The End User Has Become Rational
It’s Friday desk clearing time for this blogger. “According to realtor.com, the Santa Cruz housing market is one of the hottest in the country. However, the red hot market is dousing the dreams of some potential home buyers. They’re being priced out, but it’s actually benefiting other communities. First-time home buyer Esperanza Espinosa and her husband have worked hard for years to get out of their two bedroom, $2,000 a month apartment. They now have better paying jobs and their hard work is paying off. They’re one of many families buying into the American Dream and buying a home in Watsonville. Affordability is unlocking the door to possibility. ‘A lot of people like it here because you can get a three bedroom and two bath for $450,000 right now,’ said Century 21 realtor Gloria Melo. ‘Which in any other place you cannot get that.’”
“‘Before, I couldn’t afford to buy a house because I always worked in the fields and I don’t make that much money,’ Espinosa said. ‘And then my husband work as a dishwasher and everything.’”
“The Treasure Valley market was on a hot streak in 2014 and 2015 that brokers and agents say is not sustainable. Stacie States, president of Keller Williams Realty Boise, said her office is training its 501 agents how to adjust to a slower market, both in terms of tempering client expectations and managing the agents’ personal finances. Nobody expects the Treasure Valley housing market to crash and burn like it did in 2007. But prices could fall this time, too. ‘The economy has always been cyclical,’ States said. ‘Unless history stops repeating itself, we will definitely see the market shift.’”
“The number of homes available for sale in metro Denver spiked in July, while home sales dropped and prices flattened out, providing further evidence that one of the country’s hottest housing markets might be topping out, according to the Denver Metro Association of Realtors. The median price of a single-family home sold, $350,000, was 2.8 percent below June’s median. ‘This is all welcome news for homebuyers who have survived the recent months of market frenzy,’ said Anthony Rael, chairman of the DMAR market trends committee.”
“The median price of King County single-family homes sold in July slipped 3 percent over the month to $485,000, a surprising reversal for a month that brought peak prices in each of the past two years. The drop comes after King County’s median home price hit a post-recession peak of $500,000 in June. More than half of Seattle Times readers who responded to a poll last month said ‘the single biggest reason’ keeping them from buying a home was affordability. Another one-fifth said they couldn’t find a home they want to buy.”
“Chinese developer Fantasia Holdings Group has launched a vacation rental business similar to Airbnb Inc and HomeAway Inc to utilise the scores of homes left unsold as a property boom faded. Unsold apartments are a hallmark of many provincial Chinese cities, as local governments used land sales and property development to generate growth. ‘There are more than 50 million vacant units in urban China, which have become a major source of properties for vacation use,’ Fantasia chairman and CEO Pan Jun said in a statement.”
“The sharp decline in the new launches in the NCR has pulled it down from being the biggest market in India in H2 2014 to fourth position now trailing behind Bengaluru, Mumbai and Pune. The report showed that the unsold inventory in NCR amounts to 1,89,678. Despite three cuts in the repo rates by the central bank in the last six months and some reduction in lending rates by the commercial banks, there has been no meaningful take-off in home purchase in H1 2015. Samantak Das, chief economist at Knight Frank said that even at the average absorption rate of last eight quarters, it will take five years to get rid of the inventory in the NCR.”
“‘Both the launch and the sales numbers are at a decade low for NCR. While the speculators are completely out of the market, the long-term investors are not coming in because of their previous investments are stuck and they have had a bad experience. As far as the end user is concerned, he has become rational and very cautious and is waiting for prices to come down and the economy to improve,’ said Das.”
“Resale prices of Housing Development Board flats took a tumble last month — the first since March — as the number of flats changing hands also fell. Mr Alan Cheong, Savills Singapore’s research head, noted that newly-completed Build-to-Order projects in Sengkang and Punggol have led to greater supply coming upstream, thus lowering demand for older flats in these areas. ‘The resale market is suffering in areas that are perceived to be congested,’ he said, adding that prices might take a further hit in these estates.”
“Nothing better portrays the high price of paradise in California than a poll showing one in seven recent homebuyers thought they had paid too much. True, the annual survey of homebuyers from the California Association of Realtors did find that 85 percent of buyers statewide thought the home they’d purchased was worth the price. But please note: 14 percent admitted they’d overpaid. Maybe the real estate rebound has gone too far?”
“It’s not clear why recent buyers felt they’d overpaid. Were they forced to pay up in a rising market? Did they fear homes would be even costlier in the future? Or was the overpayment the cost of getting into an appreciating asset?”
“It feels a bit like the Monty Python parrot sketch. The property pundits keep telling us the Dubai market is just sleeping. Are prices falling? No sir, just stabilising. Should we worry? No sir, it’s the sign of a mature market sir – lovely plumage, the Norwegian Blue.”
“The notion that a property market is maturing because prices aren’t falling quite so fast as they fell the last time they were falling slightly less fast is nonsensical. It is Michael Palin telling John Cleese that the expired bird is merely having a nap. Some international property consultants, who really should know better, have been at pains to sugar coat the huge decline in transactions this year. It makes me imagine pushing them from a very tall building and watching them ’stabilise’ all the way down until they reach maturity on the pavement.”
“A quick look at the propertyfinder website reveals hundreds of listings for as-yet uncompleted homes launched in the past two years, many of which are being sold on at zero premium. Speculation is still thriving. Banks are not so much reducing their property lending risk as moving it from Peter to Paul – or rather from the would-be house buyer to the off-plan developer.”
“But the strong US dollar and weak oil price are together doing a perfectly good job in ’stabilising’ the market right now. Meanwhile, the first-time buyer is being hit over the head with a skillet. The parrot isn’t dead. Just stop hitting it.”
Photo
Housing scandal discovered in Shanxi Province(1/6)
Large quantities of plastic foam are used when constructing houses and other residential buildings in a community in Taiyuan of north China’s Shanxi Province, reported by China’s State run CCTV on its official Weibo account on Aug 6, 2015. (Photo/CCTV)
Hundreds of angry residents have signed a petition against building construction companies and local authorities complaining against the poor standards of residential housing in a community in Taiyuan of north China’s Shanxi Province.
That is beyond amazing.
Foam window sills! Hilarious. Where is ADan to explain away this one?
‘The main emerging-markets ETF, iShares MSCI Emerging Markets (EEM), is trading at a four-year low. To cite one dramatic example, Brazil, as tracked by the iShares MSCI Brazil Capped ETF (EWZ), is down more than 40% in dollar terms in the past year, giving back nearly all of the prior decade’s gains.’
‘China’s market is, of course, in sharpest focus as these trends unfold. But even Australia – a commodity-reliant economy that bridges the West and emerging Asia – is enduring a rough time, as seen in the drop in the iShares MSCI Australia fund (EWA).’
‘Maybe no stock reflects the challenged state of EM economies more than Brazil’s state-steered energy giant Petrobras (PBR) –at the center of all the growth, commodity and currency worries dogging emerging markets.’
‘The stock is down 60% the past year and 80% from five years ago. It has towering debt levels, and last night reported an 89% collapse in profits and an unexpected asset writedown.’
http://finance.yahoo.com/news/fed-feeling-long-hangover-in-emerging-markets-and-commodities-113443385.html#
The other day I read this one guy say, “You have weakness in the energy market…. The one positive out of today’s market is the Dow Transports,” said Robert Pavlik, chief market strategist at Boston Private Wealth. “It’s August, it’s summer, so there’s sort of no reason to do any buying or selling, but if any kind of news like China happens or momentum to the downside, then there’s less support for the market.”
That’s what he said, China happens.
http://www.cnbc.com/2015/08/03/us-markets-data.html
Foam trim has been used around here for twenty years or more…Although its not my cup of tea, properly installed it pro-forms quite well…As the photo shows, you get some very sophisticated exterior trim designs using this material…
In looking at the main picture, what do you think that trim would cost made out of wood installed ?? 3-4k would be my guess…If it was made out of stone it would be 6k + That foam on that window likely did not cost more than $300. so you can see why the use it…You get the design effect for a fraction of the cost…Its also easily repaired…
It’s called Dryvit Dave… not “foam trim”…. and it’s been around far longer than 20 years. Employing that architectural detail using Dryvit is just pimping.
‘You get the design effect for a fraction of the cost’
Apparently the buyers didn’t know.
Apparently the buyers didn’t know ??
Maybe more like didn’t care…Now that they see its foam, they sense they have been cheated with cheap material…Its cheap yes, but it is functional…Kind of like using OSB plywood as a cheaper alternative to sheet plywood…
Architectural gingerbread is non-functional by definition Dave.
Interesting discussion about this stuff on a contractors forum:
http://www.contractortalk.com/f11/dryvit-dead-76238/
Dryvit works, especially in dry climates. Dryvit has a training center. A few of our guys have been through it.
‘they sense they have been cheated with cheap material’
Yeah, it’s China. Those houses probably cost a fortune. Get some of that cheap labor and don’t cut corners. They didn’t pay for quickie-mart stuff. I wouldn’t want it. Cracks, pits, hail storm - rut-oh!
Foam adorns many (Las Vegas) resorts
Pool fire at The Cosmopolitan fueled by fake foam palm trees
Make sure you know where the exits are.
I’m sure insurance companies know all about this material.
Had the exact same construction on my house in Gilbert, AZ. very common throughout the valley of the sun.
Foam houses. LOL
“‘Before, I couldn’t afford to buy a house because I always worked in the fields and I don’t make that much money,’ Espinosa said. ‘And then my husband work as a dishwasher and everything.’”
What radical improvement in earnings potential has enabled them to ‘afford’ a $450,000 starter home?
Is anyone else having flashbacks to the mid-2000s story of the Central Valley strawberry pickers who got into a $700K+ house?
In that case it was two couples who were on the hook for the 700k. This is one couple.
That was my recollection; thanks for confirming.
We’ll know the Echo Bubble has burst when stories about couples like the one featured in this article getting foreclosed reappear.
Yeah, so it’s actually worse. The entire world is melting down, now.
I keep hearing about how the debt is solid this time. Is that a result of virtually no non-government/Fed-ownedguaranteed mortgages out there?
Fannie and Freddie have bought north of 95% of the new mortgages since about 2007-2008. They turn them into de facto government securities by insuring them, and take on the risk of default, i.e. “socialize the losses” onto the taxpayer.
Rand Paul talked about Trump buying politicians last night. In the late 80s, thousands of bankers went to jail after that real estate bubble blew up. In a much bigger implosion in 2008, not a one has lost a dime, much less gone to jail. Heck Dimon and Blankfein are now billionaires.
My point there is: the financial sector is one step ahead, buying politicians, getting laws written to legally offload risk onto the public while retaining the profits. And of course, influencing pliant regulators with the promise of cushy sinecures after their few years in government service.
So - net result - if a recession hits and foreclosures go up - it’s just another bailout for Fannie and Freddie, with minimal blowback onto Wall Street.
The goal of offloading risk and privatizing profit seems to be completed, the plan which started after the Great Depression has reached its final form.
‘how the debt is solid this time’
That’s a myth. I don’t have the link saved on this computer but the single biggest factor in foreclosures was when they bought or refinanced the house. Not subprime or low incomes. The when were those months and years that saw the highest prices. That experience shows us that areas with high prices now should see lots of foreclosures.
Remember strategic defaults. It doesn’t matter how it was scrutinized; people don’t want to throw good money after bad. Job loss; that’s coming too. The underwriter didn’t see that coming.
As far as the government getting stuck with it; they should! Nobody put a gun to anyone’s head to force them to do what they’ve done. Sure the banks are in on it; foam the runway, sit on your REO’s for years until Bernanke and Watts can gin up a frenzy. Then sell. Let’s get our wall street buddies in on the act. (Which was really more psychological, Blackstone didn’t buy that many houses). It didn’t take much. Look at how eager people were to fall back into the mania. Almost like they never really left.
It sucks, and I don’t know how it will all play out. This surge in the past 8 or 10 months is a bad sign. Lots of non-bank loans now. How much money does Quicken has in reserve to cover bad underwriting? Not enough I bet.
There’s not going to be any justice. It’ll be poor baby, they should never have loaned a dishwasher 400k. Nobody saw it coming. But the interesting thing is, will it be such a blow the political winds push Uncle Sam out of the housing biz? And how can the central bank get out of this one, when Bernanke and friends specifically targeted housing prices. Heck, everybody involved is pushing harder every day. And how bad will it get? Because IMO we are going to see a finish to what was just started.
“It sucks, and I don’t know how it will all play out. This surge in the past 8 or 10 months is a bad sign. Lots of non-bank loans now. How much money does Quicken has in reserve to cover bad underwriting?”
Another apparent parallel between U.S. housing and the Chinese stock market meltdown is this big incursion of nontraditional (”shadow bank”) lending in both cases to amply spike the punch nowl with Baccardi 151 rum.
And there’s only one way to get there. Rampant, widespread realtor and appraiser fraud.
Do remember that story from Bubble 1.0….but it wasn’t in the central valley, it was in Watsonville just like this one (they grow lots of strawberries in the area)
http://www.sfgate.com/business/article/Impossible-loan-turns-dream-home-into-nightmare-2601880.php
correction, same area, Hollister is close to Watsonville…
That’s a great question. I’m an airline pilot with an engineering degree, and my wife is a paramedic. We have no kids, and we would be VERY uncomfortable with a $450k mortgage.
We’re similarly situated on the income distribution. After trying to educate people we know for a decade now about why we rent, people still don’t get it.
Why would anyone be comfortable paying a 300% premium for a depreciating asset then doubling those losses by financing?
“…we would be VERY uncomfortable with a $450k mortgage.”
Yep… a financial stall.
He’s a cook now!
Urghhh.
This is ridiculous. fkcking gov’t . I’m willing to bet they bought it with some county sponsored program. providing down payment assistance so that later they get foreclosed.
she went from picking berries to ER Nurse or something ??
he went from dishwasher to semidriver (more likely) ??
they can’t make the payment and then they sit on the houses for 2 years rent free.
deja vu
‘Transactions in prime central London have plummeted and prices per square foot have dipped. Data from LonRes shows that in the second quarter of this year transactions across prime London are down 22.7 per cent on the same period last year and that prices on a £-per-square-foot basis are down 0.9 per cent.’
‘The period under review was, of course, including the final five weeks of the general election campaign, when the possibility of a mansion tax existed. For this reason, the properties in the £1m to £2m band were particularly badly hit.’
‘However, William Carrington - LonRes chairman - says the stamp duty changes introduced at the end of 2014 are the main cause of the market hiatus.’
‘Carrington says the hope was the a business-friendly Conservative government would give momentum to the market - however “the pre and post-election hype had no bounce.” He says London’s market now faces more uncertainty caused by David Cameron’s promised in/out referendum on Europe and nervousness about whether the Greek problems over the Euro “will spread as a contagion.”
‘Lennar Multifamily Communities has preliminary site plan approval to construct 293 housing units on the Holly Avenue and Pinewood Street area of Parole. The project is the latest on an increasing list of residential construction activity across Anne Arundel County.’
‘The Capital examined county records and found that there are at least 30 subdivisions with 50 housing units or more in the works. This has been the case for the last three years, as there has been a shift toward residential development from commercial and office space.’
‘That doesn’t seem to be slowing down any time soon, county Planning and Zoning Officer Larry Tom said. “Any kind of development trend relates largely to what the market will bear, and right now the market seems to be more oriented to residential,” Tom said. “But these trends tend to be cyclical. … There will be a time when the residential market, particularly in townhome development, may become saturated.”
Parole is a terrible area. Main selling point is access to both the DC and Baltimore beltway, plus fort Meade (NSA). Lots of government contractors, probably.
‘There are more than 50 million vacant units in urban China, which have become a major source of properties for vacation use,’
Can you imagine the costs to clean up after a steady flow of 50+ million Chinese vacationers? Somehow I am guessing that cost item is not reflected in the share price.
‘to utilise the scores of homes left unsold as a property boom faded.’
Unsold?
But wait, I thought these empty units were for all the peasants that were going to flood in from the countryside.
And isn’t there a glut of 5 star hotels in China?
All the peasants with half a million dollars in their pockets.
“It’s not clear why recent buyers felt they’d overpaid. Were they forced to pay up in a rising market? Did they fear homes would be even costlier in the future? Or was the overpayment the cost of getting into an appreciating asset?”
Or was it the price of financial ignorance? Time will tell.
^^This.
Well said.
‘Minneapolitans can be forgiven if they feel like they are living in a construction zone. The Encore and its pals, after all, are only the more recent manifestations of a boom in downtown apartment construction that’s been going on for the past few years.’
‘As thrilling as any boom can be — generating more jobs, more spending and presumably more prosperity — almost the minute it’s detected, there comes the worry about whether or when it will turn into a bubble and collapse. And so it is. Only about 20 minutes after the current surge in apartment building got under way in 2013, Burl Gilyard wrote in Twin Cities Business: “If residential real estate is the ultimate business roller coaster ride, full of exhilarating climbs and stomach-churning drops — how long until the screaming starts?”
‘Historically, “Minneapolis is up there with New York and San Francisco as having one of the tightest vacancy rates,” says Willett of MPF Research. “The vacancy rate has run about 3 percent. And that’s what it is now: 3 percent.”
‘The reason for the low rate, he says: “Lack of rental product.”
‘Downtown Minneapolis is another story, however. According to NAI Everest, the vacancy rate there is 8.3 percent. Marquette Advisors had not at press time calculated its second quarter vacancy rates, but for the first quarter, it registered 8.8 percent for downtown buildings. Both would be well over the so-called 5 percent equilibrium.’
‘Already Ryan Severino, director of research for Reis, the national real estate data service, says he is surprised that the screaming hasn’t already started, at least in some cities. He headed his comments on 2015’s second quarter “Armageddon Postponed” and writes that while a huge number of units are coming on the market, an estimated 230,000 this year, renters continue to gobble them up. But, he warns, “the pipeline remains incredibly robust and the market is only delaying the inevitable” — a moment when there will more apartments than people who will want or be able to rent them.’
‘Affordability is certainly an issue. Most of the apartments now rising here and across the nation are catering to the upscale among us. According to the Harvard report, “new units are primarily built for the high end of the market. In 2013, the median asking price for newly constructed multifamily units was $1,290, equivalent to about half of the median renter’s monthly household income. At that rent level, over two-thirds of today’s renter households could not afford this new unit at the traditional 30 percent income standard.”
“the pipeline remains incredibly robust and the market is only delaying the inevitable” — a moment when there will more apartments than people who will want or be able to rent them.’ ??
Thats what I suspect will happen here…They are building at breakneck pace…Rents are incredibly high…
Rents might be high but buying the depreciating asset is far far higher.
Think it about it for a moment. Why buy it when you can rent it for half the monthly cost?
‘It wasn’t long ago that the words housing market struck fear into the hearts of many Valley homeowners… but not anymore. The market in the Phoenix metro area hit rock bottom four years ago. “I think the confidence level is a lot better than it was four or five years ago, there’s no doubt,” said Don Hagan with Desert Schools Federal Credit Union.’
‘And those confident homeowners are watching their equity grow. Rates are still low and values are up but the decision to dive into another loan or line of credit is not one to be taken lightly. “It seems to be getting more traction now that people are beginning to feel a little bit more comfortable about their equity,” Hagan said.’
‘When China’s economy was booming, motorists became a symbol of the nation’s new spending power. Now, falling car sales may be more a symbol of China’s steady deceleration.’
‘The China Automobile Dealers Association last week warned that nationwide sales could drop for the first time in more than 17 years, if the country’s stock-market rout continues. The slump in equities hurts buyer sentiment, Luo Lei, deputy secretary-general of the industry trade group, said Friday.’
‘On the ground, car dealers like Tao Jinlong are feeling the slowdown and have to work harder than ever to make a sale. “Customers are very price-sensitive,” said Tao, a sales manager at a Ford dealership in Shanghai. “They shop around more and are demanding bigger discounts, which affects our margins. We’ve also had to spend a lot more time with them to close a sale.”
“The first thing to go when rough waters are ahead is car sales,” said Thomas Glendinning, London-based analyst at BMI Research, a unit of the Fitch Group that also does credit ratings.’
The first thing to go is high end manufacturing equipment. The boom in factory construction has been over for quite a while.
‘The only thing hotter than the beach in Miami this summer is its tempestuous housing market. While summer is historically the slow season for Miami, this summer saw record sales of single-family homes.’
‘While the supply of condos for sale is still relatively low, it did jump 9 percent from a year ago, and there is concern that thousands of new units, either planned or already under construction, will temper the market in the year ahead.’
‘The outlook is not as bright for the luxury market on Miami Beach. With a median price of $2.3 million, down 5 percent from a year ago, sales are weaker by 10 percent, according to Jonathan Miller, president of Miller Samuel.’
‘The stall on the high end is the result of fewer international investors in the market. Miami has been a safe-haven for money from all over the globe, but the strength of the dollar against foreign currencies is cutting into that. Buyers from Russia, China and Europe may be reconsidering Miami.’
‘Luxury condos are sitting on the market longer, which could portend weaker sales in the fall.’
‘The “home-sharing” service Airbnb was under fire once again this week, after affordable housing advocates released a report that they say details the extent of the company’s staggering number of often-illegal rentals in New York City.’
‘The study, published by New York Communities for Change and Real Affordability for All, found that more than 20 percent of the apartments in some of the city’s least affordable neighborhoods are offered for short- and long-term stays through the site.’
‘The East Village topped the list, with a whopping 28 percent of its units available on Airbnb, according to the study. Also in the top 10 were the West Village, Lower East Side and Greenwich Village, with roughly 23, 20 and 18 percent of apartments, respectively.’
‘By analyzing census data as well as listings on the site itself, the survey also found that nearly 60 percent of the offers were categorized as entire homes or apartments, which would make them illegal. It also claimed that the site has taken over about 10 percent of the city’s available housing stock.’
“This report confirms what we have known for a long time,” said City Councilmember Corey Johnson, whose district includes the Village. “Illegal hotel rooms are eroding our affordable housing stock. By overloading the market with expensive short-term rentals, they are reducing the supply of housing and driving rents up.”
Getting ready to try my first stay at an Airbnb rental tonight (LOLZ!!!)…
Watch your wallet. Hookers and drug dealers are in and out of those places.
My sisters will be there to watch my back.
I’ve had several good air bnb experiences, nothing bad at all. Always much nicer than a 4 star hotel in the same price range.
https://www.google.com/search?q=airbnb+nightmare&ie=utf-8&oe=utf-8
Yahoo Travel
Airbnb Nightmare: Woman’s Home Turned Into Brothel
Leah Ginsberg
June 30, 2015
Airbnb can be an awesome way to make extra money — just take for example this guy who made $200,000 off his house.
But unfortunately, sometimes it can also turn out to be a nightmare, like this poor Australian woman whose home was turned into a brothel.
It all started innocently enough: a woman contacted the homeowner via the Airbnb website, and after chatting offline she agreed to rent the woman the house for two nights (though not via Airbnb). But soon after the woman arrived, the homeowner started getting calls from worried neighbors, who saw a stream of strange men arriving at and then leaving the house.
The home owner texted the woman and asked her to leave the property to no avail, so she returned home and confronted the renter, who then left.
Though a complaint was filed with police, they were unable to prove any illegal activity.
…
“I’ve had several good air bnb experiences,”
I bet they were Liberace…… I bet they were.
‘If you were to amass all of the federally owned land in Nevada, the 10 smallest states in America, plus Guam, would fit inside.’
‘The federal government owns about 85 percent of the state. The debate was rekindled this month when President Barack Obama designated 700,000 acres in southeastern Nevada as the Basin and Range National Monument, fulfilling a longtime goal of ally Sen. Harry Reid. Basin and Range is the second national monument designated in Nevada in the past year, joining the Tule Springs Fossil Bed near Las Vegas.’
‘But often lost in the debate is that multiple federal agencies own the land, and do so for different reasons. Here’s a guide to who owns what and why.’
‘Pat Cashell manages the homeless shelter on record street. He has a very blunt way to describe the affordable housing situation in Northern Nevada. “It’s bad,” said Cashell. “It’s not just bad in Washoe County it is bad in our state. We rank last in the country in affordable housing.”
‘Heather Polk has been on the waiting list for housing for the past 13 months and is ready to move on from the challenges of being at the shelter. “You start worrying about all your stuff, what you got to do the next day and your night gets really tough,” Polk said.’
‘Cashell estimates there are nine housing units for every 100 people in the shelter. However, there are many different organizations in town that are trying to place people in affordable housing and they end up competing for the same units. “So those nine units go down to about a quarter of a unit for every hundred clients we have,” Cashell said.’
“EDAWN recently did a study. We need 35,000 plus units,” said Elaine Wiseman, community development for the City of Reno. “What happens is the rents start to go up and that is going to push out the low income people. They are not going to be able to afford the existing housing inventory.”
So, what are these homeless people doing for a living? If they don’t have a job, why not ship them to another state where there more plenty of housing (Detroit comes to mind.) I guess the other states won’t take them?
We need 35,000 plus units,” said Elaine Wiseman, community development for the City of Reno ??
I am in Reno right now…Looking west at a apartment development of maybe 100 units…I know the town pretty well having worked here in the 70’s and visiting a lot…
All the little small motels that were built in the 50′-60’s (and there are a lot of them) are either rented as apartments or shut down altogether…I look at some of them, and where they are located and I see them as having no value…Demolition cost likely exceed the value of the land so they just sit there…
Legalizing Indian casino’s in California just crushed these little Motels along with retail…
The small motels are new boarding houses. They used to line the older highways like Route 40 or Route 1. The superhighways killed them. I once drove on Route 40 near Columbus and it was the most depressing stretch of road I’ve been on. The places are demolishing themselves.
The casinos in reno are hurting badly. The machines are very tight.
Dave is right, the indian casinos in CA r eating their lunch.
I see a lot of payday lenders up there now.
South reno is a a nice area.
‘J.P. Morgan Chase announced earlier this week it has lowered the FICO and downpayment requirements for jumbo loans up to $3 million. Buyers with a FICO of 680 can now purchase a home with as little as 15 percent down; former guidelines required a FICO of 740 with 20 percent down.’
‘It’s a pre-emptive move ahead of a broader policy change that may raise the threshold for jumbo loans and reduce the need for these type of loans.’
“Although credit was too lax during the housing bubble years, the pendulum has swung too far in the other direction … although small progress has been made, significant room remains to safely expand the credit box,” the institute argued in a report released last week. “The mortgage market could have taken twice the default risk it took in the first quarter of 2015 and still have remained well within the cautious standard of 2001–03.”
‘For his part, Mix agrees. And he believes other lenders will follow Chase’s lead. “I’ve seen that in the industry: It’s slowly loosening its grip on guidelines.”
A comment:
‘by Brad Peterson, Boulder, Colorado 8/6/2015.
‘Another reason why nobody should be going to the big banks for mortgages - we are writing 10% down Jumbos with 720 ficos all day and have been for some time.’
‘It’s getting easier to qualify for a jumbo loan. That’s certainly good news for wealthy people buying a new mansion. But for for investors worried about the health of credit markets, easier access to huge loans isn’t necessarily a plus.’
‘Ed Yardeni of Yardeni Research pointed to the looser requirements as a worrisome sign in his Morning Briefing Thursday. He said this news was just “a piece of the puzzle” that is adding up to a “whole lot of debt” in the global economy.’
“If the financial crisis of 2008 was supposed to lead to deleveraging, the borrowers and the lenders either didn’t get the memo or misplaced it. We didn’t start the fire, but we aren’t doing much to put it out. Actually, we seem to be fueling it.”
‘Other headlines he adds to the list that may be fueling a debt bubble include China launching infrastructure bonds, Greece nearing a deal with creditors, and bond-financed corporate M&A reaching a record high this year.’
when u start to run out of buyers you have to loosen credit standards and lower down payments to keep people in the game. Didnt this happen last time?
God bless angelo!
‘Initial foreclosure filings in Massachusetts were up 81 percent in June from last year, which continues an upward trend over the last year and a half. Foreclosure petitions, the first step in the process, rose by more than 60-percent through the first six months of 2015. Completed foreclosures are also up double-digits over the same time frame.’
‘Tim Warren of the Warren Group, says the spike is due to a backlog of overdue loans, and not necessarily an increase of borrowers in financial straits.’
‘Warren says another reason for the push of foreclosures is banks and lenders were not eager to own distressed properties while the real estate market was down, but now that it has bounced back, financial groups are ready to unload them.’
‘The Reserve Bank has blamed an unusual concentration of investors for pushing up house prices, saying they are probably pricing out aspiring first-home buyers from properties they would otherwise own.’
“The housing sales market has become unusually concentrated in investor activity, particularly in the larger cities,” the head of the bank’s financial stability department, Luci Ellis, told a parliamentary inquiry. “Investors typically have more equity and borrowing capacity than first-home buyers and perhaps also other owner-occupiers, and might therefore be more able and willing to pay higher prices.”
‘Dr Ellis said the investor boom was being fed by both very low interest rates and the prospect of concessionally taxed capital gains.’
‘She said the United Kingdom and the United States allowed investors to deduct interest expenses against their property income but not their wage income. Corporations could deduct interest expenses only against their business income, but individuals who ran what was in effect a business renting out properties were allowed to deduct their expenses against their pay cheques from other employers.’
“One of the things I have observed in the 15 or 20 years I have spent watching the housing market is that typically in Australia a real estate agent fee is about 2 per cent of the sale price. As best as we can tell in the UK and Canada it is a number more like 5 or 6 per cent, so you are still paying the same amount of transaction cost, but you are paying it to a real estate agent rather than a state government.”
“It’s also worth noting that the disincentive to buy or sell imposed by these transaction costs is a disincentive to flip. From a financial stability point of view. That’s a good thing. We saw a lot of flippers, people who bought and sold quickly, in the United States.”
‘The two-story home on Essex Road has been empty for five years, rotting away in a tortured legal limbo. Its owner failed to pay a loan to Wells Fargo, and the bank attempted to foreclosure in 2010 and 2012, according to Cuyahoga County Court documents. Both cases were dismissed.’
‘When homeowners can’t make their payments, Wells Fargo tries to work with their clients, to allow them to stay in their homes, said bank vice president Tyler Smith. But if homes are abandoned, it’s in the bank’s interest to wrap up the foreclosure quickly as possible. That legal process can take years. Meanwhile, homes rot.’
“We understand the impact a vacant property has on a neighborhood, nobody wants to see that, including Wells Fargo,” Smith said. “There is no deliberate delays on our behalf. We’re not stalling.”
‘Here’s the timeline on the Essex Road house: January 1975: Property records show the owner lives at the address.’
‘March 2009: The owner is granted Chapter 7 bankruptcy. But the bank still has a right to foreclose on the property, because mortgages and home equity loans are secured. The bank cannot foreclose on the home while the bankruptcy was still pending in court, which typically takes between one and four months.’
‘January 2010: Wells Fargo files for foreclosure, asking for $149,231, court documents show.’
‘2010: Homeowner moves to Florida, neighbors say. Court records show that the homeowner has a home there.’
‘August 2010: Wells Fargo and the owner reached an agreement through the Home Affordable Modification Program, designed to help people struggling to make home loan payments.’
‘September 2010: The foreclosure is dismissed.’
‘June 2012: Wells Fargo files for foreclosure a second time, asking for $164,368. July 2012: Notification of foreclosure sent to owner by certified mail. September 2012: Notification of foreclosure sent again to owner by certified mail, and is returned. September 2012: First notification of foreclosure is not returned by postal service.’
‘December 2012: Case is dismissed due to inaction by Wells Fargo.’
‘October 2014: A neighbor asks Cleveland Heights to declare the property a nuisance. The city says no, because the property is not in bad enough shape.’
‘November/December 2014: Water begins to gush in the home and soaks the interior, neighbor Steve Smith said. He can hear it when he puts his ear to an old pipe. The leak doesn’t stop for 5 1/2 months. Mold and mildew start growing.’
‘April 2015: The city cited the home, demanding that the owner replace the roof, repaint the exterior and rebuild the garage. The owner had 89 days to fix the home up, but failed to complete the work. The case will now go to housing court. If the problem isn’t resolved there, or the owner fails to show up, city council could could declare the house a nuisance. That would allow the city to pay for the work, and bill the owner back with a tax lien.’
‘July 2015: Wells Fargo continues to pay landscapers to cut the grass.’
They forgot a entry into the timeline……
Late October 2014: Neighbor breaks into house, plugs all of the drains, opens all the faucets.
Come around the end of the year pipes full of water in an unheated house tend to burst.
What idiot left the water valve to the house on after years of non-payment? Was Wells paying the city meter charge?
A lot of old meters don’t lock, or the valve gets stuck in the on position. Kids turn it on sometimes. Vagrants.
It depends on the water source/city, etc. Standard foreclosure procedure is to remove the meter and valve. Complete disconnect. But I’ve never done it because the utility companies won’t allow it where I’ve worked.
So who “owns” the house (as far as the city is concerned)? The former owner, or Wells Fargo?
The ‘defacto” owner appears to be the city (and by extension, the taxpayers).
Looks like Wells Fargo may be dodging a bullet.
It seems that the former homeowner has fallen off the face of the Earth, after doing a cash out refi (when did he/she take out the refi?)
My inner Danny Ocean wants to say, “Well payed, sir”
‘The public will be able to begin buying homes in Sun City’s first new development in over 40 years – and its final one – Sept. 18. Construction will start Monday (Aug. 10) on three models for Four Seasons at the Manor, K. Hovnanian Homes’ 141-unit project. The units — all single-level — will include two bedrooms and two or 2.5 baths, but buyers will have the ability to add options and customize.’
‘Prices have not been announced, but area realtors said they are expected to range from the mid- to upper $200,000s.’
‘Bringing brand-new houses to land that has stood vacant for decades despite several attempts by builders to launch projects, Four Seasons has created a buzz within the Sun City real estate community not seen in years.’
‘The Tsonises said Sun City remains popular with people looking to retire from the Midwest, the Northwest and California, although activity from Canada has fallen off in recent years with a decline in the value of the Canadian dollar.’
I live not too far from here. The house I rent is a 3/2 with a two car garage and was bought new 14 years ago for $105,000. I assume the builder had a little profit tucked in there, so where the hell does the extra 100k go? Oh, right into somebodies pocket. And there is interest too. Plus, just drive a few more miles and there is empty land as far as you can see.
Sun City is an extra 15-25 minute commute. There is a residential vacancy rate of around 13% in Glendale and a 45% commercial vacancy rate. There are empty lots everywhere that could be used for infill.
they will sell out before they are built I bet. Sun cities are a magnet for cash.
What place for a thousand miles in any direction couldn’t be a sun city?
People in lincoln ca pisss all over themselves to be in a sun city. 700k stucco shacks are not uncommon. But they do get to drive their golf carts to the grocery store.
What place for a thousand miles in any direction couldn’t be a sun city ??
Exactly…There is no barrier to entry…Any demand will be met with immediate supply at cost plus a small profit…Nobody will build a spec house to try and make 10k…But if you build 100 of them and they can be absorbed, they will do it…
“I live not too far from here. The house I rent is a 3/2 with a two car garage and was bought new 14 years ago for $105,000.”
That’s about right.
-Concrete today is where it was 15 years ago
-Dimensional lumber is where it was 15 years ago
-Pipe and wire is where is was 15 years ago
Arvada, CO Housing Prices Fall 15%; Inventory Balloons 87%
http://www.movoto.com/arvada-co/market-trends/
‘Business is so tough for oilfield giants Schlumberger NV and Halliburton Co that they have come up with a new sales pitch for crude producers halting work in the worst downturn in years. It amounts to this: “frack now and pay later.”
‘At Halliburton, some of the capital to finance the sales will come from $500 million in backing from asset manager BlackRock, part of a wave of alternative finance pouring into the energy industry that one Houston lawyer said on Thursday allows companies to “keep the engine running.”
http://finance.yahoo.com/news/frack-now-pay-later-top-services-companies-amid-053340321–sector.html
Easy money/artificially low interest rates=deflation.
Or “throwing (somebody else’s) good money after bad.
Doesn’t “alternative financing” usually mean that the purpose for the loan is so high-risk that traditional lenders won’t touch the project? And let’s not forget that this is a politically-connected industry that already gets subsidies and tax breaks.
Labor Force Participation Rate Falls To 37 Year Low
http://data.bls.gov/timeseries/LNS11300000
but they say only 5.3% unemployed people? BS data?
If you haven’t been able to find a job for two years, you don’t count as “unemployed” anymore.
One of the reasons there is a surge in the “disabled”, especially older guys who have actual injuries.
How it plays out:
- 40 to 50 year old guy gets laid off from his decently paying manufacturing job
- Can’t find any work that pays better than minimum wage.
- Because he was making decent money until very recently, and unemployment/welfare benefits run out eventually, he applies for and gets a “disability pension”, and takes home more money than he would on unemployment or welfare, with much less stigma.
If the guys choices are claim disability, or go the unemployment route and eventually be on the streets, you can bet their choice is going to be “A”
The Republican answer to this is scream “fraud, waste and abuse”, kill the disability payouts, and put these people out on the street.
The real solution is the get back the millions of factory jobs that got sent to China and Mexico. Too bad that’s never going to happen.
What, and make the plastic crap at Walmart 20% more expensive? You might as well try and pry their mobility scooters from their cold, dead hands.
I have a former-contractor neighbor who is now on state disability (bad knees). He will only help me lift/move something if it’s after dark, just to be on the safe side . . .
Is it fraud, or the smart thing to do?
If somebody hands out ‘free’ cheeze, should you get in line?
What is truly scary to think about is how societal morality regarding pride, hard work, and refusal to tank handouts has changed in our country over the past century. People wouldn’t take charity during the depression, but they would take a government-created job that helped build infrastructure that we are (in many cases) still using today. Oh, how the tide has changed . . .