A Glaring Piece Of Hubris
It’s Friday desk clearing time for this blogger. “Some Puget Sound buyers are paying nearly $100,000 more than the list price for many luxury homes in this market. But that trend is all across the board, not just high-priced homes. Broker George Moorhead of Bentley Properties says a lot of sellers are hesitant to put their homes on the market. ‘There is no place to move to, there is no home,’ Moorhead said. ‘The buyers don’t win, OK, because they are having to overpay for something.’”
“Moorhead added that buyers have to be aggressive and be pre-approved for a mortgage before shopping around. If you settle on a home to buy, appealing to the sellers could give you the edge. ‘We are seeing pictures with families with dogs, very colorful letters, the plight of ‘I have been looking for over a year,’’ Moorhead said.”
“The run-down Desert Garden condominium complex has boarded and barred windows, dirt courtyards and a dirt-filled swimming pool. Unit No. 116, a two-level, 776-square-foot home with two bedrooms and one bathroom, sold for $10,000 cash last year. In a sign of just how bloated Las Vegas’ real estate market became, county records show that unit No. 116 sold for $62,500 in spring 2004 and then $82,000 in early 2007 — a 31 percent price jump in less than three years. The peak buyers, husband-and-wife investors from California, tried to sell the condo for $30,000 in summer 2012 but steadily dropped the price, to a low of $20,000 in fall 2013, GLVAR records show. They sold it last January to an investor for just $10,000, an 88 percent loss from their 2007 purchase price.”
“And in true Vegas fashion, the buyer already flipped the property. The investor sold it for $17,043 — 70 percent above what he paid — last June to a buyer from Los Angeles.”
“More Coachella Valley homebuyers are investing in new homes than they were a year ago, and they’re paying about 20 percent less for them. Buyers purchased 58 new homes in the Coachella Valley in January, up 29 percent compared to January 2014. They paid a median price of $357,000, down 21 percent from a year ago, according to CoreLogic DataQuick.”
“Year-over-year resale home and resale condo homebuyers purchased 408 existing homes, down 13.7 percent from 2014, and 223 condos, down 13.9 percent, according to DataQuick. The California Desert Association of Realtors reported that 3,553 single-family homes were on the Coachella Valley market in January — 20.5 percent higher than January 2014 and the highest number of homes on the market simultaneously since at least January 2013.”
“Ted Jones, chief economist for Stewart Title Guaranty Co., who formerly was the top dog at the Real Estate Center at Texas A&M University, said there may be something to reports that Austin has the most overvalued housing market. ‘Housing prices are pretty aggressive compared to the median income,’ he said. ‘It’s definitely being driven by upper middle class jobs and if you have a hiccup happen there, well…..’ One thing is for certain, he added. The market for homes priced at $500,000 and above is ‘oversaturated.’”
“Housing affordability surged for first time Maryland homebuyers in the fourth quarter of 2014, according to the Maryland Association of Realtors. MAR President Janice Kirkner said in a news release that starter home price declined almost $15,000 in the last three months of the year, the major contributing factor in the jump in affordability. ‘We ended 2014 on a very positive note in terms of affordability,’ Kirkner said.”
“The surging dollar is striking fear into business leaders who depend on foreign exports for profits. The same is true in Southwest Florida, an historically popular home-buy destination for Canadians, Britons, Chinese and Western Europeans. ‘I’m already starting to see it,’ said Roger Pettingell, a luxury specialist with Coldwell Banker on Longboat Key. ‘The idea that the U.S. is on sale because of the currency discount doesn’t exist anymore.’”
“‘Not only is the dollar stronger, but for a lot of the feeder nations to Florida, their home currencies have devalued, so the price they’re paying is now substantially higher,’ said Jack McCabe, a Florida real estate consultant. ‘Their finances have been decimated. We’re going to see a change in the amount of foreign nationals that come to Florida to buy property,’ he said. ‘It’s already happening.’”
“Calgary and Edmonton housing markets were ‘hammered’ in January, says the Conference Board of Canada. A report, by senior economist Robin Wiebe, released on Thursday, said the seasonally-adjusted annual rate of sales fell by 23.9 per cent on a monthly basis in Calgary to 20,100 and by 9.8 per cent in Edmonton to 15,372. Month-to-date in Calgary from February 1-25, according to the Calgary Real Estate Board, there have been 1,052 MLS sales in the city, down 33.59 per cent from the same period a year ago while new listings have risen by 11.78 per cent to 2,619. The average MLS sale price of $463,029 which is off by 3.98 per cent from a year ago.”
“The report classified both cities as being in a buyer’s market. According to the Conference Board report, the short-term year-over-year MLS price expectation is from zero to 2.9 per cent in Edmonton. In Calgary, the board classified the expectation as ‘falling.’”
“Mark Colvin: ‘It’s easy to think thart the global economy went back to normal after the global financial crisis but many of the underlying problems that led to were never truly fixed. Are we living in another bubble and is it about to burst, because so often the language of finance is hard to understand. The British writer John Lanchester is one of the most effective communicators on economics around.’”
“Lanchester: ‘I think the weird thing is we are and we’re both inflation and deflation at the same time. We’re in bubbles and we’re in panics almost sort of simultaneously. I think that when you talk to people who know a lot more than I do, the kind of IMF-type people, the Davos crowd, virtually to a man, everyone thinks that this system is in a very risky, very fragile state. And then there’s slightly a game play of pick a bubble, what’s your favourite bubble to likely go pop? The two I hear most about are something nasty in the euro zone which, I mean, trust me, the closer you are to the euro zone, the more likely that seems, or something going wrong in China.’”
“‘They’re both in a fragile and strange condition and then you get these data points coming out of China that you do a double take. People who are more confident about it say that since the Chinese government has full control of everything, full control of every aspect of the credit supply and access to money and all that, if there’s anyone in the world who can engineer what they call a soft-landing it would be the Chinese government.’”
“Colvin: ‘That does assume that the economy is one of those machines with levers and pipes and wires and things that you can control all of and that’s another long-standing economic argument. Where do you stand on that?’”
“Lanchester: ‘There seems to be a profound human impulse to believe that we can control things we can’t and the fact that the sheer complexity of all human interactions together, which is what an economy is, the fact that you can accurately model and control it is just very obviously, I mean to the non-economist which is what I am, it’s just very obviously a glaring piece of hubris.’”
Vienna, VA(DC Metro) Sale Prices Crater 6% YoY As Housing Correction Ramps Up
http://www.zillow.com/vienna-va/home-values/
Friday….my favorite day of the week because I get to read Ben’s desk clearing post. This week, two things caught my interest: 1) John Lanchester’s globally based comments on the state of the world and 2) the increased affordability for first time home buyers in Maryland.
Great stuff Ben. Time to renew my subscription. It has been a while.
Much obliged Jingle_Fraud.
And don’t forget to check out the price declines in New York, California, Oregon, Washington, Colorado and Texas.
This is interesting:
‘when you talk to people who know a lot more than I do, the kind of IMF-type people, the Davos crowd, virtually to a man, everyone thinks that this system is in a very risky, very fragile state’
And yet, gosh, isn’t it strange how they never say that publicly? Isn’t it weird how the mainstream media never interviews those people and publishes those worries?
I don’t find it strange at all. It is really rather logical they don’t say such things publically. They would just be accused of shouting fire in a crowded theater.
That is the problem w bubbles and fragile economies….the tide usually goes out faster than you can swim.
Could another Minsky moment be at hand, particularly given the complacency bred of de facto too-big-to-fail bailout insurance against gambling losses?
The Death of Money: The Coming Collapse of the International Monetary System
by James Rickards
I just read this. I’ve read so many scare books that I have no opinion anymore.
best book ever Jack Boogle’s books.
Yet that same Davos crowd of people enthusiastically created the current situation and defend the ideology behind it. It’s enriched them beyond their wildest dreams, of course. See the photos of the private jets that transported this year’s pampered attendees. When repeated failures of increasing amplitude don’t bring change, big trouble is on the way.
But they exist to kick the can down the road. And the can will be kicked until all facade of society has crumbled.
TOO MUCH DEBT.
‘U.S. home rental prices rose at a steady rate in January, but prices barely budged or even dipped in parts of the Midwest and Mid-Atlantic.’
‘Real estate data firm Zillow said Friday that prices increased a seasonally adjusted 3.3 percent in January compared with 12 months earlier. But some major cities are finding themselves with an excessive supply of apartments and houses, reducing price pressures for renters.’
‘”Chicago did a whole lot of overbuilding during the housing boom,” Gudell said, noting that some select downtown neighborhoods in the Windy City still have prices rising at or above the national average.’
‘Dann Wunderlich, 24, lives with his fiancee in a “spacious” one-bedroom apartment in Chicago’s Buena Park neighborhood. Together, they pay $1,050 a month, well below what Wunderlich says he was paying in 2011 for an apartment elsewhere in the city.’
“People in our area move year to year because they’re consistently finding a better price,” Wunderlich said. “I know that’s what we did until we found this apartment. If we found a better apartment with a cheaper rent, we would move.”
‘Similarly, construction has been making more apartments available around Baltimore and Washington’
‘About three years after buying a batch of unsold condos in a distressed River North development, a Florida investor is putting most of them up for sale in a deal that could represent something of a test case for the downtown housing market.’
‘Aventura, Fla.-based Gamla Cedron Group hired a broker to sell 24 of the 34 condos it has been renting out in the 198-unit tower at 757 N. Orleans St. Gamla was one of several investors to buy new unsold downtown condos in bulk after the bust, seizing the opportunity to collect rent amid a strong downtown apartment market.’
‘Several developers made bulk purchases of unsold condos in struggling downtown projects after the market crashed, and most are still renting out the units. Appraisal Research reports that 808 condos in 13 buildings that were bought in bulk in recent years are still being rented out.’
‘Amid an improving condo market, however, more of the bulk investors may decide to cash out. As the supply of new condos dwindles, “we expect to continue to see some re-marketing of unsold inventory in existing condominium buildings which have been rented since the market downturn,” the Appraisal Research report says.’
Never buy a condo!
http://www.nytimes.com/2015/02/26/technology/google-plans-new-headquarters-and-a-city-fears-being-overrun.html?_r=0
MOUNTAIN VIEW, Calif. — Apple is moving into Silicon Valley headquarters that look like a spaceship. Facebook is expanding its campus with a new building designed by Frank Gehry. Now it’s Google’s turn.”
Here in Silicon Valley, building a showplace headquarters is usually the harbinger of doom for the company doing it. I call it the edifice complex.
Examples include Borland International, SGI, Sun Microsystems, and many others.
While I’ve never worked in Silicon Valley, I once was employed by a company that built a showplace headquarters, and worked in the building. It was the peak of optimism about our business prospects. The company ceased to exist several years later.
‘Similarly, construction has been making more apartments available around Baltimore and Washington…’
“…. where rental prices rose 1.5 percent and 1.3 percent, respectively. A separate report by the rental marketplace Apartment List found that rents for a two-bedroom apartment in metro Washington were averaging $1,990 a month, up just 0.1 percent over the past year.”
So even with the new inventory coming on line, rents are not falling, they are just stabilizing. Whatever. My mortgage payment has been stable for years now. Oh -wait, it’s going up a little because I just increased my principle reduction.
” My mortgage payment has been stable for years”
Yet your total monthly cost is double rental rates.
Don’t get all excited about a little short term blip that is not statistically significant. Rents around DC had a significant and sustained increase from 2009 to 2011 and since then have been sideways in a narrow range. Essentially, since the Oxycastle was purchased, rents have not gone up.
http://www.rentjungle.com/average-rent-in-washington-rent-trends/
If we could get all the pertinent information, I would love to see a comparison of buying vs renting since oxygal made her purchase. The longer prices remain inflated, the better her decision looks. I actually don’t begrudge anyone for buying, selling, whatever. I don’t like the Jingle/RentalFraud gloating/shilling, however. And I’m not a fan of infestors in general.
I wish the deal I had in 2010 had gone through.
Just sayin’…
The problem with data is that it doesn’t reflect what makes you feel safe or happy. When it comes down to basic emotions, if you have the money for something you really really “need”, or can borrow it, it’s a done deal, and you really don’t care about the math or the losses. Gains are nice, but you really don’t care.
If having the money instead makes you feel safe and happy, then you simply find a way to spend below your means.
“….. I don’t like the Jingle/RentalFraud gloating/shilling, however.”
Guillotine… I see now I owe you and the rest of the HBB community an apology. It is not my intent to gloat or overlord. I do get passionate about my views and beliefs. I believe real estate to be a good investment opportunity and I get short with others who are 100% negative. That is why I posted examples of my positive experiences in the idustry on the HBB.
I know I haven’t changed the minds of many posters here, but maybe I’ve provided an important perspective for a few readers.
Either way, I am toning down my rhetoric and again, I apologize for acting like a A-hole. It is a misscharacterization of my zeal.
How about just telling the truth instead of the realtor scamming Jingle_Fraud.
…yet the OxySalary continues to increase and the OxyCastleEquity continues to grow.
How many years Oxy, until you own free & clear…..a point where others will still be paying rent forever?
There is no “equity” when prices are falling Jingle_Fraud. A painful reality for you and the Donk.
‘D.C. Has Lots of Vacant Land, With an Asterisk’
‘In ZIP code 20020, there’s more than 53 million square feet of vacant land controlled by the feds.’
There are plenty enough blighted areas in Southeast that developers can turn into hi-rises without digging up the Civil War forts. The problem is that all the businesses are located in the other direction.
“New home pricing has flattened in many parts of the Orlando MSA,” said Anthony Crocco, director of Metrostudy’s Central Florida region. “The market’s pricing distribution of new homes continues to push into the higher ranges, and weakens in the lower price points. Part of this change in distribution is due to the new projects opening at higher prices and older projects selling out at lower prices.”
‘Total single-family inventory, which includes units under construction, finished vacant units and models, equaled 5,140 units at the end of the fourth quarter, about 6.8 months of supply. Housing inventory increased by 5.3 percent compared to last year.’
And here in Central Florida, when you drive at night through established subdivisions that were built during Bubble1.0, and see how many houses are not for sale, yet are unlit, empty and unused it is startling. And if you are the type to think in more than 2 dimensions, you now have to ponder; How many of these occupied structures are rentals? How many are filled with people who are owners of record, yet have not made a payment in years? How many contain squatters? And yet, builders continue to build more, because the only thing that builders do is build. When the reality is finally acknowledged about inventory numbers…
It is scary. I drove through an old Levitt & Sons development in St. Cloud now owned by DR Horton. It’s called Turtle Creek, it seems their pushing homes to the sheeple. Who will buy out there is the big question?
http://www.zillow.com/queen-creek-az/
Zillow predicts 85142 home values will increase 2.6% next year, compared to a 2.7% increase for Queen Creek as a whole. Among…
my hood is negative on Zillow
‘Arizona lost more construction jobs than any other state in the nation last year, according to a report released this month by the Associated General Contractors of America. And, experts warned, the lagging numbers just might be the “new normal” for the state.’
‘Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business at Arizona State University, said the recession hit Arizona harder than other states. The state has only restored about 75 percent of its lost jobs, McPheters said. “The demand for construction workers is not there,” McPheters said. “Arizona is running at not even half speed.”
‘At the peak of the housing bubble in Arizona, about 80,000 single-family housing permits were issued per year. In 2014, that number dropped to about 20,000, McPheters said.’
‘There is a weak demand for housing due to overbuilding prior to the recession. And population growth isn’t as strong as usual, which translates into reduced demand for new homes, McPheters said.’
‘High vacancy rates also add to the lagging demand for new construction, he said. McPheters said commercial vacancy rates are at about 25 percent.’
‘Existing home sales in the Phoenix area were down in January by 2 percent vs. a year ago and new home sales decreased 6 percent last month compared to January 2014, according to RL Brown Housing Reports.’
‘New home starts, however, were up 18 percent year over year, according to RL Brown. There were 799 new home permits taken out by builders last month vs. 677 a year earlier. There is a 20 percent increase in new subdivsions going up in the Valley increasing the number of builders chasing potential buyers.’
‘For years, people visiting Park City from across the country have fallen in love with the town. Many have returned to make it at least a part-time home. If local officials in the real estate market are right, more people from around the world are going to soon start following suit.’
‘Nancy Tallman, president of the Park City Board of Realtors, said local Realtors are preparing for an influx of foreign investors over the next few years. The trend is being driven by Vail Resorts’ increased presence in town. The Epic Pass Vail offers at Park City Mountain Resort and Canyons Resort and the rest of their properties around the country is sold all over the world and grants access to ski resorts in several countries.’
‘As more foreigners take advantage of the pass to visit Park City, Tallman said, they’re going to discover Park City is a great place for a ski home. Among the perks foreign investors may find attractive are convenient access to an international airport and, perhaps more importantly, prices well below peak value.’
“You’re going to get people coming from different parts of the world to ski here,” she said. “People from Europe, South America, Mexico are going to come because for $729 they can ski all week at two resorts in Park City. People who have been going to Colorado are going to use this pass to check out Park City. People come out here, and like all of us, they fall in love with Park City. Then they start looking at property.”
‘Tallman expects international investors to move quickly and grab real estate in town while it’s relatively cheap. The current median price of a single-family home is 12 percent below peak values.’
“These investors are savvy,” Tallman said. “They do their research and they realize that our properties have not returned to peak pricing, that it’s still ‘discounted.’ It’s still a good value.”
‘Tallman said that, overall, foreign investors entering the market is a positive trend for local real estate. “It’s always a good thing when we have demand for our properties. It helps increase value,” Tallman said. “The more buyers we have, the higher the prices could theoretically go.”
I remember Park City in the late 70’s when it still looked like an old mining town, it was more Ouray than Aspen. It has been painful to see it change over the years.
ouray 550 CW Mcall:
https://www.youtube.com/watch?v=UDq6i2AQaCg
http://en.wikipedia.org/wiki/Mammoth_Mountain_Ski_Area
I used to go here allot back in the day. Used to be cheap.
“The more buyers we have, the higher the prices could theoretically go.”
And ever-spiraling prices is the primary sign of a healthy and improving real estate market…
Get a piece of that crooked Chinese money while you can, Park City. Maybe indolent residents of the Gulf States too. It’s definitely an improvement on the Dubai indoor ski slope.
Let’s try it again….
Question;
Why would an individual pay more than production costs($55/sq ft) for a used item, in this case a house?
Because buying a house is the second biggest hormone based, emotional, manic, illogical decision people make in their entire lives.
+1
‘Walter Investment Management Corp., a mortgage banking business and one of Tampa Bay’s 10 largest public companies by revenue, on Thursday morning reported sharp losses for the fourth quarter and all of 2014. The company also provided more details on earlier disclosures that it was under investigation by multiple federal and state agencies.’
‘The 6,700-employee company said in a Securities and Exchange Commission filing that it is facing “increased scrutiny and potential enforcement actions by federal and state agencies, including a pending investigation by the CFPB (Consumer Financial Protection Bureau) and the FTC (Federal Trade Commission) and a pending investigation by the Department of Justice and HUD (Department of Housing and Urban Development).”
‘Why? Walter states it involves “inquiries from government agencies into advertising and loan solicitation, underwriting, loan origination, securitization, collection, foreclosure, loss mitigation, bankruptcy, loan servicing transfers and insurance, including lender-placed insurance.”
‘The company’s operations include Green Tree Lending, whose loan servicing problems have attracted the attention of regulators, and a second mortgage lending unit called Ditech.’
‘Walter reported a fourth-quarter loss of $44 million, or $1.17 per share, after reporting a profit in the same period a year earlier. Wall Street had expected earnings of 64 cents per share.’
‘For all of 2014, the company reported a loss of $110.3 million on revenue of $1.49 billion.’
‘Cash is still king in the Cape Coral-Fort Myers home-buying market, even as cash sales throughout the country are generally falling, according to RealtyTrac. Among metropolitan statistical areas with a population of at least 500,000, this area was third nationally with 53.9 percent cash home sales in the fourth quarter, the report states.’
‘Miami had the highest share at 58.1 percent, followed by Sarasota-Bradenton-Venice (54.3 percent), Cape Coral-Fort Myers (53.9 percent), Tampa (49 percent) and Memphis, Tenn., at 48.1 percent.’
‘In South Florida, the continued strength of cash was fueled by offshore money, Mike Pappas, CEO and president of the Miami-based Keyes Company, said in a written RealtyTrac release.’
“World money has been pouring into the Miami real estate market,” he said. “The strong cash purchases are a validation of the Miami region as the undisputed capital of Central and South America. Many wealthy overseas individuals purchase properties as a safe haven.”
Ever seen that pouring of money in reverse?
We’re about to.
‘Baby Boomers, who purchased their first homes on Staten Island for around $50,000 in the 1970s, and then upgraded for about $150,000 in the 1980s and 1990s, have fueled the housing market for the last several decades. Now, as Boomers nationwide retire in droves, they are seeking to realize significant profits by putting those larger homes on the market, and then downsizing.’
‘But those who would typically be seen as potential buyers aren’t in the position to purchase a new home.’
‘The Bipartisan Policy Center cites a Federal Reserve study: “Nine percent of 29- to 34-year-olds got a first-time mortgage between 2009 and 2011, down from 17 percent a decade earlier.” In addition, the policy center cites a National Association of Realtors report that said in 2011, 25- to 34-years-old made up 27 percent of all home buyers; a decrease from 33 percent in 2001.’
‘The result? A potential nationwide housing bubble, that studies show will be caused by not enough demand for the thousands of high-priced homes the Baby Boomers want to sell.’
‘Over the last several years there has been a slow down in sales of higher-end homes on Staten Island — many owned by Baby Boomers, say Realtors. “We are definitely seeing the pressure on high-end properties due to the (national) trends,” said Dil Gillani, president of the Staten Island Board of Realtors, and broker/owner of Gillani Homes in South Beach.’
‘Part of the problem is many Boomers are still carrying high mortgages, and are pricing their homes at more than they’re worth in the current housing market. “Many Baby Boomers, because they didn’t save and don’t have the right kind of money for retirement, are trying to sell houses in order to downsize. …But they (Baby Boomers) have a big house and they have no one to buy it at the price they want for it,” said Claire Bisignano Chesnoff, broker/owner of the New Dorp-based Claire Properties.’
“’Many Baby Boomers, because they didn’t save and don’t have the right kind of money for retirement, are trying to sell houses in order to downsize. …But they (Baby Boomers) have a big house and they have no one to buy it at the price they want for it,’ said Claire Bisignano Chesnoff, broker/owner of the New Dorp-based Claire Properties.”
“… because they didn’t save and don’t have the right kind of money for retirement …”
Truly, a nation of dummys.
“…right kind of money for retirement…”
Yes, there are 2 “kinds” of money - “real” money, and “IOSs” which will be sold at huge discounts and tremendous principal losses as baby boomers exchange this “money” (i.e. worthless promises to pay that will not be honored) for “real” money to buy groceries and gasoline and to keep the heat and lights on.
Neil, please pass the popcorn.
Whatever happened to Neil?
‘The result? A potential nationwide housing bubble, that studies show will be caused by not enough demand for the thousands of high-priced homes the Baby Boomers want to sell.’
Long predicted, and a problem for ANYTHING Baby Boomers want to sell. Not because the generations to follow are smaller in numbers, but because they are poorer. And in the case of housing don’t necessarily want the same things.
“Not because the generations to follow are smaller in numbers”
We’ve covered that here and in fact the following cohort is much smaller.
3 million a year turning 65 for the next 20 years.
What bothers me is the extent to which the government is taking future money away from my children to try to force them and their peers to overpay for those houses so older people can take cruises.
The one way to take back whatever disadvantages Generation Greed has foisted upon those coming after is to take it back by paying less for housing. Thus the panic.
The answer is simple; Rent for half the monthly cost as record high inventories build and prices continue to sink.
The kids are not taking back anything by refusing to volunteer for the trap of financial suicide their parents fell into. It just goes poof.
I am a firm believer that there is a difference between “can’t” and “don’t want to” when it comes to buying a home. Think about it: All of the real estate experts will complain that Millenials and Gen Xers “can’t” buy a house due to student loans, underemployed jobs and such, but I believe more of us “don’t want to” buy because we’ve seen the consequences. Our generation has seen massive increases in prices, which comes with people being foreclosed or in huge debt. I’d bet that 80 percent of us have seen one family strung through the ringer with a massive mortgage obligation, stuck in a town and unable to move to a new area for a better job, never going on any vacations or enjoying life. I give applause to the Millenials for not going down that path. For all of the selfish things people say about that generation at least they are smart enough not to enter the RE game.
Central Banks monetize Trillions of dollars yet working people are still broke.
Instead the world has rolling bubbles.
On the other hand, Sacramento area Sun City homes are selling very quickly for premium prices. It is a fascinating trend to observe.
Nonsense.
Housing Demand Plummets YoY In 55 Of 58 California Counties
http://files.zillowstatic.com/research/public/County/County_Turnover_AllHomes.csv
Only 3 counties posted a gain in housing demand. The average of the median sale prices in those three counties was 60% less than the statewide median sale price.This explains why inventory is massive and growing and sellers are slashing list prices across the state.
There’s a whole lot more slashing to come.
“And in true Vegas fashion, the buyer already flipped the property. The investor sold it for $17,043 — 70 percent above what he paid — last June to a buyer from Los Angeles.”
And The Circle Of Stupid is completed…
The guy who bought the most expensive place (Vegas) was my mother’s doctor for a short time when we first moved here. I disliked him intensely, a real condescending creep. He ordered every test for her under the sun; we found out later he owned the testing facility.
Was he the first or second buyer?
This guy
It was listed for just under $9 million in 2013, GLVAR records show, so the buyer — health care entrepreneur E— M—– — got an 11 percent discount off the price tag.
I guess you become a “health care entrepreneur” when you can’t hide it anymore that you view people only as dollar bills. He had a fat ass, very womanly. As Spock would say, fascinating.
‘The number of unsold condos in Regina has hit a record high and Saskatoon might not be far behind. “The condo that we have featured in this building currently is a 989 square-foot, two bedroom, two bathroom condominium and it’s priced at $276,900 with very similar finish that you see here,” said Vaughn Krywicki, a real estate agent for RE/MAX. “This is the first situation I’ve encountered, some other things that can happen sometimes is the developer may throw in a full set of appliances or a blind package, that type of thing.”
‘They are incentives that may be needed to draw in potential buyers. According to Canadian Mortgage and Housing Corporation(CMHC) officials, the number of unsold condos in Regina hit a record high late last year.’
‘In Saskatoon, the number of condos under construction was at a pace not seen in three decades. There were a total of 1,954 starts, with 49 per cent of those intended for home ownership. “That is the concern moving forward that at some point unless we see a high level of absorption by the market in the home ownership in the condo and condominium market that those units will find their way into inventory.” said Goodson Mwale, senior market analyst for CMHC.’
‘Based on January numbers, the average cost of a condo in Saskatoon was $317,000 compared to a single-detached home at $432,000. The boom is fueled by robust employment and net migration which experts predict will moderate both this year and 2016.’
‘The number of unsold condos in the Toronto housing market has spiked to a 21-year high, raising new concerns about a possible condo glut in Canada’s largest housing market.’
‘A record 10,368 condos were completed in January, eight times the normal amount according to Bank of Montreal economist Sal Guatieri. Though most of those were pre-sold, there were 1,602 unsold condos in Toronto last month, the highest number since the city’s prolonged housing bust in the early to mid-1990s.’
‘High-rise sales in Toronto fell 38 per cent in January, according to data from RealNet, to 531 sales from 861 a year earlier. Prices for new condos slowed in growth to 1 per cent, year over year. Guatieri said the spike in new condos is due to a large increase in condo starts in 2012, which in turn was a reaction to a record number of condo sales in 2011.’
‘Montreal has seen house prices drop 4 per cent in the six months leading up to January, and the number of unsold condos has jumped by 40 per cent in a year. The city is now officially a buyer’s market.’
‘Condo prices have fallen nearly 6 per cent in Ottawa over the past year, according to the city’s real estate board.’
‘In Calgary, where the oil price collapse has all the makings of turning into a real estate market rout, condo sales were 41 per cent lower this January than they were a year ago, while new listing were up 52 per cent. Calgary, too, is now a buyer’s market.’
‘The Malaysian-owned Battersea Power Station project in London is constructing million-pound homes, but they are beyond the reach of locals as developers target rich foreigners, reported the British daily The Guardian.’
‘The consortium’s plan is to fill up the iconic London landmark with shops, offices, luxury apartments and penthouses with a price tag from 30 million pounds. Ringing it will be more apartment blocks. The Guardian in a February 14 report said the first phase of 865 flats launched were mostly sold to buyers from Asia, which earned the company heavy criticism.’
‘The paper quoted Angela Parkinson, a local resident and member of the Battersea Power Station Community Group (BPSCG), which campaigned against the project. “These flat are just deposit boxes for buyers taking advantage of the rising value of property in London,” she was quoted as saying.’
‘The Battersea Power Station project, is part of the transformation taking place in the entire Battersea area, which together with the neighbouring Nine Elms area, will see more than 20,000 luxury apartments housed in high rise buildings constructed.’
‘It reported that consultants Property Vision, which used statistics from researchers Lonres and Dataloft, estimate than more than 54,000 homes are planned or currently under construction in London, most of them in prime areas and with a price tag of more than one million pounds.’
‘In contrast, only 3,900 homes worth one million pounds and upwards were sold in central London last year.’
“luxury apartments housed in high rise buildings…”
I looked at the picture. It sent chills down my back. Flashback to the redevelopment slums in NJ in the 1970s.
“Most men lead lives of quiet desperation and go to the grave with the song still in them.” Thoreau
in a “luxury apartment”.
‘The percentage of home buyers who could afford to purchase a median-price, existing single-family home in California in fourth quarter 2014 edged up to 31 percent from the 30 percent recorded in the third quarter of 2014, but was down from 32 percent in fourth quarter 2013, according to the state Realtor group’s Traditional Housing Affordability Index.’
‘Nineteen regions saw greater quarter-to-quarter improvement in housing affordability due to price declines, with Santa Barbara, Contra Costa, Napa and Los Angeles counties leading the way.’
‘Nineteen regions saw greater quarter-to-quarter improvement in housing affordability due to price declines, with Santa Barbara, Contra Costa, Napa and Los Angeles counties leading the way.’
Falling houisng prices in CA is very positive new for the economy. Here’s more;
Los Angeles, CA Sale Prices Crater 6% YoY; Plunge 16% QoQ
http://www.zillow.com/los-angeles-ca-90046/home-values/
‘Nineteen regions saw greater quarter-to-quarter improvement in housing affordability due to price declines, with Santa Barbara, Contra Costa, Napa and Los Angeles counties leading the way.’
I see a major improvement in the language journalists are using to describe housing price changes, as they finally recognize that falling prices from unaffordable heights actually are a good thing!
PB, even more telling, it was a press release from the CAR……
Denver, CO Sale Prices Tumble 5% YoY; Crater MoM And QoQ As Excess Housing Inventory Balloons
http://www.zillow.com/denver-co-80220/home-values/
CRATER
‘More Coachella Valley homebuyers are investing in new homes than they were a year ago, and they’re paying about 20 percent less for them. Buyers purchased 58 new homes in the Coachella Valley in January, up 29 percent compared to January 2014. They paid a median price of $357,000, down 21 percent from a year ago, according to CoreLogic DataQuick.’
‘Year-over-year resale home and resale condo homebuyers purchased 408 existing homes, down 13.7 percent from 2014, and 223 condos, down 13.9 percent, according to DataQuick. The California Desert Association of Realtors reported that 3,553 single-family homes were on the Coachella Valley market in January — 20.5 percent higher than January 2014′
This article isn’t very clear for whatever reason. It does say there is a builder starting a bunch of houses at $300k, IIRC about 50k under the median for existing houses. Even if we assume there are no townhouses in these numbers my calculator shows 8.7 months of inventory for existing single family. We also learned recently Orange County new house sales are off 40% and 78 new were purchased in San Diego in January. 78 in an area that size. Builders will lead the way down. We know Phoenix builders knocked 10-20% off and that fizzled in January too. Las Vegas builders have been discounting for months. The price is telling them to move ahead, but the buyers are pulling back.
We read a lot that ‘we need more houses.’ But there’s a reason construction isn’t following at the rate of a decade ago; the builders know there isn’t strong demand. They’re snake-bit, and know the lay of the land better than most. (They sell houses for a living). Sure, they took the price increases and made the easy money. But it looks like they are out of suckers and I’d expect the next phase to be undercutting the existing market like they are doing in Coachella.
“It does say there is a builder starting a bunch of houses at $300k, IIRC about 50k under the median for existing houses.”
Hmmm… a run down 20+ year old depreciating shack or a new one for $50k less.
Hint: Contractors have much more room to go lower. As in $200k less.
The spread should widen appreciably as the costs of construction go down. Even their pickup truck goes twice as far on a dollar.
‘Global markets remain oversupplied, prices haven’t fallen enough to press OPEC’s rivals into cutting sufficiently and increasingly efficient shale producers could restore output, said Miswin Mahesh, an analyst at Barclays in London.’
“It’s still a very hard road,” said Mahesh. “We haven’t really seen an outright chunk of U.S. shale or any other high-cost production falling.” The U.S. pumped 9.29 million barrels a day in the week ended Feb. 20, the most in three decades, according to the EIA.’
http://finance.yahoo.com/news/saudis-oil-price-war-paying-113112568.html
So much pimping about oil prices going straight back up to $80+/bbl is encouraging the overproduction to continue unabated.
Gasoline is up another 6 cents a gallon just today. The smart money is buying oil like crazy or is covering its short positions while it tells the average Joe that oil is going to go down.
http://futures.tradingcharts.com/marketquotes/index.php3?market=CL
“smart money is…”
The really smart money was long oil at $100. Now we’re down to sort of smart money.
What do you think of this ?
Oil field services firms Halliburton Co. (NYSE: HAL) and Baker Hughes Inc. (NYSE: BHI) announced Monday morning that the two companies have reached a definitive agreement under which Halliburton will acquire Baker Hughes in a cash and stock transaction valued at $34.6 billion.
Read more: Baker Hughes and Halliburton Merger (NYSE: HAL) (NYSE: BHI) - 24/7 Wall St. http://247wallst.com/energy-business/2014/11/17/baker-hughes-and-halliburton-formidable-competitor-for-schlumberger/#ixzz3Sy5TXvbe
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As an owner of BHI shares, it made me very happy when they announced it.
“The smart money is buying oil like crazy…”
Only a fool would gag this up. Oil prices will fall by at least 50% from here. “Rig counts” are for suckers. “Production” is what you look at. We just hit the highest domestic production since 1973. Oil storage is beyond 50 millions barrels and climbing. Once we hit 70 million, there’s nowhere to store it. We are on the precipice of another global meltdown, and demand is cratering. You do the math, jackwad.
His brain has followed his money. That’s what smart money means. It smarts.
Pending Home Sales Rose 1.7% in January
Wall Street Journal
Interesting that they’re citing “pending home sales” instead of sales that have closed.
There will be a sequel to Blade Runner! (over 30 years later)
http://youtu.be/NoAzpa1×7jU
How are are our price protection racket operatives doing today?
Regarding the Coachella Valley:
I’ve heard for a few years now that the CV was “hot” (prices rising, hard to find a home, etc.). However, this was coming from people buying expensive houses in golf courses, etc. The overall new home sales numbers were dismal however…10% of peak, and 30% of pre-peak sales pace.
The median falling seems to be indicative of places like Desert Hot Springs and Indio starting new home development again. These places generally have lower priced homes.
The houses are duplicates of everywhere else. Seems “everywhere else” has a long way to fall. And it’s falling.
What is your take on the more “centrally located” cities of Palm Springs, Cathedral City and Rancho Mirage? Also, if I recall there is a lot of complexity with Indian land leases.
“I think the weird thing is we are and we’re both inflation and deflation at the same time. We’re in bubbles and we’re in panics almost sort of simultaneously.”
What I see looking at regional economies around the country are many that have never come close to a sustainable recovery.
And regional booms in three sectors — information technology and new media in big urban areas on the coasts, a debt-driven snapback boom in auto production, and oil and gas.
The auto production and oil and gas recoveries seem to have petered out and gone into reverse. That leaves the urban hipsters doing the new media stuff — for now.
“Colvin: ‘That does assume that the economy is one of those machines with levers and pipes and wires and things that you can control all of and that’s another long-standing economic argument. Where do you stand on that?’”
At least one HBB regular clearly thinks of it that way. As was pointed out long ago by Hayek, the reality is that command-and-control economic management produces inferior results to decentralized capitalism.
Hello Kiddies:
So, what does it mean when house prices in craptastic California cities are down 20%? Could it mean, well, you know, CRATER?
bWAAAAAhhahahahahah.
Austin housing doesn’t seem to follow trends elsewhere at the moment
—–
Marking a strong start for the year, Central Texas home sales were up 11 percent in January, and the median sales price was $240,000, which was a record for the month of January, the Austin Board of Realtors said today.
In its latest report, the board said 1,547 homes were sold last month, compared with 1,390 in January 2014, an 11.3 percent increase. Half of the homes sold for more than $$240,000 and half for less, a 12.7 percent rise in the median year-over-year.
January was the fifth straight month of annual home sales increases and the fourth consecutive month of double-digit gains in home prices, signaling that housing affordability remains an issue in the local market. The nearly 13 percent increase in the median price was the highest jump, by percentage, since September 2013, the board said.