March 6, 2015

In A Sane World, Most People Would Want Cheaper Housing

It’s Friday desk clearing time for this blogger. “No one knows better than real estate insiders how money flooding in from mainland China is driving up prices in Vancouver, the second-most unaffordable city in the world. One top Vancouver real estate executive, who did not want to be named, said in 2011 it was estimated that for every $1-million spent on all types of real estate in Vancouver, $300,000 could be attributed to demand from China. The executive said that people in his business generally don’t want the public to understand the magnitude of offshore investment, and certainly don’t want city hall to do anything about it.”

“‘I own a business, I drive a German sedan, I wear a handmade suit made in Italy, and I drink good wine,’ he said. ‘The people I hang out with, these guys want every flood gate wide open. If we cut off the buyer source they lose commissions. There is a huge stake for a lot of local people in keeping this thing going.’”

“The Federal Government will consider laying criminal charges against one of China’s richest men after finding that his company had illegally bought the harbourside mansion Villa Del Mare last year for $39 million. Treasurer Joe Hockey gave the company owned by 55-year-old Hong Kong property developer Hui Ka Yan, 90 days to sell the Point Piper mansion or face having it repossessed. The divestment order is the first legal notice handed out in six years under foreign investment rules governing residential property. But Treasurer Joe Hockey warned there were more to come.”

“‘I made this order following advice from the Australian Government Solicitor that the purchase breached the Act,’ Mr Hockey said. ‘Under Australia’s foreign investment policy, foreign investment should increase Australia’s housing stock. Non-resident foreign nationals cannot buy established dwellings as homes or investments.’”

“Billboards in Chinese at Lisbon’s international airport peddling luxury properties leave little doubt about who is buying real estate in Portugal. The haste with which some Chinese buyers have acquired their piece of Portugal has left them feeling cheated once they realize they might have struck better deals. Hua Guiping flew from Shanghai to Lisbon in 2013. In less than a week after her arrival, she agreed to buy a home for 500,000 euros. ‘While none of the houses that I visited pleased me, the seller insisted the price was very low and that in two years it would rise to one million euros,’ Hua said. ‘I agreed to buy the house and returned to China feeling happy because I thought I had made an excellent deal.’”

“A few months later, while browsing the Internet, Hua learned that some of the homes in the same resort were on sale online for less than half the price she had paid. ‘I saw that houses in the same area were valued at 210,000 euros to 250,000 euros while my home was sold for more than twice that value,’ said Hua. ‘I’m truly upset by all this.’”

A new study in Florida confirms the latest chatter from real-estate watchers: Miami’s sizzling downtown condo market is cooling down. Overseas investors, especially those from Latin America, have largely driven the new projects. But the DDA report concludes that the gush of foreign money into Miami is already slowing down. Between 2011 and 2015, purchasing power in major foreign markets plummeted against the dollar, including Argentina (down 51.9 percent), Brazil (down 37.6 percent) and Venezuela (down 31.8 percent).”

“‘The downturn isn’t going to affect someone from South America who can cut a check for $5 million,’ said William Hardin, the director of the Hollo School of Real Estate at Florida International University. ‘It’s the mid-tier investors who will face a problem. This will reduce the price points less wealthy investors can afford, and they do make up a significant chunk of the market.’”

“It used to be a struggle for Baltimore leaders to get developers to believe that people would want to live in the city. Now apartment builders have embraced the idea so enthusiastically that even some of its loudest champions think they might be going too far. The glut of new apartments has raised questions about whether the units will find renters, especially at the rates that owners of top-of-the-line buildings are asking.”

“‘In the last two years, obviously [building] exploded,’ said Pikesville developer Yonah Zahler. His Zahlco Development started putting together its first deal about three years ago and now owns more than 100 rental units in the city. ‘I knew this would happen,’ he said. ‘I knew these two years would be strong on the construction end. I wonder if demand will meet up.’”

“In 2014, Fauquier had a year-over-year pricing decrease of 2.5 percent, according to the Greater Piedmont Area Association of Realtors. Dawn Arruda, a RE/MAX agent in Warrenton, explained that when a market starts out early and strong, owners who are are the fence want to jump in and start selling. This created a market with too much inventory, said Arruda. By summer and fall, the market was over-saturated with too many houses and not enough buyers. ‘Everyone anticipated that 2014 would be the first year that we could hold down pricing,’ said Arruda. ‘By the fall, we had to lower prices to help move the houses.’”

“Homes sales in the San Fernando Valley sank to a record low in January as the market slump intensified in the face of rising prices and continued tight inventory. During January, sales of previously owned houses fell 12 percent from a year earlier to 307 units, the fewest for any month since record keeping began more than 30 years ago, said the Van Nuys-based Southland Regional Association of Realtors. And sales plunged 41 percent from 522 in December.”

“The median home price rose 5 percent from last year to $510,000 while declining $11,000 from December. It got as high as $543,000 last August and then started creeping down. January’s median price was the lowest since $515,000 last March. Economist William W. Roberts, director of the San Fernando Valley Economic Research Center at Cal State Northridge, said it is not time to panic over the slumping sales. ‘I don’t think it’s serious because prices are holding up. If the prices were falling then I would worry. That would be a concern,’ he said.”

“Milwaukee officials detailed new concerns that another looming wave of foreclosures could damage vulnerable neighborhoods still recovering from the last housing crisis. Aaron Szopinski, the city’s housing director, sounded the alarm that Mayor Tom Barrett and the city did not want a repeat of the years following the recession. ‘What we do know right now is not very good,’ Szopinski told members of the Common Council’s foreclosure and abandoned homes committee. ‘We do not want a sequel.’”

“Deputy City Attorney Danielle Bergner told committee members that much of the problem involving troubled properties is the lack of information. She detailed one case of an abandoned home in the 3500 block of N. 49th St., which she said had a complicated and convoluted story involving Bank of America and Nationstar. It took three years to get the home to a sheriff’s sale. ‘We don’t know who is controlling the mortgages of these properties,’ she said.”

“Orlando-area resident Mark Revord said he is living a nightmare, trapped next door to a so-called ‘zombie’ home. ‘Zombie’ homes are dilapidated wrecks languishing in foreclosure limbo, abandoned by owners and often ignored for years by the banks. Revord said his home was once valued at $250,000, but that the plummeted down to $68,000 during the housing crisis. He and his wife are now trying to re-finance, but they are worried about the zombie home next door. ‘The minute an appraiser wants to come out, that is going to be problem,’ he said, gesturing to the rundown home.”

“For now, he, and hundreds of thousands of other Americans, are stuck. ‘Something is not right,’ he said. ‘I would like a few answers and I think a lot of people in this country are in the same boat as I am.’”

“As a nation, we assume that anyone who owns their own home stands to benefit from higher property prices. That’s not only nonsense, it’s damaging nonsense. I’m a homeowner. Been one for five years now. Despite ostensibly being on the right side of the great property divide, I just won’t stop banging on about quite how badly my generation and those behind it have been shafted by Britain’s housing market.”

“The idea that anyone who owns their own home can only benefit from ever rising housing costs has a distinct whiff of Daily Express bullshit around it. The broken housing market is one of the biggest problems currently facing this country, deepening inequality, holding back the economy, costing the state a fortune in subsidies to buy to let landlords. Does expensive housing really benefit someone who owns a flat in, say, Luton, and is offered the job of a life time in Oxford? Or the couple with a baby on the way who can’t afford that second bedroom?”

“Politicians will quite naturally conclude that trying to make housing cheaper will be politically suicidal. If you ever wondered why George Osborne has pushed an economic plan calculated to keep house prices high, despite the fact that the collapse in ownership rates is a betrayal of everything his party is supposed to stand for, this is one very big reason why.”

“I own a flat. I still want cheaper housing. And in any sane world, most other people would, too. A ladder is meant to have more than one step.”




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67 Comments »

Comment by Ben Jones
2015-03-06 04:03:18

‘Owners of about 3.3 million U.S. homes face higher payments on home-equity lines of credit over the next four years as interest-only periods expire on loans originated during the bubble era, RealtyTrac reported.’

‘California has the most loans scheduled for reset — 645,872, two-thirds of which are seriously underwater. The state’s average monthly payment for Heloc borrowers will increase $215 after a reset, RealtyTrac said.’

“We’re going to see distress because of this,” Mark Hughes, chief operating officer of First Team Real Estate, a brokerage based in Irvine, said in a telephone interview. “We’ve heard people say, ‘Our loan’s been recast, our payment’s $600 more a month and we need to get out of here.’”

Comment by Shillow
2015-03-06 07:46:35

Even after the recent runup they are still underwater? They need to give it back. Unfortunately I’m sure they can paper these over like they did with the rest of the economy.

This got me thinking about that 23 year old intern who just bought a house. It is plain to see that the entire financial structure of the U.S. is being managed to protect his interests and keep his property “value” up. What’s the downside? Bad credit if something goes wrong? They will ignore it. Losing the house at some point? Well until then he and wifey are probably better than in an apartment, especially if there are kids and a yard. Long term financial suicide? In the long term we’re all dead. He’s betting on the house, which always wins. It is very upsetting.

Comment by snake charmer
2015-03-06 11:45:19

The entire financial structure of the U.S. is being managed so as to hose that intern for as long a time as possible. I almost laughed at the quote from the Orlando resident saying that something wasn’t right and he would like a few answers. Don’t count on answers from our dissembling political leadership, and anything emanating from the Fed is so ambiguous that you can find any answer you want, which of course is the intent.

 
 
 
Comment by Ben Jones
2015-03-06 04:11:36

‘The oil glut is threatening to expose cracks in the commercial-mortgage bond market. Wall Street analysts are poring over commercial-mortgage backed securities for signs of distress as the oil crash weighs on demand for real estate in energy hubs. Properties that house workers — such as apartment complexes, mobile-home parks and hotels — are likely to be the first to see vacancy rates rise as oil rigs idle and jobs vanish, according to Nomura debt analysts Lea Overby and Steven Romasko.’

‘The boom in oil production coincided with the resurgence of the commercial-mortgage backed securities market, where property owners can finance just about any building that produces rental income. Bond sales linked to everything from skyscrapers to strip malls are surging amid a recovery in real estate values after issuance froze for more than a year in the wake of the financial crisis.’

‘Concern among investors is mounting that lenders are lowering their standards amid the rush to sell new bonds, making it easier for borrowers to fund potentially unstable projects. Looser underwriting standards in the CMBS market are enabling landlords with subpar properties to pile on large amounts of debt, Moody’s Investors Service said in a January report.’

‘Even in big cities with diverse economies, the 45 percent drop in oil prices during the past eight months is sapping demand for real estate. In Houston, Shorenstein Properties took a 28-story office tower off the market in December after receiving bids.’

‘The pullback may signal a shift in fortunes for U.S. oil and gas centers such as Houston and Austin, Texas. As recently as October they were named the most attractive markets for buying and developing real estate in 2015 in a survey by PricewaterhouseCoopers and the Urban Land Institute.’

“Right now, people have hit the pause button a little bit,” Kevin Roberts, the president of the Southwest region at commercial real estate services firm Transwestern, said by phone. “There is a disconnect between buyers and sellers and between landlords and tenants.”

Funny how thing s like this happen:

‘The boom in oil production coincided with the resurgence of the commercial-mortgage backed securities market’

Comment by Combotechie
2015-03-06 07:03:58

“The boom in oil production …”

… which was financed by borrowed money …

“… coincided with the resurgence of the commercial-mortgage backed securities market …”

… which was also financed by borrowed money.

Which means … we have displayed before you a borrowed money economy - an economy that, at root, is run on borrowed money.

Hence, when the borrowing goes south then the economy that is dependent on this borrowing will also go south.

Comment by Combotechie
2015-03-06 07:20:47

But (thank you God) the economy will never go south because the people at the Fed are possessed with SPECIAL INSIGHT and SPECIAL MAGIC and they will use this special insight and special magic to STEER A COURSE through these rough times until our economy - and all the economies of the entire planet - are once again STRONG ENOUGH to go it alone.

Just be a bit patient .. we’re almost there.

Comment by Ben Jones
2015-03-06 07:33:01

Yeah, it’s useful to recall that Bernanke’s big plan, besides insane amounts of money creation and year after year of rate suppression, was house prices. Yep, after a meltdown largely attributed to collapsing house prices, he stood up and said house prices were going to save us. Here we are, and along time has passed. We’ve seen people camp out for houses, hundreds of people attend a single open house. And the multiple offers and bidding wars!

Sure, the UHS and mortgage brokers have a little more money to spend at Applebee’s. Maybe a new car. Investment bankers can really pay a lot for some tiny air box in Manhattan. Chinese buying in Canada, Canadians buying in the US. Somehow this housing thing hasn’t sparked a real sustainable economic improvement. It’s almost like Bernanke’s main plan had a flaw in it.

(Comments wont nest below this level)
Comment by Blue Skye
2015-03-06 08:28:06

A flaw? It seems more probable that the plan was diabolical, and hundreds of millions of people around the world have made a Faustian bargain.

 
Comment by snake charmer
2015-03-06 11:55:21

Sometimes I think that, while he meant well, his ideology was so limited he couldn’t conceive of anything else, like a painter whose palette was restricted to different shades of a single color. Certainly our political leaders are more than happy to hand off economic policy to unelected technocrats and their purported expertise. And the Fed’s game plan has been exploited grossly by malevolent banks.

 
 
 
 
 
Comment by Housing Analyst
2015-03-06 04:17:04

Kirkland, WA List Prices Dive 17% YoY; Sellers Slash Prices As Correction Ramps Up

http://www.zillow.com/kirkland-wa/home-values/

Comment by Terrapin
2015-03-06 09:11:31

Where are you getting that headline? I just clicked on the link and it says, “Kirkland home values have gone up 5.2% over the past year and Zillow predicts they will rise 4.5% within the next year.”

Comment by Beer and Cigar Guy
2015-03-06 09:37:25

Its not about some ethereal “value”, its really about sold price for closed transactions. Click on the link again, scroll down to the graph displaying “Zillow values” and re-select “median sale price” to view it. Its almost like Zillow and other RE site/shills have some vested interest in making you think that prices always go up, huh?

 
 
Comment by redmondjp
2015-03-06 13:15:25

Come on HA,

We’ve talked about using bad sources and Zillow is the worst.

I live in the Kirkland area and it is even more crazy than 2006 right now. It is one of the most desirable areas to be in on the Eastside, and Google is hiring a lot more people to work there. And they make a lot of $ while interest rates and home inventory levels are at historic lows - you do the math.

The Seattle area is San Francisco Del Norte (in more ways than one).

No correction in sight yet in our area.

Comment by scdave
2015-03-06 15:07:44

Come on HA, ??

Why engage with him ?? Thats why he posts what he does to attempt to conjure up a reaction…Ingnore him…

 
Comment by Housing Analyst
2015-03-06 16:29:12

Your beef is with MRIS my friend. Take up falling housing prices and collapsing demand with them.

 
 
 
Comment by Housing Analyst
2015-03-06 04:25:30

“Stream of Foreign Wealth Flows to Elite New York Real Estate”

http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html?_r=0

‘Real estate agents say commitment to anonymity is essential.’

F.R.A.U.D.

 
Comment by Housing Analyst
2015-03-06 04:30:29

More positive economic news…..

“Storage Dearth May Drive Oil Prices To $30″

http://www.marketwatch.com/story/storage-dearth-may-drive-oil-prices-to-30-2015-03-05

Remember… Falling prices of all items to dramatically lower and more affordable levels is exactly what is required to lift the economy and raise employment levels.

 
Comment by Housing Analyst
2015-03-06 04:34:44

“For now, he, and hundreds of thousands of other Americans, are stuck. ‘Something is not right,’ he said. ‘I would like a few answers and I think a lot of people in this country are in the same boat as I am.’”

You know the answer but you just don’t like it. You overpaid 250% for a depreciating asset….. just like all the other people ‘in this country’ you mention.

 
Comment by Housing Analyst
2015-03-06 04:37:20

“The idea that anyone who owns their own home can only benefit from ever rising housing costs has a distinct whiff of Daily Express bullshit around it.”

BINGO

The end result is default, collapse, a moribund economy and tears.

 
Comment by Housing Analyst
2015-03-06 04:42:16

Frisco, TX Housing Increasingly Affordable As Sale Prices Plunge 8% YoY

http://www.zillow.com/frisco-tx/home-values/

 
Comment by Housing Analyst
2015-03-06 04:51:29

San Francisco, CA List Prices Plummet 18% As Housing Demand Plummets To 20 Year Low

http://www.zillow.com/san-francisco-ca-94117/home-values/

 
Comment by doom
2015-03-06 05:01:43

Got up early to scan the blogs and I see where this statement jump at me ‘I don’t think it’s serious because prices are holding up. If the prices were falling then I would worry. That would be a concern,’ he said.

All I see when houses close in many states including Ca. FOLKS LOWER THEIR PRICES AND TOOK A BATH TO GET FROM UNDER-WATER REAL ESTATE OF THE SUB-PRIME PAST.

Sorry for the caps, but can’t stress enough many people are still losing a bundle on their houses and overall the trends still look frightful to me?

 
Comment by Ben Jones
2015-03-06 05:02:45

‘Realtors report more buyer activity in their markets on the heels of lower mortgage rates, but still not enough inventory to match demand.’

‘Realtors surveyed also cited the positive effect of mortgage rates now at less than 4 percent and the reduction in FHA monthly mortgage insurance premium rates (by 0.5 percentage points) as reasons for their positive outlook. FHA has announced for loans originated starting January 26, 2015, it will charge a monthly mortgage insurance premium of 0.85 percent on the outstanding loan balance, down from 1.35 percent. Government-sponsored enterprises Fannie Mae and Freddie Mac also increased the maximum loan to 97 of the house’s value, up from 95 percent.’

‘According to the survey, majority of first-time home buyers make a “low” down payment. Among first-time buyers reported to be obtaining a mortgage in the months of November-January 2015, about 66 percent made a down payment of 6 percent or less. Although this is a decline from the 77 percent figure in early 2009, this is higher than the 61 percent figure at the beginning of 2014, indicating some easing of credit.’

Comment by scdave
2015-03-06 06:28:55

but still not enough inventory to match demand ??

Thats the main problem here and along with a couple of other things driving the market…Here is a article on boomers downsizing…seems they are a little shocked on prices;

STICKER SHOCK STALLS DOWNSIZING BOOMERS
Source: CNBC

http://www2.realtoractioncenter.com/site/R?i=-ftg77iL1KUaPbza73ajvA

Comment by Housing Analyst
2015-03-06 07:30:26

With 25 million excess empty and defaulted houses, inventory is an issue but not in the way you’re characterizing it.

 
Comment by rj chicago
2015-03-06 08:54:54

Article has a valid point - less space more cost. And this is for existing construction. Seems to be a real problem that continues to metastasize as the Fed fuels the money train and the banks hold back lending due to Fed and Bwaney Franks great piece of bs legislation.
Again - I was just down PHX way lookin about and found a nice community with single level living BUT the cost per s.f.? ……um….just at 300.00 - 540,000 k for just at 1800 s.f. - OUCH!! And yet boomers of which I am one are buying this stuff sometimes sight unseen.
As HA notes - real cost is probably in the 50 to 100 per sf in a normal world BUT kids we don’t live in a normal world and we aren’t in Kansas anymore there Toto.

 
 
Comment by Housing Analyst
2015-03-06 06:32:44

Lol@LionRealtors

 
 
Comment by Housing Analyst
2015-03-06 05:16:10

Colfax, CA List Prices Crater 26%; Sellers Seek Fast Exit

http://www.zillow.com/gold-run-ca-95713/home-values/

 
Comment by Housing Analyst
2015-03-06 05:20:39

Loomis, CA List Prices Sink 6% YoY; Plunge 25% QoQ And 20% MoM

http://www.zillow.com/loomis-ca-95650/home-values/

 
Comment by Housing Analyst
2015-03-06 05:22:24

Diamond Springs, CA List Prices Dive 20% YoY

http://www.zillow.com/diamond-springs-ca-95619/home-values/

 
Comment by Housing Analyst
2015-03-06 05:25:33

San Jose, CA List Prices Dive 12% YoY As Housing Demand Plummets

http://www.zillow.com/san-jose-ca-95117/home-values/

 
Comment by Professor Bear
2015-03-06 06:23:10

“‘I own a business, I drive a German sedan, I wear a handmade suit made in Italy, and I drink good wine,’ he said. ‘The people I hang out with, these guys want every flood gate wide open. If we cut off the buyer source they lose commissions. There is a huge stake for a lot of local people in keeping this thing going.’”

Screw the hosers who just want a home to live in.

Comment by Ben Jones
2015-03-06 06:54:55

‘Billions of pounds of corruptly gained money has been laundered by criminals and foreign officials buying upmarket London properties through anonymous offshore front companies – making the city arguably the world capital of money laundering.’

‘Some 36,342 properties in London have been bought through hidden companies in offshore havens and while a majority of those will have been kept secret for legitimate privacy purposes, vast numbers are thought to have been bought anonymously to hide stolen money.’

‘The flow of corrupt cash has driven up average prices with a “widespread ripple effect down the property price chain and beyond London”, according to property experts cited in the most comprehensive study ever carried out into the long-suspected money laundering route through central London real estate, by the respected anti-corruption organisation Transparency International.’

‘Some sources claim it has skewed developers towards building high-priced flats and houses rather than ones ordinary people can afford. While corruption and tax evasion are likely to be the biggest sources of the illicit money, drug dealing, people trafficking and sanctions busting are also common, police say.’

‘Detective Chief Inspector Jon Benton, director of operations at the Proceeds of Corruption Unit, said: “Properties that are purchased with illicit money, which is often stolen from some of the poorest people in the world, are nearly always layered through offshore structures. In nearly all the grand corruption cases we investigate, we find – what we suspect is – proceeds of corruption being used to purchase high-value properties.”

Only a few years behind the HBB, but again, welcome to the party.

Comment by Professor Bear
2015-03-06 09:04:53

There is a fascinating symbiosis between real estate developers and big-time international criminals with money to launder.

 
Comment by snake charmer
2015-03-06 12:03:58

I’m always curious to understand why, in a democracy, there isn’t more popular reaction to this. Is everyone in London more interested in the princess’s pregnancy and soccer matches? We’re talking about a country where an ex-prime minister now openly “advises” JP Morgan Chase.

Will there be a reaction when food prices are affected in the same manner?

 
 
 
Comment by Ben Jones
2015-03-06 06:24:51

‘Put together, China is pursuing the most contractionary mix of economic policies in the G20, relative to the status quo ante. Collateral damage is already visible in the sliding global prices of iron ore, copper, nickel, lead and zinc over recent months, as well as thermal coal, oil, corn and even sugar.’

‘Zhiwei Zhang, from Deutsche Bank, says China faces a “fiscal cliff” this year as Beijing attempts to rein in spending. “This year, China will likely face the worst fiscal challenge since 1981. This is not well recognised in the market,” he said.’

‘A budget squeeze is already emerging as the property slump drags on. Zhiwei Zhang says land revenues fell 21pc in the fourth quarter of last year. “The decline of fiscal revenue is the top risk in China and will lead to a sharp slowdown,” he said.’

‘The Chinese tax system is highly leveraged to the property cycle, like Ireland’s before the boom broke in 2007. The scale is epic. A study by the US Federal Reserve found that property investment in China has risen from 4pc to 15pc of GDP since 1998. This is even higher than in Japan in the blow-off years of the late 1980s.’

‘China is not the only country in Asia facing a hangover. Nomura’s Rob Subbaraman says housing booms in India, Hong Kong and Taiwan all match or exceed the US bubble in 2008, with Malaysia not far behind. “Asia is setting itself up for a major credit crunch,” he said.’

You missed a few Rob, but welcome to the party.

Comment by Dman
2015-03-06 07:56:44

““The decline of fiscal revenue is the top risk in China…”

Which goes hand in hand with the decline of Chinese real estate. The housing bubble funded local governments, and local governments funneled that money back into real estate. Now the feedback loop is broken, and the bills are coming due.

 
 
Comment by Ben Jones
2015-03-06 06:30:17

‘the seller insisted the price was very low and that in two years it would rise to one million euros,’ Hua said. ‘I agreed to buy the house and returned to China feeling happy’

Now who can say this blog isn’t cheerful?

Comment by Dman
2015-03-06 08:00:56

I’m sure some lucky seller in Spain is very happy indeed.

 
Comment by snake charmer
2015-03-06 12:09:37

I actually enjoyed that one. P.T. Barnum was never more vindicated.

 
 
Comment by Ben Jones
2015-03-06 06:48:02

‘the fewest for any month since record keeping began more than 30 years ago, said the Van Nuys-based Southland Regional Association of Realtors.’

Think about how many more houses there are now versus 30 years ago.

‘The median home price rose 5 percent from last year to $510,000 while declining $11,000 from December. It got as high as $543,000 last August and then started creeping down. January’s median price was the lowest since $515,000 last March. Economist William W. Roberts, director of the San Fernando Valley Economic Research Center at Cal State Northridge, said it is not time to panic over the slumping sales. ‘I don’t think it’s serious because prices are holding up. If the prices were falling then I would worry.’

Prices are falling Bill.

 
Comment by Ben Jones
2015-03-06 06:57:46

‘Auckland house values are up by 43.8 per cent on the last boom in 2007 - but a valuer is warning that off-the-plan buyers are not always recovering their money if they sell too soon.’

‘New housing areas Addison, Stonefields and Flat Bush were also seeing huge value rises, up to 10 per cent in just three months, Mr Wilson said. “In some of those more established new developments, two-tier markets are starting to appear where buyers are paying a premium for new homes off the plans. These buyers are then often unable to sell for the same value levels when they attempt to sell the properties within a short time frame.”

‘Within a short period like six months, they might not get their money back.’

“The second buyers might not pay the same amount as the first if there’s a lot of new stock in that housing scheme as they can readily buy a brand new place, so why wouldn’t they? It’s a bit like the new car market,” he said.’

Wait a minute Wilson. Are you saying I can’t expect to make gobs of money flipping new cars?

 
Comment by Ben Jones
2015-03-06 07:03:07

‘According to numbers from CoreLogic , in December 2014 the country’s foreclosure rate fell to 1.4%, the lowest level since March 2008. But while the overall market is well on the way to recovery, elevated foreclosure rates persist at the high end. In December, the rate for mortgages of $750,000 or more was 2.5%.’

‘This disconnect has characterized the 2008 crash and its aftermath, says Sam Khater, CoreLogic’s deputy chief economist. High-end housing had traditionally seen fewer foreclosures than the market at large, but, he notes, the last decade’s recession turned that convention on its head.’

‘The CoreLogic data shows that in January 2006, the foreclosure rate for mortgages of $750,000 or more was 0.1%, compared with an overall rate of 0.5%. By March 2008, though, these numbers had crossed over, with the high-end rate up to 1.5%, versus 1.4% for the overall rate.’

Comment by Blue Skye
2015-03-06 08:43:59

It’s a pretty simple score, price drops then peak foreclosures, then price drops & etc.

 
 
Comment by Ben Jones
2015-03-06 07:08:14

‘The government sweep of profits from Fannie Mae and Freddie Mac was defended by the top Treasury Department housing official, who called again for Congress to replace the U.S.-owned mortgage-finance giants.’

‘Michael Stegman, a senior adviser at Treasury, used his speech Thursday at a Goldman Sachs housing-finance conference in New York to respond to shareholders who have sued to stop the sweep and called for the companies to be allowed to build capital and be freed from U.S. conservatorship.’

“Simply returning these entities to the way they were before is not practical nor is it a realistic consideration,” Stegman said.’

‘Concerns about whether Fannie Mae and Freddie Mac may need more taxpayer support have mounted as their profits and capital cushions have shrunk in recent quarters. Stegman said taxpayers would face costs either by allowing them to recapitialize or with new draws from the Treasury.’

‘Stegman said Congress must step in to change the housing-finance system, because regulators can’t do it on their own.’

“Allowing the GSEs to exit conservatorship within the existing framework that includes their flawed charters, conflicting missions, and virtual monopolistic access to a government support” exposes taxpayers to risk and “is irresponsible,” he said.’

Not much is being said about how the GSE “profits” have withered away. Being used as a bubble machine isn’t a long term proposition.

 
Comment by Ben Jones
2015-03-06 07:17:53

‘Fed Chair Janet Yellen has added her voice to the growing chorus of disapproval with respect to the big banks. During a speech last night in New York Yellen said, “There may be pervasive shortcomings in the values of large financial firms that might undermine their safety and soundness.”

‘This comes just days after Warren Buffett, in his annual letter to shareholders called bankers “Wall Street denizens” who “are always ready to suspend disbelief when dubious maneuvers are used to manufacture rising per-share earnings, particularly if these acrobatics produce mergers that generate huge fees for investment bankers.”

Growing chorus? Shortcomings in value? Well it’s a good thing these wall street firms can’t expect a bail-out.

 
Comment by Larry Littlefield
2015-03-06 07:46:54

“Despite ostensibly being on the right side of the great property divide, I just won’t stop banging on about quite how badly my generation and those behind it have been shafted by Britain’s housing market.”

I’m in the same situation in Brooklyn. What that’s actually like was recently described by the co-founder of Gothamist, a successful news site with operations in several cities — who has been forced to move in with his parents.

http://gothamist.com/2015/02/27/parents_solve_housing_crisis.php

“I haven’t used this column to really bitch about real estate prices and gentrification for about 18 months, and in that time, I think we can all agree that things have only grown worse. Across the whole city prices are up another 5 or 10%, but in neighborhoods with good schools, it’s more like 25% (or more!) Renting is no better—the median rent in Queens was up 30% in just the last year.”

So his parents, who bought a Brownstone for cheap when the city was down in the 1970s, are winners?

“My parents and their friends are all paper-millionaires, but they’re all hardcore New Yorkers who want to die here, and so they can’t sell their places or even use much of the equity they’ve built. And they have to listen to their kids bitch about housing, or worse, dip into their retirement accounts to help their kids buy apartments, or worst of all, see them move away.”

Comment by scdave
2015-03-06 08:05:42

or worst of all, see them move away.” ??

yep…See it all the time around here…

 
Comment by Housing Analyst
2015-03-06 08:30:55

I’m sure the fraud is at unprecedented levels in NY.

 
Comment by 2banana
2015-03-06 08:39:55

Don’t worry - the taxes on that million dollar brownstone will soon force them to sell…

Comment by Larry Littlefield
Comment by Cactus
2015-03-06 13:48:15

Similar with California and prop 13

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Comment by scdave
2015-03-06 15:11:07

Similar with California and prop 13 ??

Thats one of the reasons it passed so easily…Forcing people out of their homes because of tax increases…

 
 
 
 
 
Comment by rj chicago
2015-03-06 08:43:17

“Deputy City Attorney Danielle Bergner told committee members that much of the problem involving troubled properties is the lack of information. She detailed one case of an abandoned home in the 3500 block of N. 49th St., which she said had a complicated and convoluted story involving Bank of America and Nationstar. It took three years to get the home to a sheriff’s sale.

‘We don’t know who is controlling the mortgages of these properties,’ she said.”

Wonder if this lady has ever heard of MERS!!!?

Comment by Ben Jones
2015-03-06 09:04:56

Shadow inventory is a crazy internet conspiracy theory. Zombie foreclosures are a set of monthly statistics put out by Realtytrac.

Comment by Rental Watch
2015-03-06 10:45:33

http://www.realtytrac.com/news/foreclosure-trends/zombie-foreclosures-q1-2015/

Most recent data I’ve found: 142k total zombie foreclosures.

Comment by Ben Jones
2015-03-06 11:04:32

Jan 16, 2015

‘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.’

‘Mortgage servicers, whose job is to ensure bondholders receive repayments on loans, have frequently failed to foreclose on delinquent debt in a timely manner, and therefore risk falling foul of legal deadlines which limit the time home-owners can be chased for payment.’

‘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.”

‘Such problems often stem from poorly originated loans falling into the hands of non-bank mortgage servicers after banks offloaded battered portfolios in the aftermath of the crisis. The US$25bn robo-signing settlement that banks reached with regulators in 2012 hastened such transfers.’

‘Some servicers, unable to manage the volume of loans, have let defaults slip through the cracks. As a result, some trusts will be left empty-handed on collateral which was meant to pay off RMBS deals.’

‘Investors can comb through outstanding legacy RMBS mortgages coded as “in foreclosure” state by state, but in New York alone such loans stand at roughly US$14bn, according to Intex. And even that figure provides an incomplete picture because not all of what goes on with a loan is reported to investors as it happens.’

http://www.reuters.com/article/2015/01/16/fanniemae-rmbs-idUSL6N0UL2Q420150116

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Comment by Carl Morris
2015-03-06 11:33:12

It almost seems like they are saying that while banks want to take full advantage of the statute of limitations, it’s frustrating if the little guys are able to as well?

 
Comment by Rental Watch
2015-03-06 14:54:21

And what does that have to do with Zombie foreclosures OR shadow invetory?

Zombie foreclosures are EMPTY homes that are in the foreclosure process. In other words, they represent homes that will add supply (new places for people to live) once they get through the system.

The article you posted describes situations where servicers are too slow in processing foreclosures, and thus the loan is at risk of being wiped out completely. If anything, that happening en masse would reduce (not increase) the number of foreclosures.

 
Comment by Housing Analyst
2015-03-07 10:11:03

And so do the 25 million excess, empty and defaulted houses.

You’re drawing a distinction without a difference Rental_Fraud.

 
 
Comment by Beer and Cigar Guy
2015-03-06 12:48:05

“Most recent data I’ve found: 142k total zombie foreclosures.”

And you actually believe that data? How about unicorns and the Easter Bunny?

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Comment by Rental Watch
2015-03-06 14:45:41

So, what data do you believe?

Here’s the problem:

If you discount every source of data that gives you ONE number you don’t like, you end up with no data sources at all.

If, however, you look at all data sources, you begin to see where data overlaps and trends emerge…LIKE:

Trend 1: Serious delinquencies falling substantially from the peak.

 
Comment by Rental Watch
2015-03-06 15:08:10

BTW, Ben noted the data, and the source, I was simply providing the actual data.

When the Zombie foreclosure numbers were up in the 350k+ range a year or two ago, I didn’t hear anyone say the numbers were not to be believed. Nor do people criticize RealtyTrac as a source of data when it shows spikes upward in foreclosure notices. In fact, the numbers are celebrated.

So, is RealtyTrac a good source of data? Or not?

 
Comment by scdave
2015-03-06 15:12:46

And you actually believe that data ??

But you believe yours correct…Whats the difference ??

 
Comment by Ben Jones
2015-03-06 19:45:59

‘I didn’t hear anyone say the numbers were not to be believed’

I would have. There’s probably more than that in Florida, right now. Realtytrac is a foreclosure tracking service. These reports they’ve started putting out here and there are new. This zombie thing started last Halloween, IIRC. Why did this odd Fannie conference get leaked? Out of no where, and no follow up.

We’re at the point where all will be revealed one way or the other soon. HAMP resets, HELOC resets, inventory growing, sales dropping, foreclosures rising. Now interest rates going up. The biggest factor IMO: the global bubbles look to be bursting at near the same time. And as many here suggested for years, China was the first domino.

 
 
 
 
 
Comment by Puggs
2015-03-06 11:52:11

Falling prices makes for a simpler life for all!

 
Comment by Jessica Sala
2015-03-06 14:23:54

Bad news here in SWFL. We’ve had an influx of foreign investors that have propelled our market forward. Losing them would be very determential to the success that we’ve found since the bubble burst.

 
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