A Bubble That Is Bound To End Badly
It’s Friday desk clearing time for this blogger. “Rather than settle for garages of antique cars or a museum’s worth of paintings, billionaires are increasingly willing to pay $100 million for homes that can serve as showcases for their fortunes, according to an analysis by Christie’s International Real Estate. The luxury housing market has shifted in the past year as the dollar has strengthened. Sales in Manhattan, Los Angeles, San Francisco, London and other global hubs are stabilizing after having rocketed in 2013. There has been a 25 percent drop in Manhattan’s monthly sales pace and a 50 percent drop in Miami Beach, said Kevin Maloney, a developer whose firm, Property Markets Group, works on luxury buildings.”
“Global buyers have become more patient. They are seeking value because their incomes, earned in euros, pesos, reals and other currencies, now buy less in dollars. ‘If I had my druthers, I’d like to see the dollar weaken against other currencies,’ Maloney said.”
“Heading into the peak home-selling season, metro Denver’s housing market remains one of the tightest in the country. Across the western half of the state, however, inventory remains plentiful and buyers still retain the upper hand, especially for more expensive homes and in more rural areas, according to regional market reports from the Colorado Association of Realtors. ‘Our foreclosures have gone way down, but we are still having them and we still have short sales,’ said Ann Hayes, a broker with Keller Williams Colorado West Realty in Grand Junction.”
“Sales of new homes in the Chicago area fell again in the first three months of the year as builders put off new projects, extending a decline that began more than a year ago. The drop was entirely attributable to a 48 percent plunge in sales in the city of Chicago. Sales have fallen simply because developers aren’t building that many homes, said Tracy Cross, principal of Tracy Cross & Associates. ‘If you don’t build it, they won’t come,’ Cross said. He estimates sales would be about 40 percent higher ‘if supply were available,’ but builders remain cautious ‘because of Chicago’s slower economy.’”
“The Inland Southern California housing market, a bastion for bargain home sales when foreclosures peppered the region, has had a lethargic sales pace in 2015, a new Trulia report shows. Two years ago, Trulia labeled the Inland region as the third-hottest market in the nation. Today, it’s been classified as sluggish. The Inland market has slowed because investors and cash buyers who were scooping up distressed property at discount rates have moved to other feeding grounds, he said. ‘Homes are less of a bargain today,’ Trulia housing economist Ralph McLaughlin said.”
“The foreclosure nightmare that haunted U.S. homeowners during and after the Great Recession has loosened its grip considerably in most states. In New Jersey, the bad dream just gets scarier. ‘In my view, the aftermath of the crisis is still with us,’ said Bruce M. Sattin, a lawyer who represents clients fighting foreclosure. ‘While the number of new foreclosure cases spiked after the real estate market crashed in late 2007, there are still cases from back then in the system.’”
“The U.S. Justice Department’s lawsuit against Quicken Loans has caught the attention of lenders everywhere. Kim Harland of Nova Home Lending said her continuing compliance education makes it hard to believe that any lender would do anything outside of the lines. She said most lenders tend to err on conservative side rather than pushing the envelope. Yet, pushing the envelope is exactly what the Department of Justice is accusing Quicken Loans of doing. The suit claims that, from September 2007 through December 2011, Quicken knowingly submitted improperly written mortgages insured by the Federal Housing Administration that resulted in millions of dollars in insurance payouts for default loans triggered by the company’s deficient practices.”
“Canada’s housing market is a bit like an old china teacup right now—it’s pretty from a distance, but there are cracks if you look close enough. Looking particularly precarious is the condominium sector in Toronto and Vancouver, forcing developers to shift their strategies to compensate. Developers are starting to extend ever-more lavish incentives as the number of unsold newly completed units rises. George Athanassakos, a finance professor at Western University’s Richard Ivey School of Business, argues Canada’s housing market is headed for a fall. ‘If you go back in time, there’s not really another period where the housing market [has been] so out of whack,’ he says. ‘Eventually, bubbles burst.’”
“A 1,000 sq m suburban replica of an American McMansion in Beijing that looks on to a rubbish-strewn wasteland, has been put up for sale. A snip at US$8 million — the same list price as Sandy Cay, a resort island in the Bahamas offering views of white sand and real palms. Welcome to the world of Chinese real estate, where a combination of rapid riches and easy credit has fuelled a decade-long boom in local house prices that ended only last year. From a country of almost zero homeownership only 15 years ago, more than 80 per cent of Chinese households now own their own homes.”
“Yet, the price tags and exotic names often jar horribly with reality. Next to Palm Beach is the Merlin Champagne town, a gated community whose only nearby shopping amenities consist of a rundown mall where the main draw is a McDonald’s outlet.”
“Chinese buyers are finding more reasons to turn overseas, including the recent drop in domestic property prices. Net capital outflows from China reached a record US$91 billion in the final quarter of last year, following an outflow of US$56.7 billion in the third quarter. Most offshore transfers are done through underground banks or exporting companies, state-owned enterprises or government departments that have a right to transfer money abroad.”
“‘For smaller amounts, there is the gem and fine-art trade. But for larger amounts, the easiest way is to leverage a government department or state enterprise with a foreign-exchange quota — I have good connections and can provide that service to clients who want to purchase property overseas,’ said an agent at Luxury Property Showcase who asked not to be identified.”
“By the middle of 2015, it has become clear that all is not well in the land of China. Now the signs are increasing China will soon engage in its own form of quantitative easing, in what could be seen as a sign of panic. China needs to do QE when official growth is still above 7 percent? For many experts, this is a confirmation that underneath the surface, China is facing huge problems.”
“‘This is the nonsense of the Chinese miracle economy. The very fact we are discussing the People’s Bank of China [PBOC] doing QE shows how off the boil the economy has become. The whole China dynamic has shifted,’ says Fraser Howie, author of Red Capitalism.”
“The Survey and Research Center for China Household Finance estimates that more than one in five homes in China’s urban areas is vacant. ‘The loans behind the local government debt are loans to buildings that are empty, not generating cash flows. They are loans to buildings that are unproductive,’ says Richard Vague, managing partner at Gabriel Partners. ‘If you are a banker, having extra cash doesn’t do you any good. I’m not going to be surprised at all if it goes to unproductive purposes. Because frankly they ran out of productive things to spend the money on. All that’s left is speculation.’”
“Here’s an astonishing statistic; more than 30pc of all government debt in the eurozone around €2 trillion of securities in total is trading on a negative interest rate. It’s a bubble that is bound to end badly. With the advent of European Central Bank quantitative easing, what began four months ago when 10-year Swiss yields turned negative for the first time has snowballed into a veritable avalanche of negative rates across European government bond markets. In the hunt for apparently ’safe assets,’ investors have thrown caution to the wind, and collectively determined to pay governments for the privilege of lending to them.”
“On a country by country basis, the statistics are even more startling. According to investment bank Jefferies, some 70pc of all German bunds now trade on a negative yield. In France, it’s 50pc, and even in Spain, which was widely thought insolvent only a few years ago, it’s 17pc. It marks a scarcely believable turnaround on the situation at the height of the eurozone crisis just a little while back, when some European bond markets traded on yields that reflected the very real possibility of default.”
“What makes today’s negative interest rate environment so worrying is this; to the extent that demand is growing at all in the world economy, it seems again to be almost entirely dependent on rising levels of debt. The financial crisis was meant to have exploded the credit bubble once and for all, but there’s very little sign of it. Rising public indebtedness has taken over where households and companies left off. And in terms of wider credit expansion, emerging markets have simply replaced Western ones. The wake-up call of the financial crisis has gone largely unheeded.”
“One by one, all the major central banks have joined the money printing party. Anything to keep the show on the road. It’s what Chris Watling of the consultancy Longview Economics has termed the ‘philosophy of demand at any cost.’ A crisis caused by too much debt has been fought with even more of the stuff.”
“The flip side of the cheap money story is soaring asset prices. Eventually, there will be a massive correction, in which creditors will suffer sickening losses. Nobody can tell you when that moment will arrive. We live in an ‘extend and pretend’ world in which economies pathetically fight between themselves for any scraps of demand. One burst of money printing is met by another in an ultimately futile, zero-sum game of competitive currency devaluation. Both Keynsian and monetary economics seem to be in some kind of end game. What comes next is anyone’s guess.”
Scottsdale, AZ Sale Prices Plunge 7% YoY On Collapsing Housing Demand
http://www.zillow.com/scottsdale-az-85259/home-values/
Mesquite, NV Sale Prices Crater 10% YoY; National Housing Demand Falls To 20 Year Lows
http://www.zillow.com/mesquite-nv/home-values/
Colleyville, TX Sale Prices Dive 5% YoY On Billowing Housing Inventory
http://www.zillow.com/colleyville-tx/home-values/
You’ve really cracked open the Roget’s today, cheez doodle dude.
Hey Donk…
Fairfield County, CT Sale Prices Down 3% YoY; Plummet 10% MoM As Housing Correction Gains Strength
http://www.zillow.com/fairfield-county-ct/home-values/
Eventually, there will be a massive correction, in which creditors will suffer sickening losses. Nobody can tell you when that moment will arrive.
Any guesses?
In the 1970s I remember having a long discussion with my uncle about all the doomsayers. Going off the gold standard, nuclear war, economy tanking, the end of the world…..all that stuff. His advice: proceed with life, because you can’t live in a box of fear.
That is the best advice I ever received. If the world tanks, there will be more pressing problems than those for which you can possibly prepare!
Liquidate assets, retire debt and hold onto every dollar you’ve got Jingle_Fraud. You’re going to need every last one of them.
‘about all the doomsayers’
‘proceed with life’
What exactly do you think I am doing?
‘If the world tanks’
OK, so if a bunch of gamblers lose their ass, the world tanks?
‘there will be more pressing problems’
Yeah I know, most of what I’ve done the past few years was fixing problems caused by foolish gamblers.
‘for which you can possibly prepare’
For some reason, I get the sense you want to wave off what’s happening. This isn’t gold bug newsletter from the 70’s. We’ve had at least two major manias in 15 years. My position is that we are in the midst of a global real estate bubble, and probably stock, bond, milk, art, antique car and rosewood furniture bubbles too.
Wave it off if you want. I don’t like to predict. It’s hard enough to objectively observe. But here’s some things to consider;
Why are people paying a fee to deposit money? Seems kinda odd. And what forces or circumstances could are causing this and how will it play out?
Why is QE all of a sudden a normal thing that booming China would engage in? There was a time when creating gigantic amounts of money would have been considered to have a downside. Does it still and if so, what is it?
I can remember when central banks monetizing debt would have been considered insanity. Now Japan’s central bank does that and buys REIT’s, and has for years. What exactly is holding this all up?
And if a boom in $100 million dollar houses doesn’t get your attention, what does?
I know; la-de-dah! It’s all a little too overwhelming at times, so better to remember Uncle Who-ever and his box of fear. I’ll say this; I’m not afraid of anything that’s coming.
Well have a good day, and watch your head, because I for one see some strange things out there. Some of us are even preparing to take advantage of it.
“I’m not afraid of anything that’s coming.”
Falling prices to dramatically lower and more affordable levels isn’t something anyone I know is afraid of. We all welcome it.
“My position is that we are in the midst of a global real estate bubble, and probably stock, bond, milk, art, antique car and rosewood furniture bubbles too.”
I agree with all of that but, with the exception of real estate, who does it hurt? If some successful 70 year old dude with a hot blonde 40 year old wife wants to pay a million dollars for a stupid 1970 Barracuda at Barrett-Jackson, then be my guest. That purchase probably caused the employment of ten marginally adequate body shop men in Texas.
From the Denver Post above:
‘Conditions also are looking up in the hard-hit mountain region, which includes resort areas such as Telluride, Vail, Aspen, Crested Butte, Steamboat Springs and Summit County.’
‘A 9.3-month supply of homes is available in the mountain region, down 23.8 percent from a year earlier.’
‘Strong interest from Texas buyers, flush with oil money, and foreign investors looking to diversify have helped fuel the resort area rebound in recent years, Harvey said.’
I can remember a time when oil rich Texans piling into Colorado real estate (among other things) caused a lot of hurt. Suicides even.
It’s gonna matter when it’s a choice between bloated pensions for these old bastards and elementary schools.
Means test.
OK, so if a bunch of gamblers lose their ass, the world tanks?
The gamblers have bought Washington and other governments in such a way as to make taxpayers pay for the loss, while the gamblers keep their asses. Look at the billions they poured into AIG. The gamblers on Wall Street won’t go down either, if they threaten to take millions of 401K’s with them. So yeah, I do expect a bit of world tanking.
The gamblers have bought Washington …
This being the case why get stuck in the Hillary Jeb coin flip? Why vote at all? This means goverment of the people, by the people, for the people is dead.
If it is, it has been that way for a long time:
‘The income stream of the Clinton Foundation, which includes many millions of dollars from foreign governments and individuals with close links to foreign governments, has created a firestorm of controversy…There are huge loopholes in the disclosure rules, one of them being that, while sponsors of paid speaking engagements must be revealed, “sub-sponsors” are exempt. As the Washington Post tells it:
“[I]n 2012, Hillary Clinton’s disclosures show, Bill Clinton was paid $250,000 for a Boston speech to the Global Business Travel Association. But the documents filed by Bill Clinton’s office show that a proposed sub-sponsor was the aircraft manufacturing giant Boeing. During a 2009 trip to Russia, Hillary Clinton made a personal pitch for a state-owned airline to buy Boeing jets.”
‘That’s the way US foreign policy has been conducted since the earliest days of the American Empire, when the US entered the imperialist sweepstakes at the end of the nineteenth century. It started in the 1890s, when Admiral Alfred Thayer Mahan came out with his trend-setting book, The Influence of Sea Power Upon History, which provided the rationale for a huge military buildup by the European powers, who were scrambling for colonies. Teddy Roosevelt, an ambitious rising politico at the time, was a zealous convert.’
‘Inspired by the messianic delusion of America’s alleged “manifest destiny,” Roosevelt, Lodge, and John Hay – who would be Teddy’s Secretary of State – pushed the policy of imperialism as the new Republican doctrine. They cloaked their global designs in the language of commercialism, claiming a new era of great wealth could be achieved if only Americans could be coaxed out of their “sloth” – as Teddy put it – and energized by the great adventure of joining the imperialist powers of Europe in the business of colonialism. At the end of that rainbow, the Republicans promised, would be a pot of gold – but only for the politically connected. The would-be beneficiaries of this policy lined up to support the new expansionist dispensation.’
‘With the evil William McKinley replacing the pro-hard money “isolationist” Grover Cleveland, the Roosevelt-Lodge-Hay cabal moved in for the kill – and found a ready-made victim in the sclerotic Spanish empire, which was on its last legs. With Hay at Foggy Bottom, and Teddy as Secretary of the Navy, the American expansionists gobbled up Cuba, seized Puerto Rico, conquered the Philippines, and stole Hawaii.’
‘The acquisition of Hawaii, an early example of crony capitalism in action, was the work of the sugar interests, whose plantations were even then encroaching on that Pacific paradise. It was they, in collaboration with the US Navy and expansionists in Washington, who engineered the so-called “revolution” that kicked out the monarchy and set up a white man’s “republic,” which then – after much delay, due to stubborn if ultimately unsuccessful resistance from anti-imperialists on the mainland – was incorporated as a US territory.’
‘When McKinley met his maker at the hands of an alleged anarchist, Teddy, who had inveigled his way into the Vice Presidency, took the reins of the new American Imperium. One of his first aggressions was a textbook example of the emerging crony capitalism: the making of the Panama Canal. Murray Rothbard tells the fascinating story: “It is well known that Roosevelt engineered a phony revolution in Columbia in 1903, creating the new state of Panama and handing the Canal Zone to the United States. What has not been fully disclosed is who benefited from the $40 million that the U.S. government paid, as part of the Panama settlement, to the owners of the old bankrupt Panama Canal Company, a French company which had previously been granted a Colombian concession to dig a Panama canal.”
“The Panama Canal Company’s lobbyist, Morgan-connected New York attorney William Nelson Cromwell, literally sat in the White House directing the ‘revolution’ and organizing the final settlement. We now know that, in 1900, the shares of the old French Panama Canal Company were purchased by an American financial syndicate, headed by J.P. Morgan & Co., and put together by Morgan’s top attorney, Francis Lynde Stetson. The syndicate also included members of the Rockefeller, Seligman, and Kuhn, Loeb financial groups, as well as Perkins and Saterlee.”
“The syndicate did well from the Panama revolution, purchasing the shares at two-thirds of par and selling them, after the revolution, for double the price. One member of the syndicate was especially fortunate: Teddy Roosevelt’s brother-in-law, Douglas E. Robinson, a director of Morgan’s Astor National Bank. For William Cromwell was named the fiscal agent of the new Republic of Panama, and Cromwell promptly put $6 million of the $10 million payoff the US made to the Panamanian revolutionaries into New York City mortgages via the real estate firm of the same Douglas E. Robinson.”
Good for you Ben. Reading up on Barbara Tuchman’s ‘The Proud tower’. These times certainly parallel that of pre WW1!
Along the same lines…
History: Read it and Learn (Part V of: A Bird’s Eye View of Contrived Terror)
The problem is that the powers that be may not permit you to take advantage of strange things. Look at the short-selling bans in 2008. Look at the growing number of restrictions worldwide on cash transactions. Look at manipulated asset markets where politically-connected entities are given an informational advantage. It’s not enough to be right; you also need leaders who are willing to let others be wrong.
The distortions concern me, but the political response to them concerns me more.
And the prohibitions on individuals buying foreclosed fixer-uppers?
“What exactly is holding this all up?”
Confidence. People are confident that their money is worth something. That their paychecks are worth something.
I think paper money/debt throughout history has been based on confidence. For whatever reason, people seem more confident that things will hold together, no matter what comes.
If you cash is so worthless you can always send it to me.
“And if a boom in $100 million dollar houses doesn’t get your attention, what does?”
QE goes right into the pockets of the wealthy elite.
Really?? Some of the best advice I’ve ever received came from here (the HBB) and the Of Two Minds blog back in 2005-2007…both advised that a massive housing bubble had inflated and by Spring 2007 that the pop was imminent and that it would take the entire economy with it. I found this advice quite convincing, put my house up for sale and priced it about $10K under the market, had a buyer under contract within a week, and walked away with $200K cash tax free several weeks later.
(I lived in this place for 10 years and did NOT buy it as an investment)
Good job Bluto,
I also sold but a year earlier in June 2006. Started reading this blog about that time.
Eventually, there will be a massive correction, in which creditors will suffer sickening losses. Nobody can tell you when that moment will arrive.
Any guesses?”
sicking losses never they will spread it out to everyone , massive correction who knows ?
And now for a bit of comedy …
“The U.S. Justice Department’s lawsuit against Quicken Loans has caught the attention of lenders everywhere. Kim Harland of Nova Home Lending said her continuing compliance education makes it hard to believe that any lender would do anything outside of the lines.”
Hard to believe … Bahahahahahahahahahaha
“She said most lenders tend to err on conservative side rather than pushing the envelope.”
Bahahahahahahahahhahahahaha … truly Kim Hartland need to get out a bit more often.
“Yet, pushing the envelope is exactly what the Department of Justice is accusing Quicken Loans of doing.”
Oh? And why would Quicken do such an evil thing?
“The suit claims that, from September 2007 through December 2011, Quicken knowingly submitted improperly written mortgages insured by the Federal Housing Administration that resulted in millions of dollars in insurance payouts for default loans triggered by the company’s deficient practices.”
Bahahahahaha … Quicken knowingly - KNOWINGLY - submitted improperly written mortgages insured - INSURED - by the FHA.
Imagine that!
Here’s a blast from the past …
The Orange Man is off the hook.
“If Everybody is Guilty Then Nobody Is.”
http://www.ritholtz.com/blog/2011/02/angelo-agent-orange-mozilo-off-the-hook-for-now/
“Yet, the price tags and exotic names often jar horribly with reality. Next to Palm Beach is the Merlin Champagne town, a gated community whose only nearby shopping amenities consist of a rundown mall where the main draw is a McDonald’s outlet.”
A “McDonald’s Outlet”? What will they sell there, factory second McDLT’s?
I’m hoping that the meaning of “outlet” here is more like “branch” or perhaps “outpost.”
‘Damaged credit from losing a home to foreclosure, signing it away to the bank or selling at short sale will exclude millions of people from homeownership in the coming decade, the National Association of Realtors says.’
‘The situation may be amplified in parts of South Jersey. New Jersey as a whole and South Jersey specifically saw increases in foreclosure activity in the first quarter from a year ago, RealtyTrac reported last week. Atlantic County led all U.S. metropolitan areas in foreclosure activity rate.’
‘The effects missed mortgage, car and credit card payments will have on the region’s economy and housing stock are still being realized. “It will certainly have an impact because lending standards are still going to be sensitive and solid employment and job security are still going to be important for qualifying for a mortgage,” said Anthony D’Alicandro, a broker with Coldwell Banker Argus Real Estate in Northfield.’
‘The agency saw a 19 percent increase in inventory in mainland Atlantic County municipalities in the first quarter as homeowners lost jobs, listed homes for sale or moved from the area, he said. This is putting more supply into the market, which was behind a 4 percent price drop in those towns.’
‘At Clarifi, a nonprofit credit counseling agency with an office in Galloway Township, appointments with a specialist increased 65 percent in March from about a year ago, outreach coordinator Stephanie Bittner said.’
‘So far this year, more than 94 percent of appointment dates have been booked.’
‘Bittner said homeowners can salvage their credit scores somewhat by taking steps early. This can include reaching out to mortgage companies to check out available options or perhaps giving the home back to the lender rather than going through foreclosure. “It’s still going to hurt you, but it’s not going to be as bad, so to speak,” she said.’
‘Bittner said she is working with a client who left her house, is now renting and eventually wants to buy again. “It’s too late for the house, but what else with the credit card, car payments … so we can at least try to keep as many things on track as possible,” she said. “If they don’t take the necessary steps, it’s going to have an impact on their life longer than it needs to be.”
Still haven’t heard one single positive outcome from paying grossly inflated prices for a depreciating asset like a house. Not one.
Lesson: Never pay more than reproduction costs for a depreciating asset. If you paid more than reproduction costs ($55/square foot), you got ripped off.
There is a broad range of quality in home design and construction. Even condition. Ditto for neighborhoods and towns. Price per sq ft is meaningless without reference to quality.
Did you marry a fat ugly woman because she was the best weight/volume for the buck?
“Quality” lumber?
“Quality” concrete?
“Quality” excavation?
“Quality” copper pipe?
“Quality” gypboard?
“Quality” is meaningless without qualifying.
1. Dumb ‘em down.
2. Profit.
Check out this article and pay close attention to just how important a part that credit (and the lack of credit) plays in the lives of these people.
Life really doesn’t have to be like this for these people but I am so, sooooo glad that it is.
I thought that “giving the home back to the lender” and foreclosure were the same thing.
A deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.
http://en.wikipedia.org/wiki/Deed_in_lieu_of_foreclosure
‘This month it was revealed as much as a fifth of Dubai’s prime properties lie empty for most of the year. For years, many reports have pointed to towers in JBR or JLT which remain in darkness at night when residential areas should be lit up with tenants and homeowners.’
‘However, the figure is in line with international statistics that show that one in four apartments in major cities across the world are empty. In Dubai, real estate experts believe that between 15 and 20 percent of units in the city are left unoccupied, either because the property is a holiday home or an investment which the owner is holding unto until it is time to flip it.’
“There are no recorded statistics for absentee owners, but in my opinion, I would safely say currently in the region of 20 percent of properties, of which buyers mainly come from Europe, Russia, the GCC and to a lesser degree the Indian sub-continent,” Andrew Cleator, luxury sales director, LuxHabitat, told Khaleej Times.’
Photo at the link.
Beyond the perception that real estate values will rise, no one has ever explained to me what the attraction of Dubai is. The weather? No. Jobs, cultural opportunities, a good place to raise a family? Also negative.
‘Zombies are on the rise in New York City — zombie properties, that is. In a legacy of the 2008 real estate crash, the number of abandoned homes stuck in the midst of foreclosure proceedings reached 3,525 in 2014, a 38% increase from the year before, a report from state Attorney General Eric Schneiderman found.’
‘Because foreclosure proceedings can linger for months and even years, homes are often left without upkeep and become problems for entire neighborhoods, the attorney general said. “Too often, these vacant homes rapidly deteriorate, dragging down property values and creating hotbeds for criminal activity,” he said.’
‘Brooklyn had the highest number of so-called zombie properties with 1,089, followed by 966 in Queens, 720 in Staten Island and 639 in the Bronx. Manhattan had the fewest with just 111. Statewide, zombie properties increased by 50% from 2013 to 2014, bringing the total number to 16,701, according to Schneiderman’s report, based on information from RealtyTrac.’
Keep in mind we are breathlessly told how HOT these areas are.
‘Howard Beach resident Isaac Maya has had to look at the abandoned, dilapidated house next to his just sit there for more than five years. “It’s just getting worse and worse,” Maya said. “I don’t see anything going on there.”
‘A for-sale sign is up in front of the house, located at 164-29 92 St., but according to Maya, nobody but possums and a few trespassers have entered the property in years.’
‘Calls to the number listed on the notice led a Queens Chronicle reporter to a Wells Fargo hotline. A spokesman for the bank said in an email that it is the “servicer on the loan” and that Freddie Mac, a government-sponsored firm, is “the investor and actual owner of the loan.”
“There have been efforts to sell the property ‘as is’ via short sale, but the previous offers were declined by Freddie Mac,” the spokesman added.’
Short sale means they haven’t foreclosed. At least 5 years since it’s been abandoned, and it hasn’t been foreclosed.
Here’s one reason why you cannot lose with the stuff I use …
“A spokesman for the bank said in an email that it is the “servicer on the loan” and that Freddie Mac, a government-sponsored firm, is “the investor and actual owner of the loan.”
How many housing units are there in NYC? What is the vacancy rate? What should a reasonable vacancy rate be?
How many units need to be created (or destroyed) in order to get to that “reasonable” vacancy rate?
I suspect the number of units that need to be created (or destroyed) dwarfs the few thousand zombie foreclosures.
Quick Google search:
There are 2.174MM rental units in NYC per the 2011 census.
The current vacancy rate (Per the current Census estimate) is about 3%.
A vacancy rate representative of a more balanced market is 5%.
In order to get to a vacancy rate of 5%, you would need to add more than 40k units to the market.
4,000 zombie properties, even if they hit the market all at once, would do nothing to the supply/demand balance in the market.
Try 4 million excess empty and defaulted houses across NY state Rental_Fraud.
‘When drilling in the Bakken was at its height and people flooded the area from across the country to take jobs, houses and apartments were in high demand. Costs climbed as a result. Some looked for alternative housing. Many found it in long-term RV lots. ‘
‘Ardis Ulmer and her husband, owners of R & A Lot Rentals in Dickinson, capitalized on the demand for RV spaces four years ago. She said there wasn’t enough housing in Dickinson at the time and the units that were available were expensive.’
‘The couple saw an opportunity and seized it, converting open pasture once used for cattle grazing into RV lots with utility hook-ups. In the beginning, Ulmer said, they “couldn’t get lots in fast enough.”
‘Now, they have 22 spaces for RVs to pull in, hook up and settle down for extended periods. Until recently, all of the lots had been full. But Ardis said within the past few months, she and her husband have witnessed the effects of the slowdown.’
‘Ulmer said while the slowdown is one of the main reasons people are in and out of the parks, there are other reasons people leave. She said many underestimate the bitter cold of North Dakota winters and a thin metal wall being the only barrier from strong gusts of wind.’
‘She has also seen people move off their lot to buy a house or rent an apartment while prices are low. “We have had people leave because they were laid off,” Ulmer said. “But there are other reasons, too.”
The idea of living in an RV in the North Dakota winter is almost laughable. You literally could not warm the interior up, and you’d have ice building on the walls from freezing condensation. You would be burning propane 24/7 and wearing a parka indoors.
San Jose, CA Sale Prices Plummet 15% YoY; Debt Fueled Housing Correction Ramps Up
http://www.zillow.com/san-jose-ca-95123/home-values/
‘South Park is one of the hottest neighborhoods for investment not just in Downtown, not just in Los Angeles, but across the United States. Construction is happening throughout the community. Everything from mid-rise apartment buildings to hotels to billion-dollar mega-projects are rising.’
‘Los Angeles Downtown News last week wrote about the plans that Shenzhen Hazens has for the site of the Luxe City Center Hotel and an adjacent parking lot. The $700 million project will ultimately include three towers (30-42 stories tall), which will produce a hotel and 650 condominiums.’
‘Just to the south, Beijing-based Oceanwide Real Estate Group is working on Oceanwide Plaza, which will create another three skyscrapers (40-49 stories) with 504 housing units and 183 hotel rooms. Then there is the $1 billion Metropolis, from Shanghai’s Greenland Group. The project, north of L.A. Live and along the 110 Freeway, is under construction, and the first phase will produce an 18-story hotel and a 38-floor condominium tower with 300 residences. Phase two would bring a pair of high-rises, standing 54 and 40 stories tall, with a total of 1,250 condominiums.’
‘Together, that is 10 towers, creating 2,700 housing units — most if not all for-sale — and two hotels.’
‘Not to be overlooked is retail: Plans call for Shenzhen Hazens’ Luxe development to have 80,000 square feet of retail space, while Oceanwide Plaza will include 167,000 square feet of shops and restaurants.’
‘While these projects represent a massive addition to South Park, they are only a portion of what is coming.’
‘But it sparks questions: Are there enough jobs in the community so that people who move here don’t have to climb into the car to get to work? If the answer is no, then traffic is an issue. It can already be difficult to drive in South Park when there are games or concerts at Staples Center or L.A. Live. How can congestion be eased when the housing and retail at Oceanwide Plaza and the Luxe site open? What happens when huge business gatherings take place at the Convention Center?’
‘The developers are a mix of local, national and international firms, and they may have little in common beyond seeing the opportunity to make a financial killing in South Park.’
Is this where Cartman lives?
That’s the South Park in CO.
I like the way these things are called “projects.” Because I suspect that’s what they will ultimately be.
I have a friend that manages a new mid-rise apartment in South Park. It’s hell to try to get there during sporting events, so that must bode well great for people trying to get home from work. Also half of the building overlooks hobos and train tracks on a street full of delapidated buildings. It’s not “luxury” but what a standard middle-class apartment built in 2014 should look like. The place was built cheaply so it’s already showing some wear.
For the privilege of this, you’re looking at $1800-$2000 a month for a 500 sq ft studio.. upwards of $2600+ for one with bedrooms.
They didn’t build enough parking spaces for everyone in the building on the belief that “people would ride bikes and walk and work downtown” and now they have that issue.
It also features a number of “work-live” lofts. I don’t know anyone who freelances who can pay over $3,000 a month for a place to live but that’s all the rage in new construction.
The owners intended to just build it, fill it up and sell it all along. It took them longer than they expected but they finally found some fool to buy it. It’s irritating considering the amount of hubris and arrogance the owners show. But - that’s real estate.
Ashburn, VA(DC metro) List Prices Crater 17% YoY; Sale Prices Dive 10% YoY
http://www.movoto.com/ashburn-va/market-trends/
http://www.zillow.com/ashburn-va/home-values/
Bellevue, WA Housing Inventory Skyrockets 174%; Sellers Slash List Prices 14%
http://www.movoto.com/bellevue-wa/market-trends/
GIGO - Bellevue is one of the hottest markets in the country right now. Lots of rich Chinese want to live there. Get some good data and get back to us.
Data my friend data. Stick with the data.
Bellevue, WA Housing Demand Plummets 16% YoY; Prices Fall
http://files.zillowstatic.com/research/public/City/City_Turnover_AllHomes.csv
redmondjp has turned into a total shill. “Lots of rich Chinese want to live there.” Wow, you have zero credibility now. Oh, that’s right, you’re a loanowner.
‘Tuesday’s post-earnings bearish engulfing candle tells the story here. That sets up a potential double-top for tech’s biggest cash cow heading toward the end of a tumultuous trading week.’
‘But Apple’s not the only culprit. Plenty of other stocks are also starting to betray the bulls. In fact, one sector in particular might catch your eye.’
‘Here are some startling numbers:
520 stocks listed on the Nasdaq are up at least 30% year-to-date.
Of these 30% gainers, 107 are down at least 10% this week.
Out of these losers, 75 belong to the health care sector. 52 are listed as biotechs.
‘I wouldn’t be in any hurry to try and buy the dip on some of these lead balloons. At the very least, we’re seeing strong rotation out of biotech’s heading into May. Just to clarify, I’m not trying to call a top in this sector. The Biotech iShares are still up 10% year-to-date. But it’s important to note just how tired some of these outperformers have become over such a short timeframe. There’s no reason to try and catch these falling knives right now.’
Notice how nothing is mentioned about fundamentals? Everything mentioned here is related to price.
If you were to want to value a business then you would probably be interested in just how busy the cash register is and this would probably be how you would measure “performance”.
But if it a stock that is having it’s “performance” measured then it the stock’s price is what is looked at.
http://finance.yahoo.com/echarts?s=LNKD+Interactive#
And it’s only the last trade that’s looked at generally.
One day this week, twitters’ stock lost $5 billion in one day. That’s 5,000 million$. Gone. This is a company that, as I understand it, is losing money hand over fist. Call me old fashioned, but is it too much to ask that a company actually be profitable to be “valued” at multiple billions?
Biotechs are notorious for being ALL about fundamentals. Drug works, stock up. Drug fails, stock delisted. Not much room for manipulation.
‘The east coast export powerhouse of Zhejiang was the only provincial-level region in China to achieve higher growth in the first quarter, when resource producers and heavy industrial bases were hit hard by tough business conditions.’
‘As of last Friday, all 31 regional governments in the Chinese mainland had released first-quarter GDP growth data. Expansion slowed in 30 regions from that of last year, a compilation by China Daily showed.’
‘The sharpest drop occurred in Liaoning province, where growth slumped by 3.9 percentage points to 1.9 percent. Year-on-year expansion was also the slowest among all regions. The second-largest fall was in Hainan province (down 3.8 percentage points) and the Xinjiang Uygur autonomous region (down 3.1 percentage points).’
‘Resource producers and heavy industrial bases were hit hard by sliding producer prices, which have been declining for more than three years. The national Producer Price Index fell 4.6 percent year-on-year in March alone, the 37th straight month of decline.’
‘Liaoning, a manufacturing stronghold that grew rapidly in previous years, saw its growth plunge as industries grappled with a capacity glut and investment tumbled.’
‘Steel, cement and iron ore output fell in the first quarter for the first time in years. As a result, industrial output contracted 5.9 percent. With a glut of unsold housing, property developers slashed investment. As a result, total investment tumbled 18.5 percent, whereas a year earlier it expanded 17.2 percent.’
‘Major coal producer Shanxi province’s problems showed no sign of easing, with GDP growth slowing further to 2.5 percent from 4.9 percent a year earlier. The province was crippled by falling coal prices and the exposure of widespread corruption that the Chinese media have termed a “corruption landslide”.
‘The effect of the slowdown was very evident in local governments’ fiscal revenue. General fiscal revenue at the local level just grew 4.9 percent in the first quarter, the slowest rate since 1994. Revenue from land sales, a pillar of local governments’ income, slumped 36.1 percent.’
“It lays bare the shortcomings of the traditional growth model,” said Liu Qiao, a professor of finance at the Guanghua School of Management at Peking University.’
GDP numbers mask changes in revenue through the magic of “same unit pricing as before”. Falling prices will not show up in GDP, but they will show up in not being able to service debt.
‘Arch MI, a company that assesses mortgage credit risks for lenders, estimates there is a 32 percent chance that home prices in Austin will fall in the next two years. The local data is part of its Spring 2015 national report “The Housing & Mortgage Market Review”.
‘The survey comes at a time when other reports have questioned whether Austin’s home market has become overvalued. Four of the top five markets with the highest risk of declining home values are in Texas.’
‘Other data sources dispute that median income in Austin is sufficient to purchase a median home. Affordability has become a major concern to both Realtors and local officials. Increasing inventory has been another rallying cry across the Central Texas residential real estate community and it appears homebuilders are rising to the challenge.’
‘There are 6.3 home starts for every 1,000 people in Austin, putting it in a robust category. That’s the most home starts per capita of all the markets surveyed, just barely edging out Houston, which had 6.2 home starts for every 1,000 people.’
‘Other reports have predicted a slowdown in Texas home price appreciation and sales. But so far there’s no sign of that happening. North Texas home prices so far in 2015 are up about 9 percent – one of the biggest increases in the country.’
‘Other housing forecasts have said the decline in oil prices and dropping energy industry employment were most likely to impact housing markets in Houston and Midland-Odessa.’
‘North Texas is still continuing to attract large numbers of jobs from other parts of the country and in non-energy sectors.’
‘Texas led the nation in job losses in March thanks to the decline in oil and gas prices and resulting cutbacks by energy firms. It was the first job decline for the state in more than five years.’
“… there is a 32 percent chance that home prices in Austin will fall in the next two years.’
I like it, not necessarily the prediction but rather the precise number used in the prediction.
A precise number tends to give validity to a prediction, it suggests to the properly dumbed-down that the predictor actually knows what he is talking about.
Personally I like prediction where decimal points are used, something like:
“… there is a 32.27 percent chance that home prices in Austin will fall in the next two years.”
See? More better.
There’s multiple versions of this article on the intertubes. Here’s another:
‘The ultra-luxury housing market is scaling new heights as a record number of properties around the world command prices topping $100 million. “You’re looking at a universe of over 1,800 billionaires who are starting to become members of this club of collectors of the most unique and incredible real estate in the world,” Dan Conn, chief executive officer of Christie’s International Real Estate, said in a telephone interview. “It’s something they’ll hold onto for a lifetime, the same way they’ll hold onto a Picasso or a Warhol or any number of the great pieces of art we’ve sold over the years.”
“People want trophy homes,” Eyal Ofer, a Monaco-based shipping and real estate magnate, said in interview earlier this week at the Milken Institute Global Conference in Beverly Hills, California. “They’re a scarce commodity. And they’re better than gold because you can boast about it.”
‘The fact that asking and sales prices for ultra-luxury properties are reaching new heights isn’t a sign of problems in the broader market and shouldn’t raise concerns that last decade’s housing bubble will be repeated, Conn said.’
“I think of this market as fundamentally different from the rest of the market,” Conn said in an interview Thursday on Bloomberg Television’s “Market Makers.” “In order to buy one of these properties, you have to be in the billionaires club.”
http://finance.yahoo.com/news/sales-100-million-homes-rise-143000802.html
Something tells me that those places cost more than $50/square foot
Does it tell you that they’re not SFR’s too?
has Yellen released a schedule of sales of the 4+ trillion in financial sludge?
yum sludge
“One by one, all the major central banks have joined the money printing party. Anything to keep the show on the road. It’s what Chris Watling of the consultancy Longview Economics has termed the ‘philosophy of demand at any cost.’ A crisis caused by too much debt has been fought with even more of the stuff.”
I term this the ‘hair of the dog hangover cure.’
“The flip side of the cheap money story is soaring asset prices. Eventually, there will be a massive correction, in which creditors will suffer sickening losses. Nobody can tell you when that moment will arrive.”
Given the interest of bailout authorities in preventing any such moment from ever arriving, isn’t it safe to assume that stealth measures will be taken as needed to prevent such a moment from ever arriving?
God’s work proceeds…
WASHINGTON (AP) — The surging cost of rental housing has squeezed a rising proportion of U.S. families since the Great Recession struck in 2007.
For more than one in four renters, housing and utilities consume at least half their family income, according to an analysis of Census data by Enterprise Community Partners, a nonprofit that helps finance affordable housing. The number of such households has jumped 26 percent to 11.25 million since 2007, a sign that the 6½-year-old recovery from the recession has given scant relief to much of the country.
The government defines housing costs in excess of 30 percent of income as burdensome.
Yet renting is still half the cost of buying at current grossly inflated asking prices.
do u have a housing fetish?
Check your blinker fluid Poet.
Really? Because they sure go out of their way to make sure that it is.
Zillow says flat and I’m predicting up 2% in my hood 22151
South of central soviet
“The drop was entirely attributable to a 48 percent plunge in sales in the city of Chicago. Sales have fallen simply because developers aren’t building that many homes, said Tracy Cross, principal of Tracy Cross & Associates. ‘If you don’t build it, they won’t come,’ Cross said. He estimates sales would be about 40 percent higher ‘if supply were available,’ but builders remain cautious ‘because of Chicago’s slower economy.’”
If prices are falling, buyers have no reason to buy, as they can pay less later for the same or a better house. But no sales results in falling prices. Plus builders won’t build if no one is buying. But as the writer pointz out, no building results in no sales.
The Chiraq housing market is a quagmire of pecuniary externalities!