The Only Thing We Have To Watch For Is Greed
A report from the Colorado Springs Gazette. “The Colorado Springs-area housing market went through the roof last month. The median price for single-family homes that sold in May increased to $243,000, a 12.4 percent jump when compared with the same month last year, according to a Realtors Association report. It’s the highest median price on record, based on Realtors Association reports and data compiled by The Gazette. Home sales, meanwhile, totaled 1,397 in May, a 24.3 percent year-over-year increase and also a record high.”
“In the Colorado Springs area, about 85 percent of the homes that sold in May went for less than $500,000, and the majority of those sales were $300,000 or less, said Cherri Fischer, board chairwoman of the Pikes Peak Association of Realtors. Becky Gloriod, an agent with Berkshire Hathaway HomeServices who specializes in high-end properties, said there’s a little more activity in the upscale market compared with last year. ‘What we are seeing is a few more sales, but the pricing hasn’t appreciated,’ Gloriod said.”
“Colorado Springs doesn’t have enough high-paying jobs to support the purchase of homes priced in the upper six figures and beyond, Fischer said. ‘Without the jobs to support a million-dollar home purchase,’ she said, ‘they’re going to languish.’”
The International Business Times. “Ever since subprime mortgages helped torpedo the American financial system, a quiet revolution has taken place in the home loan industry. for the first time, shadow banks capture the lion’s share of new government-backed mortgage origination. In April, lenders like loanDepot.com and mortgage stalwart Quicken Loans issued 53 percent of new home loans, edging out traditional banks and credit unions. The share of government-insured mortgages coming from these companies has more than tripled since 2010, according to data from the conservative American Enterprise Institute.”
“That new reality has experts warning of an unprecedented new era in the mortgage industry, in which the majority of home loans come from institutions with no deposits on their books — a massive transfer of systemic risk from closely scrutinized depository banks to lightly regulated shadow banks. ‘This is a whole new era,’ says Marshall Lux, co-author of a new study from the Harvard Kennedy School on the rise in nonbank mortgages. ‘The only thing we have to watch for is that greed doesn’t come back in.’”
The Star Democrat in Maryland. “After a few cold years during and after the Great Recession, the Mid-Shore housing market is warming up. Despite an increase in homes sold, prices dropped slightly on average in the first three months of 2015 vs. the same time in 2014. The average price from January through March of this year was $224,988 vs. $241,308 in 2014 — a decrease of 6.8 percent. The biggest difference came in February with the average in 2015 at $186,964 vs. $226,691 or a decrease of 17.5 percent.”
“Blaine Williamson, MSBR president, said he is not discouraged by the downward price trend. ‘The first-time homebuyer market is on fire right now and that’s what’s bringing that number down,’ Williamson said of average Mid-Shore home prices. He said six of his recent clients are first-time homebuyers, and they all have been involved in ‘multiple offer situations.’ ‘There’s a lot more homes being sold at the lower end values of the market which is bringing down that number even though people are starting to fight over them and the values are starting to go back up,’ Williamson said. ‘Things are really starting to move. We’re going to see some price appreciation. We’re heading in the right direction. We really are.’”
Multi-Housing News on Florida. “Just six years after hitting rock bottom, and we are looking at over 20,000 condo units on the boards in Miami. Yet questionable site selection, rising construction costs and global currency dynamics have experts expecting the first shelved Miami condo project within the next six months. If developers are gorging on anything this time around it’s speculative land buys. Tony Graziano, principal of Integra Realty Resources found construction costs have increased 25 percent over the course of the cycle as of March 2015. ‘Basically, the contractors are seeing guys making money, and they are raising costs,’ Graziano said.”
“‘Foreign currencies are weakening, and this is really the time for many developers who have been on the fence to decide how they are going to go forward,’ said Peter Zalewski, a principal with the Miami real estate consultancy Condo Vultures. ‘You will start to hear in June, July and August that some projects aren’t going forward. Some might be reworked. This is really the summer of shakeouts.’”
The Philadelphia Inquirer on New Jersey. “The Bella, a product of a more optimistic time in Atlantic City, is one of the city’s only truly luxury condo high-rise buildings. Units used to sell for close to $500K back in the heady years of, say, 2008. Lately, as Atlantic City’s economy tanked, nearby Revel and Showboat closed, and the neighborhood stagnated, prices have dropped precipitously, with some unit asking prices sinking (way) below $200,000.”
“Now, Credit Suisse Bank, which owns 40 of the units, most on upper floors with ocean views, is getting out, says Bob Dann, of Max Spann Real Estate & Auction Co., and is offering the units at absolute auction. ‘They’ll probably sell for significantly discounted price,’ Dann said. ‘With evidence of strong recoveries in other real estate markets such as Philadelphia and Miami, now is the time for buyers to take this once-in-a-lifetime opportunity to get in Atlantic City on the bottom floor.’”
The Associated Press. “Of all the financial threats facing Americans of retirement age, housing isn’t supposed to be one. But after a home-price collapse, the worst recession since the 1930s and some calamitous decisions to turn homes into cash machines, millions of them are straining to make house payments. Jim, 67, and LaRue Carnes, 63, moved to Sacramento, California, in 1978 and bought a house for $54,000. They refinanced their mortgage several times and pulled money out of the house and took on higher mortgage payments. ‘Foolishly, like so many Americans, we used the house as a bank,’ LaRue says.”
“In 2011, Jim was laid off, and the couple fell behind on mortgage payments. Three times, they dipped into retirement savings to fend off foreclosure. Eventually, with a $25,000 grant from a state program, Keep Your Home California, they negotiated a new mortgage they could afford. Still, they’re still struggling. Once a month, they eat free breakfast at a church, bringing home bagels and fruit. They ‘never thought we would be partaking of such,’ LaRue says.”
Zillow calling tx oil patch cities +2% price increase 2015
Losing all credibility
Yet their own data shows falling prices. So does Movoto and everyone else.
Frisco, TX Housing Prices Fall 8%
http://www.movoto.com/frisco-tx/market-trends/
‘A growing number of U.S. households will be headed by Hispanics in the coming years, but a new report finds that many of them will struggle to achieve home ownership because they lack the down payment, income or credit to follow through on their plans. Nearly 4 million Hispanics would like to purchase a home when they move, the report said, but only 1.5 million are financially prepared to do so. That’s a gap of 2.5 million households.’
‘Marty Rodriguez, owner of Century 21 Marty Rodriguez in Glendora, agreed that many potential buyers are struggling to achieve home ownership. But resources are available to help them secure homes.
“There are lots of programs out there for them,” she said. “We just sold a house to a client that came in with less than $1,000 down.”
No downpayment, no problemo.
Haven’t we seen this movie before?
“we used the house as a bank”, hard to feel sorry for folks who did many foolish things. On top of that that get a $25,000 grant for not knowing how to manage their life? A better way, start classes in our schools on finance and the pitfalls of borrowing.
After all Hollywood portrays the pitfalls, the mafia breaks a limb when you get foolish on their money the only difference today, the banks bankrupt you with poor credit rating and 25% credit card interest but you get to keep your limbs?
And Lennar is complaining that there is now too much regulation.
http://www.cnbc.com/id/102728802
‘Lennar CEO Stuart Miller made his remarks ahead of the release of weekly U.S. mortgage applications data, which showed the number of applications fell 7.6 percent from the week ending May 29. He added the market’s slow recovery can be attributed to a number of factors, including the reluctance of Generation Y from buying houses.’
“The millennials have not jumped into the market as first-time buyers,” he said. “Historically, it’s always been an axiom of our business that when 20-year-olds move back home, it takes six to 12 months for everyone to realize it’s a bad idea. This time around, that’s not the case.”
Can’t speak to pricing elsewhere, but I have a hard time envisioning a Millennial household with $50K annual income stepping up to buy a place priced well north of $500K.
Worth $500k? or priced at $500k?
Clearly not WORTH $500k if they’re not stepping up to buy.
All this “Gen X, Gen Y, Millenial” BS should be grouped into one category: Gen AG, or Generations After Greed, because anyone following the Boomers got fawked.
Lennar is complaining that there is now too much regulation ??
There is no question about it at least in California…1 example and there are more others than I can count;
Sprinklers required now in every new residential structure in the entire state…$15,000. “Min” add to the cost…Bigger homes are more along the line of $30,000.+….Now, the owner next door has no such requirement…Even if they do a major remodel…And when I say major, I mean taking the house all the way dow to the wood members…Maybe doubling the size with a addition…See some inconstancies here…But this is the kind of BS that legislators pass into law…Prodded by firefighters unions, sprinkler installation unions and sprinkler supply manufacturers…
Spare me Dave. $3k for 2000 sq ft of sprinkled space.
“Lennar is complaining that there is now too much regulation ??”
Miller was complaining more about over-regulation for obtaining a mortgage. In other words, he wants to ease mortgage regulation so he can sell his homes.
But I’m with you on superfluous building code.
Why are prices skyrocketing for houses that have no sprinklers?
Because the cost to build new homes (permits/fees, building code) is too high to justify adding a lot of new supply at lower price points.
So supply of new homes is limited, which, all-else-equal, drives up the prices for all other homes (supply/demand, aided by cheap money).
Until, of course, prices of new homes justify adding a lot of supply…and then we will have our construction boom in California–which will drive higher employment, making people feel pretty good for a while, but with the additional supply, the seeds will be sown for the next price bust (triggered by the next recession, or ??).
A $500 permit and $3000 sprinkler arrangement doesn’t account for a 250% premium that amounts to a $300k overage Rental_Fraud.
If, according to your contention, building homes and selling them is so damn profitable, then why aren’t more homes being built and sold?
Your explanation isn’t compelling based on the market data.
If what you say is true, people should be building new homes like crazy and selling them at much lower prices, driving down the value of existing homes.
Why aren’t they?
There is no demand Rental_Fraud. Housing demand is at 20 year lows and falling.
‘people should be building new homes like crazy’
Why don’t you answer it? I’ve had several posts that would quote a builder saying there’s not enough demand.
http://www.paragon-re.com/Market_Updates/
There are a bunch of overpriced condos and mcmansions being built, and we are starting to hear the dreaded “glut” word.
Builder are greedy. Why else would they run up Bozeman’s land prices (just one example) so fast? The more it costs, the more they make. I had a great article from Construction Magazine a few months ago. The writer took builders to task for abandoning the entry level market. It doesn’t really matter, you can’t build your way out of a bubble.
Look at the median price/sq ft chart on that link. The cake has been baked.
There is a misnomer that everything put on the market sells in 60 days and new home builders are going like gangbusters?
Many will tell you the truth, traffic is fair to weak and most can’t afford the final product, that is upgrades, landscaping, impound accounts due to shaky portfolio ’s that is what really is going on, no matter what the NAR professes.
“Why don’t you answer it? I’ve had several posts that would quote a builder saying there’s not enough demand.”
Ask those same builders if they would have a greater sales pace if prices were 20% lower. The answer will be “yes”.
The truth is that there is weak demand at prices that allow builders to turn a reasonable profit. That is why they aren’t building like crazy in lower priced markets.
Look to SF as the example. There is insane demand at high prices…guess what? The skyline is littered with cranes–because it makes economic sense to build. And sowing the seeds for the next correction.
When you ask land brokers in places like the Inland Empire why homes aren’t selling (thus necessitating builders to buy more land), they’ll tell you that builders haven’t been willing to drop their prices, and so the sales pace is slow. When a builder finally does drop their prices, guess what? Homes sell.
I spoke with a market study expert yesterday, and he told me the story of a small subdivision in a price sensitive market (more affordable than neighboring communities). The builder started with asking prices that were a bit too high…sales were weak.
So, the builder dropped their prices by about 5-6%…guess what? The sales pace picked up. The subdivision (as small as it was) is now sold out.
It’s not as simple as there being demand, or no demand. The question is demand where? What size/quality of home? And at what price?
For basic homes in places like the Inland Empire, demand is too weak at prices that make sense for builders to add lots of supply. Given the cost to build a home, profit margins are thin at prices that allow the builders a reasonable sales pace.
All else equal, a lower price will increase sales pace–this is home sales 101. And for HA to claim that builders have 100% profit margins at current prices, yet at the same time builders are are complaining of weak sales rates, doesn’t hang together by any stretch of the imagination.
If builders had the profit margin as high as HA claims, they wouldn’t be so reluctant to lower their price to increase sales volume and make more money. Because a 5% drop in prices would only lead to a 10% drop in profit PER HOME, and if that made you go from selling 2 homes per month to 3 (a slow pace to a modest pace for most subdivisions), it would be well worth it.
However, if you are dealing with a 10% profit margin (as is common in the industry), a drop in price of 5% cuts your profit per home in half…and that price reduction better double your sales pace (or more), or you won’t make the change. And since once you drop the price, it’s hard to raise it again…builders are quite reluctant to lower prices.
‘Developers develop and builders build. That is, a developer takes raw land, obtains the necessary permits, creates building lots, and puts in the sewers, the water and electric lines, the streets and curbs. Then the builder comes in and erects the house.’
‘A builder also can be a developer. In fact, many are. But building and developing are two distinct and different tasks. And nowadays, most of the larger housing companies buy “finished” lots, or “pads,” from someone else.’
“In the old days, everybody was a vertical builder,” says Ralph Grebow of the Atlantic Companies, a land acquisition and development firm based in Iselin, N.J. “They did everything. They bought the land, obtained the approvals, put in the improvements and did the building and selling themselves.
“Today, builders want to be manufacturers,” Grebow continues. “It’s what they do best. And they want to employ all the principles of just-in-time inventories. That means owning the lots for as short a period as possible.”
‘Because it takes so long to win practically any jurisdiction’s blessings to move forward, a builder would have to carry land on his books for years if he also wanted to be a developer. Which is why they tend to take options on lots rather than develop them themselves.’
‘By employing what Keith Fichtner of Empire Land, which controls nearly 13,000 building lots in Northern California, calls an “11th-hour delivery system,” builders don’t actually buy lots until they have a signed contract. That way, they can be in and out as fast as their construction schedules allow.’
http://articles.chicagotribune.com/2005-01-23/business/0501230499_1_volume-builders-building-lots-production-builders
There’s plenty of land out there. If Tokyo can be over-built, any place can.
“‘Developers develop and builders build. That is, a developer takes raw land, obtains the necessary permits, creates building lots, and puts in the sewers, the water and electric lines, the streets and curbs. Then the builder comes in and erects the house.’
‘A builder also can be a developer. In fact, many are. But building and developing are two distinct and different tasks. And nowadays, most of the larger housing companies buy “finished” lots, or “pads,” from someone else.’”
This is generally true from what I’ve seen.
And it’s often dependent on how difficult it is to get land approved, so whether a builder is also the developer is often times not just builder specific, but also market specific.
For CA, it is common for builders to also be developers. They often need to be in order to acquire land–it’s competitive for approved lots given the difficulty in obtaining entitlements. For TX (and many other states), it’s very uncommon.
The fact remains, in lower priced Inland So Cal markets, even if the raw land were handed to you for free, it is difficult to finish lots, build a home, and sell for a profit.
‘even if the raw land were handed to you for free, it is difficult to finish lots, build a home, and sell for a profit’
And you say HA is putting us on.
No Rental_Fraud. “The fact remains” that you pretend to understand input costs, bidding, estimating and delivering a structure when the truth is you haven’t the foggiest notion.
You spout because you just don’t know.
“I spoke with a market study expert yesterday”
That’s your favorite lead-in to your tripe. Find another.
“The fact remains, in lower priced Inland So Cal markets,”
You forgot to include this part of my quote…it’s critically important.
^lol.
You really weave a tangled web Rental_Fraud.
Here’s a foreclosure listing I just got an email on. This is the zillow link:
3024 W Mermaid Ct, Tucson, AZ 85746
3 beds 2 baths 1,493 sqft
Lot: 5,662 sqft
Single FLamily
Built in 2000
5788 days on Zillow
Foreclosure Estimate: $106,320
Below Zestimate®: $14K (12%)
http://www.zillow.com/homedetails/3024-W-Mermaid-Ct-Tucson-AZ-85746/8562961_zpid/
They just cut the price to $96,900. “List Price/SqFt: 64.9″
It was built new for “Last sold: Jul 1999 for $104,310″ $69/sq ft.
Oh magically, we’ve all got to pay twice, triple what was paid 15 years ago, because, oh bugger. I would hammer these fools way down from here.
http://www.metrostudyreport.com/category/southern-california-market/
“Overall, the Inland Empire market appears to have lost some momentum due to a drop in consumer demand and limited affordable product supply.”
“less than 30% of home buyers currently able to afford a new home, which combined with limited product inventory at the lower-end of the price spectrum, has major implications on the home building industry through the balance of 2015.”
If one of the problems with new home sales is that there isn’t enough affordable inventory, yet it is easy to build cheap homes with massive profit margins, why aren’t builders doing it? Don’t they like to make money?
I submit that the cost structure in these markets is such that they can’t build affordable homes and turn a profit, and so they aren’t. What’s HA’s reason? Weak demand? Of course there’s weak demand…only 30% of buyers can afford the homes that are being built. If it’s so easy to build inexpensive housing, why don’t they do so in order to meet the market of homebuyers?
Why don’t they build homes that people can afford? It is irrational to to build homes that are unaffordable if there is another option.
Didn’t Tucson rank as one of America’s emptiest cities by Forbes a couple of years ago?
Too many homes, not enough people = bad idea
‘Year-over-year annual starts experienced a significant jump from 4,875 starts in 1Q14 or up 23.1%. The current housing inventory monthly supply stands at 9.5 months, not much different than 4Q14, but it is 2.3 months higher than 1Q14. Vacant Developed Lots increased from 16,597 lots in 4Q14 to 17,002 lots in 1Q15, with monthly supply dropping from 35.5 months to 34 months during the same period’
‘Vacant Developed Lot Inventory (4Q14 to 1Q15)’
‘Riverside County VDL’s increased from 8,804 lots to 8,995 lots (+2.2%). VDL monthly supply is 27.3 months.’
‘San Bernardino County VDL’s increased from 7,793 lots to 8,007 lots (+2.7%). VDL monthly supply is 47 months.’
‘In 1Q15, the Inland Empire real estate market experienced similar characteristics to the broader Southern California market, as resale transactions dropped off considerably.’
Sounds like plenty of land but prices are stupid.
“The highest volume of 1Q15 starts occurred in the following price segments: $300k – $400k (37% of starts) and $400k – $500k (28%),” said Dennis Handler, Director of Metrostudy’s Southern California region. “Approximately 81% and 85% of housing inventory and VDL inventory falls below the $500k range, respectively.
‘one of America’s emptiest cities’
Does that lower the construction cost by 50-75%? Anyway, they’ve got a high vacancy rate, but it wasn’t like that in 1999.
“yet it is easy to build cheap homes with massive profit margins, why aren’t builders doing it?”
Same question, same answer. Housing demand is a 20 year lows and falling.
Yet the builders keep increasing the size of the houses they build. They are harvesting the dwindling pool of fools that think debt on a house will make you rich.
“Sounds like plenty of land but costs are stupid.”
There, I fixed it.
““The highest volume of 1Q15 starts occurred in the following price segments: $300k – $400k (37% of starts) and $400k – $500k (28%),” said Dennis Handler, Director of Metrostudy’s Southern California region. “Approximately 81% and 85% of housing inventory and VDL inventory falls below the $500k range, respectively.”
Why aren’t they building more in the $200’s?
If demand is weak for what they are building, and the experts are saying that there is a lack of affordable housing, why aren’t they building cheaper homes?
“However, if you are dealing with a 10% profit margin (as is common in the industry), a drop in price of 5% cuts your profit per home in half…”
Here’s another thing Rental Fraud doesn’t understand: basic business accounting. Or any kind of accounting.
He has never sold anything, nor run any sort of business, in his life.
If I sell a $200,000 house at a 10% profit margin, that’s a $20,000 profit. If I drop the price 5% to $190,000, my 10% profit on this sale is now $19,000.
Who is this guy?
“The problem is rooted in a consequence of the post-2008 return to sane mortgage underwriting practices. Loan officers are no longer handing out mortgages left and right, but instead are tying them to borrowers’ income. As a result, housing prices can rise only if incomes rise, or if people can spend a greater share of their income on housing.”
http://www.nytimes.com/2015/06/03/opinion/where-the-housing-crisis-continues.html?_r=0
Comment from a reader on that article:
We see this in our working class neighborhood in a rural Minnesota city (pop. under 20,000). Housing prices are not recovering here, but across town in more “desirable” neighborhoods, prices are getting better–average local home prices were up 6% last year supposedly.
We bought our house for just under $100K in early 2008, and we’re lucky we haven’t had to move. The estimated market value of our home on our property taxes is now $87K, a drop of about $25K. We do home improvements because we want a comfortable, safe home for our family, not because we have an eye toward our house value if we sell.
Focusing on our home’s current market value would be too depressing–several smaller homes on our block have sold in the $30 and $40Ks in the past 3 years, either due to foreclosures or retirees needing to move. For working class people who own homes, a home is often a large part of their net worth, so this is a big hit even though we’re talking about pretty inexpensive homes.
“The estimated market value of our home on our property taxes is now $87K, a drop of about $25K.”
That is typical historically. Houses depreciate.
same old bs day after day.
More positive economic news!
Tualatin, OR Housing Prices Fall 5%
http://www.movoto.com/tualatin-or/market-trends/
Median List Price: down 5% YoY.
Median House Size: down 16% YoY.
Median Price per sq-ft: _UP_ 9% YoY.
Median transaction price: _DOWN_5% YoY
“That new reality has experts warning of an unprecedented new era in the mortgage industry, in which the majority of home loans come from institutions with no deposits on their books — a massive transfer of systemic risk from closely scrutinized depository banks to lightly regulated shadow banks. ‘This is a whole new era,’ says Marshall Lux, co-author of a new study from the Harvard Kennedy School on the rise in nonbank mortgages. ‘The only thing we have to watch for is that greed doesn’t come back in.’”
How is this any different from the Countrywide era, aside from the players’ names?
When you start seeing orange peel tan’s run for the exits.
‘This is a whole new era,’ says Marshall Lux, co-author of a new study from the Harvard Kennedy School on the rise in nonbank mortgages. ‘The only thing we have to watch for is that greed doesn’t come back in.’
___________________________/
Let us know if you see any greed Marshall! What a discredit to elite education.
“That new reality has experts warning of an unprecedented new era in the mortgage industry, in which the majority of home loans come from institutions with no deposits on their books — a massive transfer of systemic risk from closely scrutinized depository banks to lightly regulated shadow banks. ‘This is a whole new era,’ says Marshall Lux, co-author of a new study from the Harvard Kennedy School on the rise in nonbank mortgages. ‘The only thing we have to watch for is that greed doesn’t come back in.’”
Two brief points:
a) this does not end well - institutions with nothing to backstop mortgages gone sour does not bode well for said institution - but then why the f….should they care - it is only OPM.
b) re the last sentence - ummm…..dude look around - greed is already here you dolt!!!
That is all.
I remember 2007-08, when we were fond of posting here that the bursting bubble “was only in the first inning.” I’m trying to remember if anyone predicted that the game would be called because its natural outcome was unacceptable.
If we’re going to stick with baseball as an analogy, I prefer to see the whole stretch since the 1980s as the game. The crisis of 2007-08 was like a mid-innings rally by the reality team, which was squelched by the Fed and other central banks as a relief pitcher for the bubble team, which promptly padded its lead when it next batted. But the reliever is tiring. There’s nobody left in the bullpen to face the next reality uprising.
Jim, 67, and LaRue Carnes, 63, moved to Sacramento, California, in 1978 and bought a house for $54,000. They refinanced their mortgage several times and pulled money out of the house and took on higher mortgage payments. ‘Foolishly, like so many Americans, we used the house as a bank,’ LaRue says.”
…There’s really nothing left to be said that hasn’t been said 10,000 times before on this here blog.
I can’t help but wonder what they spent the refi on. Maybe kids college.
Foolish people now get $25k of my tax money after making several bad decisions???
I get rage every time I see a Keep your Home California commercial for precisely this reason.
Does any city have jobs to “support a million-dollar home purchase”?
Sounds to me more like the ChiCom kleptocrats aren’t buying in Colorado Springs.
‘Federal Reserve policy is creating “economic distortions” resulting in a transfer of wealth to the people who need it least, according to an analysis from a prominent Wall Street bond expert. A stock buyback frenzy that has boosted the market and put money in the hands of those seeking short-term gains is but one of the less-desirable Fed benefits cited by BlackRock’s Rick Rieder in a blog post on the firm’s website.’
“The global economy is witnessing a massive redistribution of wealth and income with borrowers, equity shareholders and short-term investors benefiting; and savers, bondholders and longer-term investors being placed at risk,” wrote Rieder’
‘Rieder’s analysis notes that S&P 500 companies announced $133 billion in buybacks for April alone—a record—while the investment grade debt-to-equity ratio has jumped from 72 percent in 2010 to 85 percent now. In a separate report Wednesday, Dealogic said corporate bond volume issuance has hit a record $543.4 billion in 2015.’
‘While companies were using the cheap debt to shore up their balance sheets in the early post-financial crisis days, “we have increasingly seen debt used for stock buybacks and dividends … in essence rewarding equity-holders at the (possible) expense of bondholders,” Rieder said.’
“Now, there is nothing wrong with stock buybacks and dividends per se, and indeed they can contribute to a very sensible corporate capital allocation strategy,” he added. “But should this use of capital crowd out long-term capital expenditure (investment) in a firm’s core business, or begin to threaten its credit quality, then it can become concerning. And this is what we are seeing today.”
http://www.cnbc.com/id/102730177
My calculator says off 7.5% since December 29th, 2014:
https://www.google.com/search?q=dow+transportation+index&ie=utf-8&oe=utf-8
2/19/2007 - 328.59
1/29/2015 - 331.42
6/02/2015 - 296.58
http://us.spindices.com/indices/equity/sp-united-states-reit-us-dollar
This guy says Canada’s housing market is good to go.
http://business.financialpost.com/personal-finance/mortgages-real-estate/plenty-of-plankton-and-four-other-reasons-why-canadas-housing-market-wont-crash
^^Good read. Why does Stuart have, “a message for the US” ?
The comment section alone was interesting, lots of USA bashing from our northern neighbors.