July 1, 2015

An Unhealthy And Unsustainable Pace

A report from Realtors.com. “For the fifth consecutive month, the number of houses under contract are up—and it’s the most activity we’ve seen since the height of the housing boom, the National Association of Realtors® reported. NAR’s Pending Home Sales Index for May increased 0.9% over April to 112.6. That’s 10% higher than last year, and the highest level of activity since April 2006, when the index was 113.7. And it’s not just volume that’s up: Sale prices increased, too. ‘That is an enormous increase in activity year over year,’ says Jonathan Smoke, our chief economist, adding that May’s index ‘puts an exclamation point on all home sales data points for the month.’ ‘This spring is the healthiest and best overall spring since the peak of the housing boom,’ adds Smoke.”

From The Hill. “‘The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring,’ said Lawrence Yun, the NAR’s chief economist. Yun said that the lack of inventory is causing home prices to rise at ‘an unhealthy and unsustainable pace.’ ‘Housing affordability remains a pressing issue with home-price growth increasing around four-times the pace of wages,’ Yun said.”

From D Magazine in Texas. “In the first quarter of this year, many North Texas neighborhoods saw double-digit price gains. At the same time, fewer houses were on the market than at any time in the past three decades. For the first time that most real estate agents here can remember, bidding wars have become commonplace. ‘I’m writing cover letters with my offers, telling the stories of my buyers, hoping to appeal to the sellers’ emotions,’ says Wendy Hulkowich, lead agent at the Hulkowich Group, in Plano. ‘I just wrote one that said, ‘Look at this family. They are first-time homebuyers with a newborn, and they want your house.’ We included a picture of them in the hospital with the new baby. We’ve never had to do things like this in Dallas before. This market is unique.’”

The Star Tribune in Minnesota. “For much of the year, Mark Harrington’s ski retreat in Big Sky, Mont., sits empty with no one to appreciate the sweeping views of Lone Peak and the pine-studded mountainside. So Harrington, of Orono, enrolled the property in an upscale travel club, called 3rd Home, that’s like Airbnb on steroids. ‘You’re still paying your bills even if you’re not using it,’ he said. ‘And after a while you get tired of going to the same place.”

“Every time a 3rd Home club member stays at his getaway, he gets ‘keys’ that can be redeemed for a stay at second homes owned by other members. There are now more than 3,600 luxury home options for members to choose. With the appetite for getaway homes becoming ­insatiable, especially among baby boomers, the 3rd Home concept fulfills a unique niche in a rapidly expanding vacation home market. Last year, there were an estimated 1.13 million vacation home sales, nearly 60 percent more than the year before and the highest since the National Association of Realtors (NAR) began conducting the survey in 2003.”

“Though wage growth has been stagnant and nearly 1 in 10 Americans still owes more than their house is worth, Lawrence Yun, NAR’s chief economist, surmises that the steady rise in home prices is giving people the assurance that real estate is a solid long-term investment. ‘Affluent households have greatly benefited from strong growth in the stock market in recent years,’ he said. ‘Furthermore, last year’s impressive increase also reflects long-term growth in the numbers of baby boomers moving closer to retirement and buying second homes to convert into their primary home in a few years.’”

National Real Estate Investor. “Condo developers will launch sales for more than 12,000 new development condominium units in 2015 and 2016—just in the borough of Manhattan in New York City—more than the twice the number of new condos that started selling in 2013 and 2014, according to the Corcoran Group. In San Francisco, there’s a ‘recent construction boom of high-rise, ultra-luxury condo buildings south of Market Street,’ according to Paragon Real Estate Group. Developers in San Francisco opened 2,707 new condominiums in 2014 and 2,955. That’s up from a low 1,271 in 2010.”

“In towns like Washington, D.C., some 2007 condominium developers that converted to rental properties when the condominium units failed to sell are now converting back to condominiums. Condominiums prices have also revived in a few secondary markets, like Austin, Texas, where job growth has been strong and incomes are high. ‘The condo prices that we track have been moving up pretty consistently,’ says Danielle Hale, director of housing statistics for the National Association of Realtors. ‘You are seeing more new construction.’”

The South Florida Business Journal. “R. Donahue Peebles, CEO of the Peebles Corp. said the 50 percent deposit requirement for new condos in Miami is a ‘horrible model’ for buyers because you put your money at risk with a developer. People in Latin America are willing to do it because they have flight capital and that is what they are used to in their home countries, but Latin American buying of new condos in Miami has slowed because of problems in their economies, Peebles said.”

“‘This market is in for a leveling off and it will get quieter,’ Peebles said. ‘The projects under construction will be finished and others will not get built.’”

“Part of the problem is that the local market in Miami can’t afford to buy many of these high-end condos, Peebles said. ‘It is important to have the contracting opportunities be reflective of the demographic of your city so you avoid putting different groups into a permanent underclass,’ Peebles said. ‘The income and wealth disparity that has taken place in this country today is not sustainable.’”

The Signal in California. “The median price of homes sold in the Santa Clarita Valley in May reached its highest level since October 2007. The median price of a single-family home was $530,000 in May, up 6 percent from April and 9.3 percent from May 2014, according to the Southland Regional Association of Realtors news release. The price marks the third consecutive month the median price was higher than $500,000. In addition, 109 condominium units were sold in May at a median price of $315,000, which was the highest reported since December 2007.”

“The total number of homes sold dropped, however. The organization attributes the sales decline in part to the lack of qualified buyers. ‘After seeing too many months of double-digit price increases, it makes sense that we’re into single-digit gains,’ said Bob Khalsa, president of the Santa Clarita Division of the Southland Regional Association of Realtors. ‘When the market is working properly, as it is now, buyers simply refuse to pay or simply cannot pay ever-increasing price.’”

The Southern Illinoisan. “It is still a good time to buy a house in Southern Illinois, according to real estate agents in the region. Ted Popov, Carbondale RE/MAX branch owner, said houses in the region are staying on the market for about five months between owners. The reason for that is because sellers are hoping to get the same amount of money for a home they would have gotten before the market severely dipped in the late 2000s. Sellers aren’t getting those prices, he said.”

“Another factor is sellers are believing their home is worth a certain price because of an appraisal they had done a year or two ago. ‘Appraisals can be misleading; they are dated for a reason,’ Popov said. ‘They have a six-month lifespan.’”

“The amount of homes on the market right now are more than can be reasonably absorbed by the buyer pool, he said. ‘I think we are at the point where the competition is now seller versus seller, than seller versus the bank,’ Popov said.”

“He said sellers are meeting the buyers’ demands in every fashion to keep a deal together. Details that sellers normally wouldn’t worry about if a buyer complained because of multiple interested parties, are keeping them involved in the process in order to sell the home. ‘I have had cooperation from sellers that I have never seen before,’ Popov said.”




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97 Comments »

Comment by Senior Housing Analyst
2015-07-01 04:38:30

Las Vegas, NV Housing Prices Fall 9%

http://www.zillow.com/las-vegas-nv-89138/home-values/

Comment by taxpers
2015-07-01 05:25:01

$164 sq ft in Vegas baby,Vegas ?

Comment by Senior Housing Analyst
2015-07-01 05:29:12

It is the falling transaction price that is important here. $/sq ft will fall as demand plummets and transaction prices continue to crater.

 
 
Comment by Puggs
2015-07-01 08:57:35

Did you turn 65?

 
Comment by Prime_Is_Contained
2015-07-01 12:29:17

And HA continues to pick tiny tiny zip-codes in order to find bogus noisy data-points.

Real data for Vegas:

http://www.zillow.com/las-vegas-nv/home-values/

May 2015: 192K
May 2014: 186K

CR8ER!! (Ha!)

Comment by Mafia Blocks
2015-07-01 12:51:45

It seems to me prices are falling across Vegas.

Why not refute the data? Don’t backpedal.

http://www.movoto.com/las-vegas-nv/market-trends/

Comment by Prime_Is_Contained
2015-07-01 17:35:17

After failing in your first attempt to mislead, you link to a different site that offers Median LIST price (e.g. WISHING price), but no data at all on Median Sales price.

Refute the data that I already posted. You won’t… because you can’t.

Please proceed to attempt to mislead… again.

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Comment by Mafia Blocks
2015-07-01 17:39:26

You’re backpedalling.

 
Comment by Prime_Is_Contained
2015-07-01 18:06:14

Continue with your dissembling (please do look the word up, as I assume you need to).

You might want to look up “backpedalling” as well, since it is clear from your usage that you do not know what it means.

What position did I take, and then retreat from? Um, nope.

 
Comment by Mafia Blocks
2015-07-01 18:15:20

You failed to refute the fact that prices fell in Las Vegas.

 
Comment by Prime_Is_Contained
2015-07-01 19:01:58

Or I could use bald-face statistical lies, like you do here regularly:

Las Vegas housing sale prices SOAR, up 18%!!!

http://www.zillow.com/las-vegas-nv-89128/home-values/

May 2015: 170K
May 2014: 144K

(Hint: too small a sample size)

 
Comment by Mafia Blocks
2015-07-01 19:26:14

You’re off a digit. The zipcode where prices fell 9% is 89138.

Try again.

 
Comment by Prime_Is_Contained
2015-07-02 04:40:32

And you are once again completely missing the point, which is this: attempting to generalize from a few cherry-picked data-points produces bogus conclusions.

So, your choice: either sales prices are up 18% in Vegas (unlikely!), or your method is flawed.

 
Comment by Senior Housing Analyst
2015-07-02 05:12:07

The point is housing prices fell 9% in that area of Las Vegas.

 
Comment by Prime_Is_Contained
2015-07-02 15:44:30

The point is that such a small area has too few sales occuring in any given month to draw ANY conclusion from them.

 
 
 
 
 
Comment by Ben Jones
2015-07-01 05:16:40

From the Texas piece:

‘During the biggest residential housing boom in U.S. history, a period more or less between 2000 and 2006, when places like Los Angeles were seeing triple-digit gains in home prices, Dallas’ home prices rose about 24 percent overall. Two-four. That’s it.’

So why Dallas? IMO, it’s like Denver. It took hold and grew like a fire. It just as well could not have happened, or not grown so large. Also from this article:

‘The last time Tracy and Mike Voegtle were in the Dallas real estate market, things were pretty easy. They bought a house in Lake Highlands in 1999, and after years of steady but small appreciation, sold it in 2006 when they relocated to Atlanta. There, they bought a house near the peak of the nationwide boom. “In 2006, we paid more for our house in Atlanta—in a 300-home neighborhood—than anybody paid for a home in that same neighborhood all year,” Mike Voegtle says. But when Mike’s architecture firm merged with Dallas’ 5G Studio Collaborative last year, Mike and Tracy and their three young boys packed up again for Dallas—and a suddenly different housing market. “We could not find a buyer in Atlanta for the longest time, so we ended up taking a bath on our house there,” Mike says. “But we had to move on. And when we came to Dallas, we found the exact opposite market. Here, the day homes go on the market, they already have multiple offers on them. We don’t even get the chance to look at most of the ones we’re interested in.”

An echo…

‘In 2006, we paid more for our house in Atlanta than anybody paid for a home in that same neighborhood all year’

You’ll do well in Dallas I’m sure.

Comment by Mafia Blocks
2015-07-01 05:24:37

“we ended up taking a bath on our house there,”

Home owners are getting squeaky clean these days.

 
Comment by Dman
2015-07-01 06:57:25

Even though they got burned in Atlanta buying into a quickly rising market, they want to do the exact same thing in Dallas. It’s hard to feel sorry for these people.

Comment by redmondjp
2015-07-01 09:09:27

Timing is everything . . .

Comment by Mafia Blocks
2015-07-01 09:12:27

Fixt for you.

Timing Price is everything . . .

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Comment by Califoh20
2015-07-01 15:37:52

amen!!

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Comment by VegasBob
2015-07-01 15:26:41

Joseph Goebbels’ ashes must be doing a little jig somewhere in the Danube River.

Just think, only 5 or 6 years after the biggest housing bust in world history, the sheeple are at it again with Housing Bubble 2.0.

Real estate is a great investment? That’s a lie.

Buy now or be priced out forever? Another lie.

Real estate values go up forever? Another lie.

It just amazes me how gullible the average human being is.

And when it all crashes and burns again, the refrain will be the same as last time: “Nobody could have seen it coming.”

 
 
Comment by Senior Housing Analyst
2015-07-01 05:21:40

“it’s the most activity we’ve seen since the height of the housing boom, the National Association of Realtors® reported.”

Which is still not much activity.

Housing Demand Plunges To 20 Year Low

http://2.bp.blogspot.com/-fqSztKilps8/VFlPKlr52JI/AAAAAAAAhKU/v5oS41S-y0s/s1600/MBANov52014.PNG

Comment by redmondjp
2015-07-01 22:36:21

There are tens of thousands of 6-figure tech jobs within a few miles of my house. Housing demand here has never been higher, and we have the low inventory and record-high prices to prove it.

Boots-on-ground data, my friend.

Comment by Senior Housing Analyst
2015-07-02 05:13:52

Data my friend.

Kirkland, WA Housing Prices Fall 19%

http://www.movoto.com/kirkland-wa/market-trends/

 
 
 
Comment by VinceInWaukesha
2015-07-01 05:29:36

I live a couple hundred miles north of:

“The reason for that is because sellers are hoping to get the same amount of money for a home they would have gotten before the market severely dipped in the late 2000s.”

A friend of my daughter’s moved away a couple years ago and they’re letting their old house foreclose. I read the docs online (they’re published here) and they paid $200K at the bubble peak and zillow very optimistically thinks they can get $150K for a maintained house of that size and location in perfect shape (LOL as if an abandoned house is in perfect shape) and they owe the bank about $190K. You don’t pay much principle in the first 5 years (then they took off, just getting around to foreclosure five years later after payments stopped), and you’d be a fool to put anything down during a bubble so that’s why their balance is only $10K lower in 2015 than a decade ago.

The total lifetime systemic cost of a foreclosure and bankruptcy can’t be even $15K (that’s like six months median household income! Surely its less!) and they would have to bring more than $30K to the table to avoid that $15K of costs, so courthouse steps later this month…

I can click thru the online data and there’s still foreclosures happening because of the last pop, aside from my daughter’s friend anecdote.

Comment by Dman
2015-07-01 07:01:57

“You don’t pay much principle in the first 5 years..”

Nope, but people think they’re “investing” their money from that first mortgage payment, whereas renting is throwing your money away. Wait until the IRS and bill collectors start going after your daughter’s friend.

Comment by In Colorado
2015-07-01 08:59:48

With interest rates in the 4% range, even from day 1, 30% of P&I on a 30 year loan is principle. At 6% the number drops to 16%, at 8% interest it drops to 9%. If interest rates were to drop to 2%, half the monthly nut on day 1 is principle.

What is also true is that the average borrower has no inkling of this.

Comment by Rental Watch
2015-07-01 09:05:51

“What is also true is that the average borrower has no inkling of this.”

Bingo.

My mom was a bookkeeper when I was a kid (allowed her to stay at home), so I was always around numbers. I remember looking at and studying an amortization schedule when I was a kid (less than 10).

I bet less than 25% of borrowers have looked at an amortization schedule. They just care about how much they need to write the check for each month.

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Comment by Rental Watch
2015-07-01 09:19:57

BTW, the effect you note is why when rates rise, it will have a slower impact on payments than the rate increase would imply.

A doubling of rates from 3.5% to 7% doesn’t double the payment, it increases the payment by about 50%. The cost of the capital certainly does double, and the rate of paydown gets cut in half (approximately)

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Comment by Mafia Blocks
2015-07-01 09:55:15

One of our more prolific writers recently wrote,

“If you have to borrow for 15 or 30 years, it’s not affordable nor can you afford it.”

He’s right.

 
 
Comment by taxpayers
2015-07-01 10:45:04

Kewl- this interest thing is muy importante’

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Comment by oxide
2015-07-01 11:23:52

It’s not the interest rate.

If they bought at peak, they probably had a 0 down interest-only loan. So they would have paid NO principle for ~ 3 years. Then the loan would have reset; they maybe paid two years or so of sky-high payments including that $10K, decided they couldn’t afford it, and gave up.

If they bought at $200K with a 4% fixed mortgage, they would have paid $20K in principle after 5 years.

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Comment by BearCat
2015-07-01 12:12:17

All this is true IF you are refinancing.
But, given that most buyers are “how much a month”, you need to consider the correlation between interest rates and house prices.

I would say that:
1. Lower interest rates lead to higher house prices (and vice versa)
2. Lower down payment requirements lead to higher house prices
3. Higher wages lead to higher house prices

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Comment by Rental Watch
2015-07-01 09:00:49

The whole “you don’t pay much principal in the first 5 years.” is a common statement, but meant more in times of higher interest rates.

Mathematically, the lower the interest rate, the more principal you pay in the first 5 years.

At 3.75%, you pay down approximately 10% of the principal balance after 5 years.

When rates were 7%, you would only pay down approximately 6% after 5 years.

When rates were 9%, you would only pay down approximately 4% after 5 years.

Comment by Mafia Blocks
2015-07-01 09:02:17

When you’re paying a 250% premium for a depreciating asset like a house, it doesn’t matter.

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Comment by VinceInWaukesha
2015-07-01 09:37:42

Circularizing the whole argument WRT it doesn’t matter, I guess if they only paid for about five years and they paid down maybe 10% and then the bank added on 5% worth of late payment fees, prop taxes, who knows what other fees, that does kinda imply their mortgage was about 4%. Of course I have no idea what the terms were, 15, 30, option pay, who knows. Online docs just list names, initial balance, current balance, that’s about it.

I’ll never know, they moved hundreds of miles away because of a job transfer. That in itself is interesting, as a social effect. So “good paying jobs” are so rare that if your boss transfers you to a new office, its cheaper to lose the house and go bankrupt than to just stay put and get a new local job. Or the remaining pool of “good paying jobs” is so much smaller that the balance tips the direction of mailing in the keys. Yet the theory is they’ll supposedly sell the house to a sucker with a good paying job for more than they paid or at least more than the loan balance. But if the sucker existed, he’d just take the suckers job or work alongside and not have to move, basically. Interesting display of “logic”.

I’ll keep an eye on the house after the foreclosure. Should be interesting to see someone try to flip it. I can’t imagine why anyone would buy an abandoned house other than flipping. If an abandoned house won’t sell at 190 and market is maybe 160, after a flipper puts in $5K worth of granite, stainless, and paint and try to sell at $400K or whatever flipper insanity, I wonder how long till the flipper’s loan forecloses?

 
Comment by Dman
2015-07-01 10:25:13

Don’t forget that 6% that gets skimmed off of every transaction. How many months or years does someone have to pay on a mortgage for that amount to be paid toward the principal?

 
Comment by In Colorado
2015-07-01 13:26:19

Don’t forget that 6% that gets skimmed off of every transaction.

And that that’s just the re-la-tors (yeah, I know they hate being called that) cut. There’s also

Title insurance
Escrow/title fees
And a ton of junk fees

 
Comment by VegasBob
2015-07-01 15:34:30

In a lot of states there’s a transfer tax. I think it’s 4% in Pennsylvania.

I’ll get socked with a 1.78% transfer tax on a property I just sold in Clark County, Washington.

So it’s not unusual to see 10% of the selling price get skimmed off the top.

And in other places, like Texas and Pennsylvania, annual property taxes are worse than the horrific income tax rates people pay in places like California or Hawaii.

 
 
 
 
 
Comment by oxide
2015-07-01 05:33:43

Southern Illinois? The closest city center is St. Louis, over a hundred miles away. Where is everyone working? My guess is most of the income is gov cheesechecks.

Checked Zillow. Lots of decent livable Oil City houses for, for example, a prof and secretary at Southern Illinois U.

Comment by Dman
2015-07-01 07:03:55

From my driving experience, I would guess that almost everything in southern Illinois is agriculture related.

Comment by oxide
2015-07-01 07:49:12

And this is different from government cheesechecks how? :razz:

Comment by redmondjp
2015-07-01 09:26:25

“Lookie here, Martha, it’s our annual check from the agricultural department paying us not to grow anything! Get yer dress on, we’re going to Applebees tonight!”

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Comment by snake charmer
2015-07-01 08:01:05

I have a college friend who now lives in Springfield. I once asked him where “southern Illinois” began, and he said it depended on whom you asked. While I-70 looks like a natural dividing line if you divided the state into thirds, people in Chicago might refer to “southern Illinois” as anything south of I-80. I remember the term “downstate” being used a lot.

I’ve hiked in the Shawnee National Forest, and some of the small towns around there had main streets that were nearly abandoned. Other than the Wal-Mart and strip of fast-food joints, there was very little human activity at all. Those people I did see looked sullen and beaten. I looked at a map of the U.S., and we were closer to Mississippi than we were to Chicago.

Comment by Arizona Slim
2015-07-01 13:08:42

I bicycled through that area more than 30 years ago. The description that snake charmer shared fits with what I saw.

 
Comment by rms
2015-07-02 00:45:46

+1 The heartland experienced their zenith in the sixties.

 
 
Comment by In Colorado
2015-07-01 09:56:17

My guess is most of the income is gov cheesechecks.

Which are written by Mayor McCheese (per Jim Gaffigan)

 
 
Comment by Senior Housing Analyst
2015-07-01 05:34:59

Frisco, TX Housing Prices Fall 13%

http://www.movoto.com/frisco-tx/market-trends/

 
Comment by oxide
2015-07-01 05:45:42

Speaking of Southern Illinois, here is the kind of house that Ethan in NoVA wants:

http://www.zillow.com/homedetails/2027-Jackson-St-Murphysboro-IL-62966/105612217_zpid/

Small house, walk-out basement. Needs work, and it doesn’t have a garage/shop, but at this price it’s not hard to fix stuff up.

Comment by Ben Jones
2015-07-01 05:51:30

The wires hanging from the downstairs ceiling is a confidence builder. And the red bathroom is a nice touch.

Comment by oxide
2015-07-01 07:02:12

Oh, but the Tuscany mural! And lack of dishwasher. And the major road practically in the back yard. Point is, it’s livable, which is about you can expect for $35K.

[thank you for looking at the link. It's nice to post an actual house on a housing blog instead of wall-to-wall walls of words about international banking... ]

Comment by Ben Jones
2015-07-01 07:54:12

Why is it that some houses cost a fraction of others? Credit. If someone expected they could make a sweet 100k on this house in a short time and a lender would finance it, boom!

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Comment by Rental Watch
2015-07-01 09:17:07

Perception also matters.

During the worst of the foreclosures, there were plenty of people who, if they thought they could make an easy $100k, they would buy the home for cash at the auction.

Credit drove down that margin…until cash buyers stepped away.

 
Comment by Mafia Blocks
2015-07-01 09:48:37

The “worst of the foreclosures” is yet to come with 25 million excess empty and defaulted houses out there.

 
Comment by VinceInWaukesha
2015-07-01 10:05:14

With all due respect wikipedia claims median FAMILY income of $25,551. Its going to be hard for a family with perhaps $20K coming in to pay $100K for a flip house. At $20K paying for utilities and maintenance becomes a question, for example.

Its telling that wikipedia doesn’t have an “economy” section, because the area doesn’t appear to have one. How the median household clears $10/hr is unclear. I looked around in google maps and they appear to have no commercial other than minimum wage retail, and no industrial light or otherwise. Residential, McJobs, thats it.

That mural… I redecorated my daughters bedroom a couple years ago and I know what something like that costs… thats like 5% the total worth of the entire building… Something nice the size of a window is a couple hundred bucks, this is likely a lot more. Or maybe up close its not very nice, hard to say.

 
Comment by Dman
2015-07-01 10:43:25

There are plenty of houses in rural America that are older, but aren’t in bad shape, and can be had for the price of an SUV. But there’s nothing to do except shop and work at Wal Mart. Unless you were born into that, it’s hard to get used to. There’s a reason these areas are cheap to buy in.

 
 
 
 
Comment by Ethan in Northern VA
2015-07-01 11:30:18

LOL. Tear it down and put a steel building up in it’s place!

The townhouse I rent isn’t too bad. It’s of mediocre quality. But $470K? No thanks. If they were still like $300K or $330K or something I’d be cool with one. Live there for a bit then rent it out. The neighborhood had been devoid of any for sale or for rent units, but now all of a sudden 3 are available.

Job stability is a thing though. Never know where the next job is! My job seems stable but you just never know. Originally the place I worked was near but when I got laid off and moved to the new company I now have a commute, so moving to another similar place wouldn’t be horrible.

I hate the traffic trying to get out of the area going to Richmond/Norfolk/Baltimore.

Comment by Mafia Blocks
2015-07-01 11:33:40

“Tear it down and put a steel building up in it’s place!”

Wood frame is less than steel.

 
 
 
Comment by Senior Housing Analyst
2015-07-01 05:49:10

Adams Morgan, Washington DC Housing Prices Fall 14%

http://www.zillow.com/adams-morgan-washington-dc/home-values/

 
Comment by Ben Jones
2015-07-01 06:29:20

‘A decade ago, when the housing boom pushed home prices up 15% a year in some markets, “teardowns” were a controversial phenomenon. The practice involved buying up small, modest homes in older, close-in neighborhoods, tearing them down and building larger, more expensive homes – often derisively referred to as “McMansions.”

‘In Chicago, a mini home-building boom is underway with construction permits issued for more than 2,000 single family homes in the first 4 months of this year, with teardowns accounting for a hefty number of them. North side neighborhoods are seeing significant teardown activity, according to Deno Jeffries of RE/MAX Exclusive Properties.’

“Because there isn’t any vacant land in this area, if new homes are built, something old must go,” Jeffries said. “Often it will be an older frame home or a two-unit building. Those properties sell for anywhere from $600,000 to $1 million or more depending on location and lot size.”

‘What’s built in their place sells for a lot more.’

‘But it has always been developers and speculators who were active in the teardown market in the Washington, D.C., metro, which remained one of the nation’s strongest housing markets, even throughout the housing downturn. The Washington Post reported in 2013 that a new wave of teardowns had begun in close-in suburbs, at a pace not seen since the housing bubble.’

‘Some of the ripest properties for demolition, the Post noted, are owned by elderly, longtime residents, who are having to field offers from brokers and builders looking for prime locations for luxury homes that will fetch more than $1 million.’

‘For an older homeowner who might have purchased the property for $40,000 decades ago, the offer might represent a windfall to fund their final years.’

http://www.consumeraffairs.com/news/teardowns-a-trend-from-the-housing-boom-are-back-070115.html

Comment by Dman
2015-07-01 07:09:59

There are plenty of teardowns in an upscale town by me. Nice period homes from the twenties punctuated by gigantic McMansions that look like a pimps nightmare in comparison. These last few decades won’t be known for their architectural standards by any means.

Comment by oxide
2015-07-01 07:53:31

It’s one thing to tear down mass-built blue-collar Cold War cape and ranch boxes in Pimmit Hills, VA. But 1920’s period houses are well-built Craftsman or Tudor revival. Tearing them down is a travesty. You don’t build THOSE for $50/sq ft.

And pimp dream houses are bad to begin with. What does a pimp nightmare look like? :shock:

Comment by Mafia Blocks
2015-07-01 08:07:17

Donk,

1920’s fire traps are what they are.

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Comment by snake charmer
2015-07-01 08:04:20

Amen to that. After a while, every house is valued closer to the price of the McMansion that is expected to replace it.

 
 
Comment by Anonymous
2015-07-01 12:09:53

Wow…people with money want to move to Chicago? I don’t want to sound like a hater, I enjoyed my visit there last summer, but looking at the city/state financial situation, I’d pass on living there.

Comment by Ethan in Northern VA
2015-07-01 14:24:37

Chicago introduced a new cloud computing/services tax today. It could be interesting. Netflix and similar streaming services just got a Chicago tax. Same with Amazon Web Services.

 
 
 
Comment by Ben Jones
2015-07-01 07:21:47

‘The average sales price of a Manhattan apartment has eclipsed $1.8 million — a new high.’

‘Douglas Elliman Chief Executive Dottie Herman tells The New York Times that New York real estate experts “don’t even blink” at the numbers. But she concedes that “anyplace else, they’re outrageous.”

http://finance.yahoo.com/news/reports-average-manhattan-home-price-121544069.html#

Comment by Ben Jones
2015-07-01 07:32:44

I got this in an email yesterday:

http://metrocosm.com/new-york-city-property-values-in-perspective/

The email said:

‘It covers the whole U.S., but the focus is on New York City. The Upper East Side (less than a square mile) now has more property value than several entire states. If that is not indicative of a bubble, I don’t know what is.’

Comment by Rental Watch
2015-07-01 09:10:43

Wow.

That’s reminiscent of the Japanese property bubble, when the land under the imperial palace in Tokyo was worth more than the entire state of California.

 
Comment by snake charmer
2015-07-01 12:22:12

I recall reading during the Japanese bubble that a typical good-sized Tokyo office building in the late 1980s was worth a stupendous sum, something like $1 billion. This was right before Pebble Beach was sold.

 
 
 
Comment by rj chicago
2015-07-01 07:40:02

Ben:
Help me understand why it is that L. Yun still has a job.
What a shill.

And the rental vaca home thing similar to AirBNB - um….me thinks that leasing to even high enders has a risk that personally I am not willing to make if I were in that position.

As Dave Ramsey screams all the time - THINK!!!

Comment by Ben Jones
2015-07-01 07:46:48

Yun is sounding warnings, while the other chief economist (how can they have two?) is shaking the pom-poms.

This vacation house thing has flown right under the radar. The highest ever recorded.

 
 
Comment by Senior Housing Analyst
2015-07-01 09:22:11

Minor(Seattle, WA) Housing Prices Fall 20%

http://www.zillow.com/minor-seattle-wa/home-values/

Comment by Prime_Is_Contained
2015-07-01 13:03:41

And of course you choose such a small geographic area that a sale only occurs there every few months. Choose the 5-year Median Sale Price graph for that area. Notice that most months aren’t even shown on the graph, because there are no sales that occurred.

You know what conclusions you can draw from a “n of one” data-set? That’s right—none. It is an anecdote, not data.

You love noise.

Let’s look at a larger area for signal rather than noise:

http://www.zillow.com/seattle-wa/home-values/

May 2015: 468K
May 2014: 444K

CR8ER!!!

Comment by Mafia Blocks
2015-07-01 13:34:18

Refute the data. Don’t backpedal.

Comment by Prime_Is_Contained
2015-07-01 17:39:17

I provided better data from the same data-source that you chose to reference. And it says exactly the opposite of the tall tale that you were spinning.

Please, continue with your attempts to mislead; I will refute it again.

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Comment by Mafia Blocks
2015-07-01 18:04:52

You failed to refute the fact that prices in Minor Seattle fell 20%.

 
Comment by Prime_Is_Contained
2015-07-01 18:56:18

You either do not understand statistics sufficiently well to understand that your chosen sample is far too small to be statistically insignificant—or you are intentionally attempting to lie with statistics.

 
Comment by Mafia Blocks
2015-07-01 19:27:24

Prices in Minor Seattle fell 20%. Deal with it.

 
Comment by redmondjp
2015-07-01 22:40:29

Wow, HA, that’s really mature - when confronted with the facts (that you use data to lie), all you can come back with is “Deal with it”?

Dude, get a life.

Oh, and stop posting under multiple names - that is something a 14-year-old does.

 
Comment by Senior Housing Analyst
2015-07-02 05:15:12

Prices fell in Kirkland, WA too. Down 19%.

http://www.movoto.com/kirkland-wa/market-trends/

 
 
 
 
 
Comment by taxpayers
2015-07-01 10:48:09

July 5th= peak day
called it !

It was in 2005 in my hood 22151 and it will be again
there’s news everyday about celebs selling their castles
(after reading Ben’s BB)

 
Comment by Senior Housing Analyst
2015-07-01 11:53:25

Evergreen(San Jose), CA Housing Prices Fall 11%

http://www.zillow.com/evergreen-san-jose-ca/home-values/

 
Comment by Ben Jones
2015-07-01 12:02:02

I see oil is down over 4%. Do you like spicy crow Dan? Something like Kung Pao? Might make it easier if you changed it up some days.

3 tablespoons minced garlic

2 tablespoon minced ginger

2 tablespoons sambal oelek

1 cup naturally brewed dark soy sauce

3 tablespoons sugar

1/2 cup naturally brewed rice vinegar

1 tablespoon cornstarch with 1 tablespoon water for a slurry

Grapeseed or canola oil for cooking

Kosher salt and freshly ground black pepper

In a wok or saute pan coated lightly with oil over high heat, add garlic and ginger and saute for 1 minute, just to soften. Add sambal, taking care not to inhale the chile, and saute until well-blended. Add soy sauce to deglaze, then add sugar and rice vinegar. Bring to a boil and slowly whisk in slurry to thicken. Check for flavor and season if necessary. Keep warm to use in recipes or cool to room temperature, store in an air-tight jar and place in the fridge.

https://www.ming.com/food-and-wine/recipes/simply-ming-season-4/kung-pao-sauce.htm

Comment by Mafia Blocks
2015-07-01 12:12:39

Eat up Mr. Dan A. Crowman…. eat up.

Here’s something to wash it down with. It’s on me.

https://goo.gl/yRCqOC

 
 
Comment by TruDat
2015-07-01 13:02:47

Atlanta market continues to move along nicely, we looked at buying a bigger home but realized what a bad move that would be. So, when will housing take another dump, and what’s the best way to pick up a rental property?? TIA

Comment by Senior Housing Analyst
2015-07-01 13:12:33

I wouldn’t do anything except for sell right now. The China deflation is just getting legs under it.

 
Comment by Ben Jones
2015-07-01 13:53:49

No reserve auctions.

 
 
Comment by Arizona Slim
2015-07-01 13:13:03

Realtors are still liars.

Comment by RioRanchoRicardo
2015-07-01 15:26:21

Ahem.

“The term REALTOR® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no instruction from clients ever can justify departure from this ideal.”

http://www.realtor.org/governance/governing-documents/the-code-of-ethics

Comment by Mafia Blocks
2015-07-01 16:38:22

That’s what they want everyone to think I guess.

Meanwhile….

“Bucks County Realtor Charged With $643K Fraud”

http://www.phillymag.com/news/2015/04/02/bucks-county-realtor-charged-with-643k-fraud/

 
Comment by Bluto
2015-07-01 18:50:45

riiight…but despite all that the general public perception of realtors is somehow on the level of used car salespersons, lawyers, politicians, etc.

Comment by redmondjp
2015-07-01 22:42:22

To me, they are far worse than lawyers, a vast majority of which have college degrees as well as a law school degree.

What degree does a realtor have to have?

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Comment by Mafia Blocks
 
Comment by Califoh20
2015-07-01 15:35:50

Silly Realtards.

 
Comment by Ben Jones
2015-07-06 08:19:17

‘Three years ago he bought a big house…The average home price in Toronto was over four times his and his wife’s combined annual income. So his financial situation has been tight. Then his wife was laid off a year ago. After six months she found another job, but with a big pay cut. Their household income had dropped quite a bit, and after paying all their monthly bills—mortgage, insurance, property taxes, car loans, and other living expenses—they ended up with a shortage of several hundred dollars every month.’

And this was a purchase 3 years ago.

 
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