More Viewing Real Estate As A Golden Ticket
A report from CNBC. “Last decade’s housing bubble is becoming a distant memory. Mortgage rates are near historic lows, interest-only loans are back and everyone loves real estate as an investment again. More than 1 in 4 Americans (27 percent) said real estate was the best investment for money they would not need for at least a decade, according to a new Bankrate.com survey of 1,000 investors. It is the first time real estate has taken the top spot in the three years Bankrate has been conducting the survey. Cash was investors’ favorite in 2013 and 2014. ‘It begs the questions if more Americans are once again viewing real estate as a golden ticket,’ said Greg McBride, chief financial analyst for Bankrate.”
“Financial advisors say many clients are catching the real estate bug again. ‘Just last week, a high-tech corporate boomer client with no experience in renovating and selling real estate told us he wanted to go into flipping a property with his friend, who does this for a living,’ said Jon Ulin, certified financial planner in Boca Raton, Florida. His client wanted to liquidate 25 percent of his IRA to invest in the project and told Ulin it would ‘diversify’ his portfolio.”
“But investors with good credit can borrow to buy real estate, which can enhance returns — or magnify losses, depending on the market. ‘The singular and best reason to own real estate as an investment is to use leverage,’ said Stephen Lovell, a certified financial planner in Walnut Creek, California. ‘Without it, your return on investment tends to be about 2 percent to 3 percent.’”
From Realty Check. “The Mortgage Bankers Association is predicting purchase loan volume to rise to $801 billion in 2015, an upward revision from the $730 billion forecast last month and the $638 billion originated in 2014. The bankers association is also pointing to a slightly looser grip on underwriting. Some lenders are starting to bring new products, like interest-only loans back to the market. Freddie Mac recently loosened restrictions in several areas of its mortgage underwriting, including how it factors student loan debt into the debt-to-income calculation.”
“‘That’s a big deal, given that the reason often cited for millennials not buying in bigger numbers is student loan debt, so if less of those payments have to be counted against them, then more millennials will qualify to purchase a home,’ said Craig Strent, CEO of Maryland-based Apex Home Loans.”
WMUR in New Hampshire. “WMUR employee Rick Michlik and his wife are first-time homebuyers who put bids on four houses this spring. ‘By the time we got to that fourth one, the amount of competition (was intense),’ Michlik said. ‘The house was listed and within the first two days, we’re talking at that point six to seven to eight offers.’ Irene Vincent of Hearthside Realty has 28 years of real estate experience and she said the market has been moving quickly. ‘We’re looking at about 17 or 18 listings, and 15 of those went under agreement definitely within a seven-day period of time,’ she said. ‘Fifty percent of our inventory went under agreement within 48 hours.’”
KVUE in Texas. “The Austin Board of Realtors (ABoR) released June home sale numbers, showing the median-priced house is $272,250; an increase of 8 percent compared to June 2014. The average price for a single-family home is $333,866. ‘It’s definitely higher than average; higher than you would typically want to see in a normal market,’ said Aaron Farmer, president-elect for ABoR.”
“‘The competition among buyers is very tough,’ said Priyank Gupta, who purchased a home in Austin’s Circle C area in June. Gupta said he started looking in March. He and his wife bid on eight houses, but couldn’t get one. ‘We actually overbid on some houses which was still not good enough for the sellers,’ Gupta said. ‘There were times when the house would come on the market and be off the market within 24 hours.’”
The Sun Sentinel in Florida. “Michael Citron, an agent selling in Broward and Palm Beach counties, said most of his clients want homes priced from $200,000 to $400,000. Buyers are waiting with phones in hand for email updates on the newest listings, and bidding wars are common for many properties, Citron said. ‘They’re breaking down the doors to get into these homes,’ he said. ‘Homes in good-school-district areas are flying like the wind.’”
“Ken Johnson, a real estate economist at Florida Atlantic University, isn’t worried about the market collapsing as it did nearly a decade ago. But he cautioned prospective buyers not to get caught up in the recent hype, saying they should be willing to walk away from a property if it’s not a good deal. ‘I absolutely think you should observe these (June) numbers with extreme caution,’ he said. ‘People think, ‘I better buy today before prices get too high.’ That’s not a reason to be buying.’”
The Press Democrat in California. “Does Sonoma County really have the tightest housing market in the United States, based on how quickly buyers are snapping up homes? That’s what the Wall Street Journal reported on Monday, using data supplied by Realtor.com. But local real estate agents said the results, apparently based upon the company’s online listings, differ markedly from data supplied by the region’s multiple listing service.”
“Some contend the current market isn’t as heated as in 2013, when the median price jumped 23 percent in one year. The June median price was 11 percent higher than a year earlier. Realtor.com was unabl to provide a response to inquiries about its methodology. But its website suggested the data for the Santa Rosa metro area was based on 497 listings, out of a total of 1.8 million listings across its database. In comparison, said Rick Laws, vice president in Santa Rosa for Pacific Union International, the region’s multiple listing service reported a much larger sample, a total of 1,436 properties that were listed for sale in Sonoma County in June.”
“He acknowledged there isn’t an easy way to answer such questions but still found the Realtor.com results ‘hard to believe.’”
The Bozeman Daily Chronicle in Montana. “A glossy sign, erected at the side of a Mendenhall Street parking lot in downtown Bozeman, announces progress. Breaking ground in August, it proclaims, is the next in a steady drumbeat of major construction projects coming to the city’s core: the ‘5 West’ development, a five-story, mixed-use building slated to provide retail, office and residential space on the site of what is now Opportunity Bank.”
“But the 5 West sign, complete with its architectural rendering and ‘Live | Work | Play’ slogan, has been marred by an anonymous dissenter. Added to its contents — if it hasn’t yet been cleaned up — is an asterisk, and a message scrawled in black marker: ‘Trust fund not included.’”
“The 5 West project is set to include condos tentatively priced from about $285,000 to $750,000, on par at the lower end with much of the Bozeman real estate market. For comparison, figures from the Gallatin Association of Realtors put the city’s median single-family home price at $369,000 and rising. One of the downtown area’s key planning documents, its 2009 Downtown Bozeman Improvement Plan points to three ‘key urban residential markets’ for Bozeman’s core — singles and young couples in their 20s and 30s, ‘downsizing’ baby boomers and, of perhaps most note to trust fund alarmists, buyers seeking second or vacation homes.”
“Referencing a University of Montana study, it notes that the latter group tends to be ‘relatively wealthy,’ with average annual incomes around $100,000. In contrast, according to the Bureau of Labor Statistics for the last three months of 2014, the average Gallatin County worker makes $760 a week, equivalent to $39,520 a year. Additionally, wages in some major Bozeman sectors are considerably lower than the overall average. The retail trade industry, which employed 17 percent of Gallatin County workers in October, averaged an annual wage of $29,600. Accommodation and food service workers, 15 percent of the workforce, were paid even less — $17,472 on average.”
“Entering the $39,520 income figure into a realtor.com home affordability calculator (and assuming a 20-year mortgage, 4.2 percent interest rate and $30,000 down payment) provides a $144,900 purchasing power estimate for the county-average individual wage earner — more than $100,000 less than the minimum price for a 5 West unit. And, for a single-income household able to put away 10 percent of its income, saving up to that $30,000 down payment would take seven-and-a-half years.”
Yeah, that’s the ticket.
‘Michael Citron, an agent selling in Broward and Palm Beach counties, said most of his clients want homes priced from $200,000 to $400,000. Buyers are waiting with phones in hand for email updates on the newest listings, and bidding wars are common for many properties, Citron said. ‘They’re breaking down the doors to get into these homes,’ he said.’
I’m out of breath Michael. Please text me a listing.
So what is it going to take for rental watch and jingle mail to admit it’s a bubble? Buyers eating glass for sellers? One million for the privilege of a walk through?
I asked a while back, were these speculators going to glide the price right back to it’s perfect equilibrium? Or were they going to run it to the moon and over-do it? And that’s buying the BS that the correction was “over-done”. Prices were never allowed to find their natural level and this market has been massively manipulated since at least 2010.
Heck of a job Bernanke, Yellen, Watts.
ok, we have floating condos
can I get zero down on one?
The building projects went crazy in Palm Beach County, starting in April. Then, the beginning of July, the new project permitting went dead. Just stopped. And the foreclosure auctions are way down, too, even though they are still working off quite a few from 2008.
I guessed that they are anticipating an end to foreign money. The county is a favorite place for Canadians as well as the Chinese.
The SWAY rental houses next door are not being maintained so well and it is problematic because the lawn has gone to weeds and is creeping over into my yard. But I am very happy in my cheap rental.
It’s hard to feel sorry for the people who fall for the realtor hype in these articles. If you buy when the bubble is expanding, you lose even more when it pops.
Actually, what’s it going to take for our political and economic leaders to admit there’s an echo housing bubble? They won’t, because they did everything they could to create it.
Of the 20+ people currently seeking the Presidency under the banner of one of the two major parties, with the possible exceptions of Sanders and Paul, I don’t think a single one would say that the bubble has returned. And the ultimate real estate charlatan, Trump, is leading all GOP candidates in the polls.
You keep calling the current environment a “bubble”. And the articles you provide support that. HOWEVER, notably absent from the articles are bidding wars in places like Stockton, Riverside County, etc. Also notably absent are articles about liar loans, substantial new home construction, people buying 10 homes with nothing down, etc.
I’m saying (and have said) that current prices nationally are consistent with the peak of a more traditional cycle–we aren’t close to the prior bubble prices. However, that high national average consists of some markets that have prices that are REALLY out of whack (SF, NYC, Austin, etc.), and many other markets that are far less crazy (and some still that are a long way from crazy prices).
The markets that are a long way from crazy tend to be markets where a lot of population growth has been occurring over the prior 10+ years.
As such, you think that the next crash is around the corner.
I think that supply of both housing (as measured by vacancy rates), and credit (in consideration of underwriting standards–not interest rates) is sufficiently tight to avoid a near-term crash in prices. HOWEVER, as prices that are too high bleeds into secondary and tertiary markets, new home development will ramp back up, economic activity will increase, complacency will spread, and that will set us up for the next correction.
You think it’s the same bubble. I don’t.
You think prices never found their natural trough. I do. (look at Shiller’s long-term data–it may not persuade you, but it did persuade me).
However, despite those differences, we both think that prices nationally at the current level are too high, and that they will inevitably come down. You think it’s going to happen sooner, and in a more extreme manner. I think it will happen later, and less significantly.
Rental Watch what is your take on the parabolic very high end markets? Why are they so “strong” this cycle?
There seems to be a degree of decoupling between the very high end and the rest of the market. Both are trending up but the very high end is super-strong.
very high end markets? Why are they so “strong” this cycle ??
They are strong in every up cycle…Its just a new high bar this time…Why ??
#1. Location
#2. Mountains of cash looking for store house of value
#3. Foreign Investors
#4. Interest Rates
#5. Jobs
The only explanations I can think of are: no where else to put the money (stock market high, interest rates low), scarcity of the “best of the best” properties, fear of inflation, belief that “hard” assets are better than cash (that Central Banks are hell-bent on devaluing), foreign money wishing to be invested in assets that are denominated in dollars (we are still the “cleanest dirty shirt”).
Some of this also applies to art and classic cars.
It doesn’t hurt that in places like Silicon Valley, tech money continues to flow.
I don’t get it, since I don’t think short-term…I’d rather have my money in cash earning $0 or owning stock in a high quality company, than owning something that costs money, and it at all-time or near all-time high prices. Unless of course, I have more money that I’ll ever need, and simply want to live in a really nice home in a really nice location.
Yet you’re justifying nosebleed prices in areas like Reno, NV based upon nonsensical fantasies instead of fundamentals. Ladies and gentlemen, the above poster is the mania part of the bubble.
The phrase to focus on is:
“HOWEVER, as prices that are too high bleeds into secondary and tertiary markets, new home development will ramp back up, economic activity will increase, complacency will spread, and that will set us up for the next correction.”
The median sale price in Reno is $266k (per Zillow). Peak median sale price was $338k (which inflation adjusted would be $398k today). On an inflation adjusted basis, Reno is still 33% below peak bubble prices.
The best I can tell currently is that the perception of lots of jobs coming is causing people to jump into the Reno market. The market was not prepared for the increase in demand (I’ve heard anecdotes of builders selling out much earlier than anticipated), which has caused prices to rise rapidly.
It has also however, caused developers to take notice and work on preparing more land for housing (I’ve likewise heard of a number of developers acting to add housing supply).
It is a fact that Tesla is building a MASSIVE factory just outside of Reno.
It is a fact that lots of economic prognosticators are predicting huge job growth in Reno (Tesla, but also others are coming to town).
If they are right in terms of job growth, lots of housing will need to be built or else the housing market will be tight for years in Reno.
HOWEVER, if the jobs don’t come to pass as expected, there is a good chance that the ramp up in building that is just starting now will negatively impact the housing market within the next few years.
http://www.zillow.com/reno-nv/home-values/
The link to the data I note.
There are more than 20,000 vacant houses in the Reno/Sparks area since AB284 came into effect. Math was never your strong suit, but Kool-Aid is.
Nevada’s ticket to squat. Two wrongs don’t make a right.
Down in Vegas, it’s all good:
Las Vegas Real Estate Market Update (July 2015)
How old is your data Guillotine?
AB284 was later softened, and foreclosure numbers have come back up.
‘Home-buying has recently surged as more buyers have flooded into the real estate market. ‘The recent pace can’t be sustained, but it points clearly to upside potential,’ said Ian Shepherdson, chief economist at Pantheon Macroeconomics.’
‘Properties typically sold last month in 34 days, the shortest time since the Realtors began tracking the figure in May 2011.’
‘Home prices have increased at more than three times the pace of wages. The average hourly wage has risen just 2 percent over the past 12 months to $24.95 an hour, according to the Labor Department.’
‘Construction has yet to satisfy rising demand, as builders are increasingly focused on the growing rental market.’
‘Approved building permits rose increased 7.4 percent to an annual rate of 1.34 million in June, the highest level since July 2007, the Commerce Department said last week. Almost all the gains came for apartment complexes, while permits for houses last month rose only 0.9 percent.’
‘The share of Americans owning homes has fallen this year to a seasonally adjusted 63.8 percent, the lowest level since 1989.’
‘The recent pace can’t be sustained, but it points clearly to upside potential’
Bahahahahahahaha … take a close look at this statement - it has two parts:
Part 1: “‘The recent pace can’t be sustained …”
(Which should suggest one should exercise caution or else suffer the pain of taking a loss)
Part 2: “… but it points clearly to upside potential.”
(Which suggests one should jump in or else suffer the pain of being priced out)
Part 1 and part 2 contradict each other and this causes - what? - a bit of angst perhaps?
Angst!
Angst = Just do it! Visit your local banker today and get ‘er done!
What to do here:
1. Watch from the sidelines while others get rich quick by borrowing money to buy real estate while you get priced out forever?
2. Borrow money to buy real estate at a high multiple of your household income, only to soon find yourself hopelessly underwater and jobless at the very same time in the next recession?
Decisions, decisions…
“Decisions, decisions…”
Stop the angst! Stop the pain! Just do it!
Toss and turn, toss and turn!
You are but one dotted line away from relief. See your local banker today and MAKE IT HAPPEN!
We had an article in my paper today about torrid June sales locally, with the same explanation as yesterday’s articles that Ben excerpted here — all the experts are predicting a rise in interest rates very shortly. I have strong doubts about that.
“But investors with good credit can borrow to buy real estate, which can enhance returns — or magnify losses, depending on the market. ‘The singular and best reason to own real estate as an investment is to use leverage,’ said Stephen Lovell, a certified financial planner in Walnut Creek, California. ‘Without it, your return on investment tends to be about 2 percent to 3 percent.’”
Isn’t buying assets on margin what recently got millions of Chinese stock market investors into underwater positions on their invesment portfolios?
And had a similar effect on millions of U.S. mom-and-pop real estate investing operations in the post-2008 period? Not to suggest another U.S. real estate bust like the 2007-2011 episode could ever again occur over the foreseeable future…
“Not to suggest another U.S. real estate bust like the 2007-2011 episode could ever again occur over the foreseeable future…”
Of course not. I’ll be so jealous when all these brilliant financial investors make tons of money on their shiny new houses, and I’ll just be a gosh darn renter sad that I didn’t join the lemmings in jumping off the cliff.
‘Growing concerns about the health of the Chinese economy helped wipe $40bn off the value of Apple on Wednesday despite the company reporting a sharp increase in global sales and profits.’
‘The 5% fall in share price in the world’s biggest company was mirrored by a slide in shares in mining and commodity firms to their lowest levels since the stock market crash of 2008.’
‘Despite a doubling of sales of iPhones to China’s growing middle class over the past year, financial markets fear the recent official Chinese figures showing economic growth of 7% are exaggerated and that consumer demand may flag in the coming months.’
‘The consultancy firm Oxford Economics said alternative measures showed China expanding at between 4-5%, while analysts at broker Cowen pointed to “evidence of a widespread demand reset from China” as they downgraded their forecasts for Apple’s prospects.’
‘Copper prices were trading on Wednesday at almost their lowest level in almost six years, while US oil prices dipped to $50 a barrel. Analysts know the metal as “doctor copper” for its ability to reflect the underlying state of the global economy.’
‘Analysts at Goldman Sachs, said: “It is, in our view, highly likely that the four-year trend decline in copper prices is set to continue through at least 2018.” The Bloomberg commodities index hit a 13-year low.’
‘At one point Apple’s stock market value had fallen by almost $60bn as investors weighed up the prospects for a company which has usually beaten even the most optimistic forecasts.’
“World trade volumes for both goods and services have risen by less than global GDP over the past four years,” said economists at UBS. “This is an unprecedented outcome in postwar history.”
Copper has been showing the way for over a year now:
‘Analysts know the metal as “doctor copper” for its ability to reflect the underlying state of the global economy’
‘Industrial giant United Technologies slashed its 2015 earnings forecast Tuesday due to the sharp slowdown in China’s real estate sector and disappointing aviation parts sales.’
‘Activity has also been lackluster in UTC’s business for heating and cooling buildings, again due to a big decline in China. “With six months of trends behind us, it is now clear the commercial aftermarket at UTC Aerospace Systems will be significantly below our expectations for the year,” said chief executive Gregory Hayes.’
‘Company officials described a broad slowdown in the Chinese housing market, with real estate investment, new construction starts and sales all “under pressure,” said chief financial officer Akhil Johri.’
Apples and copper and oil, oh my.
So much for the false theory that the U.S. stock market was immune to the contagious impacts of China’s stock market crash…
”Spartans’ Foreigners Detained for Publicity Stunt
(Global Times), July 22, 2015′
‘Dozens of foreigners delivering food dressed as Spartans were taken away by Beijing police for “affecting public order,” “the Beijing Youth Daily” reported Wednesday.’
‘Photos posted online showed around 100 scantily-clad foreigners marching through the streets holding food boxes. Some photos showed them in a pyramid formation shouting in front of a building, while some showed them at the Guomao Railway station in Chaoyang District.’
‘Other photos showed police holding them down at a pedestrian bridge in Sanlitun District.’
‘Video identified them as employees of a Beijing-based Sweetie Salad restaurant and were delivering salad to office workers and promoting the restaurant. Police officers decided to accost them to restore public order after the foreigners ignored several warnings.’
http://en.people.cn/n/2015/0722/c90000-8924654.html
A comment:
‘In a normal country, where the government isn’t paranoid about more than two people gathering in public, a “publicity stunt” like this would be viewed as harmless, even if a few pedestrians might feel annoyed. Only in China would this kind of stunt be viewed a a crime. Can someone explain how public order was “affected.”
All you trolls above who are condemning the participants reveal who you are: paid 50 cent commenters or brain dead nationalistic cretins. Normal people in the normal world (read: outside China) would not hail the police for tackling to the ground people delivering food.’
Some replies:
‘You stick to your warped values we stick to ours. It is as simple as that. Don’t try to force your values on all like the US tries to force her form of democracy on everyone in the name of freedom. How democratic is that ?! So Philiip Hamilton , if you want to parade naked, corpulate on a public beach or marry your sister in church, go bank to democratic west and not foul up the air in China.’
‘Your condemnation of others as paid wumao or brain dead nationalistic cretins shows what a despicable swine and disgusting racist you are. If you are so capable, why stay in a shitty communist haven? Just shows what a hypocrite and cheapskate you are in wanting to enjoy low-cost living but ungrateful for the welcome you get in Asia.’
‘You are obviously the ignorant one here. In China, anyone who wants to parade for any purposes must obtain a permit from the authorities in advance. Simple rule is: When in Rome, do as the Romans do. Condemning people who comment as trolls (and typical bigot description of “wumao”) shows you are just a vile racist and muckraker, dude. We know who you are: a pathetic loser trying to justify your miserable existence.’
Check out the photo of the police holding these guys down on the bridge.
‘五毛 (literally, 50 cents / wumao), short for wumaodang or 50 Cent Party, is a pejorative term for Internet commentators hired by the Chinese government to post comments favorable towards party policies in an attempt to shape and sway public opinion on Internet message boards.’
‘Why it is blocked: Though there has already been much media coverage about China’s professional web commentators and the government has openly acknowledged their presence, it still does no good (at least from the CCP’s perspective) to have accusations of “wumao” every time someone makes a pro-China commennt.’
http://blockedonweibo.tumblr.com/post/12874983562/literally-50-cents-wumao-short-for
wumao = Who understands my Albuquerque opinion?
“Video identified them as employees of a Beijing-based Sweetie Salad restaurant and were delivering salad to office workers and promoting the restaurant.”
Yep, there’s no better way to get a salad than to have it handed to you by a guy wearing a loin cloth.
Or from your apartment neighor that prepares it in the shower (Seinfeld).
I get the distinct sense that China, at some future time, may have a Cambodia-style psychotic break. Something about Asian cultures applying non-indigenous ideologies, whether Marxism or financialized capitalism, seems to lend itself to hyper-distortion.
Lead poisoning is a big problem in China. I had a friend adopt a Chinese girl who had blood levels 20X what the CDC considers poisoned. It effects cognition. http://cen.acs.org/articles/92/i5/Crimes-Lead.html . And lead poisoning was believed to be a contributing factor to the fall of the Roman Empire.
Now China has even more contaminants in the environment. Mercury is the poison that lead to the term Mad as a Hatter because they had high exposures in the process of making hats. You bet they are eating that, too.
It is going to get ugly over there.
China is one of two places I refuse to travel to for work. I had my employer agree to that years ago before I signed on. I generally like to travel to foreign places, but the pollution in China makes it a non-starter. The other place is India. I love the people, but the country itself is a literal cesspool, and Indians themselves tend to be the first to agree with that statement. People take a crap wherever the feel like it, and there is human feces all over the place. We meet elsewhere (usually London) or do conference calls.
Oh, for pete’s sake. Here we go with the doctored Chinese economic stats again.
Back when I was a college kiddie, I took a course on the Chinese economy.
The prof was a world-renowned expert on that part of the world, and you know what? He and his colleagues had quite the time with the official numbers from the Central Statistical Bureau. To put it politely, those numbers were NOT to be trusted.
This was back in the late 1970s.
“The more things change . . . ”
or is it
“The more you know . . . “
“He acknowledged there isn’t an easy way to answer such questions but still found the Realtor.com results ‘hard to believe.’”
Realtor is the conduit for the gross misrepresentations and is wholly responsible for bringing the marks to the table.
“Realtor is the conduit for the gross misrepresentations and is wholly responsible for bringing the marks to the table.”
Yes! Bringing marks to MY table! (And I don’t even have to pay them.)
Realtors work, I reap. Life is good.
Sounds like Realtor.com is the US equivalent of China’s State Statistical Bureau.
Could be, though realtor.com’s chief economist strikes me more as an imbecile than a manipulator….some of his blathering is astoundingly moronic.
http://www.realtor.com/author/jonathansmoke/
I read that Newscorp is involved somehow.
hmm, most interesting! was not aware of that….this article has some details
http://www.inman.com/2015/01/27/why-news-corp-bought-realtor-com-instead-of-zillow-or-trulia/
The monied interests are building a narrative.
‘Trust fund not included.’
Similar signage is needed at new housing developments around San Diego, as the young families we know who bought here since we arrived either had a partner who owns a share of a family trust or, at minimum, enjoyed a large cash infusion from the Bank of Mom and Dad to provide a down payment.
This has been, and continues to be, a multi-generational transfer of wealth.
anyone’s parents have a mort at age 60?
it’s all the rage now
refis so kids can go to LA college for 5 yrs.
how many morts were “underwater” in the 50’s?
Has there ever been another period in history when so many Americans could all make large investment gains by simply buying real estate on leverage and holding it forever?
Perhaps so: What about the 1994-2008 period?
make large investment gains by simply buying real estate on leverage and holding it forever ??
I have a very close friend, much older than me who has been a investor in real estate here and a few outside the area (Tahoe/Hawaii) for over 50 years…He has never sold one real estate holding…He still owns the first property he bought over fifty years ago…
My former landlady would admire that guy. She was a buy-and-hold kinda gal.
My former landlady would admire that guy ??
I can attest that his children admire him…
I had an uncle like that who started buying real estate in the Long Beach area back in the 50’s. His motto was “Buy cheap and keep”.
“…He still owns the first property he bought over fifty years ago…”
And up to his empty skull in debt.
Jealous much, HA?
This guy has it made and you know it. Probably drives a 1990s Volvo with 268K miles on it too.
And I can guarantee you, there is no debt to be found.
Jealous much, HA ??
Probably not jealousy…More like idiocy…Just look at his post suggesting that someone who has owned a piece of real estate over fifty years is up to his eyeballs in debt…HA is just our resident imbecile who offers nothing of substance to the blog…Ignore him…
Awww poor Dave. Can’t scrape together that massive mortgage payment this month?
Ashley Madison: “Life is short. Have an affair.”
Mr. Banker: “Life is short. Take out a HELOC.”
Bahahahahahahahahahahahahahaha
‘The housing market is slowly recovering, more than seven years after the economy collapsed into a pit of toxic mortgages. But look closely at the recovery and you can see another story: how government policy helps the affluent, not the desperate.’
‘On the consumer side, despite low inflation and modest wage gains, house prices are on the rise in large parts of America, especially urban areas with strong job growth such as the California coast, Puget Sound and near the nation’s capital.’
‘When housing prices rise faster than incomes, it suggests a bubble, as I warned about in 2004. The bubble was the result of inflated appraisals that 11,000 honest appraisers tried to stop as big banks abandoned traditional underwriting, in which they check income and credits to see if a loan can be repaid.’
‘Significantly, The biggest mortgage growth is in jumbo loans. In San Francisco more than 38 percent of mortgages this year were jumbos, up from 17.6 percent just three years ago. More than 1 in 5 Los Angeles mortgages is jumbo. In Detroit, America’s desperation capital, just 1.9 percent are jumbos, but that is more than double the rate in 2012.’
‘So the housing recovery is really a story of high-end homes, not mass housing. And that fits perfectly with the trend of the last 35 years of government being a problem for the many but a boon to the few. Keep in mind that incomes at the very top are skyrocketing while the bottom 90 percent of earners are back to the inflation-adjusted income levels of the mid-1960s.’
‘The rise in housing prices in major urban markets shows how smartly the big mortgage-issuing banks have been about restricting the supply of existing housing that is for sale, which benefits them in several ways.’
‘The big banks are strategically holding foreclosed properties off the market, often by letting people live in them free, years after they stopped making mortgage payments.’
‘So beware of the new rise in housing prices. It augurs not so much a general economic recovery as more evidence of how government policy helps the few at the expense of the many.’
‘David Cay Johnston, an investigative reporter who won a Pulitzer Prize while at The New York Times, teaches business, tax and property law of the ancient world at the Syracuse University College of Law.’
Sad panda’s won’t like this editorial.
“In Detroit, America’s desperation capital, just 1.9 percent are jumbos, but that is more than double the rate in 2012.”
Right, Detroit is desperate because it’s not paying into another bubble like the usual sucker cities. Yep, it’s unfortunate that tens of thousands of house buyers will be forced to buy a home they can afford. Do they hand out Pulitzer Prizes with every four pack of toilet paper?
With the highest city taxes in the nation, a sparsely-populated, crumbling infrastructure that is financially impossible to maintain, and a corrupt city government that has learned nothing from its bankruptcy, one would be a fool to purchase a home within the city limits of Detroit.
No argument from me. But he mentions urban areas, which usually includes suburbs. I hate it when people don’t specify what geographical region they’re talking about. Jumbo mortgages are common in Los Angeles and San Francisco (notice I didn’t say California) because houses are back to bubble territory. How is this helping anybody? Even rich people are screwed when they have to pay too much for a house.
I can point to a case of a foreclosed property being held off the market by Wells Fargo. It’s a short walk away from where I grew up, and the house was built by the richest man in the nabe.
Subsequent owners walked away from the place, and now it’s just sitting there, rotting away.
While I was visiting my parents during the 2014-15 Xmas holidays, I called the township and reported this property. Township inspector already knew about it. He was trying to figure out how to get Wells Fargo to actually take possession of the place.
‘Capital exodus China reaches $800bn as crisis deepens’
‘Half the shares traded in Shanghai and Shenzhen were suspended. New floats were halted. Some 300 corporate bosses were strong-armed into buying back their own shares. Police state tactics were used hunt down short sellers.’
‘We know from a vivid account in Caixin magazine that China’s top brokers were shut in a room and ordered to hand over money for an orchestrated buying blitz. A target of 4,500 was set for the Shanghai Composite by Communist Party officials.’
‘Caixin says the China Securities Finance Corporation - a branch of the regulator - now owns an estimated $200bn of Chinese stocks and has authority to buy a further $500bn if necessary to prop up the market.’
‘This use of “brute force” - in the words of Peking University professor Michael Pettis - has done the trick. Equities have recovered. How could they not do so, since selling was illegal, and not to buy was also illegal?’
‘Yet it is hard to see what remains of Xi Jinping’s pledge at the Communist Party’s Third Plenum in 2013 to let market forces play the “decisive role” in the economy. There was always a contradiction in this pledge. Mr Xi was touting free enterprise, even as he tightened control on the internet, academia and political dissent.’
‘His failure to see through his reform strategy is fatal for China’s economy. The World Bank and China’s Development Research Centre - the brain-trust of premier Li Keqiang - published a long report three years ago calling for a market revolution before the Chinese economy hits a brick wall.’
‘It warned that the country’s 30-year growth model is obsolete. The low-hanging fruit of state-driven industrialisation has been picked.’
Free enterprise when asset prices are rising, government intervention when they are falling.
Sounds vaguely familiar…
“The low-hanging fruit of state-driven industrialisation has been picked.’”
Q. How are they hanging?
A. Low.
Q. Would you like them picked?
A. No, they’ve been picked already.
The pledge was a lie. Xi knew that, without fraud and manipulation and mania, the Chinese economy would collapse. And of course, those forms of succor just as surely will collapse it too. Quod me nutrit me destruit.
Turning a failure to buy overpriced equities into a crime is a new one, to be sure. In this country we have a more subtle kind of force, in the form of artificially-imposed ZIRP.
‘There’s gobs of money chasing assets these days but there’s no “bubble” in commodities, which are tanking.’
‘It’s not just gold, which gets a lot of headlines; nearly all major global industrial commodities are back to 2009 levels — including coal, gas, oil, iron ore and copper. Agricultural commodities such as wheat, coffee and sugar have also fallen on hard times. The dollar’s rally has certainly been a factor in the price action, with the greenback advancing versus other major currencies amid speculation the Fed will start raising rates sometime this year.’
‘The other big story is China, which reported better-than-expected second-quarter growth of 7% last week, a development that notably didn’t change the downward trend for commodity prices. As the following charts demonstrate, China’s imports of oil, iron ore, steel and aluminum all fell sharply at the start of 2015.’
http://finance.yahoo.com/news/commodities-slump–signifying—150552080.html#
‘Mohamed El-Erian said Thursday he believes China can engineer a soft landing to its recent stock market woes, but the country’s economic slowdown is raising a multitude of issues. “China is no longer a locomotive of global growth, and that has implications for companies. It has implications for commodities markets,” Allianz’s chief economic advisor told CNBC.’
‘Economic weakness is not limited to China, El-Erian said. Of the BRICS countries, only India is looking good, while he sees problems in China, Russia, Brazil and South Africa. “If you look around the world there is no longer a dynamic source of growth,” he said.’
http://finance.yahoo.com/news/el-erian-china-no-longer-152413686.html#
Boy, it’s a good thing everybody saved their pennies and didn’t go into too much debt.
‘Trading on the Shanghai and Shenzhen stock exchanges will be suspended for a four-day holiday, from September 3 to September 6, to mark the 70th anniversary of victory in the Chinese People’s War of Resistance Against Japanese Aggression (1937-1945) and the world war against fascists, according to an announcement after Tuesday’s closing.’
http://www.ecns.cn/cns-wire/2015/07-22/174013.shtml
“Freddie Mac recently loosened restrictions in several areas of its mortgage underwriting, including how it factors student loan debt into the debt-to-income calculation.”
“‘That’s a big deal, given that the reason often cited for millennials not buying in bigger numbers is student loan debt, so if less of those payments have to be counted against them, then more millennials will qualify to purchase a home,’ said Craig Strent, CEO of Maryland-based Apex Home Loans.”
_______________________________/
Are you kidding me? Yeah, tens of thousands of dollars in student loan debt will have no impact at all on the borrower’s ability to service a mortgage. What a great idea. While we’re at it, let’s ignore car loans and credit card debt too.
We’re just pretending now. We are a deeply foolish people and we will get what we deserve.
Actually a mortgage lender should be willing to tolerate more student loan debt than other types of debt. Student debt payments can be deferred. Also, student debt borrowers can take advantage of programs that reduce payments based on a percentage of income.
I strongly suspect that the next-door neighbors are now renting because of the wife’s student loan debt. She got a PhD, oh, about 12 years ago. Was never able to find a tenured position.
So, they sold their house and moved into one of the crappiest houses in this neighborhood. (And, yes, we in the neighborhood association have MANY issues with the landlord. To the point of reporting him to the city. Which does nothing.)
“Was never able to find a tenured position.”
One has to be willing to move too.
May architecture billing index….
Only firms expanding are in the ‘institutional’ sector - that sector includes schools and prisons….
http://www.aia.org/practicing/AIAB106741
I’m confused…..
I was just reading Confounded Interest and to say the least I am confounded by the two most recent posts…..
First one shows that UE claims are the lowest since 1973 - yep 4 decades going back to my sophomore year in HS. Highest number of folks not in the labor force since the late 70’s.
The second post from yesterday just below it shows housing sales at highest clip since 2007.
So….we have an economy where there are fewer folks working, fewer are seeking UE because fewer are working and no longer can apply for UE and yet housing is selling like proverbial hot cakes at ever higher median prices!!!
Am I missing something here?
You’re not the only one who finds these trends confusing.
Am I missing something here ??
Your likely missing the powerful driver of ultra low long term interest rates…
Where I live, a vast majority of the new homeowners are immigrants. Very wealthy immigrants, who typically have anchor-baby kids, and then shortly thereafter, have the parents from the home country move in with them. This is the rule, rather than the exception.
At least, having three generations living under one roof, they have some justification for the 3700sf house.
Story of my peeps too. Grandmother from the old country lived with my father’s family until she died.
“a vast majority of the new homeowners are immigrants.”
And neck deep in debt on a depreciating asset they paid a massively inflated price.
What exactly is it about all-cash housing purchases that you can’t wrap you tiny mind around, HA?
What is it about your homeowner status which impairs your ability to see the massive bubble that is your neighborhood?
It’s all dumb.borrowed.money. my friend.
Kirkland, WA Housing Prices Fall 19%
http://www.movoto.com/kirkland-wa/market-trends/
Look at how many housing units that have been built since the crash.
Look at the population growth over the same time period.
Look at the vacancy rates nationally.
Higher home prices are being driven off of very low supply, and weak to moderate demand.
Look at the debt growth since the crash.
Per the NY Fed, total household debt is still below the peak (in nominal and real terms).
The debt growth has been at the federal level–and while that will come back to bite us in the a** bigtime when interest rates start to tick up, it isn’t effecting the housing market or economy currently.
*YET*
Off topic for Rental Watch: if you are charitably inclined you might look into putting those highly appreciated stocks into a charitable remainder trust. Pick the right institution and they will be happy to help with the details.
More Dingbat talking points from Rental_Fraud
-25 Million excess empty and defaulted houses…. and rising
-Population growth the lowest in US history… and falling.
-Vacancy Rates 500% higher than long term trend
-Housing demand at 20 year lows and falling
… and most importantly..
Current asking prices of resale housing is 250% higher than long term trend and double construction costs.
Do the math my friends. Honest math.
http://davidstockmanscontracorner.com/is-the-echo-housing-bubble-about-to-burst/
The difference between the current situation and 2005 is that I’m not seeing leverage on raw land. Banks aren’t really lending on it, at least to the small timers, so perhaps that’s influencing small builders as well. This current bubble is more like a “pocket bubble” where we see price distortions in limited markets on less volume while others die on the vine.
‘Central Ohio’s housing market in the first half of the year has been its best since 2006, when home sales were torrid and before the financial collapse crushed the market.’
‘Some 13,782 existing single-family houses and condominiums were sold in the region during the first six months of this year, with average prices poking through $190,000 for the first time, said June’s market report this week from Columbus Realtors.’
‘The market in the first half has improved from 2006, before the housing bubble burst, when 13,192 houses were sold at an average sale price of $175,169, according to Columbus Realtors reports. A house back then spent an average of 96 days on the market before it was sold. By comparison, houses remained on the market for 62 days during the first half of this year.’
http://www.bizjournals.com/columbus/blog/2015/07/how-hot-is-central-ohios-housing-market-hotter.html
What is weird around here is I can show you record prices for land in one area, then I can turn around and show you a place 60 mies away where land is selling for late 90’s prices.
“Real bed” and “quiet at night” are ways one Airbnb host describes his van that’s available to rent in New York City — not to drive, but as a home away from home. Airbnb customers need to pay only $22 a day, or $160 a week, with a $6 cleaning fee, for the van parked in Long Island City, an up-and-coming part of Queens close to Manhattan.’
‘The host supplies batteries for fans in the van, but you can’t move it.’
http://www.kmbz.com/Man-with-a-Van-Rents-It-Out-to-Airbnb-Customers-fo/21782351
It that van’s a rockin’ don’t go a knockin’.
And tenants will be shown how to use the 5-gallon buc - er, I mean, portable commode.
What is it, a place where people shoot up?
‘Rider Levett Bucknall’s latest North American RLB Crane Index shows 42 fixed cranes in the Seattle area, a drop of nine from the consultant’s inaugural report in January.’
‘RLB predicts construction will continue to grow in major U.S. and Canadian cities, especially for high-rise apartment and condo projects.’
‘Less than half of the cranes in Seattle now are building residential towers, but that’s not the case in other cities. Toronto has 110 active cranes and 91 of them are working on housing.’
‘RLB says downtown Portland is seeing a boom in construction, with several residential towers underway in the South Waterfront and Pearl districts.’
‘Other cities are also busy. In Calgary, there is a backlog of 50 proposed high-rise developments; San Francisco has 26 cranes up, with more than half of them for residential towers in the SoMa neighborhood; and New York City has 70 cranes working on residential and mixed-use projects.’
‘In its report, RLB cited data from Corcoran Sunshine that predicts 5,377 condo units will come online this year in New York City — about twice as many as last year.’
‘Boston was the only other city with a decrease in tower cranes over the past six months. The report says the drop was due to projects finishing, but five cranes were erected for new projects.’
https://www.djc.com/news/co/12079940.html?cgi=yes
“Financial advisors say many clients are catching the real estate bug again. ‘Just last week, a high-tech corporate boomer client with no experience in renovating and selling real estate told us he wanted to go into flipping a property with his friend, who does this for a living,’ said Jon Ulin, certified financial planner in Boca Raton, Florida. His client wanted to liquidate 25 percent of his IRA to invest in the project and told Ulin it would ‘diversify’ his portfolio.”
Another Boomer soon to go bust!
If this was a Vegan forum, HA would comment 5x a day that the “Vegan” has really bad levels of cholesterol.
He is our village idiot living on planet htraE.
Have another on me my friend.
https://goo.gl/yRCqOC
The Shanghai Composite Index dropped like a bowling ball, like yesterday at the open then magically bounced up:
http://www.marketwatch.com/investing/index/shcomp?countrycode=cn&mod=MW_story_quote
‘Between the end of June and early July, the Chinese government announced at least 40 measures to prop up the market, including an interest-rate cut by the central bank and establishing a stabilization fund to outright buy stocks.’
‘All together, Chinese authorities are estimated to have mobilized as much as 5 trillion yuan, almost 10% of the gross domestic product, to halt panic sales, Reuters reported.’
‘But such drastic tactics, while effective in the short term, could discourage foreign investors’ participation in the stock market and challenge China’s aspirations of becoming a global financial power.’
‘Chris Konstantinos, director of international portfolio management at RiverFront Investment Group, also noted that the Chinese government’s “carte blanche” on market action could offend “democratic societies’ sensibilities.” “I don’t believe it bodes well for China’s recent overtures toward greater transparency and the prospects for attracting a more global shareholder base for Chinese shares,” he said.’
‘Earlier this week, Bridgewater Associates LP, the world’s largest hedge fund, warned its investors that China’s market turmoil will have broad repercussions, a dramatic reversal from its usual bullish stance on the country, The Wall Street Journal reported.’
“The rise and fall of the market over the past year may well have convinced many investors that the market is simply not a reliable investment vehicle,” said analyst Michael Spencer at Deutsche Bank in a report. “Quite clearly, the reform objective of allowing the market to play a decisive role in allocating capital has suffered a setback.”
‘The state-sponsored buying of stocks is also creating an overhang, which the government will eventually have to tackle. “Hong Kong resolved it by putting the shares they bought into a fund, restructured it to replicate the index and sold it gradually as the Tracker Fund. China could do the same. But it’ll depress the market for some time,” he said.’
http://www.marketwatch.com/story/the-true-cost-of-chinas-multibillion-dollar-market-intervention-2015-07-23
‘almost 10% of the gross domestic product, to halt panic sales’
There goes that 7% GDP.
Oh dear…
‘China’s factory sector contracted by the most in 15 months in July as shrinking orders depressed output, a preliminary private survey showed on Friday. The flash Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) dropped to 48.2, the lowest reading since April last year and a fifth straight month below 50, the level which separates contraction from expansion.’
http://finance.yahoo.com/news/china-july-factory-activity-falls-15-month-low-015751379–business.html
Buh bye, 7% GDP growth rate…
Sacramento, CA Housing Demand Falls 8% YoY; Down Every Year Since 2009
http://files.zillowstatic.com/research/public/City/City_Turnover_AllHomes.csv