Reminders Of The Real Estate Bust
The Kirkland Reporter in Washington. “A rise in the number of people looking to buy homes and a historically low inventory has led to an all-out bidding war in Kirkland. This competition has led to a 11.7 percent jump in single family home prices in Kirkland from last year, according to Redfin, with the median price at $620,000. A buyer using a lender can still compete by agreeing to financially cover any difference between the appraisal and the asking price, according to RE/MAX Northwest realtor/broker Debbie Walter. But in order to match, buyers with lenders may have to waive all contingencies, which concern the conditions under which a prospective home buyer can withdraw a deposit made at the beginning of the transaction.”
“‘You have to go in a bit naked in regard to your protection,’ Brants said. ‘It becomes a battleground of sorts, where you’re competing in a multiple offer situation against cash buyers where the only way to beat them is to waive all contingencies. It becomes who wants it the most, essentially.’”
KENS 5 in Texas. “New data shows overvalued home prices could put San Antonio at risk for another housing bubble. According to Fitch Ratings, home prices in San Antonio are 15% overvalued. That’s third worst in the state of Texas, which already has one of the most overvalued housing markets in the country at 11%. That’s something that Kelley Guerrero, a homeowner who’s selling her family’s home in Alamo Heights, says she’s seeing first hand. ‘The price per square foot tends to be somewhere between $200-$300, which I think is a bit high but the buyers are willing to pay that,’ said Guerrero.”
“Average home prices city-wide are now $225,100, nearly one-third more than 2006, right before the recession.”
The Bozeman Daily Chronicle in Montana. “The cost of building homes is always on the rise. But never is the increase more apparent than during a strong rebound and growth period like parts of Montana — and the rest of the country — are experiencing now. Statistics from the U.S. Census Bureau show Montana building permits for single- and multi-family homes in March were up 75 percent over last year. Lot prices in and around Bozeman are still cheaper than they were in 2007, but they’ve nearly doubled from three years ago, said Brian Popiel, chairman of the Southwest Montana Building Industry Association.”
“Though Bozeman hardly has a glut of houses overall, the current boom in the larger homes market may lead to a time when there are too many homes that Bozemanites can’t afford, Popiel said. ‘Everything I’m seeing points me to (the notion) that we would get a glut of houses in the $350,000-$450,000 range,’ he said. ‘That takes a pretty sizable paycheck to get there. And Bozeman doesn’t have that many of those jobs.’”
The Tampa Bay Times in Florida. “All over Tampa Bay they lurk — deserted, decaying, scary reminders of the real estate bust. Zombie houses. Abandoned by their owners and stuck in the foreclosure process, they are a blight on neighborhoods rich and poor. Some have been vacant for years, so long that people like Lee Randall can’t even remember the last time they saw the normal signs of life. ‘It’s been like that for years,’ Randall said. ‘There’s some nasty stuff in there. You’d need a mask and bulldozer.’”
“George W. Bush was still president when the cute white house on Nevada Avenue NE began its transformation into rotting zombie. In 2008, CitiMortgage started to foreclose on the loan, which Michael R. Cole assumed when he bought the house in 1995. The foreclosure dragged on with little action until it was finally dismissed on July 18, 2012, for lack of prosecution. The bank quickly filed a motion to reopen the case, but nothing has happened in the almost three years since then.”
“Asked for an explanation, a CitiMortgage spokesperson said that Cole’s loan is now ‘investor-owned’ — he would not identify the investor — and that Citi’s involvement with the house ended last year. There is nothing in public records that shows Citi ever sold or transferred the loan. Cole did not return calls seeking comment. In 2006, according to records, he and his wife moved to Brooksville and bought a much larger home with a $265,000 loan from another bank.”
The Columbus Dispatch. “Ohio is spending the final portion of more than half a billion dollars in federal funds aimed at providing mortgage ‘relief’ for struggling homeowners. But several years after the original fanfare and promises that the funds would bolster the housing market, it appears that all that money didn’t end up helping nearly as many people as expected and ultimately just delayed, not helped, the market to right itself.”
“For example, Alesia Butcher, a 53-year-old home health-care worker whose $976 monthly mortgage payment on her West Side home has been covered by the fund since late last year, is still looking for full-time work and isn’t sure how she will manage after the payments stop in early 2016. David Evans resumed paying his $725 monthly payment in the past few months from his Social Security disability income following two heart attacks and high medical bills from his wife’s cancer battle, but concedes that he is struggling.”
“About 6,000 Ohioans still are receiving mortgage help. It may be several more years before it is known how many people end up slipping into foreclosure even after getting thousands of dollars in relief payments. So far, nearly 500 homeowners who received assistance have faced foreclosure, and the number continues to grow.”
The Record in New Jersey. “Andrea and Joe Buccino bought their first home, a Cape Cod in Wallington, for $385,000 in 2005. A decade later, they put it on the market for $299,000. For sellers at the lower end, accepting the idea that their homes are still not worth anywhere near what they paid can be a stressful experience. The Buccinos have reluctantly accepted that reality, a decade after they bought their Wallington home. They cut their asking price repeatedly before bringing it to $299,000 at the end of March. After that cut, they got an offer quickly, and the sale is pending. ‘We’ve gotten to the point where we’re ready to move,’ Buccino said. ‘It’s hard to let it go for what’s going to be a rock-bottom price. But sometimes it’s better to move on and get what we want.’”
“Zalika Etienne, a teacher, bought a six-bedroom home on Paterson’s Eastside neighborhood with her husband, brother-in-law and sister-in-law in 2006. They paid $576,000. When they bought the house, Etienne said, they were ‘very, very excited, very proud first-time buyers’ and viewed the property as ‘our own lifetime investment.’”
“But then the recession hit, and Etienne lost her job and her sister-in-law’s salary was cut after a company merger. ‘It ended up being too difficult for us to pay the mortgage,’ she said. They decided to move out of state, and the home was sold in a short sale last fall for $245,000. Now, after losing the house she was once so excited about, Etienne wonders if her family paid too much. ‘Hindsight is always 20/20,’ she said, ‘but I question whether it was ever worth what we paid for it.’”
“‘Everything I’m seeing points me to (the notion) that we would get a glut of houses in the $350,000-$450,000 range,’ he said. ‘That takes a pretty sizable paycheck to get there. And Bozeman doesn’t have that many of those jobs.’”
The GSEs may need to chip in a little to help make those homes affordable.
http://www.fha.com/lending_limits_state?state=MONTANA
BOZEMAN, MT Single $346,150
What do you know? The price has run up to the loan cap. What a coincidence.
Good point Ben….I have always felt that if government policy is to offer loan assistance then it should be tied to some index according to the property location or to income…Those big CAP’s in rural area’s of places like Montana just encourage 2nd home purchases and a run-up in prices…Furthermore, I don’t think governments assisted loans should be allowed at all on anything other than your personal residence…Maybe even limit it further…You only get one every 10 years…Stop all the flipping and speculating BS…
http://www.fha.com/lending_limits_state?state=TEXAS
SAN ANTONIO-NEW BRAUNFELS, TX
Single
$316,250
‘assisted loans should be allowed at all on anything other than your personal residence’
The FB in New Jersey was certainly speculating on her primary house.
The FB in New Jersey was certainly speculating on her primary house ??
But if the loans are limited in the ways I suggest then maybe the price of the home would not have been so inflated…The way the loans are offered are helping fuel the rise…
And not only were they speculating, but the NJ couple in the story are referred to as move-up buyers. So now they are going to take on a more expensive albatross.
Because losing money once just wasn’t enough.
Not to worry. Those ultra-high loan limits are soon to be phased out, akong with Fannie and Freddie themselves.
Not to worry. There seems to be no end to the supply of out of staters who think these joints are cheap.
BTW I got a cold call from a young Realtor today, wanting to know if we were looking to downsize. If only! But all the decent places cost 100k more than we could get for this dump.
“Asked for an explanation, a CitiMortgage spokesperson said that Cole’s loan is now ‘investor-owned’ — he would not identify the investor — and that Citi’s involvement with the house ended last year. There is nothing in public records that shows Citi ever sold or transferred the loan. Cole did not return calls seeking comment. In 2006, according to records, he and his wife moved to Brooksville and bought a much larger home with a $265,000 loan from another bank.”
Is the Fed considered a real estate ‘investor’ in cases where it used QE to take MBS onto its balance sheet?
Shadow inventory is a malicious internet conspiracy theory. Zombie houses are a monthly Realtytrac statistic (and occasional media report).
The Fed simply gobbled up all the empty houses and parked them on their balance sheet, where they can rot away. This is the most crooked system I have ever heard of in my life. I mean, a Federal Reserve working to impoverish the populace?
I don’t see it as a conspiracy theory.
I just see the shadow inventory as being concentrated in relatievly few markets, and generally not applicable to most markets.
Take “Zombie Foreclosures” as an example (part of the Shadow Inventory). At RealtyTrac’s last report (Q1 2015), there were 142,000 “Zombies” (empty homes that were hung up in the foreclosure process).
Florida had 35k
NJ had 18k
NY had 17k
The top 3 states had about 50% of the Zombies.
The top 10 states had about 75% of the Zombies.
If all were dumped onto the market immediately, would there be an impact in Florida? There would be some negative effect…until those homes cleared the market, which probably wouldn’t take very long–measured in months, not years.
And for the 40 states with the remaining 25% of the Zombies? A non-factor.
You don’t know what you’re talking about. Northern NV, for instance, was experiencing NOD’s at the rate of 750+ per month until they passed Assembly Bill 284 which required more of lenders to foreclose. Magically, the number dropped to less than 20 per month, and this has been going on for close to 4 years now. Where are those houses? They sure as hell didn’t magically get current on their loans. Do the math, jackwad.
Do the math, jackwad? I have been doing the math…for years.
You seem to know all about AB 284. Do you know about AB 300, which softened the rules imposed by AB 284 in mid-2013?
A “normal” non-current loan rate is in the 5% range. NV has a non-current loan rate of 6.8% as of March 2015, according to Black Knight financial services. This includes delinquent mortgages (that have not yet had NODs filed).
This is down from more than 12% in the middle of 2013 when AB 300 was passed.
NODs have recently been running at over 1,000 per month in the entire state of NV (and have been for nearly a year).
Is the Shadow inventory completely gone in NV?
Of course not.
Is it greatly diminished?
Absolutely.
Answer the question mathboy. Where did the 20,000+ delinquent loans go?
“A “normal” non-current loan rate is in the 5% range.”
And the long term default rate is barely 1% yet current defaults are in the 7% range.
Whatchya think Rental_Fraud?
In the past 12 months, about 11,000 have been foreclosed.
https://trends.propertyradar.com/nevada/
And I’m not counting short sales, and/or cures.
Nor, am I looking at what has been happening from mid 2013-mid-2014.
Link is to follow, but in the past 12 months, about 11k homes were given a notice of sale (ie. scheduled for foreclosure auction).
Your answer?
AB 300 allowed those delinquent loans to be processed through the system as foreclosures.
AB300 never led to those homes coming to market. YOU LIE.
So, how do you explain the NODs and notices of sale reported by Property Radar (link above)?
“And the long term default rate is barely 1% yet current defaults are in the 7% range.”
Current DELINQUENCIES plus FORECLOSURES are in the 7% range (ie. non-current loans). The foreclosure component of this historically has been about 1%.
http://www.bkfs.com/Data/DataReports/BKFS_MM_Feb2015_Report.pdf
See page 5 of the February Mortgage Monitor.
The green line represents homes in the foreclosure process…we were at 1.58%, and gradually trending downward. “Normal” for this number is about 1%.
When you add in delinquent loans (the red line), the sum equals the blue line. As you can see, early in the 2000’s (2003-early 2007), the total of foreclosures plus delinquencies (”non-current” loans) totaled about 4 to 5%.
And for fun, look at the back of the report–Page 16.
This shows you where the non-current loans (ie. the shadow inventory) are located by state.
Which excludes foreclosure moratoriums in all 50 states.
Nice try Rental_Fraud.
Rental_Fraud,
25 million excess empty and defaulted houses are “concentrated in relatively few markets”?
“Average home prices city-wide are now $225,100, nearly one-third more than 2006, right before the recession.”
Dismal choice: Forever bubble or recession.
Whichever ultimately happens may not end up being anybody’s choice, but rather an unintended, unpleasant consequence of recent housing policy maneuvers.
Wages in San Antonio (northern Mexico) will certainly support these prices. And if not, the loans are 90% backed by the government, so what’s the problem?
Pretty soon they will make it illegal to not buy a house.
We have the ACA (Affordable Care Act). Why not go to the next level, the AHA (Affordable Housing Act)? Anyone who refuses to buy a house is forced to help pay the monthlies for those who buy. And if any homeowner ever goes underwater, nonowners are required to help shoulder the bailout tab.
http://finance.yahoo.com/news/why-homebuyers-face-tough-spring-101235831.html
‘Eager to buy your first home this spring? Already own, but want to trade up? Be warned: there’ll be plenty of competition Bidding wars have broken out in hot …’
Blah, blah, all these articles are alike.
‘Buyers are snapping up vacation homes…Vacation homes accounted for 21 percent of sales last year, the highest share ever measured by the National Association of Realtors.’
Funny how the second house buyers aren’t having a problem find something to buy.
“The same day the house gets listed, it’s not unusual to get four, five or six offers,” said Brian Callahan, an agent for real estate brokerage Redfin in Madison, Wisconsin, where homes take fewer than four months to sell, on average.’
Why would it take 4 months to sell?
One thing tech and Zillow have improved is being able to see what’s generally available (if not immediately due to shilling). From what I see, houses that sit for more than about 6 weeks are mispriced and not getting any bites thereafter. All the while more houses pour into the inventory. I think the days on market conventional wisdom needs to be revised drastically downward based on the current Internet tech.
Heard a story this weekend that was curious. A friend is relocating, and they were looking at a house for a couple of months. It just so happened that when they made an offer, there was another offer that came in all cash.
The house had been marketed for a while, and it was just a funny coincidence. The other buyer closed.
An odd case of multiple bids on a house that took several months to sell.
In any event, they did ultimately find a place, and the story behind their housing search was that it seemed like a pretty “normal” market…they didn’t feel compelled to promise to feed the squirrels, or send pictures of their kids, and they weren’t worried about competing against multiple offers.
You always seem to have these anecdotal stories Rental_Fraud.
He’s talking his book. He’s a speculator, levered up to the teeth on house prices.
‘Alesia Butcher…is still looking for full-time work and isn’t sure how she will manage after the payments stop in early 2016. David Evans resumed paying his $725 monthly payment in the past few months from his Social Security disability income following two heart attacks and high medical bills from his wife’s cancer battle…’
Foam, meet runway.
‘Those who make up the cash buyers in Kirkland tend to come from several backgrounds, according to Brants. Although some are foreign investors, others withdraw from their other financial investments and use the liquid assets to purchase a home outright, then refinance the home and put their money back into investments.’
‘Cash buyers also have had an effect on the terms of the sale not just by decreasing the amount of time needed to close a sale - the median time a single family home spent on the market was seven days - but by removing the presence of a lender. While lenders require an appraisal of the home’s value in order to finance the buyer’s mortgage, with cash buyers, no appraisal is necessary’
‘Walter, who also works in Kirkland, said some buyers use escalation clauses when putting in an offer. With this clause, a potential buyer puts in their bid, but also states they will pay a certain amount above the highest offer if it is higher than theirs, up to a certain amount. If two bidders contain escalation clauses in their offers, then the winner is determined by the maximum amount they are willing to pay outright for the home.’
‘The competition has also made it very difficult to anticipate how much a house might sell for, something which was fairly predictable in the past. One example Brants gave was a Kirkland home that, in spite of needing renovations, sold approximately $100,000 above the initial asking price, $560,000, after they received 15 offers, with the buyer waiving all contingencies.’
‘The market currently favors sellers, at some point buyer fatigue may curb their expectations, Brants said. “Sellers are definitely in the driver’s seat,” she said. “They can make the rules if they have enough interest in the home, and interest will be determined by pricing it appropriately.”
‘However, she said, sellers run the risk of getting too greedy, such as asking too high a price and not getting enough offers to compete against one another, ultimately resulting in a lower price than if they had priced it appropriately. “When I’m talking to sellers about selling their home, I compare it to a race,” she said. “You have to set your finish line, the final purchase price. Where you set the price determines how many participants.”
Any little town or burb, and the local UHS turn into experts in fleecing buyers.
Ah, the “foreign investor”. Not content just to bid up housing prices in California, New York, Florida, Arizona, and Chicago. They’re now bidding up prices in Washington state, Oregon, Colorado, Ohio, Texas, Winnipeg, and everywhere in-between. What a time to be alive! Buckets of cash for all!
Make fun of it all you want, but in my area, foreign investers are a significant driver of our high prices.
I’m going to start referring to my neighbor city as “Bellevue R.O.C.”
With demand in Bellevue down 16% YoY, a few uninformed straggler sales speak more to collapse than anything else.
http://files.zillowstatic.com/research/public/City/City_Turnover_AllHomes.csv
Laughable. Demand in Bellevue is up, up, UP!
And prices are down too. See for yourself.
Bellevue, WA List Prices Crater 14%; Inventory Explodes 178% As Demand Plummets
http://www.movoto.com/bellevue-wa/market-trends/
Remember….Get what you can get for your house today because it’s going to be much less tomorrow for many years to come.
Dude you must be smoking some strong crack.
I live here and have been going to open houses lately.
Your numbers are bogus.
This area is still going crazy.
I’ll be the first to chime in when the market turns.
You have a beef with the data. Take it up with them.
Kirkland, WA Sellers Slash List Prices 20% As Housing Demand Plummets
http://www.movoto.com/kirkland-wa/market-trends/
Your data source is garbage. Anybody can cherry-pick statistics.
Like I said, I live here. I’ll be the first one to say when things turn.
And they haven’t yet.
The market here is hotter than it was in 2005.
You have a beef with the data. Take it up with them.
Oxnard, CA List Prices Crater 16% YoY
“They’re now bidding up prices in Washington state…”
I’ve got a 1550-sqft 3/2 spec that I’ll “let go” for $375k, and that includes my belongings too. Here’s the keys!
“sometimes it’s better to move on and get what we want.”
What a shame, 10 years in a house they didn’t want. I guess they want a house that pays them to own it.
“I guess they want a house that pays them to own it.”
That used to be the thinking.
(or whatever it was that was used as a substitute for thinking)
‘in 2006…They paid $576,000. When they bought the house, Etienne said, they were ‘very, very excited, very proud first-time buyers’ and viewed the property as ‘our own lifetime investment.’”
“But then the recession hit, and Etienne lost her job and her sister-in-law’s salary was cut…’
Dang, this is a thriller How will it turn out?
‘It ended up being too difficult for us to pay the mortgage,’ she said. They decided to move out of state, and the home was sold in a short sale last fall for $245,000.’
Well, what do you know? Then, the ‘fill-in-the-blank’ hit. It can be oil prices fell. Or Google’s stock crashed or the government layoffs. It’s always something other than they paid too damn much for the house.
But this was “good debt” right ??
they paid too damn much for the house.
cuz a fool lent too damn much for the house. As long as there are fools lendin’ there will be fools buyin’.
Wait. You can pay too much for house???
http://video.cnbc.com/gallery/?video=3000378233
I’m never sure why this guy is given any press. But at least he knows a cooked number when he sees it.
“George W. Bush was still president when the cute white house on Nevada Avenue NE began its transformation into rotting zombie”
Nice to see the reminder on who’s watch all this chit started…
History is made up:
http://news.morningstar.com/articlenet/article.aspx?id=697329&SR=Yahoo
‘As securitization grew in the 1980s, Fannie and Freddie were heavy issuers of mortgage-backed securities, making money on the guarantee fees they charged in exchange for their assumption of credit risk. The savings and loan crisis eliminated many competitors from the market, leaving the GSEs to pick up share. Mortgage-backed securities also became more complex over time, and the GSEs became more aggressive in their business practices, using their low-cost funding and minimal capital requirements to add assets to their balance sheets.’
‘By 2008, the GSEs did not have the capital strength required to maintain solvency as home prices fell. Fannie Mae and Freddie Mac eventually experienced charge-offs exceeding their precrisis equity balances. The companies were placed into conservatorship by their regulator…Fannie and Freddie have operated under this arrangement ever since.’
The conservator deal was arranged behind closed doors as early as 2005. House prices hadn’t even begun to fall in most areas. What caused the GSE’s to fail? Why were criminal charges brought by the Justice dept against Fannie execs in fall 2004, only to disappear? What happened to the thousand or two off-shore special purpose entities? Why did the SEC allow the GSE’s to continue to trade on the stock market and issue bonds well after they couldn’t produce financial statements?
+1 Ben…
The bubble started before you suggested it did Dave.
I’d say it has more to do with these loans like the FHA caps we talked about. I know for sure there was a raging housing bubble in Austin TX in 1998.
It doesn’t matter who makes the loans. Then, Countrywide, now Quicken, backed by the GSE’s BTW. (Remember the undocumented income reference a few weeks ago?) The credit is the grease and greed will take over from there.
The bubble started before you suggested it did Dave ??
I disagree….I have been around awhile…Yes, in some locations the rise in real estate values has been greater than others…My daughter and SIL live outside of Lexington Kentucky..He bought his house roughly 10 years ago for $113,000…He told me just the other day, he would be lucky to get what he paid for it 10 years ago…
In our valley, prices rising maybe 3% a year was pretty typical and consistant with CPI…There were spikes in both directions but generally reverted back…
The Bubble started when GWB did this;
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0CCQQFjAB&url=http%3A%2F%2Fwww.nytimes.com%2F2008%2F12%2F21%2Fbusiness%2Fworldbusiness%2F21iht-admin.4.18853088.html%3Fpagewanted%3Dall&ei=3MJQVbn5OpODgwTM_4D4Bg&usg=AFQjCNF6cpWFS9qtpn2EeVhsKMX6zGHKvg&sig2=aL2QmCGXk-XVcuLxFTEcfw
‘The Bubble started when GWB did this’
I disagree. In 1998 I moved to Austin and paid the highest rent I ever had of $1,200/month. My landlords mortgage payment was almost twice that, I found out. It was a shack too. He had 4 more and lost them all in a couple of years. “Oh, the dotcom went bust and” etc, etc.
At the same time 40 miles south I had bought 12 acres a few years before for $5k/acre. No competition, looked at it for months before making the decision. There was no bubble that I could see outside of Austin. It didn’t even occur to me til I moved to Austin. You could buy an older house in San Marcos for cheap. Like this:
http://www.realtor.com/realestateandhomes-detail/705-N-Bishop-St_San-Marcos_TX_78666_M74390-26253?row=5&source=web
Price$209,000
I was working in Buda, TX in 1996. My co-workers were buying brand new houses for $50k. When I was there in 2010, they started at $150k. And there were thousands and thousands of them newly built, from Austin to San Antonio. “Zero down!” said the signs.
‘San Francisco’s smallest condo on the market (no bedroom, hardly a kitchen) sells for 40% over asking price’
‘In case you don’t know, homes in San Francisco are outrageously expensive.’
‘Mind-bogglingly, eye-bulgingly, jaw-droppingly expensive.’
‘Latest case in point: This 291-square-foot studio unit, which Curbed San Francisco identified as the tiniest condo for sale in the city, just sold for $415,000—after a bidding war that jacked up the price nearly 40 percent.’
‘The sales price doesn’t only speak to how competitive San Francisco’s market is right now; it also speaks to the ridiculously fast pace at which the city’s home prices have grown over the past decade. Not even 12 years ago, this same unit was purchased for just $155,000. The home has nearly tripled in value during a decade that included one of the largest and deepest housing crises the nation has ever seen.’
https://homes.yahoo.com/blogs/spaces/san-francisco-s-smallest-apartment-174145751.html?soc_src=mail&soc_trk=ma
Well, I think we are in agreement really Ben…Sure, SF and other places prices are illogical…But in other places, like my daughters place, they have not budged in a decade…
Real Estate prices are local…Just like Jobs are local…..The fuel for all this IMO, is the combination of jobs, interest rates and available loans…Change any one of those three and things would be different…
http://quickfacts.census.gov/qfd/states/48/4865600.html
San Marcos (city), Texas
Median value of owner-occupied housing units, 2009-2013 $121,500
Median household income, 2009-2013 $27,443
Persons below poverty level, percent, 2009-2013 37.3%
http://smmercury.com/2014/11/04/median-home-price-increases-slightly-in-san-marcos-significantly-just-about-everywhere-else/
‘During the third fiscal quarter concluded Sept. 31, eighty-eight San Marcos homes changed owners for a median price of $160,000, up from a median of $158,000 during the previous fiscal quarter, according to a Texas Association of Realtors statewide housing report. The tiny bump helped erase declines recorded during the first two quarters of 2014, but it was not enough to catch up with residential real estate appreciation documented in a large majority of comparable communities and in Texas a whole.’
I know a guy who bought a house in San Marcos mid-1990’s for 25k.
“Real Estate prices are local…Just like Jobs are local…..The fuel for all this IMO, is the combination of jobs, interest rates and available loans…Change any one of those three and things would be different…”
You forget supply.
If there was a lot more supply of housing in SF, prices would be way down.
Watching the treasuries is like one of those African wildlife shows, where the tail-switching gazelle is eating grass as the lion closes in:
http://finance.yahoo.com/q?s=^tnx
‘Treasury yields ripped higher Monday, putting pressure on stocks and signaling a possible sea change in the global rate environment. The move in yields on the 10-year note and 30-year bond was surprisingly rapid and violent. “This is starting to become a bad omen. This is not good. There’s enough leverage out there in different forms, where if this is the end of the ‘easy money, low long-term rates’ story and the Fed is not going to be able to hike, the long-term interest rates market is going to do the tightening for the Fed, and this will be bad for most financial assets,” said George Goncalves, head of rate strategy at Nomura.’
“If this move is really a referendum on central bankers providing too much liquidity and if this is the hangover part, it could go much further,” said Goncalves.’
http://finance.yahoo.com/news/bond-yields-spike-market-looks-202935520.html
But then again, it could lead to a quick reversal in the other direction if panic-driven FOMC members invoke QE4.
I’d say the biggest risk out there these days is a case of whiplash due to policy uncertainty.
You might note a tad of concern out there with the German bund pricing, considering there is an EU QE ongoing.
‘Asian bonds tracked a selloff in U.S. and European debt, and the euro weakened a fourth day amid wrangling over whether Greece will qualify for further aid. Asian stocks slipped and emerging currencies dropped versus the dollar.’
‘Overblown expectations for the European Central Bank’s quantitative easing plan pushed global debt valuations to extreme levels, triggering a “large and vicious” selloff in European bonds that’s infected other markets, according to Goldman Sachs Group Inc. Greece has readied a repayment to the International Monetary Fund, officials said, as the ECB prepared to reassess emergency funding for the country’s banks.’
‘Germany’s 10-year notes paid 0.610 percent at the end of Monday trading, more than 12 times the 0.049 percent that marked a record-low yield on April 17.’
12 times. Ouchie for someone out there.
This competition has led to a 11.7 percent jump in single family home prices in Kirkland from last year, according to Redfin, with the median price at $620,000.
Wait, hasn’t HA been saying for at least a year that Kirkland is _cratering_??!? He wouldn’t mislead us with carefully chosen noisy sample from the data-set, would he??!?
First hand report: things are insane in Seattle and surrounds. There was an email thread at work recently about how young, well-employed buyers are approaching this market. A number of crazy techniques from the bubble years are apparently back in vogue here: “escalation clauses” where folks are bidding $100K or more over asking; love letters to the sellers, telling them how your family will fit so well in their property; etc. Words, they are resorting to out-and-out “bribes”—or at least, that seems like the best word to describe it. Apparently buyers are writing one earnest-money check to the seller’s agent’s to hold, and another check made out DIRECTLY to the seller! In other words, choose our offer over the other bids, deposit my money directly in your checking account, and keep it regardless of whether we close. Crazy, huh??
Words
“Worse”, I mean.
Oh, and I forgot: to even be considered, you apparently have to waive all contingencies. People are doing pre-inspections before bidding if they have any concerns; many are simply waiving inspection. It’s completely nuts.
It won’t last, of course. This is a historical anomaly, that much is for certain—and those never do last.
The bubble is HOT here at the moment.
Best tidbit: on that email thread, many recent purchasers were opining about how Seattle is different. LOLZ… I can’t prove that it isn’t, but at the moment, it is looking like it is different everywhere; in other words, bubble-think is alive and well!
Not really. You’ve got sellers slashing list prices all over the west coast. In particular Seattle, SF, LA and Portland.
You seem all happy and swept up in it, like redmondjp. Problem is, only a few tiny pockets are even showing such strength. Most areas are not experiencing that.
I’m swept up in it, but can’t say that I’m happy about it. I’m just pointing out that my area hasn’t seen any downturn yet. In fact, things are more crazy than 2005-2006 due to 1) much lower inventory, and 2) lots of all-cash foreign investers.
I’d sell right now if I could, but my wife and I both have stable jobs in the area and I haven’t been able to find any other suitable place to buy that I can afford. And rent would be 2-3x what I am paying to be in my house (I bought in 1998).
With demand and prices plummeting, it’s unlikely you could find a buyer at a fraction of the amount you think it’s worth.
Remember….Houses depreciate rapidly.
Dude, can you not read the papers? Every house that hits the market here right now that is priced right is sold within a few days for over asking.
Just talked to my realtor - the 2100sf 3BR close to me and very near Microsoft with an asking price of $799K sold for over $816K (the highest her buyer was willing to go) in a few days.
Demand and prices are NOT plummeting. Give it a rest.
If you were right, there is no way in hades that a 3BR house would quickly sell for over $800K.
Not only are prices falling but demand is plummeting in Seattle.
Data my friend data.
Seattle Housing Demand Craters 12% YoY As Prices Fall
http://files.zillowstatic.com/research/public/Metro/Metro_Turnover_AllHomes.csv
Garbage in, garbage out.
Anybody that uses Zillow for RE data is an idiot.
You probably believe the Zestimate for your house too.
Data my friend data.
Renton, WA List Prices Plunge 5% YoY
http://www.movoto.com/renton-wa/market-trends/
Duuuuuude!
I WORK in Renton.
Renton is no Redmond (or Kirkland, or Bellevue, etc.). Renton still has semi-affordable houses for sale. It is too far away from downtown Seattle or Microsoft, which is why prices are lower there.
Ok…
Housing prices are falling in Renton.
You work in Renton.
Your point is?
“A buyer using a lender can still compete by…..”
All I want to know is, who are all these “cash buyers” in Kirkland? I don’t think your average IT guy / coder has 600K just lying around. That’s who mostly actually lives and works in kirkland BTW.
Is this “investors” who think they’re getting in before the huge demand hits from all the tech “expansion?”
I got news for them though. Once prices get too high in a given area (like they are now), it makes better business sense to move elsewhere since most tech companies are geographically non-dependent and receive little to no “economy of scale” benefit from locating near input sources other than maybe sales.
Maybe someone who lucked out on his stock options. But there can’t be that many of them.
FWIW, every young pup coder I know in the Bay Area is expecting to someday make out like a bandit with his stock options. As the saying goes: Many will be called; but few will be chosen.
I’ve been here in western WA for around two decades now working in tech. I don’t know anyone who’s made out hugely on stock options. Some have done fairly well, but there actually aren’t a whole lot of startups coming out of here making overnight billionaires. Microsoft’s heyday for options was (literally) last century.
Any young to middle aged males that I’ve know who have or have made real money move to places where it’s a lot easier to get laid. Seattle mostly sucks for the average hetero male who’s not rich.
I can only assume that these “cash” buyers are foreign. There’s a actually a couple local services that help wealthy foreigners meet the instant green card requirements by making the minimum investment.
We should consider the possibility that these buyers may not care if they lose money - they just want to get the hell out of whatever craphole they’re currently a citizen of.
There’s a lot of competition to get a green card, and I expect that for a well heeled foreigner losing a hundred grand or two on an “investment” is a small price to pay.
No one should be surprised about the foreign money buying up US assets. Didn’t we ship all our jobs and manufacturing overseas in the 70s/80s/90s? And then we spent our dollars to buy overseas made goods. So years of trade deficits put our dollars into Chinese factory owners pockets. Then that money got recycled into the Chinese economy, which went into giant empty cities which put more money into the pockets of oligarchs. And now that money is flooding back to the US, Canada and to some extents, Europe.
And it’s all borrowed money. If you think the rug got pulled out from the Japanese in the late 80’s or early 90’s, imagine the declines coming this round.
Um, all-cash purchases from foreign investers is NOT borrowed money.
These buyers won’t sell if the market corrects - sure, they will lose money, but there is no risk of foreclosure.
Um. There are no “all cash purchases”. It’s all dumb borrowed money.
Remember…..Get what you can get for your house today because it’s going to be much less tomorrow for many years to come.
Dude, again, being an imbecile.
If you don’t require any financing to buy a house, there is NOTHING borrowed about it. Those houses will never be foreclosed upon.
I suppose all of those drug dealers are using that very same dumb borrowed money too . . . doesn’t seem to bother them any.
And that’s not the case.
Dumb.Borrowed.Money.
California drought illustrated: here’s a new listing for 3 acres of raw land in the foothills between Yosemite and Fresno. Flip thru the pictures… what’s wrong?
http://www.landsofcalifornia.com/california/land-for-sale/3.86-acres-in-Madera-County-California/id/2071755
The trees have fall colors in the springtime! I’m not a botanist but I bet those trees are dying. Plus the yellow bone-dry grass… It’s going to be a long fire season here… a literal tinderbox.
There are a lot of properties for sale around here. I’m guessing a lot more foothill and mountain properties are going to hit the market as owners realize things are getting bad and they need to get out. Falling prices to follow?
and if they are on a well…
Pine trees are dying all over the place.
“The trees have fall colors in the springtime! I’m not a botanist but I bet those trees are dying. Plus the yellow bone-dry grass… It’s going to be a long fire season here… a literal tinderbox.”
Friends had a small California ranch near Paso Robles, and one summer when fire stuck during high winds they were given just a few minutes to round up documents, pets and valuables and flee. Everything else was lost.
What? You mean people aren’t clamoring to live in the “Garden State”. It’s not that far from Newark, right?
Ben - Are you selling now?
Bidding wars have started again here on the Central Coast.
Kirkland WA List Prices Plummet 19% YoY; Inventory Balloons 121%
http://www.movoto.com/kirkland-wa/market-trends/
Correction: Kirkland; still one of the hottest RE markets in the nation.
Falling prices to dramatically lower and more affordable levels has a tendency to do that.
Well thanks HA that looks promising. If could just have that trend in the Bay Area.
You do my friend. Cheer up and remember…. There is nothing more bullish for the economy than falling housing prices.
San Francisco Metro Sale Prices Fall 4% YoY On Skyrocketing Inventory
http://www.zillow.com/san-francisco-metro-ca_r395057/home-values/
Try, just for once, using data that isn’t from Zillow or movato to ‘prove’ your point.
Oh wait, you can’t find any.
Refute it.
Oh wait, you can’t. Stick with the data my friend.
Denver, CO List Prices Crater 9% YoY; Inventory Explodes 135%
http://www.movoto.com/denver-co/market-trends/
You just proved me correct. I don’t use garbage data sources.
You’re backpedalling.