A Boom Built On False Equity
A report from the McClatchy Washington Bureau. “Real-estate valuation firm Smithfield & Wainwright warns that at least 14 states and the District of Columbia may be experiencing inflated prices like those that preceded the U.S. financial crisis. ‘You’re starting to get a disconnect,’ David Macpherson, the company’s chief economist, said of rapidly rising prices in some markets. His company compares home sales price data from the Federal Housing Finance Agency to the cost of renting a home or replacing one in areas across the country. When the sales price exceeds by 10 percent or more either the cost of renting or replacing a home, the valuation firm argues, it signals a potential price bubble that could burst.”
“‘The banks are exposed and the homeowners are exposed because they both have a false feeling that the house is worth that amount of money. And that’s false equity,’ warned Hogan E. Copeland II, Smithfield & Wainwright’s chairman. The equity they think they’ve built up in their home may prove ephemeral.”
“‘It’s getting pricier,’ said Robert Shiller, the Yale University economist who created the Case/Shiller Home Price Index. While nowhere near the boom that preceded the bust in 2008, the price increases seem incongruent, Shiller suggested. ‘We do see nationwide an increase in home prices and I don’t know if things are better. This boom has negative color to it,’ said Shiller.”
The New York Times. “Through a federal visa program known as EB-5, foreigners, more than 80 percent of them from China, are investing billions of dollars in hotels, condominiums, office towers and public/private works in the hope it will result in green cards. In the last four years, the program’s popularity has surged. In fiscal year 2010, 1,885 visas were issued. But by fiscal year 2013 that figure jumped 354 percent to 8,564, according to government data. Last year, the entire annual allotment of 10,000 visas had been claimed by August — before the end of the fiscal year in October.”
“In 2009, Yi Lin was working as a media executive in Shanghai when he began thinking of applying for a green card through the program. He spent two years researching developments before he settled on investing $500,000 in a mixed-use project in Miami. ‘You have to be very clear about the process and the project and how it is financed,’ Mr. Lin said. ‘Unfortunately, many Chinese are clear about the immigration process, but are not familiar with the project they are investing in.’ It is important, he said, because if a project fails, foreigners can lose both their investment and the opportunity to secure a green card.”
The Miami Herald in Florida. “The Miami Herald and partner Bendixen & Amandi International posed questions to 105 top real estate professionals in a telephone survey. With more supply on the market — mainly luxury condo units — the insatiable demand of the last few years is now being met. ‘The buildings aren’t selling out in five minutes anymore because there’s the same number of buyers for more projects,’ said Gil Dezer, president of Dezer Development. ‘It’s not a normal or stable market when the units are going that fast.’”
“Some of those polled worried that the new real estate boom is leaving locals behind. ‘There is very little new construction being built at price points that South Floridians could afford,’ said one respondent. ‘The price points are out of reach for 90% of South Floridians. The target is foreign and out-of-town buyers.’”
“And a whopping 97 percent of those surveyed answered ‘Yes’ to the question: ‘Is the political and financial instability around the world in places like Latin America and Europe having a significant impact on the Miami-Dade residential market?’ Russian buyers, for one, have disappeared from the scene almost completely.”
The Coloradoan. “Rapid housing price hikes in Fort Collins are sounding alarms for economists, housing advocates, city officials, Realtors and hopeful home buyers. Nearly a third of Fort Collins residents earn less than $49,999 and about half earn less than $74,999, according to the American Community Survey’s five-year estimates. The average sale price for a single-family detached home in Fort Collins last year was $325,044, up 8.6 percent from 2013 and up 15.3 percent from 2012, a Coloradoan analysis of single-family home sales shows. The median, or midpoint, last year was $285,450.”
“‘I don’t see any way we’re going to have any homes in Fort Collins ever again under $300,000,’ said Dave Pettigrew, a broker/partner with Ascent Real Estate Professionals, who tracks sales data. While 2014 sales prices astounded Pettigrew, the 15 percent increases trending this year are even more worrisome. ‘Personally, I don’t think 15 percent is a sustainable number,’ Pettigrew said.”
The Boston Globe in Massachusetts. “Buyers may be packing open houses and battling it out in bidding wars, but the number of homeowners in the Boston area is headed down, not up. Homeownership rates have fallen across all income ranges in Boston and suburbs since peaking back in the 2006 at the height of last real estate boom. The biggest decline has been among middle-income earners. Zillow reports homeownership ranks have also thinned out at the bottom and the top of the wage scales.”
“The drop mirrors a national trend as well, with the homeownership rate across the country sinking to 63.8 percent, the lowest since at least 1995. ‘There are plenty of people looking at the market and seeing these rapidly appreciating prices and saying ‘maybe it’s a good time to hold off and save up,’ notes Alex Coon, market manager for brokerage firm Redfin’s Boston-area office.”
The Press of Atlantic City in New Jersey. “At 28, Andrew Imperiale could afford to buy a house. And lots of people have told him what a smart move it would be. He just doesn’t want to. Imperiale, a lawyer who just rented a new three-bedroom place in Ventnor, likes the flexibility that comes with not owning a home or owing a mortgage. He doesn’t know how long he’ll want to stay in his new house, and he doesn’t have to know now. ‘Maybe in the next two or three years,’ he said, adding that he mainly likes the fact that he’s ‘not stuck in one place. And No. 2, there’s the amount of money it takes’ to buy, even with a first-time homebuyers’ program designed to attract young buyers.”
“‘You can put down 5 percent, but then you’re paying a mortgage you can’t afford,’ he said. As a renter, ‘You don’t have to worry if the place leaks. You don’t have to fix the roof. I just thought it was a dumb move for me. … It’s too big a commitment when you don’t know where you’re going to be in five years.’”
“Renters have been making up a growing part of the nation’s population. That growing demand for rentals has major effects on the housing market. For one, rents are now ‘artificially high,’ as a national housing economist told the Atlantic Builders Convention in Atlantic City this year. Reis Inc., a commercial property-tracking firm, found the average rent across the country has increased 14 percent since 2010 — considerably more than the inflation rate, the Associated Press reports.”
“At her Number One Realty office in Atlantic City, Carol Moscony said rents have stayed fairly stable in the city in the past few years — at the same time buying a place has become a huge bargain for some people. ‘Now is definitely the time to buy,’ said Moscony, giving as an example a condo with ‘properties I used to sell for $180,000. Last year, I sold one for $33,000. … Or in 2008, (a condo) that you would pay $120,000 for, now it’s going for $33,000 to $35,000.’”
Shiller;Homes, in fact, are a consumption item that depreciates
Here’s the big shocker: Used houses should not be priced higher than replacement cost!
Compare the prices to a new one. Some of these new homes have more fees and permit costs built into them than the older homes cost to build originally.
So you can buy a new house or buy an older won for usually around 15% less.
Sorry Poet but your $90k building permits are a fantasy.
You don’t know CA son.
Fantasy.
It’s not just the permits, it’s the impact fees and they can be higher than even $90K. In some Fontana CA areas I believe the cost for sewage is $50K per unit. Everyone complains about the builders but it’s really the cities IMO. And this is why they don’t build smaller homes (1500-2000 sq ft) in the IE. Bear in mind, the higher the selling price the higher the property taxes, so there’s no efficiency incentive for city infrastructure projects.
nonsense.
Development Fees for Fontana
https://www.fontana.org/DocumentCenter/Home/View/2277
Here you go…
Building Permit fees are small. Go to page 2:
Planning:
Circulation: $5,734 per home
Landscape, Public Facilities, Police, Library, Fire, Final Inspection, Municipal Services: $5,303
Inclusionary Housing: $1,350
Engineering (starting on Page 2)
Park Development: $6,500
Sewer Expansion/Connection: $5,984
PLUS
Fees per acre Storm Drain Fees PLUS Flood Control, PLUS MSHCP (whatever that means) that range from a low of $10k per acre up to a max of $47k per acre. If you are cramming 7 homes per acre, that’s another $1,500 to $6,500 per home in fees.
And note the small print at the bottom of the page:
“SEE SCHOOL DISTRICT FOR ALL APPLICABLE FEES”
http://www.fusd.net/departments/Business/Facilities/DevFees.stm
$3.76 per square foot in school fees.
A 2,000 square foot home would be another $7,500 in fees.
So, in total, before you’ve pulled a building permit, graded the site, put in the roads, curbs/gutters, utilities and other infrastructure, you are into the City for a bare minimum of $34k in fees, and up to approximately $40k with an assumed density of 7 homes per acre–if you have less density, the number goes up.
And people wonder why finished lots (which include these costs) are expensive.
When I priced a build on a lot I owned, total costs were under $50/sq ft. Not every place is like California, the poorest (is it any wonder why?), where people are stupid enough to live 3 to an apartment. Oh, but worry not. No house has ever sold for less than cost to build, has it?
Actually, lots of them did. In California. Just a few years ago.
That’s for shoebox developments Rental_Fraud. Not a single family residence.
“That’s for shoebox developments Rental_Fraud. Not a single family residence.”
WRONG
SFD = Single-Family Dwelling
MFD = Multi-Family Dwelling
Where there is a different in the per-unit cost, they show both numbers, right next to one another. My numbers were all pulled from the SFD numbers.
For instance:
The “Circulation” Fee:
SFD=$5,734.00 PER UNIT
MFD=$3,509.00 PER UNIT
“No house has ever sold for less than cost to build, has it?
Actually, lots of them did. In California. Just a few years ago.”
Yes, but right now, in many parts of inland CA, if you are starting from raw land, it is very difficult to build a new home and sell it for more than it costs to build. This is in part due to high fees, but also due to expensive construction (fire sprinklers required, etc.).
So, you get very little construction, leading to supply constraints, overcrowding, higher rents/prices. Until the math again makes sense to build more.
‘it is very difficult to build a new home and sell it for more than it costs to build’
‘U.S. housing starts jumped to their highest level in nearly 7-1/2 years in April and permits soared. Groundbreaking surged 20.2 percent to a seasonally adjusted annual pace of 1.14 million units, the highest since November 2007, the Commerce Department said on Tuesday. The percent increase was the biggest since February 1991.’
‘In April, groundbreaking rose in three of the four regions, but fell 1.8 percent in the South, where most of the home building takes place. Single-family homes groundbreaking gained 16.7 percent. Groundbreaking for the multi-family homes segment increased 27.2 percent.’
http://www.cnbc.com/id/102690006
“SFD = Single-Family Dwelling”
WRONG.
READ the application process. It’s all for multi structure development, curbs, pipe, asphalt, sidewalks, buried electric, turning lanes.
“READ the application process. It’s all for multi structure development, curbs, pipe, asphalt, sidewalks, buried electric, turning lanes.”
Yes. A subdivision of single family residences to be added to a City. This whole thread started with someone noting the cost of a sewer hookup (ie. obtaining city services with a new development). Or did you think you could get a sewer hookup without paying a fee?
You’re ducking weaving again Rental Fraud. The application is for a contractor going through the permitting, review and approval process for sanitary, potable, asphalt, curbs and sidewalks. Not an end user connection to the system.
Lights out Rental_Fraud.
Please don’t shorten my quote to make it look like your link is applicable.
“”right now, in many parts of inland CA, if you are starting from raw land, it is very difficult to build a new home and sell it for more than it costs to build.”
The article notes national and regional numbers, not inland CA.
Righto R_Fraud. When you stop misrepresenting the truth about yourself and housing.
The application is for a contractor going through the permitting, review and approval process for sanitary, potable, asphalt, curbs and sidewalks. Not an end user connection to the system.
RW was talking about contractor’s costs and the fact that they were not building because it was difficult to make a profit. You seem to have imagined that he was talking about end-user fees, and now you are misrepresenting what he did say in multiple ways. Give it a rest.
Wrong again. Read the application and Rental_Frauds misrepresentation.
“I used to sell for $180,000. Last year, I sold one for $33,000. …”
Because $33k is all a 40 year old depreciating shack is worth.
WHAT R YOUR LOSSES SON?
….. all it’s worth. $33k.
And you paid how much? $400k+?
“Some of those polled worried that the new real estate boom is leaving locals behind. ‘There is very little new construction being built at price points that South Floridians could afford,’ said one respondent. ‘The price points are out of reach for 90% of South Floridians. The target is foreign and out-of-town buyers.’”
That’s okay. We’ll just have ghost towns like Central London where despite the hot housing market, shops are closing down because nobody is there to buy anything. Then they can move all of those pesky low income Americans two hours North where they’ll be forced to commute to their minimum wage jobs taking care of the affluent Chinese, Russians and Venezuelans in Miami.
The Keys are like that. I read a story a number of years ago in one of the South Florida newspapers that detailed how much of the islands’ hourly labor force of waiters, chambermaids, etc., is bused in every day from Miami. It’s three hours from there to Key West!
I probably post on this every week, but as a people, we are extraordinarily complacent, to the point of denial, about the social ramifications of real estate bubbles. It’s as if all we can focus on are transactions and numbers and graphs.
‘the price increases seem incongruent, Shiller suggested. ‘We do see nationwide an increase in home prices and I don’t know if things are better. This boom has negative color to it’
You didn’t “predict” this did you Robert?
Very interesting. Recently the NAR’s Yun has been making similar grunting noises.
What’s the matter boys? It’s all good, right? There’s no subprime, everybody can afford it, no price is too high, right? The bubble was in the loans and those bad old banks are gone, right?
I was told ever higher house prices were a positive boon to the economy that would save us all, but Robert here seems to be getting cold feet. Man, wouldn’t it be awful if you were wrong all along Robert? Remember when you made such a fuss about the government “saving” the housing market, and you’ve been bouncing your little pom-poms ever since?
Incongruent, indeed.
Hedging, parsing, ducking and weaving. Call your attorney Robert.
I have recently noticed the MSM no longer refers to home price increases as “improvements.” Am I just reading the wrong articles?
‘I don’t see any way we’re going to have any homes in Fort Collins ever again under $300,000,’ said Dave Pettigrew…While 2014 sales prices astounded Pettigrew, the 15 percent increases trending this year are even more worrisome. ‘Personally, I don’t think 15 percent is a sustainable number’
You seem conflicted Dave. ‘Ever again’ is a long time. And if it isn’t sustainable, there’s a whole lotta people in Fort Collins that are screwed. Maybe even you.
Nearly a third of Fort Collins residents earn less than $49,999 and about half earn less than $74,999, according to the American Community Survey’s five-year estimates.
_____________________________/
Is Fort Collins that wealthy? That seems like a very high median income number.
And can somebody explain why Colorado is so bubbly right now?
And can somebody explain why Colorado is so bubbly right now?
I wish I could. But it seems to be nothing but bubble and apparently “discovered” by some noobs that the mountains and low humidity weather can be a nice combination. So for the moment all the cool people that can’t afford somewhere even cooler want to be here.
And can somebody explain why
Coloradoeverywhere is so bubbly right now?ZIRP all over?
Is Fort Collins that wealthy? That seems like a very high median income number.
It does seem that way. One possible explanation is that “poorer” people are moving to less expensive communities in Weld County or Loveland. I have met people who moved out of “Fort Fun” because “the rent was too damn high”
http://en.wikipedia.org/wiki/Colorado_Amendment_64 ?
‘It’s shaping up to be another tough summer for would-be homebuyers in the Portland area. This year has been the most competitive since the housing market began its recovery in 2012, with cash offers, above asking-price bids and rapid-fire negotiations marking desirable properties. New numbers from the Regional Multiple Listing Service this week suggest that won’t let up as the year’s busiest buying season begins.’
‘In the most popular areas and at the hottest price points, buyers are seeing offers stack up within hours. Bidding wars are back, and cash is crowding out even the most qualified buyers who hope to finance their home purchase with a mortgage.’
“I think this summer’s going to be pretty fierce,” said Brian Allen, co-owner of Portland-based Windermere Stellar.’
‘Real-estate professionals, though, say an increasing number of homeowners are sensing the housing market’s thaw and electing to list their homes. “For the first time, there’s things to check out and things to go look at,” said Jenelle Isaacson, the owner of Living Room Realty in Portland. “But the demand behind it is just as strong.”
‘Ten or more offers on a single home aren’t uncommon, Isaacson said. And buyers using a mortgage to finance their purchase, even if they have a large down payment, are often competing with cash buyers willing to pay just as much.’
‘To get an edge, some buyers are willing to waive protections — like making their offer contingent on an inspection — that they wouldn’t dream of making otherwise, Allen said.’
“While prices have gone up, it’s sort of plateaued,” said Jason Waugh, chief executive of Berkshire Hathaway HomeServices Northwest. “You’re not flirting with … double-digit year-over-year appreciation. That bodes well for future stability rather than a course correction.”
Check this out:
‘chief executive of Berkshire Hathaway HomeServices Northwest’
Well, at least we have an expert assuring us we won’t lose our ass waiving an inspection.
This article is a good example of what I mentioned yesterday. A mania carries the seeds of its own destruction.
‘cash offers, above asking-price bids and rapid-fire negotiations’
Makes you kinda lose your breath, huh? In such a situation, one might even pay too much.
As I mentioned yesterday, the Berkshire Hathaway listings are coming out of the woodwork in my neighborhood (three within a couple miles of my house, within the past two weeks, in Redmond WA). I went to an open house at one last Sunday. The agent they hired to work the open house was a freelancer buyers agent, so if john q. newbuyer walks into the door, the agent is ready to pounce on him.
I suspect that these homes are foreclosures that the bank is unloading right at the peak. The timing is all-too suspicious. And I’ve never seen any Berkshire RE signs until the past couple of months.
And I’ve never seen any Berkshire RE signs until the past couple of months.
I’ve noticed an up-tick in their signs in my area as well (Phinney Ridge in N. Seattle). It could well be that they are sufficiently well connected through Buffett that they are getting a piece of the unloading action.
Though regardless of who gets a piece of the action, I’ll be glad just to see the unloading finally occurring.
The ones in my neighborhood don’t appear to have been unoccupied foreclosures, though.
I think that the banks have been very good about keeping their foreclosures occupied, especially if they are nicer houses in nicer areas (even if it means letting people live there for free, or by renting out until top of market where we appear to be now).
Over here on the Eastside, I would say that most of the foreclosures are occupied, and I know that the one I went through last Sunday was previously listed a few years back as a rental so I suspect it has been rented out since then.
The houses on the Eastside that are largely unoccupied are 2nd/3rd houses owned by company executives, and (more recently) foreign invester-owned ones.
In the wealthier suburbs of Chicago, there are endless listings (likely a majority) of uninhabited homes…but the untrained eye wouldn’t have the faintest clue. It is really quite something to see just how detailed the business of staging has become. Grand pianos. Foosball and pool tables. Clothing. Liquor bottles. All a facade.
From Winnetka to Hinsdale to Lake Forest we are witnessing a massive attempt at a pump and dump. The shadow inventory of million dollar homes is of an epic scale.
Grand pianos.. foosball and pool tables…
In 2011-2012 when I was househunting, the houses were obviously TOO lived in. Multifamily flophouses full of junk.
Now, all the listings are cleaned up and staged. But not with grand pianos. In the ghetto nabes it’s Ikea-style dining sets and cribs in the small bedroom. They’re taking their cue from HGTV shows which feature a high proportion of preggo couples.
In such a situation, one might even pay too much.
In such a situation, one might even be virtually guaranteed to pay too much!
I have little luck convincing the young folks around me at work of that, though my bearish leanings are well known.
I have little luck convincing the young folks around me at work of that, though my bearish leanings are well known.
All you’ll get for your troubles are rolled eyes.
‘California has a serious low-wage jobs problem, and it’s only gotten worse over the past 15 years.’
‘In a new analysis my colleagues and I found that fully a third of our state’s workers earned low wages in 2014 – less than $13.63 an hour. That’s about 4.8 million workers, the large majority of them adults and many of them working full-time and supporting families. Yet their median earnings are only $15,300 a year.’
‘The result is a profound lack of economic security across the state, especially in immigrant communities and communities of color.’
‘What makes these statistics especially troubling is that California’s low-wage workers are older and more educated than they were 35 years ago. Only 5 percent are teenagers, down from 16 percent in 1979, and 48 percent have some college experience or more, up from 39 percent in 1979….Even as worker productivity in the U.S. has increased over the last four decades, the earnings of low-wage workers, after adjusting for inflation, have declined in our state and across the country.’
‘California is not going to be able to educate itself out of the low-wage jobs problem because the link between more education and higher pay is becoming more tenuous. Wages for college graduates have declined by 6.5 percent in real terms since 2000. And official projections show that 7 out of the top 10 growth jobs over the next decade will be low-wage occupations.’
‘Staying on our current path toward greater inequality is not sustainable. The cost to low-wage workers and their families includes the immediate strain of constantly having to choose whether to pay for food, housing or electricity, as well as the longer-term effects of poorer health outcomes, shorter life expectancies and lower educational attainment for their children.’
‘And when jobs don’t pay enough, low-wage workers and their families are often forced to turn to public assistance to make ends meet – we estimate costing about $14.3 billion a year in California in state and federal programs. Programs such as the Earned Income Tax Credit, Medicaid and food stamps provide vital support to fill the gap left by employers who pay low wages.’
‘It’s been six years since the end of the Great Recession, and California has shown solid gains in terms of employment growth and fiscal stability. It’s time to confront the Achilles heel of low-wage jobs and the short-sighted business models that create them.’
Annette Bernhardt is a senior researcher at the UC Berkeley Center for Labor Research and Education
‘constantly having to choose whether to pay for food, housing or electricity’
Wait a minute. Every day I read that rents are up and away! This is double-plus good because it “forces” more people to buy houses and sends prices ever higher. Which is the whole raison d’etre of the universe.
But if I have so much money, and I spend more on housing, then I have less to spend elsewhere. So the bakery or shoe shop or car repair guys might make less. Now dang it, Bernanke told us higher houses prices were going to fix all this. And California certainly has that. So why are they so broke?
‘constantly having to choose whether to pay for food, housing or electricity’
Perhaps I can be of some help.
(snort)
US Consumption Weakness Extends Into Q2
By Danske MarketsMarket Overview
May 14, 2015 05:49AM GMT
US retail sales for April were weak. Control retail sales (excluding gasoline, autos, building materials and food) were flat and sales excluding autos and gasoline were up only 0.2% m/m. Headline retail sales were also flat, with gasoline sales down 0.7% m/m and auto sales down 0.4%. There were revisions to the control group of +0.2pp for March, -0.15pp for February, +0.12pp for January and -0.08 for December. Net, this leaves Q1 private consumption poised for a marginal upward revision to 2.0% q/q AR, from 1.9%. More important though is the momentum into this quarter, which is not impressive. Given today’s retail sales data, we estimate real personal consumption was up only 0.05% m/m in April and, even with a rebound in the coming months, it will be difficult to get Q2 consumption growth above 3.0% q/q AR.
The big surprise in the data is that sales by department stores fell 2.2% m/m despite weekly chain store sales data having been strong. Furniture sales were down 0.9% and sales of electronics were down 0.4%. Strength was seen in sales of sporting goods (+0.8%), non-store retailers (+0.8%) and eating and drinking (+0.7%). Details also show motor vehicle sales down 0.4% m/m (we expected this given a fall in unit auto sales) and sales at gasoline stations down 0.7%, which reflects that after seasonal adjustment gasoline prices were down in April.
We remain puzzled by the weakness in consumer spending.
…
“Wait a minute. Every day I read that rents are up and away! This is double-plus good because it “forces” more people to buy houses and sends prices ever higher. Which is the whole raison d’etre of the universe.”
You can pay high rents if you cram 3 people into a 1 bedroom apartment.
http://articles.latimes.com/2014/mar/07/local/la-me-crowding-20140308
A byproduct of not enough housing.
With 25 million excess empty and defaulted houses, 4.4 million of which are in CA, there is plenty of housing Rental_Fraud.
‘In a new analysis my colleagues and I found that fully a third of our state’s workers earned low wages in 2014 – less than $13.63 an hour. That’s about 4.8 million workers, the large majority of them adults and many of them working full-time and supporting families. Yet their median earnings are only $15,300 a year.’
At least Californians have their high levels of accumulated home equity to fall back on.
Half of college graduates expect to be supported by their families
http://finance.yahoo.com/news/half-college-graduates-expect-supported-040128208.html
My daughter starts college in 2016. I am planning on having to support her through college and then until she is 26 years old in 2023. I will die eating dog food before I will let her become a debt slave to this system.
I just got a second job - working for a Chinese company.
senior researcher at the UC Berkeley Center”
Solution bigger government and more taxes, except not for senior researchers
All this is interesting and no news really to anyone who is paying attention. It’s the reason I left the US 4 years ago.
A quick story…
My wife and I went to buy a house in Boulder - where we grew up - and found nothing nice. We made one offer on one house and it was rejected - the house sat for 18 months then went under contract for less than our offer, btw - so we went back to the Ski town we were living in, sat down, had a discussion and left 3 months later. I’m in Colorado again for a few months visiting folks and drowning in the rain. lol.
I tell folks I doubt we’ll ever move back. It’s not that it’s bad here or not worse in many places outside the US but it’s just that we grew up in these places and it’s just too much of an insult to buy into it all.
I like being an expat. I like having to speak 3 or four languages really poorly. I like not forking over $650k for my parents split level or the crap I rented while at CU. lol.
I like having to speak 3 or four languages really poorly.
Europe?
Hong Kong and a few spots in Europe. I’m actually pretty good with languages but it’s gotten ridiculous - Catalan, Swiss German?
I’m in Colorado again for a few months visiting folks and drowning in the rain. lol.
I’ve haven’t seen this much rain in 20 years, it is welcome though.
I’ve haven’t seen this much rain in 20 years
Well…a year and a half anyway.
“And California certainly has that. So why are they so broke?”
“CALIFORNIA IS AMERICA’S POOREST STATE”
http://www.laweekly.com/news/california-is-americas-poorest-state-4177082
Yesterday some posters were reminding us that the Federal Reserve is all powerful.
‘Central banks are incapable of saving economies or creating growth. The only thing a central bank can do is create inflation. These market manipulators set forth on a journey seven years ago to save the world by engaging in massive monetary manipulation, euphemistically called Quantitative Easing (QE), and a Zero interest rate policy known as (ZIRP).’
‘As I could have told them before they started, all this easy money will fail to create viable growth. The economy, held back by massive debt levels, initially clocked in at 0.2% for the first quarter. This number is set to be revised down to negative territory due to a huge increase in the trade deficit during March. And the second half isn’t setting up to be much better either.’
‘The Fed was successful in re-inflating the housing and equity bubbles and also creating another new massive bubble in the bond market. But those at the Fed stand determined to never let real data points get in the way of the narrative that printing money saved the economy.’
‘For the past seven years, investors didn’t have to worry about credit risk because central banks were ready buyers regardless of a nation’s insolvent condition; as long as inflation was thought to remain quiescent.’
‘Despite years of QE and ZIRP, the economy is still scraping along the bottom. If the Fed were to raise the cost of money above the one percent level, it will bring this bubble-addicted economy to its knees, as it provides the pin to the bubbles in real estate and equities.’
‘The only sure outcome is chaos on a global scale because central banks have never been able to extricate the economy from the bubbles it created. Such is the inevitable result of the massive and historic intervention of central banks into the sovereign debt market. In other words, bubbles never pop with impunity and the international bond bubble is certainly not going to be the exception. Therefore, no matter what happens to interest rates in the future you can be sure of one thing…the suffering will be immense.’
“The only sure outcome is chaos on a global scale because central banks have never been able to extricate the economy from the bubbles it created. Such is the inevitable result of the massive and historic intervention of central banks into the sovereign debt market.”
Experiment, you left out the word “experiment”, as in:
“Such is the inevitable result of the massive and historic experiment of the intervention of central banks into the sovereign debt market.”
“In other words, bubbles never pop with impunity and the international bond bubble is certainly not going to be the exception. Therefore, no matter what happens to interest rates in the future you can be sure of one thing…the suffering will be immense.”
The case for cash is as soid as ever.
The Fed is beholden to the Oligarchs!!
‘Despite years of QE and ZIRP, the economy is still scraping along the bottom. If the Fed were to raise the cost of money above the one percent level, it will bring this bubble-addicted economy to its knees, as it provides the pin to the bubbles in real estate and equities.’
This is why I expect the Fed to continue jawboning interest rate hikes for a few more years before taking any action. They can always later respike the stock market punchbowl with another liftoff delay, on the premise that the economy turned out weaker than expected.
All they can do is inflate asset bubbles.
I think there is a sense that prices wont go down. There was that feeling last time too. I feel like I’m talking about the last bubble all over again but I think the bigger bubble is in stocks. I think we talked about that for like 4 years.
“Markets can remain irrational a lot longer than you can remain solvent.”
‘Bubble fears: The $2.62m house sale that has Sydney worried’
‘House-buyers in Sydney will be feeling Auckland’s pain, with the sale of a modest three-bedroom house for A$2.62 million fuelling speculation of a housing bubble there.’
‘The median price for a three-bedroom house in the inner-western Sydney suburb of Haberfield, where the house was sold, was A$1.5 million in March, Business Insider reports.’
‘The last time the house at 44 Kingston St was sold was in 1980, where it went for $110,000.’
‘The surprising sale of 44 Kingston St - a three-bedroom, one-bathroom property on 697m2 of land - follows similar cases in Auckland. A two-bedroom flat in Mt Albert sold for $797,000 last week, 77 per cent above its CV price.’
‘Another house, a four-bedroom property on Waiheke Island, sold for nearly three times its valuation at the end of last year, reaching $2.4 million. Over the weekend, a run-down house in Mangere Bridge sold for $677,000 - more than twice its land value.’
Who were the buyers of these properties? Is that a state secret? It does appear that a number of cities around the world have reached an absurd blow-off top, but who’s to say? Still a lot more money to be looted out of China, or created by central bankers and given to wicked financiers for free.
‘Existing-home sales in Eau Claire, Chippewa and Dunn counties surged in April compared with the year-ago period, according to the latest monthly report from the Wisconsin Realtors Association.’
‘The counties combined for 249 sales last month, 37.6 percent more than in April 2014. The median sales price rose 31.2 percent to $157,500 in Dunn County, 10.6 percent to $141,500 in Chippewa County and 7.5 percent to $142,475 in Eau Claire County.’
“After a slow start to the year, the spring housing market really has come to life,” said Dan Kruse, WRA board chairman, in a news release. “The growth in sales was strong in every region of the state and was especially robust in the less urban regions.”
‘One reason for the higher sales price was the tightening of available inventory, said Michael Theo, WRA president.’
“The banks are exposed and the homeowners are exposed because they both have a false feeling that the house is worth that amount of money. And that’s false equity.”
What? Are you suggesting that the price of the house doesn’t equal the value of the house? But … but … if you do not use the price to determine the value then what is there to use?
(Oh, and check this out:)
The bank’s “false feeling” and the homeowner’s false feeling” creates “false equity”.
(There’s a step missing here somewhere. Oh, here it is …)
The bank’s false feeling and the homeowner’s false feeling creates a false price and this false price then translates into false equity.
False price. And just what is it that powers a price up to such a point whereby the price becomes “false”?
(Psssst. Borrowed money. The answer is lots and lots of borrowed money.)
Santa Rosa, CA Sale Prices Crater 6% YoY As California Housing Bust Looms
http://www.zillow.com/santa-rosa-ca-95409/home-values/
I got this today:
Just Reduced!
9221 Sierra Mar Drive, Sunset Strip
Located in the coveted “Bird Streets” area above Sunset Boulevard. Just off Doheny and minutes from the action on the Sunset Strip. This is your chance to tailor a home to your individual taste and specific needs and watch your investment grow. 3 bedrooms and 3 bathrooms upstairs with living space downstairs, including an office and a bonus studio. Great patio deck off the living room with an incredible view.
Now offered at $2,750,000
I’ve gotten an email about this one before.
http://www.zillow.com/homedetails/9221-Sierra-Mar-Dr-Los-Angeles-CA-90069/20534820_zpid/
$2,750,000
Price cut: -$245,000 (5/18)
Last sold: Jul 1995 for $580,000
So can I walk to Whiskey-A-Go-Go from there? Awesome!
I’m liking that salmon-pink Fender Strat. And are those platinum records on the wall?
“At her Number One Realty office in Atlantic City, Carol Moscony said rents have stayed fairly stable in the city in the past few years — at the same time buying a place has become a huge bargain for some people. ‘Now is definitely the time to buy,’ said Moscony, giving as an example a condo with ‘properties I used to sell for $180,000. Last year, I sold one for $33,000. … Or in 2008, (a condo) that you would pay $120,000 for, now it’s going for $33,000 to $35,000.’”
So she used to sell these condos at $180,000, telling people, I’m sure, that it was “a great time to buy”. Now she’s selling them for $33,000 and still telling people it’s “a great time to buy.”
No morals whatsoever.
I’ve seen it here before but it bears re-peeting…
Cray-turd.
“Real-estate valuation firm Smithfield & Wainwright warns that at least 14 states and the District of Columbia may be experiencing inflated prices like those that preceded the U.S. financial crisis.
Candidly, I’m surprised that CA isn’t noted as one of the 14 states.