A High-Risk Money-Go-Round
It’s Friday desk clearing time for this blogger. “Several houses with former celebrity owners have lingered on the market for months — or, in the case of Bob and Dolores Hope’s Palm Springs estate, several years. The Hope mansion was originally offered privately for $50 million in March 2013. It dropped to $34 million in January 2014. Now, its listing price has fallen to just under $25 million — half the initial ask. The 73-acre Palm Springs estate of actress Suzanne Somers and her husband, Alan Hamel, has been waiting for a buyer on and off since 2008. It was originally listed for $27.5 million. The asking price dropped to $12.9 million in 2009, then rose to $14.5 million, where it remains today.”
“A 6,700-square-foot house that once belonged to Bing Crosby has been listed for $5 million since November. The house has been shown to several people, listing agent Marc Lang told The Desert Sun. The house sold to its current owner in 2005 for $2.625 million, according to the county assessor’s records. ‘It is still available, but we’re hoping to be able to put it into contract shortly,’ Lang said.”
“Throughout New York, foreclosures pending in court fell by only 1.1 percent to 83,236 over the one-year period ending Oct. 31. Disposing of that backlog could take until December 2017, according to a report by the nonprofit Empire Justice Center. But the problem doesn’t end there. Court clerks in many counties outside New York City have been unable to identify older court filings, which means the actual number of pending cases is higher.”
“One problem is that owners of underlying mortgages often don’t move quickly to complete foreclosure and sell the property. More than 75 percent of vacant houses awaiting foreclosure in the city are investor-owned properties that often are problematic to deal with.. Rochester is typical of many economically distressed areas where inner-city home values have not recovered and the value of vacant homes continues to decline, according to Sarah Edelman, a housing finance policy analyst at the Center for American Progress. ‘There as so many cities like Rochester that are still in need of relief and stabilization,’ Edelman said. ‘The conversation in Washington has moved passed the foreclosure crisis in some respects.’”
“All the talk about the real estate market these days seems to center around how hard it is for people to buy a new home in the Puget Sound area. It’s a seller’s market to be sure. But not all sellers are celebrating. That includes sellers like me. I bought my one bedroom, 800-square-foot townhome — what the market calls a condo – in a nice community in Kent in May 2008. The housing market had already fallen quite a bit due to the recession. I thought I was getting in on the ground floor.”
“Now, 5 ½ years later, we’re married and ready to start a family. That means we’re looking to sell. Looking at similar one-bedroom units in our area up for sale, we saw a huge hill ahead of us. They were on the market for less than half of what I paid. We’re not looking to make a profit. We just want to break even or take a small loss. But after checking in with our realtor a month ago, my wife and I discovered that we’re still $24,000 underwater including closing costs. So while many buyers are getting frustrated over the lack of places to buy, there are some of us who are frustrated over lack of ability to sell.”
“According to the Canadian Home Builders’ Association Alberta economic analysis, the total number of housing starts in Grande Prairie in the first two months of 2015 dropped 34.5% from the first two months in 2014. ‘Right now, most of the home builders in town are being a little bit cautious with their starts due to what’s going on with the economy,’ said Chris Newbury, president of the Canadian Home Builders’ Association’s local branch. House prices, he added, have to increase before home builders will take on more home building projects. ‘The price needs to go up… to offset our costs, our rising costs,’ he said.”
“The last time there was a similar shift in the economy, Newbury said some home builders were caught with several units of inventory, making the situation a bit more of a struggle. ‘A lot of home builders are just being responsible with the amount of product that they have, and (trying) not to flood the market to keep the prices where they need to be,’ he said.”
“Taking a stroll down The Beach mall or The Walk in Jumeirah Beach Residence, it is common to look up and admire the skyscrapers stacked against each other, a la Manhattan. However, more often than not, a majority of towers seem dark, with no inhabitants in sight. Yes, this is a trend common across the world’s property hotspots such as Dubai, New York, London, Hong Kong, Paris and Singapore where affluent out-of-towners are buying up prime properties in urban centres.”
“Despite having significant amounts of money at their disposal, absentee homeowners are price-sensitive, say Dubai-based real estate brokerages. ‘Most buyers are aggressive to get the best possible price, especially in the current market conditions,’ said Gregory Lewis, senior negotiator, Knight Frank.”
“Property agents in Shanghai have reported their ‘busiest weekend’ in a quarter, over the three-day Qingming Festival. However, some also detected a ‘wait-and-see’ attitude among some potential buyers. Gu Hanchun, a 57-year-old potential homebuyer, told China Daily: ‘I have visited seven apartments during the three-day holiday and two of them look good to me. But I think I will wait for another month to see if more discounts can be offered on mortgage rates, and if more homeowners will decide to let pro-owned apartments, pushing up supplies and lowering prices.’”
“Jeya ‘Ganes Kisnan, 27, took a RM20,000 personal loan to settle the legal fees for his RM720,000 condominium as he could only afford to pay the down payment, even after getting a 7 per cent discount. The young entrepreneur, who makes about RM10,000 a month, will be facing a monthly installment of RM3,500 for his 25-year home loan when construction is completed by the end of the year, about the same time he would have finished paying off his personal loan. ‘Even now, I’m feeling the heat. Once it’s done, how am I going to pay?’ Jeya ‘Ganes told Malay Mail Online.”
“Skyrocketing property prices over the past few years have also prompted unmarried couples to buy real estate together in a desperate bid to get a foot on the property ladder, despite the potential risks should their relationship sour. Michelle Lee (not her real name), a 27-year-old consultant for one of the Big Four auditing firms, said she and her 26-year-old boyfriend bought a new 798 sq ft condominium unit in Puchong in 2011 for RM270,000, splitting the cost equally. Their joint monthly earnings were RM7,000 at the time. ‘Took the dive early before marriage because with the property market at the insane rate, it was hiked up year-on-year,’ Lee told Malay Mail Online. ‘If you waited for anything, you still wouldn’t be able to afford it. Inflation on property was moving much faster than anyone’s salary could grow.’”
“A home loan agent noted the softening of the real estate market, saying that a developer had paid the legal fees for her client’s housing loan, not just for the sale and purchase agreement, six months ago. ‘I thought that was quite unusual,’ the home loan agent, who declined to be identified, told Malay Mail Online.”
“Auckland’s housing market has become a giant Ponzi scheme, one economist says, as residents pay each other to get in and drive prices up and up. Shamubeel Eaqub, NZIER principal economist, said this decade’s housing market was like last decade’s finance companies, being run as a high-risk money-go-round which could eventually end in misery.”
“‘Essentially it’s a Ponzi scheme because you need more and more new entrants to keep prices rising and that’s exactly what’s happening in the housing market. We’ve seen this in all kinds of businesses, for example finance companies were a classic. Who are the people buying the houses? We’re paying higher and higher prices to each other,’ he said.”
“There was a nice contrast in the Financial Review on Wednesday. On the front page was property investor Paul Cleary, looking to offload his terrace in Rozelle, Sydney. Had the RBA reduced rates on Tuesday as was widely anticipated, Cleary had plans to increase his reserve price by $50,000. But the fact that rates stayed put wasn’t a disaster. Cleary was ’still looking at great capital growth.’”
“The copy subtly hints at the bigger, unasked question: If Cleary could make an extra $50,000 just from a 0.25% fall in rates, imagine what he’s making all up? It’s unsaid, it may even be unintentional, but it’s there alright. This story is all about the fear of missing out, about what the Cleary family is about to make and what we’re not. A Paddington agent is wheeled out to nail home the point: ‘Everything is going crazy,’ she says.”
“On page 7, Christopher Joye’s opinion piece compared the last property boom over a decade ago with the current situation, using a chart from UBS labelled ‘Biggest housing bubble ever’. Here’s the key paragraph: ‘While there were serious concerns in 2002-03 about mounting indebtedness, all the key measures the RBA publishes on this subject are far worse today. The household debt-to-disposable income ratio hit a new peak of 153.8 per cent in March (the previous ceiling was 152.7 per cent in September 2006). Australia’s household debt-to-income ratio is now 19 per cent above the 129 per cent level that raised eyebrows in 2003.’”
“Most readers wouldn’t make it to Joye’s piece - they’d already be on the blower in search of an unrenovated inner west terrace. But even if they did, they probably wouldn’t make it all the way through. This is a dull, data-driven story with a chart, not a happy family about to make a few hundred grand. Newspaper editors know what many investors don’t; that emotion – in this case greed - beats facts every time.”
Good luck selling celebrity manses in Palm Springs for megamillions. The place is a lot more of a dump than it was back in the I Love Lucy days.
I don’t know that area very well, but a friend of mine owns a house in Rancho Mirage. He just leased it for 6 months. The punch line is the tenants own a place in Palm Springs, but doesn’t want to live there.
It’s hotter than Hades in the summer, calling into question the area as a year-round living situation.
Palm Springs and the surrounding towns are now a year round destination. It was packed Easter weekend and the next two weekend for Cochella. The only reason to move to RM over PS is for a larger home or they rented PS as a VRBO and saving money in RM.
“The place is a lot more of a dump than it was back in the I Love Lucy days.”
The “I Love Lucy” days were the days when Palm Springs was the “in place to go”, and this “in place to go” thingy was the attraction.
So now look at what happens to a place when you yank away the attraction.
It’s time to once again present an extreme example of what I mean:
https://www.google.com/search?q=bodie&biw=1813&bih=857&tbm=isch&tbo=u&source=univ&sa=X&ei=PMonVZPqCJK2ogSW3oCQAw&ved=0CDwQsAQ&dpr=0.75
“One problem is that owners of underlying mortgages often don’t move quickly to complete foreclosure and sell the property.”
Wow, these owners sure must not care much about what happens to their property. I wonder why that could be?
‘”More than 75 percent of vacant houses awaiting foreclosure in the city are investor-owned properties that often are problematic to deal with.”
Investor owned = Owned by the use of Other People’s Money.
Funny how that is: You care like hell what happens when your own money is put at risk but your sense of caring drops off a cliff when the money you put at risk belongs to somebody else.
What an astounding revelation! I must hurry to write this newly-discovered and startling fact down before if forever slips from my feeble mind.
“Newspaper editors know what many investors don’t; that emotion – in this case greed - beats facts every time.”
Pure poetry. Pure and sweet.
Fire up some emotions then present to the mark a dotted line and a ball-point pen and you will be financially set up for thirty-years - or maybe even longer.
I think this writer is just using “emotion” as a prettier sounding euphemism for “stupid.” Greed should be “really stupid.”
I think the Australian Mr. Bankers might want to keep their pens in their pockets - the people buying now, at what is obviously a near peak of the bubble, will be the ones most likely to default later on. Unless the Astralian Mr. Bankers want to be the owners of thousands of million dollar homes that won’t even sell for half of the value of the loan, he should just sit back and shuffle papers at his desk. The Aussie Janet Yellen might not be as generous to the banks as ours.
“The Aussie Janet Yellen might not be as generous to the banks as ours.”
If Australia considers saving housing is something that is vital to their national interest as the U.S. does then the Aussie Janet Yellen will feel that she has no choice.
Capitalize profits, socialize losses. Works well on both side of the equator.
Losses haven’t been socialized, they’ve been hidden. Some day the banks will have to account for all the money they loaned that won’t be paid back.
“Some day the banks will have to account for all the money they loaned that won’t be paid back.”
As long as the totally-dumbed-down populations of the world are convinced (rightly or wrongly - it makes no difference) that the world’s banking systems are “must have” systems and civilization would for some reason or other collapse without these oh-so-profitable-systems then no banker on the planet should ever - EVER - have to worry about accounting for anything.
Probably true.
“Probably true.”
Definitely true. Go here or a fun-looking chart (if you dare!):
http://en.wikipedia.org/wiki/Financialization#/media/File:NYUGDPFinancialShare.jpg
Also from Wikipedia:
“Financialization is a term sometimes used in discussions of financial capitalism which developed over recent decades, in which financial leverage tended to override capital (equity) and financial markets tended to dominate over the traditional industrial economy and agricultural economics.”
One should note (and savor) this beautiful passage:
“… financial markets tended to dominate over the traditional industrial economy and agricultural economics.”
“… dominate …”
Bahahahahahahahaha … workers in the traditional industrial and agricultural economies toil hard for money and then they ship - WILLINGLY ship - hefty chunks of this toiled-for money to the finance guys, the guys who ultimately call the shots - ultimately call ALL the shots.
‘From Denver north to Fort Collins, Front Range homes are in high demand. And the market is taking its toll on those seeking a place to live. McCoy’s first offer was usurped when an investor swooped in and offered cash — even though she was willing to pay $10,000 over the asking price. Eventually, she ended up compromising on space — the home she plans to buy is half of a duplex, without the third and fourth bedroom and garden spot she originally wanted.’
‘With two children and a dog, McCoy knows her family will outgrow the duplex at some point.’
‘But with a budget of $250,000, there wasn’t much else she could afford, unless she was willing to live far outside of town and commute into Fort Collins each day. The median price of a home in the town has increased 25 percent in the past year. As of February, it was $314,850.’
‘”It was very, very eye-opening to come back into the market just two years later,” she said. “Even the house that we purchased when I moved here two and a half years ago, that same house, I wouldn’t be able to afford it right now.”
‘That’s the case for a lot of people. Middle-class workers are now getting priced out of the city, said Paul Hunter, who is chair of the Fort Collins board of Realtors and has been selling real estate here for decade.’
“Your average earner making forty or fifty thousand dollars a year, one year or more ago would be able to find a great starter home for under $225,000 in Fort Collins,” said Hunter. “That almost doesn’t exist anymore.”
‘Metro Denver home sellers listed nearly 1,600 more homes in March than they did in February, but buyers snatched them up as quickly as they appeared. Last month, 5,823 homes came onto the metro Denver market, a 37 percent increase from February. But 5,139 were placed under contract and an additional 3,904 homes closed at a median sales price of $315,000, according to the report.’
‘There were 4,112 homes available for sale at the end of the month, compared with 4,073 at the end of February and 6,098 at the end of March 2014.’
‘Brokers report that offers at $10,000 to $50,000 above list price, the waiver of appraisal contingencies, and buyers submitting offers after only viewing photos and videos online are becoming more common.’
That’s a good one. To borrow from the Australian writer:
‘Most readers would already be on the blower in search of an unrenovated inner west terrace!’
Get on the blower!
‘Buyer anxiety. Frenzy market. Those are two descriptions about the current status of the Western Washington housing market given Monday by the Northwest Multiple Listing Service. “Listings are selling as soon as they come on the market for sale,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.’
‘Sellers are getting multiple offers for the few homes on the market. NWMLS attributes part of that to the flood of people moving to the Puget Sound area for new jobs. “They’re being asked to write offers faster, for more money and with less help from the seller and the result is stress. Multiple offers only add to their stress,” said NWMLS director Frank Wilson.’
‘For those buyers who can’t win a bidding war, they’re left to try to find an affordable place to rent. Good luck with that.’
“Some high demand areas in Seattle have had a doubling of per bedroom rental rates to over $1,000 per bedroom,” said John Deely, a broker at Coldwell Banker Bain.’
‘PANAMA CITY — In the words of a local Realtor, there’s never been a better time to buy. If you can.’
‘That caveat has become a reality for many, as homeownership across the Sunshine State approached a 30-year low last year.”
‘According to data from the U.S. Census Bureau, Florida has seen some of the greatest declines in homeownership in the country over the last decade, falling from a rate of 73 percent at the start of 2005 to just under 65 percent last year. Bay County’s homeownership rate is even lower than the state’s, at 64 percent, according to information from the Bay County Association of Realtors (BCAR).’
‘BCAR chief executive officer Stephanie White chalked the declines up to the housing boom and subsequent bust, but said the situation has been improving.’
“What happened is you saw a huge reduction in homeownership and home purchases, and we all felt that deeply,” White said. “What we’re also seeing is a rapid rise in the market. … We went through that roller-coaster ride, and while we did see decreases in ownership and occupancy, we’re seeing rapid increases in that as well.”
“The only thing I could come up with is the economy has been kind of shaky over the last few years,” said Bay County Property Appraiser Dan Sowell . “My gut feeling tells me folks have been leaving the area for jobs. Perhaps some have lost jobs, or lost their homes for foreclosures. … Things still aren’t like they need to be.”
Uh…
‘while we did see decreases in ownership and occupancy, we’re seeing rapid increases in that as well’
Sounds like the front range is in full blown bubble mode again. Apparently, legalized marijuana erases everything from your mind that happened more than six years ago.
Agreed. It’s frustrating watching this right now… My wife and I are wondering if we are smart for sitting this out, or have made a huge mistake. We keep giving it six months, but then everything goes up another 10-15%. I’m just disgusted by it, along with the insane rental market here.
I would say smart. Eventually rates will go up, and that’s when you’ll appreciate being a renter on the sidelines.
Better to sit with your powder dry than to be in a debt shack wondering if you should have sold last year! You don’t build equity in a bust, and a bust is baked in.
Sounds like the front range is in full blown bubble mode again.
They’re exaggerating. I just looked at Realtor.com. There are 150 houses in Loveland from 170-250K. In Fort Collins there are 160.
Sure, if you want to live near downtown Ft. Collins there is low inventory and it’ll cost you. Move towards I-25 or the foothills and even within city limits the price/sq ft drops quickly.
“a great starter home…”
What a “start”. Buy a home approaching 8x your gross and give up half your gross pay for the next few decades. Raise your kids on what’s left after taxes. What would that be, $10K or so?
Not worth it.
But with a budget of $250,000, there wasn’t much else she could afford, unless she was willing to live far outside of town and commute into Fort Collins each day.
Oh for Pete’s sake. “Far outside of town”? Fort Collins is a city of 150K. How “far outside” did she have to go? A 15 minute commute? Even if she bought in Loveland she could be in Fort Collins in 15 minutes.
Exactly. I always found Fort Collins claustrophobic myself. Being able to walk downtown is way overrated.
There are some nice nabes with older houses that are closer to downtown, but they’re pricey. Those are Fort Collins houses that sell in a day. The newer, mass produced houses on the town’s periphery aren’t in such demand, even though they are 5-10 minutes from the “choice” nabes (except during rush hour).
And speaking of traffic, central Fort Collins is a mess during rush hour. Prospect, LeMay, College, Harmony and other surface roads are a snarl. Like you said, even though the place is “small town” it can feel claustrophobic.
And to add to the mystery, the local quality employers suck and have been in perma layoff mode for years: HP, Advanced Energy, Avago. Intel hasn’t had a mass layoff, but they did have a voluntary separation program, which from what I heard was oversubscribed as it sucks to work there.
‘Carrollton-based Centurion American Development plans to build a new 1,800-home project between Prosper and Celina in Denton County. The development will be called Sutton Fields. It is the latest in a series of residential developments in the area around Celina and Prosper.’
‘Last fall, we wrote about the growth of new housing developments near Prosper in a cover story titled “Welcome to the Megaplex,” which you can read here.’
The Prosper area was the one I visited and posted about last summer. Absolutely insane.
‘When Tony Ruggeri is looking for Republic Property Group’s next big billion-dollar bet, the 32-year-old co-president of the mega-development firm likes to stay close to the Dallas North Tollway — and far north in the region.’
‘So far north that Ruggeri’s development firm has snapped up former farm land equidistant from the Oklahoma border and downtown Dallas.’
‘As the name implies, a master-planned community requires infrastructure for thousands of homes, schools, resort-style pools, amenity centers, retail space, hike-and-bike trails and parks. That’s the sort of infrastructure that “expensive” doesn’t even begin to describe.’
‘Republic Property Group has played long odds before and won. Its wildly successful $1.5 billion Lantana development in Denton County is home to 12,000 residents. But Republic isn’t the only player. The $1.6 billion Phillips Creek Ranch and $1.3 billion Light Farms project are just part of a $15 billion wave of about 20 mega-projects underway in North Texas.’
‘And it seems like developers can’t build fast enough. In certain northern neighborhoods of Frisco, Plano and Allen, homebuyers are outbidding each other and paying more than asking price as home prices continue to rise.’
‘Land prices in key neighborhoods have doubled in the last two years, reaching record highs. That’s coupled with a limited supply of labor, said Phil Crone, executive officer of the Dallas Builders Association.’
‘The future of North Texas’ mega-developments largely comes down to the payoff, said Phillip Huffines, one of the owners of Dallas-based Huffines Communities. He and his twin brother, Donald, have pioneered Savannah and Providence, two themed mega-projects totaling more than 1,100 acres along U.S. 380 and home to 12,000 residents.’
“From an investor standpoint, our communities along 380 have been very successful,” he said. “There’s been a greater demand to live in a master-planned community, and I expect that to continue.”
“32-year-old co-president”
Well there’s another bubble top indicator. When you have young people in real estate related professions in high falutin’ positions making lots of money, you know it’s about to be over.
I remember this last go-around in the mid 2000s reading about these 20-somethings with million dollar penthouses working in mortgages.
Oh.. and this guy has only ever worked at Republic. He graduated college in 2004.
https://www.linkedin.com/profile/view?id=25444366&authType=NAME_SEARCH&authToken=kVUL&locale=en_US&srchid=295664331428694007306&srchindex=6&srchtotal=30&trk=vsrp_people_res_photo&trkInfo=VSRPsearchId%3A295664331428694007306%2CVSRPtargetId%3A25444366%2CVSRPcmpt%3Aprimary%2CVSRPnm%3A
Maybe they’ll strike oilg
‘MANILA—Neighborhoods inspired by Beverly Hills, fast-rising office towers and swanky malls resembling landmarks like St. Mark’s Square in Venice: It might sound like China circa 2005, but this is the Philippines in 2015.’
‘The real-estate sector here is enjoying a boom as new property floods a market usually stifled by low prices and developers notorious for completing projects years behind schedule.’
‘Now, supply and demand are rising fast as the national economy grows reliably at 6% to 8% per year. Property values are increasing steadily, drawing investors. And cash-rich developers, backed by some of the country’s biggest conglomerates, are having an easier time delivering on their promises.’
‘In a metropolis clogged with traffic and where millions still live in slums, Manila’s affluent buyers particularly favor newly built “townships”—self-contained districts where homes, offices, shops and schools are packaged together in tidy, linked communities, said Jericho Go, senior vice president at Megaworld Corp. , the real-estate subsidiary of the Alliance Global Group.’
‘Last year, an unprecedented 41,810 condos valued at more than 2 million pesos (about $45,000) entered the Manila market, according to real-estate consultancy Jones Lang LaSalle, which expects almost 59,000 in 2015. The Manila office sector also is surging: A record 835,800 square meters of new Grade A space will come on stream this year, with almost 1 million expected in 2016, according to Jones Lang LaSalle.’
“We’re seeing massive growth, even compared with other cities in the region,” said Claro Cordero, head of research, consulting and valuation at Jones Lang LaSalle Philippines. Even as the Manila market gradually becomes saturated, developers have dozens of up-and-coming provincial cities they can target, Mr. Cordero said.’
‘One worrisome sign: Residential supply is currently outstripping demand, a situation that in other markets has left developers with unsold properties, putting them under financial strain, said Julius Guevara, head of research and consulting at Colliers International Philippines, a real-estate consultancy. In the local market, though, the top developers have deep pockets, reducing the risks, he said.’
‘In addition, developers these days are quick to pull back on new projects if they see an impending glut, Mr. Guevara said. “In 2014, there was actually a 33% decline in new projects,” he said, as developers reacted to the huge quantities of properties due to hit the market between 2014 and 2016.’
“We see few risks,” Mr. Go said. “We sell 70% of a new development before turning soil—that typically takes us less than a year—and 70% of people pay cash.” McKinley West’s residential lots sold out within a month, the company said.’
‘There are also opportunities in social housing—properties priced at less than 1 million pesos—for developers willing to trade margins for scale, Mr. Banzon said. “This country had a housing shortfall of 3.9 million in 2013,” he said. “It will be 6.5 million by 2030.”
“Is there a risk of a bubble forming?” Mr. Guevara asked. “The important question is: Are developers addressing actual demand? In this case, it’s safe to say that they are.”
‘If you’re looking to lock in a rental unit in inner Brisbane, the time to move may be now, with rents down 2.1 per cent over the same time last year. The CoreLogic RP Data Quarterly Rental Review, out yesterday found inner city unit rents saw the weakest growth of all markets across the capital city, as a growing number of apartment developments come online.’
‘But the fall was not as extreme as that of units in Queensland’s North West region (Mt Isa, Cloncurry, Gulf Country) where rents were down 20.3 per cent so far this year.’
‘According to the review, the Brisbane fall was linked to “increasing stock availability” within the inner city unit market.’
‘Risky mortgages are back on the rise, just months after the Bank of England capped home loans, as bank profit margins are squeezed by a glut of supply and falling housing demand.’
‘Figures from the Bank of England showed that, while mortgages had become less available to borrowers with deposits of 25pc or more, those worth more than 90pc of the property’s value had risen for the first time in nine months.’
‘Under new powers recently handed to the Bank by the Treasury, it is able to cap high loan-to-value mortgages should it consider them to be a risk to financial stability. The Bank put a limit on mortgages with high loan-to-income ratios last year, and since then the housing market has slowed down substantially.’
‘The Bank’s quarterly credit conditions survey showed a “significant” decline in demand for mortgages in the first three months of the year, the third-consecutive quarterly fall. Falling demand and increasing competition has driven down mortgage profit margins, with the survey showing that rates relative to the Bank of England interest rate have now fallen for two and a half years.’
‘The percentage of short sales and REO sales jumped by 2.2 percentage points in the first quarter of 2015, the largest increase since the first quarter of 2012, according to data released by Clear Capital. All four regions – the South, the Northeast, the West, and the Midwest – saw an increase in distressed saturation rate in Q1 from the fourth quarter of 2014, according to Clear Capital. The largest increase was in the Midwest, at 3.8 percentage points. The rise in distressed saturation comes on the heels of home price moderation that began in 2013 and continued throughout 2014.’
“The rise we’re seeing in distressed saturation across the board is another sign that the legacy issues from the housing collapse are still being processed today, and suggests that homeowners are still trying to find a foothold in a slowly improving economy,” said Alex Villacorta, Ph.D., VP of Research and Analytics at Clear Capital.’
‘Florida, which has been the state hit hardest by the foreclosure crisis, had a distressed saturation rate of 30.6 percent in Q1, more than 7 percent higher than any other state in the Southern region. Orlando had the highest distressed saturation rate in Q1 out of the top 50 metro areas with 37 percent.’
“The uptick in distressed saturation and drastically moderating prices in the past year could mean that there is a backlog of shadow inventory hitting these judicial markets,” the report said. “If the supply continues to increase faster than demand, this area could see prices continue to fall, creating more uncertainty in overall home prices yet also potentially offering a housing bonanza with deals for investors and traditional home buyers alike.”
‘SPRINGFIELD, Mass. – Springfield’s foreclosure rate is currently higher than both the state’s and the national rate according to recent data taken by CoreLogic. And some argue the length of time a foreclosure takes negatively impacts the community around it.’
‘Local realtors like Kevin Sears told 22News that the longer it takes for a foreclosed home to get a new owner, the more other homes in the neighborhood drop in value. He explained that “the National Association of Realtors did a study a few years ago that showed that your home will loose approximately seven percent of its value if there’s a foreclosed and vacant property on your street.”
‘While most of the city’s foreclosures are a result of missed mortgage payments and are recouped by the bank, others become the city’s responsibility. 22News found that more than 460 of the foreclosed properties in Springfield are currently in the hands of the city because the owner didn’t pay their taxes.’
‘According to CoreLogic the jump in Springfield’s foreclosure rate showed up this past January.’
“your home will loose approximately seven percent of its value…”
which will lead to more underwater debtors. It’s a negative feedback loop.
You paid how much for a depreciating house? And you borrowed the money?
You’re screwed.
Fremont, CA Sale Prices Down 7% YoY; Plummet 14% QoQ
http://www.zillow.com/fremont-ca-94538/home-values/
A reader down under sent this to me:
Debt Glorious Debt
A humorous take on the great Aussie Housing Bubble and the debt that keeps it all going - a little twist on Oliver Twist with apologies to all food lovers.
https://www.youtube.com/watch?v=Jjx8RMwaRDM
Funny.
“They pay less taxes while negative gearing.”
Truly a totally-dumbed-down population. Up to their stupid asses in debt and they sing songs about it?
Bahahahahahahahahahahahaha …
Reminds me of those totally-dumbed-down American dummies who used to proudly stick bumper stickers on the cars they drove (but did not own) that bragged to the world:
“I owe, I owe, so its off to work I go”.
“I owe, I owe, so its off to work I go”.
I remember those.
On first glance, I read the title of todays thread as “A High-Risk Monkey-Go-Round.”
In Palm Beach County, Florida we had a real estate bump when the rental companies came through. People still have some pretty outrageous prices on the housing, but I have noticed the rents falling. Check out this little rental near the beach: http://miami.craigslist.org/pbc/apa/4951482035.html
I do not see how these rental companies are going to pay those off-balance sheet loans off with craigslist loaded with 2 bedroom apartments under $1,200 per month.