properties — still between 4,500 and 6,500 at any one time— these speculators are the next target. ‘It’s part of the natural progression of the foreclosure crisis,’ said Matt Weidner, a St. Petersburg lawyer. ‘That’s one of the sort of shocking things,’ that cities got into the habit of not really pursuing these properties.”

“Most cities still are waiting passively for the market to get hot enough that private investors will snatch up dead properties, pay off the liens and build a house. But city officials are tired of waiting. ‘What is the final solution on this? We just can’t go on forever,’ said Todd Yost, the city’s codes compliance assistance director.”

“Connecticut house sales rose the final month of 2014, but 12-month sales wound up slightly below those of the previous year, The Warren Group says. The median price of a single-family home fell 2.1 percent to $240,000 in December, down from $245,000 a year earlier. Year-to-date, the median price for homes sold was $251,500, falling 3.3 percent from $260,000 in the same timeframe last year. ‘Median prices for both decreased but I think that will change in 2015 as we see more and more first time buyers hitting the market and looking for great deals,’ CEO Timothy M. Warren Jr. said.”

“Getting an apartment in Houston is about to get less expensive and that’s good news for renters. But the reason behind the drop is concerning. You’re bound to find large apartment communities, popping up across the Houston metro area and hundreds more are expected to be completed over the next year. And because of that industry analysts expect rent rates to drop and in some cases, it’s already happening.”

“According to Apartment Data Services, there are growing concerns for builders there may not be enough people to fill all of the units being built and that will drive rates down. ‘The recent concern is that the job growth has slipped because of the price of oil and job growth drives demand for apartments. That’s where there is a little anxiety out there,’ said Bruce McClenny with Apartment Data Services.”

“The oil that fueled Calgary’s housing boom has created the conditions for a bust. Genworth MI Canada Inc., the country’s largest non-government mortgage insurer, said last week it’s preparing for more losses this year and into 2016. More than five years of rising oil prices spurred thriving sales of million-dollar trophy homes in Calgary and a doubling of home prices in the last decade. As the oil crash forces energy firms in Alberta to cancel projects and fire workers, housing sales fell the most on record in December and January, with price declines expected to follow.”

“Vince Degiuseppe, a real estate agent in Calgary who sells about 20 homes a year, said demand is falling. Degiuseppe listed a home for a couple for C$500,000 in November amid oil’s slide, and they’ve cut the price several times to C$480,000. At an open house this month, the few offers were all below the listing price. Alberta ‘has gone from the top spot in the economic growth rankings to second from last on the provincial leader board,’ said Derek Burleton, deputy chief economist at Toronto-Dominion Bank, in a note to clients. ‘A significant softening in job markets will set the stage for a second major housing correction in Calgary and Edmonton’ not seen since 2008.”

“Stark reminders keep occurring of just how bad markets have become in mining towns and regional centres with a big reliance on the resources sector. The Hotspotting team came across a local newspaper article which recorded homes for sale as low as $49,000 in Blackwater, a coal-impacted town west of Rockhampton, with an average sale price around $150,000. Early in 2012 Blackwater had a median house price of $360,000, following a 17% rise in the previous 12 months.”

“A few hundred kilometres to the north is Moranbah, the quintessential boom-bust coalmining town. I’ve written about Moranbah’s demise in considerable detail over the past couple of years. Suffice to say that the median house price, once $750,000, is now $285,000 – and the median rental yield, once above 10%, is now 3.65. Experienced property analyst Louis Christopher wrote recently about similar agonies for markets in Western Australia. ‘For the property investors who got caught up in the mining boom, the sting will be very painful. It’s a reminder that if you are buying property, the risks of falling prices are very real if the economic cycle turns - especially in boom and bust mining towns where what goes up, invariably comes down.’”

“You have heard of property developers offering buyers in Dubai everything from furniture vouchers to luxury sedans. Now that trend has started in India as well. To get buyers, Indian developers have unleashed marketing campaigns offering lower home loan rates to free furniture and from cars to free studio apartments. And this is because there is excess inventory with Liases Foras, a property research firm, putting the unsold stock at 832.09 million square feet as of December 2014. And that’s not all, sales for the fourth quarter 2014 declined by eight per cent.”

“‘It’s a buyers’ market now. Expensive homes are not selling,’ Deepakh Parekh, Chairman of HDFC, told the newspaper.”

“China’s real estate industry, thriving just a few years ago, has seen a downward adjustment along with a reduction in end-of-year bonuses and salaries, reports our Chinese-language sister paper Want Daily. According to a report on end-of-year bonuses for 2014-2015, companies in the real estate sector, which previously gave the third highest amount in bonuses, fell to sixth place. This is due to a decline in sales, the accumulation of properties on the market and the collapse of the industry’s capital chain.”

“Not long ago, the real estate industry in mainland China was one of the most profitable for the new class of nouveaux-riches in the country, according to Shanghai’s National Business Daily. According to one employee of a real estate firm, end-of-year bonuses used to be in excess of 100,000 yuan (US$16,000), while a real estate agent at another company said he bought an Audi A6 with his bonus, but that this is no longer the case.”

“For the majority of people in the sector, worse than the reduction in end-of-year bonuses is the cut in salaries after Chinese New Year. A Beijing-based headhunter for the real estate industry said that salaries in the sector are set to plummet in 2015.”

“Jim Gray got his first job in the oil patch in 1956, when oil was trading somewhere south of $5 a barrel. Trained as a geologist, Gray founded Canadian Hunter Exploration in 1973 and built it into one of Canada’s largest natural gas companies. He’s lived through a few of these boom and bust cycles, enough of them to have some perspective on the current collapse.”

“Both the provincial government and many individual Albertans are feeling a little over extended right now. Gray says that’s a hard, but important lesson to learn. ‘For those people who bought big houses or leveraged their personal wealth, I bet that lots of those young people will look back in 20 years and say the life experience they got from this was the best they’ve ever had. We’ve had chequebook public policy in this province and with a lot of our people for too long and this cold shower that we’re having is not all bad.’”

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Comment by Ben Jones
2015-02-20 04:10:10

‘Macroeconomic data from the Far East combined with reports of ships changing hands at discounted prices have poured cold water over depressed dry bulk market, shipping analysts said.’

‘The 2012-built Kamsarmax Flora Island has been sold for USD18.4 million. “The transaction points to further declines in dry bulk vessel values as the reported price is close to 20% below our latest estimates,” said Erik Nikolai Stavsetth and Kurt Waldeland, shipping analysts at Arctic in Oslo.’

“All the same, the dry bulk secondhand market remains depressed with values under pressure from freight markets at all-time lows,” Stavsetth and Waldeland told IHS Maritime.’

‘Meanwhile, Eirik Haavaldsen and Oystein Dalby, shipping analysts at Pareto in Oslo said that share prices are reflecting a bleak drybulk scenario and that they see no light at the end of the tunnel. “This week we have seen further weak housing data from China, while January data from India shows that it was the first time this decade that we did not see a growth in electricity production month over month,” they said in a weekly market report emailed to IHS Maritime.’

“At the same time, Indian coal inventories are at relatively high level, and we do not expect the depressing market to improve in the near term,” they added.’

Comment by Blue Skye
2015-02-20 06:34:59

“worse than the reduction in end-of-year bonuses is the cut in salaries after Chinese New Year…set to plummet in 2015″

More of that “reduced growth”.

Comment by Ben Jones
2015-02-20 06:52:16

The caption for the photo at the China article:

‘Happier times for employees in the real estate industry last year. A real estate firm in Henan put 11 million yuan (US$1.8 million) in cash on display at their year-end party, all to be given out to employees as bonuses. Some employees received windfalls of as much as 2 million yuan (US$320,000) and had to cart the cash home in sacks.’

I wish I could have that framed and on the wall.

Comment by oxide
2015-02-20 07:17:07

What’s stopping you? I downloaded the photo to see how far it could be zoomed before it pixelated. You can get a good 5″ x 7″ and a fair 8″ x 10″. Paste the jpeg into Word with the caption and citation, print it out, frame it, hang it, and there you are. :cool:

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Comment by Ben Jones
2015-02-20 07:19:16

I might do that. I don’t have a color printer, but the sh*t-eatin’ grins on those guys faces is priceless.

Comment by Blue Skye
2015-02-20 07:57:05

A color print can be had on the cheap at places like Wallyworld.

Comment by In Colorado
2015-02-20 12:06:14

A color print can be had on the cheap at places like Wallyworld.

They won’t print it if they even remotely suspect that it’s copyrighted material.

Comment by snake charmer
2015-02-20 11:40:41

This is probably why the Chinese movie “A Touch of Sin” was banned. I’m thinking of the scene where the man takes a wad of money and uses it to slap a woman who has refused his advances.

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Comment by Ben Jones
2015-02-20 04:12:19

‘Up to 20 high-profile trucking businesses based in Queensland have folded in the past 18 months. Queensland Trucking Association chief executive Peter Garske said a slowdown in the economy was to blame for the closures.’

‘Mr Garske said between 15 and 20 businesses had folded since mid 2013, with most of the affected businesses refrigerated carriers and trucks freighting building and construction materials.’

‘He said dozens more smaller operators were also closing or downsizing, and other companies across the country were facing liquidation on a daily basis. He said the trucking sector’s service to a vast range of industries made it extra sensitive to a softening in the wider market.’

“The customers are a microcosm of the country - the agricultural industry, the manufacturing industry, the housing industry, the retail industry. The fact that we are so closely linked to the economy should therefore provide an understanding of why my industry is finding it so difficult,” he said.’

Comment by aNYCdj
2015-02-21 15:39:58

Fascinating series…Outback truckers


Comment by Housing Analyst
2015-02-20 04:12:57

Austrian Bank Bond Rout Deepens as Swaps Show 70% Default Risk; Russian Oil


Comment by Housing Analyst
2015-02-20 04:15:32

“Russian transportation group FESCO warns of risk of bond default”


Liquidate today or tears of loss tomorrow

Comment by Housing Analyst
2015-02-20 04:33:49

Yorba Linda, CA Sale Prices Dive 16% YoY; Defaulted Inventory Balloons As Sellers Slash And Exit


Comment by Housing Analyst
2015-02-20 04:44:34

Huntington Beach, CA Sale Prices In Downdraft; Plunge 28% YoY


Comment by HB Reader
2015-02-20 09:20:27

How are you coming to the conclusion that sale prices are down 28%?

I live in this city and while I would love to see prices correct 30%, this has not been my observation.

Comment by CHE
2015-02-20 13:14:21

Check the data at the link HA provided and you’ll see…

Jan 2014 - $590K
Jan 2015 - $432K

Comment by HB Reader
2015-02-20 16:33:13

Ah, thanks. Never had much of a reason to dig too deeply into the data before this.

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Comment by Housing Analyst
2015-02-20 14:15:21

I would agree that prices in Huntington Beach have much much further to fall.

Look out below.

Comment by HB Reader
2015-02-20 16:35:04

I found a newly listed 4/3 townhome today for $499k ($287 sq/ft). Things could be getting interesting.

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Comment by Housing Analyst
2015-02-20 20:05:35

With 4.4 million excess empty and defaulted houses in CA, I’m surprised you’re not swimming in them.

Comment by Esol Esek
2015-02-24 19:43:51

A good Tidal waves will work miracles on reducing values as well, and there’s once coming…

Comment by Ben Jones
2015-02-20 05:04:58

‘Cheap oil and a weak loonie may be generally good for B.C. businesses, especially exporters, but some B.C. companies that sell equipment and services to the oilsands are feeling the pinch. Energy companies have shelved a number of new oilsands projects and expansions in Alberta and have been parking oil rigs. B.C. companies like Ideal Welders Ltd. in Delta have seen an almost immediate impact.’

“Absolutely, yes, we’re seeing a slowdown,” said Dale Hamill, Ideal Welders’ vice-president of operations. “In excess of $50 million worth of work has been shelved over the next five years that we were planning on being awarded. There is a significant impact.”

‘Hamill said his company had clients in December tour Ideal Welders’ fabrication shop on Annacis Island, where modular structures are prefabricated, then shipped for assembly on site. “They were in our facility on December 16, about eight of them, touring, doing the final negotiations for a large contract. Received a phone call while we were doing our tour. They were called into the boardroom – conference call saying, ‘Pack up your bags, everything’s off the table.’ That’s in our boardroom they take this call.”

‘Before the clawbacks started happening in December, the company employed between 110 and 120 welders. It’s now down to about 60.’

‘Other B.C. companies that are likely to feel the impact of the dramatic curtailment in Alberta oil projects are those that sell or lease heavy machinery and equipment to the oil and gas, mining and forestry sectors, like Finning International Inc. Finning’s Mauk Breukels, vice-president of investor relations, confirmed that the Alberta oilsands account for $1 billion in sales annually (about one-seventh of the company’s annual revenue) and that a scaling back on new oilsands projects is likely to affect sales.’

“You’re seeing that a lot of these oil and gas producers and contractors [are] announcing reductions in capital expenditures,” Breukels said, “so dealers like us are likely impacted by those types of decisions, as capital expenditures would often include equipment.”

Comment by Ben Jones
2015-02-20 05:09:27

‘The final numbers are out for 2014, and the median single-family-home price in the Phoenix area officially went up 5.4 percent. Orr mentions that some Canadians may decide to lock in profits made on Phoenix-area homes bought since the housing crash. In 2014 alone, the prices went up an additional 15 percent when converted to the Canadian dollar.’

BTW, this whining about Realtytracs foreclosure numbers happened before years ago. Back then it was the NAR saying they were double-counting filings. Of course a few months later and it was “fire, fire!”

Comment by Blue Skye
2015-02-20 06:40:33

Wasn’t it around that time we heard that the NAR was padding their own numbers?

Comment by Combotechie
2015-02-20 07:15:22

“Energy companies have shelved a number of new oilsands projects and expansions in Alberta and have been parking oil rigs.”

“… have been parking oil rigs.”

How about all the debt that is associated with these parked oil rigs? Does this debt also get parked?

Comment by Housing Analyst
2015-02-20 05:07:20

‘They were called into the boardroom – conference call saying, ‘Pack up your bags, everything’s off the table.’ That’s in our boardroom they take this call.”’

Just like walking around the site without a hardhat and vest. Get in your truck and go home. And don’t come back.

Comment by RioAmericanInBrasil
2015-02-20 15:09:44

Cheap oil and a weak loonie

AKA bunker fuel and Housing Analyst.

Comment by Housing Analyst
2015-02-20 18:45:09

Man up Lola.

Comment by RioAmericanInBrasil
2015-02-20 18:59:56

Every day dimwit.

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Comment by Housing Analyst
2015-02-20 19:27:41

That’s about right Lola. You’re an Everyday Dimwit.

Comment by RioAmericanInBrasil
2015-02-20 19:49:56

That’s about right Lola. You’re an Everyday Dimwit.

Good “joke” for a dullard. Humor takes smarts. Give up and just call names.

Comment by Housing Analyst
2015-02-20 20:10:09

Don’t give up Lola. Crawl out of that sewer and cheer up. Falling prices to dramatically lower and more affordable levels is positively bullish and good for the economy.

Comment by RioAmericanInBrasil
2015-02-20 20:19:50

Don’t give up Lola.

I won’t dimwit.

You are boring.

Humor ability reveals intelligence, predicts mating success …

[PDF]Humor as a mental fitness indicator - Evolutionary Psychology
humor, general intelligence, and the Big Five personality trait

Comment by Housing Analyst
2015-02-21 04:28:41

Housing Lola Housing!

Clearwater, FL Sale Prices Crater 11% YoY Boosting Local Economy

Comment by Professor Bear
2015-02-21 14:31:17

“Humor as a mental fitness indicator”

After seeing Darrell Hammond’s live show last night, plus reading about Robin William’s suicide last year, I’m not so sure. Another theory is that those who are most gifted in making others laugh often live a life fending off the demons that lurk in their own psyches.

The “Darrell Hammond Project” at the La Jolla Playhouse
by Alejandra Enciso Guzmán on February 19, 2015
in Culture, Film & Theater
By Alejandra Enciso Guzmán

When the name “Darrell Hammond” is heard or read, the immediate association is with Saturday Night Live and comedy. Hammond holds the title for being the longest running cast member on the show (14 years), as well as for the most impressions by a single Saturday Night Live cast member: Bill Clinton, Regis Philbin, Dan Rather, John Travolta, Jesse Jackson, Richard Dreyfus, Jay Leno, Donald Trump and Sean Connery in the ever-popular “Celebrity Jeopardy” skits. He also has the distinction of being the person that has said the show’s catch phrase “Live From New York, It’s Saturday Night!” the most often.

In 2011, Hammond released his memoir “God, If You’re Not Up There, I’m F*cked: Tales of Stand-Up, Saturday Night Live and Other Mind-Altering Mayhem.” It was so well received that Hammond scaled the piece to a live performance. “The Darrell Hammond Project,” co-written with Elizabeth Steins, is the result. Its world premiere under the direction of Christopher Ashley was held at the La Jolla Playhouse on January 31st.

“The Darrell Hammond Project” is a 90 minute one man show that touches more deeply than comedy sketches and television. Darrell narrates in an office/library/little boy room type setting his journey through comedy. It was comedy that enabled him to survive and achieve professional success.

The journey was not an easy one. From day one, the Florida born and raised comedian suffered abuse in his home–from having his fingers put in sockets to being cut with knives. The trauma triggered profound and complex psychological issues.

Treated by dozens of psychiatrists (seriously, more than 30) he developed addictions to alcohol and medication. As the monologue runs, Hammond describes his father as a strong, very strict man with hardly any displays of affection and his mother as absent most of the time. Hammond shows how their struggle with their own ghosts became a trigger for their behavior toward young Darrell.

Always surrounded by colors in his mind, the comedian knew each color reflected a character voice. The color he imagined inspired the voice of a character like Porky Pig for example. Audiences will have the chance to see and feel these colors and understand Hammond’s process thanks to David Weiner’s lighting design.

After seeing his 40th doctor and more than a month in therapy, Hammond began to experience a peace of mind. As the laughs arise with various Saturday Night Live video clips guided by Hammond’s funny and dark comedic humor, other feelings will storm in. The audience will want to know “Why?” and “How?”. This is a remarkable and inspiring story. It is also tough going to be made aware of how a parent who should represent (and does) the world –everything- to a little kid, can cause irreparable damage.

Darrell Hammond relives his memoir every night, with a backstage view of a man’s struggle through life, relying upon comedy as his balm and savior.

Comment by Ben Jones
2015-02-20 05:12:39

‘Home sales fell in January as investors bought fewer homes in metro Atlanta, The Atlanta Board of REALTORS reported. From December 2014 to January 2015, the area had 2,395 home sales — down 37.1 percent. The median price on those sales dipped 3.3 percent to $203,000.’

‘Year-over-year in January, homes sales were down 9.7 percent to 2,395. Metro Atlanta area housing inventory totaled 13,759 units in January, an increase of 13.6 percent from January 2014. New listings totaled 4,374, up 17.2 percent from January 2014 and up 54 percent from December 2014, The Atlanta Board of REALTORS said.’

Comment by Ben Jones
2015-02-20 05:35:23

‘People in Auburn and Tuscaloosa like to think they are very different. Athletic rivalries have a way of emphasizing differences rather than commonality. But the truth is that they are both small, Southern cities with major state universities.’

‘So it’s not surprising that they would face many of the same challenges. Communities don’t exist in a vacuum. The forces that shape the world filter into Auburn just as they seep into Tuscaloosa.’

‘People in both cities look around them and wonder, “Who is going to fill all of these apartments?” And the answer to that question has created plenty of concern.’

‘In Auburn, construction of a development at 160 N. Ross St. with 642 beds seemed to finally cross a line that spurred the city to action. “The general consensus is, ‘enough is enough,’” Auburn City Councilwoman Lynda Tremaine said at the Auburn City Council meeting Feb. 3, according to the Opelika-Auburn News. “It’s time for us to stop.”

‘The concern follows a 2012 study which said Auburn’s apartment market should grow by no more than 300 to 400 beds a year because the recent addition of 1,200 beds has “stressed the market.” But construction didn’t slow down, and more than 1,000 beds have been added since. “My concern is, it’s not following the supply and demand that you typically see in the competitive market,” Auburn City Councilman Gene Dulaney said.’

Comment by snake charmer
2015-02-20 08:29:52

There is similar development in Tallahassee and Gainesville. I suspect the thinking is that wealthier alumni with football season tickets will buy crash pads for home games, and sell the apartments for a profit later. Lots of assumptions there.

This could be the reason, too: back on 2004-05 Ben posted stories about parents buying condos for their kids attending college. The practice combined real estate speculation with a child’s need for a place to live for a few years. Seeing as how we didn’t learn anything whatsoever from the last crash, we might be repeating very recent history.

Comment by oxide
2015-02-22 05:08:18


:confused: I’ve never seen apartments measured in “beds.” At first I thought that 162 N. Ross St. was a homeless shelter.

Comment by Ben Jones
2015-02-20 05:37:53

‘Home prices in high-end Los Angeles neighborhoods including Beverly Hills, Santa Monica and Bel Air have surpassed levels reached before the housing bubble burst even as values in the region’s broader market continue their recovery.’

‘Beverly Hills had the highest median price for single-family homes in the fourth quarter, at $3.55 million, down 36 percent from a year earlier, according to the Elliman Report. Prices also fell from a year earlier in Malibu, with a 4.8 percent decline to a median $2.47 million, and in the Bel Air and Holmby Hills districts, down 22 percent to $1.75 million.’

Comment by Ella58
2015-02-20 12:11:58

Those are some massively red numbers.

If HA had posted in bold “Beverly Hills median price craters 36% from last year,” some posters would have accused him of cherry picking or misreading the stats. But now here it is in a Bloomberg article (albeit buried under a “prices up!” headline.)

How long until the double-digit price drops move from the body paragraph to the headline?

And according to the article, that massive median price drop in Bev Hills nevertheless included the sale of a $70mil house. What would the drop have looked like without it?

Comment by Rental Watch
2015-02-22 17:53:57

It all depends on what conclusion you are trying to make by looking at the data.

There were approximately 350 homes sold in Beverly Hills in the past 12 months. 200 of them were single family.

Tell me what you read into these two sentences:

“Beverly Hills had the highest median price for single-family homes in the fourth quarter, at $3.55 million, down 36 percent from a year earlier, according to the Elliman Report. …”


“In the Beverly Hills post office area, which lies inside the 90210 ZIP code but outside the city limits, they climbed 37 percent to $2.6 million, and in Santa Monica they gained 21 percent to $2.19 million.”

So, what is it, prices collapsing? Or prices skyrocketing?

I submit that it’s neither. At this point, there are 85 homes on the market, representing about 3 months of inventory based on the 350 annual sales pace. This is generally considered a pretty balanced market. The variation is simply due to a small sample size with a wide variation in the types of homes (Beverly Hills has little uniformity in the homes).

If you are trying to point toward a broad trend of prices falling, you should be looking broadly, not a single market that represents 0.1% of the homes sold in the state in which the market is located.

Comment by Ben Jones
2015-02-22 18:09:53


Calif. Single-family -5.9%

Calif. Condo/Townhome -3.0%

Los Angeles Metro Area -4.3%

Inland Empire -5.2%

San Francisco Bay Area -6.8%

Is that broad enough for ya?

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Comment by Professor Bear
2015-02-22 19:28:44

It looks like home prices are falling at double-digit (annualized) rates across all of California. And as usual, the clueless real journalists are completely missing it!

Comment by Rental Watch
2015-02-23 04:51:47

Housing is seasonal, as you well know. How about the YoY data?

Single Family: +3.4%

Calif. Condo/Townhome +6.4%

Los Angeles Metro Area +2.0%

Inland Empire +0.1%

San Francisco Bay Area +6.2%

Prices are neither collapsing, nor skyrocketing.

But there is interesting data if you can pull back a layer or two:

I saw a while back that Livermore, CA (a commuter market to the Bay Area) was roughly flat, but with only about 1 month of inventory. This is consistent with a market that is topping out…with such low inventory, you should be seeing much higher appreciation. Any appreciable addition of supply, or local recession, and you’ll see prices fall.

A contrast is markets farther inland, where you see stronger home price growth, but still with more inventory on the market. These are much less vulnerable to home prices falling, IMHO.

The other piece, as PB will readily note is the second order by looking at Y-o-Y data in consecutive months:

Y-o-Y data from December:

Single Family: +3.1% (slight acceleration to 3.4% in January)

Calif. Condo/Townhome +7.5% (deceleration to +6.4% in January)

Los Angeles Metro Area +2.8% (deceleration to +2.0% in January)

Inland Empire +3.6% (deceleration to +0.1% in January)

San Francisco Bay Area +8.9% (deceleration to +6.2% in January)

Y-o-Y data from November:

Single Family: +5.2% (deceleration to 3.1% in December)

Calif. Condo/Townhome +6.3% (acceleration to +7.5% in December)

Los Angeles Metro Area +5.2% (deceleration to +2.8% in December)

Inland Empire +5.9% (deceleration to +3.6% in December)

San Francisco Bay Area +8.1% (slight acceleration to +8.9% in December)

So, there is clearly a weakening in home price appreciation. There is not yet clearly home prices falling.

As I’ve said before, I do not thing that we’ll see significant reductions in home prices in CA until we have a lot more housing starts, or a recession.

Comment by Housing Analyst
2015-02-23 09:36:19

How about the YoY data?

San Diego, CA Sale Prices Plunge 13% YoY


How bout that Rental_Fraud.

Comment by Housing Analyst
2015-02-22 18:16:34

With millions of excess empty and defaulted houses throughout California, you can be certain there are more than 85 depreciating shacks on the market Rental_Fraud.

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Comment by Ben Jones
2015-02-20 05:41:48

‘A mysterious jump in struggling homebuilder Kaisa Group’s debt levels has left investors worried that leverage at other Chinese developers could be much higher than previously estimated. Mid-sized developer Kaisa disclosed that its borrowings stood at 65 billion yuan ($10.4 billion), a figure that stumped many analysts given it previously reported that in June last year its debt pile was just under half that level.’

“We will be more cautious on China property, because the risk premium will go up - valuations and perceptions will change because of the Kaisa incident,” said Brayan Lai, a portfolio manager with One Asia Investment Partners.’

‘An overhang of unsold new homes and nine straight months of house price falls in China’s major cities mean investors are already wary about the outlook for developers. Kaisa’s problems have escalated those concerns, given the homebuilder had been seen as a well-financed developer with relatively healthy cash holdings until late last year.’

“The Kaisa revelations raise a red flag for the sector,” said David Ng, head of China & Hong Kong research at Macquarie. He said investors will now have to examine whether other developers have hidden liabilities. “You will have to look beyond the balance sheet for potential contingent liabilities or hidden guarantees that are not reported in the financial statements,” Ng added.’

‘Last year Chinese developers accounted for 61 percent all high-yield bonds issued by Asian companies, excluding Japan and Australia, in the U.S. dollar market in 2014, according to Thomson Reuters data. Wee Liat Lee, BNP Paribas Head of Property Research, said he had expected larger developers such as China Overseas Land & Investment Ltd and China Vanke Co to bid for Kaisa, but the developers’ debt disclosures probably explain why they did not.’

“It is now quite plain what doubts they may have been having about the hidden debts,” he said.’

Comment by Ben Jones
2015-02-20 05:44:52

‘The Bank of Canada’s (BoC) surprising January cut in the overnight lending rate to 0.75% from 1% could be the beginning of more BoC cuts to the benchmark interest rate. The lower rates have “been a game-changer” in the commercial real estate market, particularly in the multi-family rental sector, said commercial mortgage broker Michael Lee of Mortgage Alliance.’

“I have a client buying a multi-family property with five-year financing at 1.77%.” Lee added that landlords can already secure 10-year mortgages at 2.43%. Based on the potential returns on Vancouver rental apartments – cap rates are in the 3.5% to 4% range and the average appreciation of a city apartment building in the past year is 16% – Lee said, “it’s practically like giving away free money.”

Comment by Guillotine Renovator
2015-02-22 12:58:15

Kick the Can(ada).

Comment by Mugsy
2015-02-23 02:46:55

“it’s practically like giving away free money.”

Yes, completely free. Just ask the strawberry pickers in SoCal who were documented making $75,000 a year. Absolutely free with no strings attached. No foreclosures, no pesky bill collectors and no regrets.

Comment by Ben Jones
2015-02-20 05:49:43

‘Figures compiled by the Housing Industry Association showed residential land fell in price by $19/sqm in the three months to the end of September. Despite the fall, Perth property is still selling at an average of $646/sqm, a near threefold increase over the past decade.’

‘At $646, Perth still easily out-ranks Sydney ($582/sqm) as the priciest place in the country to buy land for a home. The fall in Perth’s price came as the total number of land sales in Perth fell to 2000 through the quarter, the lowest since late 2011. They are down almost 45 per cent from their most recent peak in early 2013.’

‘The Kimberley remains the most expensive regional market in WA for land, with a median lot price of $196,500. Over the past year, Kimberley land prices have collapsed by more than $60,000. At the square metre rate, they have fallen to $324 from $418, a 22 per cent fall.’

Think about this:

’still selling at an average of $646/sqm, a near threefold increase over the past decade’

Comment by Housing Analyst
2015-02-20 06:59:37

With the doorbuck and doors lying on the ground twisted like a pretzel, the herd trample each other getting through the hole in the wall.

You can price it but where are the buyers?

Comment by snake charmer
2015-02-20 08:39:32

And the Kimberley is like a hot version of the Yukon. Desolate, isolated mineral boomtowns. Some of these prices sound like stories of old gold rush communities, now deserted, where sudden wealth bizarrely re-priced everyday items.

Comment by taxpayers
2015-02-20 07:09:03

On the 72 month loan you are going to pay an extra $466 in interest, but you will have an extra $70 bucks in your pocket each month. Let’s say for the sake of argument that you have to pay a little more interest for that longer loan, maybe 5%:

and they vote

Comment by Ben Jones
2015-02-20 07:11:38

‘Four-Year Lows in Institutional Investors and All-Cash Buyers in 2014 Despite Increase in Fourth Quarter’

“While the overall percentage of purchases by institutional investors is nothing to write home about nationwide, the true impact of these investors can be seen more clearly at the hyperlocal level,” said Daren Blomquist, vice president at RealtyTrac. “There were 35 zip codes nationwide where at least 50 single family homes were purchased by institutional investors in the fourth quarter, with institutional investor purchases representing from 17 percent to 74 percent of all single family home sales in those zip codes.”

“We are seeing a fair amount of deals in the area as this institutional investor money is really becoming a player,” said Wesley M. Hardin, owner/broker at RE/MAX Alliance, covering the Denver market, which saw an uptick in institutional investors in the fourth quarter. “In fact, I closed a deal this past Wednesday from a REIT back east. They sent the offer without seeing the home and closed in about 10 days. The title company told me this was their 256th purchase in the metro area in the last 12 months.”

“Cash buyers are still king in Seattle; made up primarily by investors at the low end and international home buyers at the high end,” said OB Jacobi, president of Windermere Real Estate, covering the Seattle market,” said OB Jacobi, president of Windermere Real Estate, covering the Seattle market, where the share of cash sales and institutional investor purchases increased from the third to fourth quarter. “In Seattle, we are beginning to see institutional investors sell off their properties because of the significant equity they’ve been able to build over the past few years.”

‘Nearly 8 percent of U.S. cash buyers took out a subsequent mortgage after the purchase, according to a RealtyTrac analysis of nearly 1.5 million all-cash purchases of single family homes nationwide from January 2013 through December 2014.’

‘On average the original cash purchase prices were 93 percent of the purchased property’s full market value, and the subsequent mortgage was recorded an average of 202 days — nearly seven months — after the sale.’

‘The county with the highest percentage of cash sales with a subsequent mortgage was San Francisco County, California, where 24 percent of cash buyers took out a subsequent mortgage, followed by Denver County, Colorado (21 percent), Marin County, California (20 percent), and San Mateo and Santa Clara County, both in California and both with 19 percent of cash purchases with subsequent financing.’

Comment by Ben Jones
2015-02-20 07:13:13

‘a REIT back east…sent the offer without seeing the home and closed in about 10 days. The title company told me this was their 256th purchase in the metro area in the last 12 months’

Because Denver is such a bargain right now. How would you like to be holding that REIT?

Comment by Professor Bear
2015-02-20 08:25:11

‘Nearly 8 percent of U.S. cash buyers took out a subsequent mortgage after the purchase, according to a RealtyTrac analysis of nearly 1.5 million all-cash purchases of single family homes nationwide from January 2013 through December 2014.’

Makes sense. Why wouldn’t a rich guy want to climb on board the mortgage interest deduction gravy train and put his cash to work somewhere else?

Comment by Ben Jones
2015-02-20 08:44:58

‘Nevada had one of the nation’s highest percentages of all-cash sales for homes purchased in the fourth quarter of 2014 but the percentage of institutional investors plummeted compared to a year earlier, RealtyTrac reported.’

‘All-cash sales represented 42.5 percent of all housing sales in Nevada from October through December, third highest percentage in the nation behind only Maine and Florida based on data from 39 states. The national average was 30.3 percent.’

‘Institutional investors, which RealtyTrac defines as buyers of at least 10 properties over the prior 12 months, bought only 3.6 percent of the Nevada homes that were sold last quarter. That was down from 12.7 percent a year earlier.’

Comment by snake charmer
2015-02-20 08:42:25

“Gray says that’s a hard, but important lesson to learn. ‘For those people who bought big houses or leveraged their personal wealth, I bet that lots of those young people will look back in 20 years and say the life experience they got from this was the best they’ve ever had. We’ve had chequebook public policy in this province and with a lot of our people for too long and this cold shower that we’re having is not all bad.’”

I bet differently. I bet a lot of those young people will slowly rebuild their wealth and then get fleeced a second time.

Comment by Housing Analyst
2015-02-20 09:05:34

Palm City, FL Sale Prices Crater 11% YoY


Comment by Ben Jones
2015-02-20 12:16:51

Another dining IPO goes poof!


Comment by taxpayers
2015-02-20 13:04:32

people pay loads ?
I paid .35% once

Annual Report Expense Ratio (net): 0.85% 0.86%

Prospectus Gross Expense Ratio: 0.85%
Max 12b1 Fee: 0.25% N/A
Max Front End Sales Load: 3.75% 4.04%

Comment by Ben Jones
2015-02-22 08:51:53

‘The median sales price of single-family homes in Southern Nevada last month was $200,000, down 2 percent from December but up 8 percent from a year ago, according to a new report from the Greater Las Vegas Association of Realtors. Owners sold 1,794 single-family homes last month, down 19 percent from December and 13 percent from a year ago.’

‘With investors now backing out, price-growth has cooled considerably. Prices soared 57 percent in two years after bottoming out, rising from a median of $118,000 in January 2012 to $185,000 in January 2014 for single-family homes, according to the GLVAR.’

‘Meanwhile, the number of houses without offers remains high — 7,382 by the end of January, down 5 percent from December but up 13 percent from a year ago.’

‘Listings increasingly are being ignored as investors pull back and as homeowners, emboldened by the rebound, overprice and get ignored by the shrinking number of buyers, real estate agents have said.’

Comment by Professor Bear
2015-02-22 09:28:21

‘With investors now backing out, price-growth has cooled considerably.’

Foam the runway!

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